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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







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

For the Quarter Ended September 30, 2013



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

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 No.)
|500 Park Avenue New York, N.Y.           |  | 10022                               
|(Address of principal executive offices) |  | (Zip Code)                          

(212) 993-1670

(Registrants telephone number, including area code)





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 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 whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|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
Exchange Act).    Yes   ̈    No  x

The number of shares of the registrants Common Stock, $.01 par value, outstanding as of October 29, 2013 was 11,525,616.









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SOLAR SENIOR CAPITAL LTD.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2013

TABLE OF CONTENTS





|                              |  |                                                                                                                                                 |  |  |    | 
|----------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|                              |  | PAGE                                                                                                                                            | 
|PART I. FINANCIAL INFORMATION |  |                                                                                                                                                 | 
|                              |  |                                                                                                                                                
|Item 1.                       |  | Financial Statements                                                                                                                            |  |  |    | 
|                              |  | Consolidated Statements of Assets and Liabilities as of September 30, 2013 (unaudited) and December 31, 2012                                    |  |  | 3  | 
|                              |  |                                                                                                                                                
|                              |  | Consolidated Statements of Operations for the three and nine months ended September 30, 2013 (unaudited) and
September 30, 2012 (unaudited)     |  |  | 4  | 
|                              |  |                                                                                                                                                
|                              |  | Consolidated Statements of Changes in Net Assets for the nine months ended September 30, 2013 (unaudited) and
 the year ended December 31, 2012 |  |  | 5  | 
|                              |  |                                                                                                                                                
|                              |  | Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 (unaudited) and September
 30, 2012 (unaudited)              |  |  | 6  | 
|                              |  |                                                                                                                                                
|                              |  | Consolidated Schedule of Investments as of September 30, 2013 (unaudited)                                                                       |  |  | 7  | 
|                              |  |                                                                                                                                                
|                              |  | Consolidated Schedule of Investments as of December 31, 2012                                                                                    |  |  | 10 | 
|                              |  |                                                                                                                                                
|                              |  | Notes to Consolidated Financial Statements (unaudited)                                                                                          |  |  | 13 | 
|                              |  |                                                                                                                                                
|                              |  | Report of Independent Registered Public Accounting Firm                                                                                         |  |  | 27 | 
|                              |  |                                                                                                                                                
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                           |  |  | 28 | 
|                              |  |                                                                                                                                                
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                      |  |  | 41 | 
|                              |  |                                                                                                                                                
|Item 4.                       |  | Controls and Procedures                                                                                                                         |  |  | 41 | 
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                                                 |  | 
|                              |  |                                                                                                                                                
|Item 1.                       |  | Legal Proceedings                                                                                                                               |  |  | 43 | 
|                              |  |                                                                                                                                                
|Item 1A.                      |  | Risk Factors                                                                                                                                    |  |  | 43 | 
|                              |  |                                                                                                                                                
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                     |  |  | 43 | 
|                              |  |                                                                                                                                                
|Item 3.                       |  | Defaults upon Senior Securities                                                                                                                 |  |  | 43 | 
|                              |  |                                                                                                                                                
|Item 4.                       |  | Mine Safety Disclosures                                                                                                                         |  |  | 43 | 
|                              |  |                                                                                                                                                
|Item 5.                       |  | Other Information                                                                                                                               |  |  | 43 | 
|                              |  |                                                                                                                                                
|Item 6.                       |  | Exhibits                                                                                                                                        |  |  | 44 | 
|                              |  |                                                                                                                                                
|                              |  | Signatures                                                                                                                                      |  |  | 46 | 



2



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PART I. FINANCIAL INFORMATION

In this Quarterly Report, Solar Senior, Company, Fund, we, us, and our refer to
Solar Senior Capital Ltd. unless the context states otherwise.



|Item 1. | Financial Statements
|------- | --------------------

SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except shares)



|                                                                                                                                                                               |  |                               |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                                               |  | September 30, 2013(unaudited) |         |   | December 31, 2012 |  
|Assets                                                                                                                                                                         |  |                               |         |   |                   |   |         |  
|Investments, at fair value:                                                                                                                                                    |  |                               |         |   |                   |   |         |  
|Companies less than 5% owned (cost: $247,457 and $214,075, respectively)                                                                                                       |  | $                             | 243,498 |   |                   | $ | 212,602 |  
|Companies more than 25% owned (cost: $32,839 and $0, respectively)                                                                                                             |  |                               | 32,839  |   |                   |   |        |  
|                                                                                                                                                                               |  |                               |         |   |                   |   |         |  
|Total investments (cost: $280,296 and $214,075, respectively)                                                                                                                  |  |                               | 276,337 |   |                   |   | 212,602 |  
|Cash                                                                                                                                                                           |  |                               | 7,243   |   |                   |   | 2,647   |  
|Receivable for investments sold                                                                                                                                                |  |                               | 54      |   |                   |   | 282     |  
|Interest receivable                                                                                                                                                            |  |                               | 1,742   |   |                   |   | 1,294   |  
|Prepaid expenses and other assets                                                                                                                                              |  |                               | 195     |   |                   |   | 204     |  
|                                                                                                                                                                               |  |                               |         |   |                   |   |         |  
|Total assets                                                                                                                                                                   |  | $                             | 285,571 |   |                   | $ | 217,029 |  
|                                                                                                                                                                               |  |                               |         |   |                   |   |         |  
|Liabilities                                                                                                                                                                    |  |                               |         |   |                   |   |         |  
|Credit facility payable (see note 6 and 7)                                                                                                                                     |  | $                             | 34,800  |   |                   | $ | 39,100  |  
|Dividends payable                                                                                                                                                              |  |                               | 1,354   |   |                   |   | 1,116   |  
|Payable for investments purchased                                                                                                                                              |  |                               | 41,759  |   |                   |   | 995     |  
|Management fee payable (see note 3)                                                                                                                                            |  |                               | 680     |   |                   |   | 581     |  
|Performance-based incentive fees payable (see note 3)                                                                                                                          |  |                               |        |   |                   |   | 84      |  
|Interest payable (see note 7)                                                                                                                                                  |  |                               | 92      |   |                   |   | 121     |  
|Administrative services expense payable (see note 3)                                                                                                                           |  |                               | 352     |   |                   |   | 431     |  
|Other liabilities and accrued expenses                                                                                                                                         |  |                               | 186     |   |                   |   | 498     |  
|                                                                                                                                                                               |  |                               |         |   |                   |   |         |  
|Total liabilities                                                                                                                                                              |  | $                             | 79,223  |   |                   | $ | 42,926  |  
|                                                                                                                                                                               |  |                               |         |   |                   |   |         |  
|Net Assets                                                                                                                                                                     |  |                               |         |   |                   |   |         |  
|Common stock, par value $0.01 per share, 200,000,000 and 200,000,000 common shares authorized, respectively, and 11,523,315 and
9,500,100 issued and outstanding, respectively |  | $                             | 115     |   |                   | $ | 95      |  
|Paid-in capital in excess of par                                                                                                                                               |  |                               | 215,136 |   |                   |   | 177,728 |  
|Distributions in excess of net investment income                                                                                                                               |  |                               | (4,680  | ) |                   |   | (2,247  | )
|Accumulated net realized loss                                                                                                                                                  |  |                               | (264    | ) |                   |   |        |  
|Net unrealized depreciation                                                                                                                                                    |  |                               | (3,959  | ) |                   |   | (1,473  | )
|                                                                                                                                                                               |  |                               |         |   |                   |   |         |  
|Total net assets                                                                                                                                                               |  | $                             | 206,348 |   |                   | $ | 174,103 |  
|                                                                                                                                                                               |  |                               |         |   |                   |   |         |  
|Net Asset Value Per Share                                                                                                                                                      |  | $                             | 17.91   |   |                   | $ | 18.33   |  
|                                                                                                                                                                               |  |                               |         |   |                   |   |         |  

See notes to the consolidated financial statements.



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SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share amounts)



|                                                     |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|---------------------------------------------------- |  | ------------------ | ----- | - | ------------------ | - | ----- | ------------------ |  | - | ------------------ | - |  | - | ------ | 
|                                                     |  | Three months ended |       |   | Nine months ended  |  
|                                                     |  | September 30, 2013 |       |   | September 30, 2012 |   |       | September 30, 2013 |  |   | September 30, 2012 |  
|INVESTMENT INCOME:                                   |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|Interest:                                            |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|Companies less than 5% owned                         |  | $                  | 4,915 |   |                    | $ | 4,890 |                    |  | $ | 14,111             |   |  | $ | 14,398 | 
|                                                     |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|EXPENSES:                                            |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|Management fees (see note 3)                         |  | $                  | 680   |   |                    | $ | 594   |                    |  | $ | 1,872              |   |  | $ | 1,635  | 
|Interest expense                                     |  |                    | 303   |   |                    |   | 407   |                    |  |   | 825                |   |  |   | 1,046  | 
|Performance-based incentive fees (see note 3)        |  |                    |      |   |                    |   | 244   |                    |  |   | 80                 |   |  |   | 743    | 
|Administrative services expense (see note 3)         |  |                    | 265   |   |                    |   | 170   |                    |  |   | 759                |   |  |   | 660    | 
|Insurance expense                                    |  |                    | 30    |   |                    |   | 102   |                    |  |   | 130                |   |  |   | 301    | 
|Other general and administrative expenses            |  |                    | 349   |   |                    |   | 372   |                    |  |   | 702                |   |  |   | 892    | 
|                                                     |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|Total expenses before debt issuance cost             |  |                    | 1,627 |   |                    |   | 1,889 |                    |  |   | 4,368              |   |  |   | 5,277  | 
|                                                     |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|Debt issuance cost                                   |  |                    |      |   |                    |   |      |                    |  |   |                   |   |  |   | 53     | 
|                                                     |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|Total expenses after debt issuance cost              |  |                    | 1,627 |   |                    |   | 1,889 |                    |  |   | 4,368              |   |  |   | 5,330  | 
|                                                     |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|Net investment income                                |  | $                  | 3,288 |   |                    | $ | 3,001 |                    |  | $ | 9,743              |   |  | $ | 9,068  | 
|                                                     |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:  |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|Net realized gain (loss):                            |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|Companies less than 5% owned                         |  | $                  | (467  | ) |                    | $ | 143   |                    |  | $ | (264               | ) |  | $ | 544    | 
|Net change in unrealized gain (loss)                 |  |                    | (217  | ) |                    |   | 663   |                    |  |   | (2,486             | ) |  |   | 3,545  | 
|                                                     |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|Net realized and unrealized gain (loss)              |  |                    | (684  | ) |                    |   | 806   |                    |  |   | (2,750             | ) |  |   | 4,089  | 
|                                                     |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |  | $                  | 2,604 |   |                    | $ | 3,807 |                    |  | $ | 6,993              |   |  | $ | 13,157 | 
|                                                     |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 
|EARNINGS PER SHARE (see note 5)                      |  | $                  | 0.23  |   |                    | $ | 0.40  |                    |  | $ | 0.61               |   |  | $ | 1.38   | 
|                                                     |  |                    |       |   |                    |   |       |                    |  |   |                    |   |  |   |        | 

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)



|                                                           |  |                                                |           |   |                             |   |         |  
|---------------------------------------------------------- |  | ---------------------------------------------- | --------- | - | --------------------------- | - | ------- | -
|                                                           |  | Nine months endedSeptember 30, 2013(unaudited) |           |   | Year endedDecember 31, 2012 |  
|Increase in net assets resulting from operations:          |  |                                                |           |   |                             |   |         |  
|Net investment income                                      |  | $                                              | 9,743     |   |                             | $ | 12,493  |  
|Net realized gain (loss)                                   |  |                                                | (264      | ) |                             |   | 618     |  
|Net change in unrealized gain (loss)                       |  |                                                | (2,486    | ) |                             |   | 801     |  
|                                                           |  |                                                |           |   |                             |   |         |  
|Net increase in net assets resulting from operations       |  |                                                | 6,993     |   |                             |   | 13,912  |  
|                                                           |  |                                                |           |   |                             |   |         |  
|                                                           |  |                                               
|Dividends and distributions to stockholders:               |  |                                                | (12,176   | ) |                             |   | (12,255 | )
|                                                           |  |                                                |           |   |                             |   |         |  
|                                                           |  |                                               
|Capital share transactions:                                |  |                                                |           |   |                             |   |         |  
|Net proceeds from shares sold                              |  |                                                | 37,200    |   |                             |   |        |  
|Offering costs and other                                   |  |                                                | (206      | ) |                             |   | 11      |  
|Reinvestment of dividends                                  |  |                                                | 434       |   |                             |   |        |  
|                                                           |  |                                                |           |   |                             |   |         |  
|Net increase in net assets from capital share transactions |  |                                                | 37,428    |   |                             |   | 11      |  
|                                                           |  |                                                |           |   |                             |   |         |  
|                                                           |  |                                               
|Total increase in net assets:                              |  |                                                | 32,245    |   |                             |   | 1,668   |  
|Net assets at beginning of period                          |  |                                                | 174,103   |   |                             |   | 172,435 |  
|                                                           |  |                                                |           |   |                             |   |         |  
|Net assets at end of period                                |  | $                                              | 206,348   |   |                             | $ | 174,103 |  
|                                                           |  |                                                |           |   |                             |   |         |  
|                                                           |  |                                               
|Capital share activity:                                    |  |                                                |           |   |                             |   |         |  
|Shares sold                                                |  |                                                | 2,000,000 |   |                             |   |        |  
|Shares issued from reinvestment of dividends               |  |                                                | 23,215    |   |                             |   |        |  
|                                                           |  |                                                |           |   |                             |   |         |  
|Net increase from capital share activity                   |  |                                                | 2,023,215 |   |                             |   |        |  
|                                                           |  |                                                |           |   |                             |   |         |  

See notes to consolidated financial statements.



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SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)



|                                                                               |  |                    |          |   |                    |   |          |  
|------------------------------------------------------------------------------ |  | ------------------ | -------- | - | ------------------ | - | -------- | -
|                                                                               |  | Nine months ended  |         
|                                                                               |  | September 30, 2013 |          |   | September 30, 2012 |  
|Cash Flows from Operating Activities:                                          |  |                    |          |   |                    |   |          |  
|Net increase in net assets resulting from operations                           |  | $                  | 6,993    |   |                    | $ | 13,157   |  
|Adjustments to reconcile net increase in net assets resulting from operations: |  |                    |          |   |                    |   |          |  
|Net realized (gain) loss on investments                                        |  |                    | 264      |   |                    |   | (544     | )
|Net change in unrealized (gain) loss on investments                            |  |                    | 2,486    |   |                    |   | (3,545   | )
|Debt issuance costs                                                            |  |                    |         |   |                    |   | 53       |  
|(Increase) decrease in operating assets:                                       |  |                    |          |   |                    |   |          |  
|Purchase of investments                                                        |  |                    | (173,899 | ) |                    |   | (134,825 | )
|Proceeds from disposition of investments                                       |  |                    | 107,414  |   |                    |   | 81,712   |  
|Receivable for investments sold                                                |  |                    | 228      |   |                    |   | (87      | )
|Deferred offering cost                                                         |  |                    |         |   |                    |   | (89      | )
|Interest receivable                                                            |  |                    | (448     | ) |                    |   | 241      |  
|Prepaid expenses and other assets                                              |  |                    | 9        |   |                    |   | 70       |  
|Increase (decrease) in operating liabilities:                                  |  |                    |          |   |                    |   |          |  
|Payable for investments purchased                                              |  |                    | 40,764   |   |                    |   | 5,013    |  
|Management fee payable                                                         |  |                    | 99       |   |                    |   | (350     | )
|Performance-based incentive fees payable                                       |  |                    | (84      | ) |                    |   | 331      |  
|Administrative services expense                                                |  |                    | (79      | ) |                    |   | 129      |  
|Interest payable                                                               |  |                    | (29      | ) |                    |   |         |  
|Other liabilities and accrued expenses                                         |  |                    | (312     | ) |                    |   | (43      | )
|                                                                               |  |                    |          |   |                    |   |          |  
|Net Cash Used in Operating Activities                                          |  |                    | (16,594  | ) |                    |   | (38,777  | )
|                                                                               |  |                    |          |   |                    |   |          |  
|Cash Flows from Financing Activities:                                          |  |                    |          |   |                    |   |          |  
|Proceeds from shares sold                                                      |  |                    | 37,200   |   |                    |   |         |  
|Offering costs                                                                 |  |                    | (206     | ) |                    |   | 12       |  
|Cash dividends paid                                                            |  |                    | (11,504  | ) |                    |   | (7,785   | )
|Debt issuance costs                                                            |  |                    |         |   |                    |   | (53      | )
|Proceeds from borrowings                                                       |  |                    | 123,200  |   |                    |   | 99,583   |  
|Repayments of borrowings                                                       |  |                    | (127,500 | ) |                    |   | (52,283  | )
|                                                                               |  |                    |          |   |                    |   |          |  
|Net Cash Provided by Financing Activities                                      |  |                    | 21,190   |   |                    |   | 39,474   |  
|                                                                               |  |                    |          |   |                    |   |          |  
|                                                                               |  |                   
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                      |  |                    | 4,596    |   |                    |   | 697      |  
|                                                                               |  |                   
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                               |  |                    | 2,647    |   |                    |   | 2,934    |  
|                                                                               |  |                    |          |   |                    |   |          |  
|                                                                               |  |                   
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                     |  | $                  | 7,243    |   |                    | $ | 3,631    |  
|                                                                               |  |                    |          |   |                    |   |          |  
|Supplemental disclosure of cash flow information:                              |  |                    |          |   |                    |   |          |  
|Cash paid for interest                                                         |  | $                  | 854      |   |                    | $ | 645      |  
|                                                                               |  |                    |          |   |                    |   |          |  
|Cash paid for income taxes                                                     |  | $                  | 16       |   |                    | $ | 99       |  
|                                                                               |  |                    |          |   |                    |   |          |  

Non-cash financing activities consist of the reinvestment of dividends of $434 and $0 for the nine months ended
September 30, 2013 and 2012, respectively.

See notes to consolidated financial statements.



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SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited)

September 30, 2013

(in thousands except units)



|                                                |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  |   |         | 
|----------------------------------------------- |  | ------------------------------ |  | ----------- | ----- | - | ------------------------------ | ------- | ----- | -------- |  |  | ---------- |  |  | ---- | ------ |  | --------- | ------- | ------- |  |  | - | ------- | 
|Description(1)                                  |  | Industry                       |  | Interest(2) |       |   | Basis PointSpreadAboveIndex(5) |         |       | Maturity |  |  | Par Amount |  |  | Cost |        |  | FairValue |        
|Bank Debt/Senior SecuredInvestments  114.6%    |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  |   |         | 
|Aderant North America, Inc.(4).                 |  | Software                       |  |             | 6.25  | % |                                |         | L+500 |          |  |  | 12/20/2018 |  |  | $    | 4,975  |  |           | $       | 4,932   |  |  | $ | 4,975   | 
|Advantage Sales and Marketing, Inc.             |  | Professional Services          |  |             | 8.25  | % |                                |         | L+725 |          |  |  | 6/17/2018  |  |  |      | 8,250  |  |           |         | 8,250   |  |  |   | 8,271   | 
|ALG B.V(4,6).                                   |  | Hotels, Restaurants & Leisure  |  |             | 7.00  | % |                                |         | L+575 |          |  |  | 2/28/2019  |  |  |      | 3,209  |  |           |         | 3,179   |  |  |   | 3,209   | 
|ALG USA Holdings, LLC(4)                        |  | Hotels, Restaurants & Leisure  |  |             | 7.00  | % |                                |         | L+575 |          |  |  | 2/28/2019  |  |  |      | 4,254  |  |           |         | 4,214   |  |  |   | 4,254   | 
|AmeriQual Group, LLC                            |  | Food Products                  |  |             | 6.50  | % |                                |         | L+500 |          |  |  | 3/28/2016  |  |  |      | 12,193 |  |           |         | 12,093  |  |  |   | 11,950  | 
|Asurion, LLC                                    |  | Insurance                      |  |             | 4.50  | % |                                |         | L+325 |          |  |  | 5/24/2019  |  |  |      | 9,737  |  |           |         | 9,693   |  |  |   | 9,654   | 
|ATI Holdings, Inc.(4).                          |  | Health Care Facilities         |  |             | 5.75  | % |                                |         | L+450 |          |  |  | 1/31/2020  |  |  |      | 4,963  |  |           |         | 4,917   |  |  |   | 4,963   | 
|Attachmate Corporation(4)                       |  | Software                       |  |             | 7.25  | % |                                |         | L+575 |          |  |  | 11/22/2017 |  |  |      | 10,737 |  |           |         | 10,570  |  |  |   | 10,828  | 
|BJs Wholesale Club, Inc.                       |  | Food & Staples Retailing       |  |             | 9.75  | % |                                |         | L+850 |          |  |  | 3/26/2020  |  |  |      | 5,000  |  |           |         | 4,955   |  |  |   | 5,124   | 
|Blue Coat Systems, Inc.                         |  | Internet Software & Services   |  |             | 9.50  | % |                                |         | L+850 |          |  |  | 6/28/2020  |  |  |      | 4,500  |  |           |         | 4,456   |  |  |   | 4,534   | 
|Catapult Learning LLC(4)                        |  | Education Services             |  |             | 7.50  | % |                                |         | L+600 |          |  |  | 4/05/2017  |  |  |      | 3,595  |  |           |         | 3,549   |  |  |   | 3,505   | 
|Confie Seguros Holding II Co.(4)                |  | Insurance                      |  |             | 6.50  | % |                                |         | L+525 |          |  |  | 11/09/2018 |  |  |      | 11,821 |  |           |         | 11,682  |  |  |   | 11,762  | 
|CGSC of Delaware Holdings Corp.                 |  | Insurance                      |  |             | 8.25  | % |                                |         | L+700 |          |  |  | 10/16/2020 |  |  |      | 4,000  |  |           |         | 3,944   |  |  |   | 3,960   | 
|Engineering Solutions & Products, LLC(7)        |  | Aerospace & Defense            |  |             | 8.50  | % |                                |         | P+525 |          |  |  | 4/21/2017  |  |  |      | 9,941  |  |           |         | 9,669   |  |  |   | 4,473   | 
|Fulton Holding Corp.(4)                         |  | Specialty Retail               |  |             | 8.50  | % |                                |         |      |          |  |  | 5/28/2018  |  |  |      | 15,000 |  |           |         | 15,105  |  |  |   | 15,112  | 
|Global Tel*Link Corp                            |  | Communications Equipment       |  |             | 9.00  | % |                                |         | L+775 |          |  |  | 11/23/2020 |  |  |      | 3,000  |  |           |         | 2,942   |  |  |   | 2,934   | 
|Hearthside Food Solutions LLC(4)                |  | Food Products                  |  |             | 6.50  | % |                                |         | L+525 |          |  |  | 6/07/2018  |  |  |      | 9,947  |  |           |         | 9,904   |  |  |   | 9,947   | 
|Hoffmaster Group, Inc.(4)                       |  | Paper & Forest Products        |  |             | 6.50  | % |                                |         | L+525 |          |  |  | 1/03/2018  |  |  |      | 6,263  |  |           |         | 6,222   |  |  |   | 6,169   | 
|Hoffmaster Group, Inc. 2nd Lien                 |  | Paper & Forest Products        |  |             | 10.25 | % |                                |         | L+900 |          |  |  | 1/03/2019  |  |  |      | 3,000  |  |           |         | 2,975   |  |  |   | 2,940   | 
|Insight Pharmaceuticals LLC(4)                  |  | Personal Products              |  |             | 6.25  | % |                                |         | L+425 |          |  |  | 8/26/2016  |  |  |      | 7,554  |  |           |         | 7,554   |  |  |   | 7,549   | 
|JHCI Acquisition, Inc.(4)                       |  | Air Freight & Logistics        |  |             | 7.00  | % |                                |         | L+575 |          |  |  | 7/12/2019  |  |  |      | 8,978  |  |           |         | 8,848   |  |  |   | 8,961   | 
|KODA Distribution Group Inc.(4)                 |  | Distributors                   |  |             | 7.75  | % |                                |         | P+450 |          |  |  | 4/09/2018  |  |  |      | 5,000  |  |           |         | 4,988   |  |  |   | 4,987   | 
|Landslide Holdings, Inc.(4)                     |  | Software                       |  |             | 5.25  | % |                                |         | L+425 |          |  |  | 8/9/2019   |  |  |      | 4,988  |  |           |         | 4,939   |  |  |   | 4,988   | 
|Marshall Retail Group, LLC(4)                   |  | Specialty Retail               |  |             | 8.00  | % |                                |         | L+650 |          |  |  | 10/19/2016 |  |  |      | 4,388  |  |           |         | 4,344   |  |  |   | 4,388   | 
|Miller Heiman, Inc                              |  | Professional Services          |  |             | 6.75  | % |                                |         | L+575 |          |  |  | 9/30/2019  |  |  |      | 7,000  |  |           |         | 6,930   |  |  |   | 6,930   | 
|National Vision, Inc.(4)                        |  | Specialty Retail               |  |             | 7.00  | % |                                |         | L+575 |          |  |  | 8/02/2018  |  |  |      | 9,875  |  |           |         | 9,757   |  |  |   | 9,875   | 
|Porex Corporation(4)                            |  | Chemicals                      |  |             | 6.75  | % |                                |         | L+525 |          |  |  | 3/31/2015  |  |  |      | 3,856  |  |           |         | 3,832   |  |  |   | 3,856   | 
|Renaissance Learning, Inc.(4)                   |  | Education Services             |  |             | 5.75  | % |                                |         | L+450 |          |  |  | 11/13/2018 |  |  |      | 3,960  |  |           |         | 3,925   |  |  |   | 3,960   | 
|Securus Technologies, Inc                       |  | Communications Equipment       |  |             | 9.00  | % |                                |         | L+775 |          |  |  | 4/30/2021  |  |  |      | 10,000 |  |           |         | 9,906   |  |  |   | 9,862   | 
|Shield Finance Co. SARL(3,4,6)                  |  | IT Services                    |  |             | 6.50  | % |                                |         | L+525 |          |  |  | 5/10/2019  |  |  |      | 9,875  |  |           |         | 9,769   |  |  |   | 9,875   | 
|Shoes for Crews, Inc.(4)                        |  | Footwear                       |  |             | 5.50  | % |                                |         | L+425 |          |  |  | 3/27/2017  |  |  |      | 4,583  |  |           |         | 4,575   |  |  |   | 4,583   | 
|SLT Environmental, Inc.(4)                      |  | Chemicals                      |  |             | 9.00  | % |                                |         | L+750 |          |  |  | 5/27/2016  |  |  |      | 4,887  |  |           |         | 4,845   |  |  |   | 4,203   | 
|The Endurance International Group, Inc.         |  | Internet Software & Services   |  |             | 10.25 | % |                                |         | L+900 |          |  |  | 5/09/2020  |  |  |      | 5,000  |  |           |         | 4,954   |  |  |   | 5,034   | 
|Trident USA Health Services(4)                  |  | Health Care Services           |  |             | 6.50  | % |                                |         | L+525 |          |  |  | 7/31/2019  |  |  |      | 10,000 |  |           |         | 9,903   |  |  |   | 10,000  | 
|TriNet HR Corp.                                 |  | Professional Services          |  |             | 8.75  | % |                                |         | L+775 |          |  |  | 2/20/2021  |  |  |      | 5,000  |  |           |         | 4,901   |  |  |   | 4,900   | 
|WNA Holdings, Inc                               |  | Containers & Packaging         |  |             | 8.50  | % |                                |         | L+725 |          |  |  | 12/07/2020 |  |  |      | 4,000  |  |           |         | 3,962   |  |  |   | 3,990   | 
|                                                |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  |   |         | 
|Total Bank Debt/Senior Secured Investments      |  |                                |  | 241,183     |       |   |                                | 236,505 |      
|                                                |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  |   |         | 
|Unsecured Bank Debt/Bonds  3.4%                |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  |   |         | 
|Apollo Investment Corporation(6)                |  | Diversified Financial Services |  |             | 5.75  | % |                                |         |      |          |  |  | 1/15/2016  |  |  |      | 3,650  |  |           |         | 3,348   |  |  |   | 3,851   | 
|Asurion Holdco                                  |  | Insurance                      |  |             | 11.00 | % |                                |         | L+950 |          |  |  | 3/2/2019   |  |  |      | 3,000  |  |           |         | 2,926   |  |  |   | 3,142   | 
|                                                |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  |   |         | 
|Total Unsecured Bank Debt/Bonds                 |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         | 6,274   |  |  |   | 6,993   | 
|                                                |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  |   |         | 
|Common Equity  15.9%                           |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      | Units  |  |           |         |         |  |  |   |         | 
|                                                |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  |   |         | 
|Gemino Senior Secured Healthcare Finance(6,8)   |  | Diversified Financial Services |  |             |       |   |                                |         |       |          |  |  |            |  |  |      | 32,839 |  |           |         | 32,839  |  |  |   | 32,839  | 
|                                                |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  |   |         | 
|Total Investments (9)  133.9%                  |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           | $       | 280,296 |  |  | $ | 276,337 | 
|Liabilities in Excess of Other Assets  (33.9%) |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           | (69,989 | )      
|                                                |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  |   |         | 
|Net Assets  100.0%                             |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  | $ | 206,348 | 
|                                                |  |                                |  |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |         |         |  |  |   |         | 



See notes
to consolidated financial statements.



7



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

September 30, 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 September 30, 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. Qualifying assets must represent at least 70% of the Companys total assets at the time of acquisition of any additional non-qualifying assets.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Investment is on non-accrual status.
|--- | ------------------------------------

|(8) | 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 nine months ended September 30, 2013 in these controlled investments
are as follows:
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                         |  |                                |   |  |                |   |        |                 |  |   |                         |  |  |                                 |   |  |  |   |        | 
|---------------------------------------- |  | ------------------------------ | - |  | -------------- | - | ------ | --------------- |  | - | ----------------------- |  |  | ------------------------------- | - |  |  | - | ------ | 
|Name of Issuer                           |  | Fair Value atDecember 31, 2012 |   |  | GrossAdditions |   |        | GrossReductions |  |   | Interest/DividendIncome |  |  | Fair Value atSeptember 30, 2013 |  
|Gemino Senior Secured Healthcare Finance |  | $                              |  |  |                | $ | 32,839 |                 |  | $ |                        |  |  | $                               |  |  |  | $ | 32,839 | 
|                                         |  |                                |   |  |                |   |        |                 |  |   |                         |  |  |                                 |   |  |  |   |        | 



|(9) | Aggregate net unrealized depreciation for federal income tax purposes is $6,284; aggregate gross unrealized appreciation and depreciation for federal tax purposes is
$956 and $7,240, respectively, based on a tax cost of $282,621.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



See notes to consolidated financial statements.



8



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) (continued)

September 30, 2013



|                               |  |                                                                       |        | 
|------------------------------ |  | --------------------------------------------------------------------- | ------ | 
|Industry Classification        |  | Percentage of TotalInvestments (atfair value) as
ofSeptember 30, 2013 |       
|Diversified Financial Services |  |                                                                       | 13.3%  | 
|Specialty Retail               |  |                                                                       | 10.6%  | 
|Insurance                      |  |                                                                       | 10.3%  | 
|Food Products                  |  |                                                                       | 7.9%   | 
|Software                       |  |                                                                       | 7.5%   | 
|Professional Services          |  |                                                                       | 7.3%   | 
|Communications Equipment       |  |                                                                       | 4.6%   | 
|Health Care Services           |  |                                                                       | 3.6%   | 
|IT Services                    |  |                                                                       | 3.6%   | 
|Internet Software & Services   |  |                                                                       | 3.5%   | 
|Paper & Forest Products        |  |                                                                       | 3.3%   | 
|Air Freight & Logistics        |  |                                                                       | 3.2%   | 
|Chemicals                      |  |                                                                       | 2.9%   | 
|Personal Products              |  |                                                                       | 2.7%   | 
|Education Services             |  |                                                                       | 2.7%   | 
|Hotels, Restaurants & Leisure  |  |                                                                       | 2.7%   | 
|Food & Staples Retailing       |  |                                                                       | 1.9%   | 
|Distributors                   |  |                                                                       | 1.8%   | 
|Health Care Facilities         |  |                                                                       | 1.8%   | 
|Footwear                       |  |                                                                       | 1.7%   | 
|Aerospace & Defense            |  |                                                                       | 1.6%   | 
|Containers & Packaging         |  |                                                                       | 1.5%   | 
|                               |  |                                                                       |        | 
|Total Investments              |  |                                                                       | 100.0% | 
|                               |  |                                                                       |        | 

See notes to consolidated financial statements.



9



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2012

(in thousands)



|                                                |  |                                        |   |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |   |        |  |  |   |        | 
|----------------------------------------------- |  | -------------------------------------- | - | ----------- | ----- | - | ------------------------------ | ------- | ----- | -------- |  |  | ---------- |  |  | ---- | ------ |  | --------- | - | ------ |  |  | - | ------ | 
|Description (1)                                 |  | Industry                               |   | Interest(2) |       |   | Basis PointSpreadAboveIndex(5) |         |       | Maturity |  |  | Par Amount |  |  | Cost |        |  | FairValue |  
|Bank Debt/Senior SecuredInvestments  118.1%    |  |                                        |   |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |   |        |  |  |   |        | 
|ABB/Concise Optical LLC(4)                      |  | Health Care Providers & Services       |   |             | 6.50  | % |                                |         | L+525 |          |  |  | 10/24/2018 |  |  | $    | 4,000  |  |           | $ | 3,961  |  |  | $ | 4,000  | 
|Aderant North America, Inc.                     |  | Software                               |   |             | 7.25  | % |                                |         | P+400 |          |  |  | 12/20/2018 |  |  |      | 5,000  |  |           |   | 4,950  |  |  |   | 4,950  | 
|AmeriQual Group, LLC                            |  | Food Products                          |   |             | 6.50  | % |                                |         | L+500 |          |  |  | 3/28/2016  |  |  |      | 12,522 |  |           |   | 12,391 |  |  |   | 12,522 | 
|Amwins Group, LLC                               |  | Insurance                              |   |             | 9.25  | % |                                |         | L+800 |          |  |  | 12/6/2019  |  |  |      | 2,500  |  |           |   | 2,453  |  |  |   | 2,525  | 
|Asurion, LLC                                    |  | Insurance                              |   |             | 9.00  | % |                                |         | L+750 |          |  |  | 5/24/2019  |  |  |      | 4,793  |  |           |   | 4,759  |  |  |   | 4,947  | 
|Attachmate Corporation(4)                       |  | Software                               |   |             | 7.25  | % |                                |         | L+575 |          |  |  | 11/22/2017 |  |  |      | 11,550 |  |           |   | 11,344 |  |  |   | 11,677 | 
|Bellisio Foods, Inc.(4)                         |  | Food Products                          |   |             | 7.00  | % |                                |         | L+550 |          |  |  | 12/16/2017 |  |  |      | 4,650  |  |           |   | 4,611  |  |  |   | 4,650  | 
|BJs Wholesale Club, Inc.                       |  | Food & Staples Retailing               |   |             | 9.75  | % |                                |         | L+850 |          |  |  | 3/26/2020  |  |  |      | 5,000  |  |           |   | 4,951  |  |  |   | 5,150  | 
|Catapult Learning LLC(4)                        |  | Education Services                     |   |             | 7.50  | % |                                |         | L+600 |          |  |  | 4/5/2017   |  |  |      | 3,900  |  |           |   | 3,841  |  |  |   | 3,763  | 
|Citadel Plastics Holdings, Inc.(4)              |  | Chemicals, Plastics & Rubber           |   |             | 6.75  | % |                                |         | L+525 |          |  |  | 2/28/2018  |  |  |      | 4,814  |  |           |   | 4,772  |  |  |   | 4,814  | 
|Confie Seguros Holding II Co.(4)                |  | Insurance                              |   |             | 6.50  | % |                                |         | L+525 |          |  |  | 11/9/2018  |  |  |      | 10,000 |  |           |   | 9,853  |  |  |   | 9,850  | 
|Engineering Solutions & Products, LLC           |  | Aerospace & Defense                    |   |             | 8.50  | % |                                |         | P+525 |          |  |  | 4/21/2017  |  |  |      | 9,941  |  |           |   | 9,669  |  |  |   | 5,468  | 
|Hearthside Food Solutions LLC(4)                |  | Food Products                          |   |             | 6.50  | % |                                |         | L+525 |          |  |  | 6/7/2018   |  |  |      | 10,000 |  |           |   | 9,950  |  |  |   | 9,950  | 
|Hoffmaster Group, Inc.(4)                       |  | Paper & Forest Products                |   |             | 6.50  | % |                                |         | L+525 |          |  |  | 1/3/2018   |  |  |      | 4,863  |  |           |   | 4,841  |  |  |   | 4,838  | 
|Hoffmaster Group, Inc. 2nd Lien                 |  | Paper & Forest Products                |   |             | 10.25 | % |                                |         | L+900 |          |  |  | 1/3/2019   |  |  |      | 3,000  |  |           |   | 2,972  |  |  |   | 2,970  | 
|Insight Pharmaceuticals LLC(4)                  |  | Personal & NondurableConsumer Products |   |             | 6.25  | % |                                |         | L+500 |          |  |  | 8/26/2016  |  |  |      | 7,900  |  |           |   | 7,900  |  |  |   | 7,900  | 
|KIK Custom Products, Inc.                       |  | Diversified / ConglomerateService      |   |             | 8.50  | % |                                |         | L+700 |          |  |  | 5/31/2014  |  |  |      | 14,725 |  |           |   | 14,504 |  |  |   | 14,725 | 
|Landslide Holdings, Inc.(4)                     |  | Software                               |   |             | 7.00  | % |                                |         | L+575 |          |  |  | 6/19/2018  |  |  |      | 4,875  |  |           |   | 4,787  |  |  |   | 4,875  | 
|Marshall Retail Group, LLC(4)                   |  | Specialty Retail                       |   |             | 8.00  | % |                                |         | L+650 |          |  |  | 10/19/2016 |  |  |      | 4,750  |  |           |   | 4,694  |  |  |   | 4,750  | 
|National Vision, Inc.(4)                        |  | Specialty Retail                       |   |             | 7.00  | % |                                |         | L+575 |          |  |  | 8/2/2018   |  |  |      | 9,925  |  |           |   | 9,787  |  |  |   | 9,925  | 
|Porex Corporation(4)                            |  | Chemicals, Plastics & Rubber           |   |             | 6.75  | % |                                |         | L+525 |          |  |  | 3/31/2015  |  |  |      | 4,284  |  |           |   | 4,244  |  |  |   | 4,284  | 
|Renaissance Learning, Inc.(4)                   |  | Education Services                     |   |             | 5.75  | % |                                |         | L+450 |          |  |  | 11/13/2018 |  |  |      | 3,990  |  |           |   | 3,951  |  |  |   | 3,990  | 
|Shield Finance Co. SARL(3,4,6)                  |  | IT Services                            |   |             | 6.50  | % |                                |         | L+525 |          |  |  | 5/10/2019  |  |  |      | 9,950  |  |           |   | 9,817  |  |  |   | 9,950  | 
|Shoes for Crews, Inc.(4)                        |  | Textiles & Leather                     |   |             | 6.50  | % |                                |         | L+500 |          |  |  | 3/27/2017  |  |  |      | 4,803  |  |           |   | 4,793  |  |  |   | 4,803  | 
|SLT Environmental, Inc.(4)                      |  | Chemicals, Plastics & Rubber           |   |             | 7.00  | % |                                |         | L+550 |          |  |  | 5/27/2016  |  |  |      | 9,924  |  |           |   | 9,819  |  |  |   | 9,825  | 
|Smart Balance, Inc.(4)                          |  | Food Products                          |   |             | 7.00  | % |                                |         | L+575 |          |  |  | 7/2/2018   |  |  |      | 3,880  |  |           |   | 3,808  |  |  |   | 3,919  | 
|Sotera Defense Solutions, Inc.                  |  | Aerospace & Defense                    |   |             | 7.50  | % |                                |         | L+600 |          |  |  | 4/22/2017  |  |  |      | 7,415  |  |           |   | 7,359  |  |  |   | 7,341  | 
|The Endurance International Group, Inc.         |  | Internet Software & Services           |   |             | 10.25 | % |                                |         | L+900 |          |  |  | 5/9/2020   |  |  |      | 5,000  |  |           |   | 4,951  |  |  |   | 5,000  | 
|Things Remembered, Inc.(4)                      |  | Specialty Retail                       |   |             | 8.00  | % |                                |         | L+650 |          |  |  | 5/24/2018  |  |  |      | 8,978  |  |           |   | 8,814  |  |  |   | 8,888  | 
|TriNet HR Corp.(4)                              |  | Professional Services                  |   |             | 6.50  | % |                                |         | L+525 |          |  |  | 10/24/2018 |  |  |      | 10,000 |  |           |   | 9,951  |  |  |   | 9,950  | 
|Water Pik, Inc(4)                               |  | Personal & NondurableConsumer Products |   |             | 6.75  | % |                                |         | L+525 |          |  |  | 8/10/2017  |  |  |      | 3,425  |  |           |   | 3,398  |  |  |   | 3,425  | 
|                                                |  |                                        |   |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |   |        |  |  |   |        | 
|Total Bank Debt/Senior Secured Investments      |  |                                        |   | 207,895     |       |   |                                | 205,624 |      
|                                                |  |                                        |   |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |   |        |  |  |   |        | 
|Unsecured Bank Debt/Bonds  4.0%                |  |                                        |   |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |   |        |  |  |   |        | 
|Apollo Investment Corporation(6)                |  | Finance                                |   |             | 5.75  | % |                                |         |      |          |  |  | 1/15/2016  |  |  |      | 3,650  |  |           |   | 3,262  |  |  |   | 3,778  | 
|Asurion Holdco                                  |  | Insurance                              |   |             | 11.00 | % |                                |         | L+950 |          |  |  | 3/2/2019   |  |  |      | 3,000  |  |           |   | 2,918  |  |  |   | 3,200  | 
|                                                |  |                                        |   |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |   |        |  |  |   |        | 
|Total Unsecured Bank Debt/Bonds                 |  |                                        |   | 6,180       |       |   |                                | 6,978   |      
|                                                |  |                                        |   |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |   |        |  |  |   |        | 
|Total Investments(7)  122.1%                   |  |                                        | $ | 214,075     |       |   | $                              | 212,602 |      
|Liabilities in Excess of Other Assets  (22.1%) |  |                                        |   |             |       |   |                                | (38,499 | )    
|                                                |  |                                        |   |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |   |        |  |  |   |        | 
|Net Assets- 100.0%                              |  |                                        |   |             |       |   | $                              | 174,103 |      
|                                                |  |                                        |   |             |       |   |                                |         |       |          |  |  |            |  |  |      |        |  |           |   |        |  |  |   |        | 



See notes
to consolidated financial statements.



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2012

(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 Offer 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, 2012. As of December 31, 2012
all investments are paying cash interest.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Shield Finance Co. SARL is domiciled in Luxembourg and is denominated in U.S. dollars. All other investments are domiciled in the United States.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | 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 held
through SUNS SPV LLC are: ABB/Concise Optical Group $4,000; Attachmate Corporation $9,625; Bellisio Foods, Inc. $3,720; Catapult Learning, LLC $3,900; Citadel Plastics Holdings, Inc. $3,851; Confie Seguros Holdings II Co. $5,000; Hearthside Food
Solutions, LLC $9,000; Hoffmaster Group, Inc. $3,890; Insight Pharmaceuticals LLC $5,445; Landslide Holdings, Inc. $1,950; Marshall Retail $4,750; National Vision, Inc. $9,925; Porex Corporation $4,284; Renaissance Learning, Inc. $3,990; Shield
Finance Co. SARL $9,950; Shoes for Crews, Inc. $4,803; SLT Environmental, Inc. $9,924; Smart Balance, Inc. $1,940; Things Remembered, Inc. $ 8,978; TriNet HR Corporation $10,000; and WaterPik, Inc. $3,425. Par balances in excess of these stated
amounts are held directly by 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, as
amended. Qualifying assets must represent at least 70% of the Companys total assets at the time of acquisition of any additional non-qualifying assets.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Aggregate net unrealized depreciation for federal income tax purposes is $3,918; aggregate gross unrealized appreciation and depreciation for federal tax purposes is
$1,309 and $5,227, respectively, based on a tax cost of $216,520.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



See notes to consolidated financial statements.



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

CONSOLIDATED SCHEDULE OF INVESTMENTS (continued)

December 31, 2012



|                                        |  |                                                                     |        | 
|--------------------------------------- |  | ------------------------------------------------------------------- | ------ | 
|Industry Classification                 |  | Percentage of TotalInvestments (atfair value) as
ofDecember 31,2012 |       
|Food Products                           |  |                                                                     | 14.5%  | 
|Specialty Retail                        |  |                                                                     | 11.1%  | 
|Software                                |  |                                                                     | 10.1%  | 
|Insurance                               |  |                                                                     | 9.7%   | 
|Chemicals, Plastics & Rubber            |  |                                                                     | 8.9%   | 
|Diversified/Conglomerate Service        |  |                                                                     | 6.9%   | 
|Aerospace & Defense                     |  |                                                                     | 6.0%   | 
|Personal & Nondurable Consumer Products |  |                                                                     | 5.3%   | 
|IT Services                             |  |                                                                     | 4.7%   | 
|Professional Services                   |  |                                                                     | 4.7%   | 
|Paper & Forest Products                 |  |                                                                     | 3.7%   | 
|Education Services                      |  |                                                                     | 3.6%   | 
|Food & Staples Retailing                |  |                                                                     | 2.4%   | 
|Internet Software & Services            |  |                                                                     | 2.4%   | 
|Textiles & Leather                      |  |                                                                     | 2.3%   | 
|Health Care Providers & Services        |  |                                                                     | 1.9%   | 
|Finance                                 |  |                                                                     | 1.8%   | 
|                                        |  |                                                                     |        | 
|Total Investments                       |  |                                                                     | 100.0% | 
|                                        |  |                                                                     |        | 

See notes to consolidated financial statements.



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

September 30, 2013

(in thousands, except share and per 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). 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 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 will seek to achieve our investment objective by investing primarily in senior secured loans, including first lien, uni-tranche and second lien debt instruments, made
primarily to private middle-market companies whose debt is rated below investment grade, which the Company refers to collectively as senior loans. The Company may also invest in debt of public companies that are thinly traded. Under
normal market conditions, at least 80% of the value of the Companys net assets 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 financing subsidiary, SUNS SPV LLC (the SUNS SPV), a
Delaware limited liability company formed in August 2011. 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.

Interim financial statements are prepared in accordance with GAAP for interim financial information and pursuant to the requirements for
reporting on Form 10-Q and Regulation S-X, as appropriate. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. GAAP 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. The current periods results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on
December 31, 2013.

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



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



| | (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 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 remaining maturities of 60 days or less shall each be valued at cost with interest accrued or discount amortized to the date of maturity, 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, 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.

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 of sufficient credit quality
purchased within 60 days of maturity are valued at cost plus accreted discount, or minus amortized premium, which is expected to approximate fair value.

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,



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



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 nine months ended September 30, 2013, 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) 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.



| | (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. The
Company records prepayment premiums on loans and other investments as interest income when we receive such amounts. Capital structuring and 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 Federal income taxes. The Company, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. The Company will accrue
excise tax on such estimated excess taxable income as appropriate.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | (g) | Dividends and distributions to common stockholders are recorded as of the record date. The amount to be paid out as a dividend 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 Article 6.03 and ASC 810Consolidation, the Company generally will not consolidate its interest in any
operating company other than in investment company
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



| | subsidiaries, certain financing subsidiaries, and 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 U.S. dollars on the date of valuation. The Company will not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such fluctuations would be included with the net realized and 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 US 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 measure its fair value.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (k) | 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.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (l) | 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 interest obligations. Cash interest payments received on non-accrual designated investments may be recognized as income or applied to principal depending on
managements judgment.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (m) | 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 deems that certain U.S. Treasury bills,
repurchase agreements and other high-quality, short-term debt securities would qualify as cash equivalents.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 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-



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SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



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 three and nine months ended September 30, 2013, the Company
recognized $680 and $1,872, respectively, in base management fees and $0 and $80, respectively, in performance-based incentive fees. For the three and nine months ended September 30, 2012, the Company recognized $594 and $1,635, respectively,
in base management fees and $244 and $743, respectively, in performance-based incentive fees.

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 depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each calendar year) and all 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 three and nine months ended September 30, 2013. For the three and nine months ended September 30, 2012, of the $244 and $743, respectively, the Company recognized in performance-based incentive fees, $160 and
$247 was accrued for the capital gains based incentive fee.

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
three and nine months ended September 30, 2013, the Company recognized expenses under the Administration Agreement of $265 and $759, respectively. For the three and nine months ended September 30, 2012, the Company recognized expenses
under the Administration Agreement of $170 and $660, respectively.



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



Note 4. Net Asset Value Per Share

At September 30, 2013, the Companys total net assets and net asset value per share were $206,348 and $17.91, respectively. This
compares to total net assets and net asset value per share at December 31, 2012 of $174,103 and $18.33, respectively.

Note
5. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share,
pursuant to ASC 260-10, for the three and nine months ended September 30, 2013 and September 30, 2012:



|                                                                |  |                                  |            |  |                                 |   |           |      |  |   |            |  |  |   |           | 
|--------------------------------------------------------------- |  | -------------------------------- | ---------- |  | ------------------------------- | - | --------- | ---- |  | - | ---------- |  |  | - | --------- | 
|                                                                |  | Three months ended September 30, |            |  | Nine months ended September 30, |  
|                                                                |  | 2013                             |            |  | 2012                            |   |           | 2013 |  |   | 2012       | 
|Earnings per share (basic & diluted)                            |  |                                  |            |  |                                 |   |           |      |  |   |            |  |  |   |           | 
|Numeratornet increase in net assets resulting from operations: |  | $                                | 2,604      |  |                                 | $ | 3,807     |      |  | $ | 6,993      |  |  | $ | 13,157    | 
|Denominatorweighted average shares:                            |  |                                  | 11,521,038 |  |                                 |   | 9,500,100 |      |  |   | 11,389,066 |  |  |   | 9,500,100 | 
|Earnings per share:                                             |  | $                                | 0.23       |  |                                 | $ | 0.40      |      |  | $ | 0.61       |  |  | $ | 1.38      | 

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.

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 own assumptions about the assumptions a market participant would use in pricing the
asset or liability.



18



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



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). Therefore gains and losses for such 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. Reclassifications impacting Level 3 of the fair value hierarchy
are reported as transfers in/out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur.

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, as of September 30, 2013 and December 31, 2012:

Fair Value Measurements

As of September 30, 2013



|                                     |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|------------------------------------ |  | ------- | - |  | ------- | - | ------ | ------- |  | - | ------- |  |  | - | ------- | 
|                                     |  | Level 1 |   |  | Level 2 |   |        | Level 3 |  |   | Total   | 
|Assets:                              |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Bank Debt/Senior Secured Investments |  | $       |  |  |         | $ | 37,974 |         |  | $ | 198,531 |  |  | $ | 236,505 | 
|Unsecured Bank Debt/Bonds            |  |         |  |  |         |   | 6,993  |         |  |   |        |  |  |   | 6,993   | 
|Common Equity                        |  |         |  |  |         |   |       |         |  |   | 32,839  |  |  |   | 32,839  | 
|                                     |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Total Investments                    |  |         |  |  |         |   | 44,967 |         |  |   | 231,370 |  |  |   | 276,337 | 
|                                     |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Credit Facility                      |  |         |  |  |         |   |       |         |  | $ | 34,800  |  |  | $ | 34,800  | 
|                                     |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 

Fair Value Measurements

As of December 31, 2012



|                                     |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|------------------------------------ |  | ------- | - |  | ------- | - | ------ | ------- |  | - | ------- |  |  | - | ------- | 
|                                     |  | Level 1 |   |  | Level 2 |   |        | Level 3 |  |   | Total   | 
|Assets:                              |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Bank Debt/Senior Secured Investments |  | $       |  |  |         | $ | 21,744 |         |  | $ | 183,850 |  |  | $ | 205,624 | 
|Unsecured Bank Debt/Bonds            |  |         |  |  |         |   | 6,978  |         |  |   |        |  |  |   | 6,978   | 
|                                     |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Total Investments                    |  |         |  |  |         |   | 28,752 |         |  |   | 183,850 |  |  |   | 212,602 | 
|                                     |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 
|Credit Facility                      |  |         |  |  |         |   |       |         |  | $ | 39,100  |  |  | $ | 39,100  | 
|                                     |  |         |   |  |         |   |        |         |  |   |         |  |  |   |         | 



19



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



The following table provides a summary of the changes in fair value of Level 3 assets
for the nine months ended September 30, 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 September 30, 2013:

Fair Value Measurements Using Level 3 Inputs

As of September 30, 2013



|                                                                                                                                        |  |                               |         |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | -
|                                                                                                                                        |  | Bank Debt/Senior SecuredLoans |        
|Fair value, December 31, 2012                                                                                                           |  | $                             | 183,850 |  
|Total gains or losses included in earnings:                                                                                             |  |                               |         |  
|Net realized loss                                                                                                                       |  |                               | (243    | )
|Net change in unrealized gain (loss)                                                                                                    |  |                               | (1,474  | )
|Purchase of investment securities                                                                                                       |  |                               | 146,722 |  
|Proceeds from dispositions of investment securities                                                                                     |  |                               | (97,485 | )
|Transfers in/out of Level 3                                                                                                             |  |                               |        |  
|                                                                                                                                        |  |                               |         |  
|Fair value, September 30, 2013                                                                                                          |  | $                             | 231,370 |  
|                                                                                                                                        |  |                               |         |  
|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)                                                                                                    |  | $                             | (1,579  | )
|                                                                                                                                        |  |                               |         |  

During the nine months ended September 30, 2013, there were no transfers in and out of Levels 1, 2,
or 3. The Company had no assets or liabilities measured at fair value on a nonrecurring basis during the period.

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 nine months ended September 30, 2013:



|                                     |  |            |          |  
|------------------------------------ |  | ---------- | -------- | -
|Credit Facility                      |  | Fair Value |         
|Fair value, December 31, 2012        |  | $          | 39,100   |  
|Net realized (gain) loss             |  |            |         |  
|Net change in unrealized (gain) loss |  |            |         |  
|Borrowings                           |  |            | 123,200  |  
|Repayments                           |  |            | (127,500 | )
|Transfers in/out of Level 3          |  |            |         |  
|                                     |  |            |          |  
|Fair value, September 30, 2013       |  | $          | 34,800   |  
|                                     |  |            |          |  

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 September 30, 2013, there were borrowings of $34,800 on the Credit Facility. The Company uses an independent third-party valuation firm to measure the fair value of the Credit Facility.



20



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



The following table provides a summary of the changes in fair value of Level 3 assets
for the year ended December 31, 2012 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, 2012:

Fair Value Measurements Using Level 3 Inputs

As of December 31, 2012



|                                                                                                                                    |  |                               |          |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | -------- | -
|                                                                                                                                    |  | Bank Debt/Senior SecuredLoans |         
|Fair value, December 31, 2011                                                                                                       |  | $                             | 160,976  |  
|Total gains or losses included in earnings:                                                                                         |  |                               |          |  
|Net realized gain                                                                                                                   |  |                               | 28       |  
|Net change in unrealized gain (loss)                                                                                                |  |                               | (812     | )
|Purchase of investment securities                                                                                                   |  |                               | 167,834  |  
|Proceeds from dispositions of investment securities                                                                                 |  |                               | (144,176 | )
|Transfers in/out of Level 3                                                                                                         |  |                               |         |  
|                                                                                                                                    |  |                               |          |  
|Fair value, December 31, 2012                                                                                                       |  | $                             | 183,850  |  
|                                                                                                                                    |  |                               |          |  
|Unrealized gains (losses) for the year relating to those Level 3 assets that were still held by the Company at the end of the year: |  |                               |          |  
|Net change in unrealized gain (loss)                                                                                                |  | $                             | (652     | )
|                                                                                                                                    |  |                               |          |  

During the year ended December 31, 2012, there were no transfers in and out of Levels 1, 2, or 3.
The Company had no assets or liabilities measured at fair value on a nonrecurring basis during the year.

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, 2012:



|                                     |  |            |         |  
|------------------------------------ |  | ---------- | ------- | -
|Credit Facility                      |  | Fair Value |        
|Fair value, December 31, 2011        |  | $          | 8,600   |  
|Net realized (gain) loss             |  |            |        |  
|Net change in unrealized (gain) loss |  |            |        |  
|Borrowings                           |  |            | 130,383 |  
|Repayments                           |  |            | (99,883 | )
|Transfers in/out of Level 3          |  |            |        |  
|                                     |  |            |         |  
|Fair value, December 31, 2012        |  | $          | 39,100  |  
|                                     |  |            |         |  

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, 2012, there were borrowings of $39,100 on the Credit Facility. The Company uses an independent third-party valuation firm to measure the fair value of our Credit Facility.



21



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per 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 September 30, 2013 is
summarized in the table below:



|                                       |  |                    |  |                                 |         |  |                                   |                                                               |                    |                                                   |                          |                                        
|-------------------------------------- |  | ------------------ |  | ------------------------------- | ------- |  | --------------------------------- | ------------------------------------------------------------- | ------------------ | ------------------------------------------------- | ------------------------ | ---------------------------------------
|                                       |  | Asset or
Liability |  | Fair Value atSeptember 30, 2013 |         |  | Valuation
Techniques/
Methodology |                                                               | Unobservable
Input |                                                   | Range (Weighted
Average)
|Bank Debt / Senior Secured Investments |  | Asset              |  | $                               | 198,531 |  |                                   | Yield Analysis/Market
Approach/Broker Quoted Enterprise Value |                    | Market Yields /
Bid-Ask Spreads/ EBITDA Multiples |                          | 5.3%  10.9%(7.4%)
7.1x  9.6x (8.3x)  
|Common Equity                          |  | Asset              |  | $                               | 32,839  |  |                                   | Price/Book Value
Yield Analysis/Market Approach               |                    | Multiple of BV
Market Yields                      |                          | 1.0x  1.6x (1.1x)
0.3%  10.9% (10.7%)
|Credit Facility                        |  | Liability          |  | $                               | 34,800  |  |                                   | Yield Analysis/Market
Approach                                |                    | Market Yields                                     |                          | L+0.5%  L+5.5%
(L+2.7%)               

Quantitative information about the Companys Level 3 asset and liability fair value measurements as
of December 31, 2012 is summarized in the table below:



|                                       |  |                    |  |                                |         |  |                                   |                                                               |                    |                                                   |                          |                                      
|-------------------------------------- |  | ------------------ |  | ------------------------------ | ------- |  | --------------------------------- | ------------------------------------------------------------- | ------------------ | ------------------------------------------------- | ------------------------ | -------------------------------------
|                                       |  | Asset or
Liability |  | Fair Value atDecember 31, 2012 |         |  | Valuation
Techniques/
Methodology |                                                               | Unobservable
Input |                                                   | Range (Weighted
Average)
|Bank Debt / Senior Secured Investments |  | Asset              |  | $                              | 183,850 |  |                                   | Yield Analysis/Market
Approach/Broker Quoted Enterprise Value |                    | Market Yields /
Bid-Ask Spreads/ EBITDA Multiples |                          | 5.8%  10.6%(7.8%)
3.6x  7.3x (5.8x)
|Credit Facility                        |  | Liability          |  | $                              | 39,100  |  |                                   | Yield Analysis/Market
Approach                                |                    | Market Yields                                     |                          | L+0.5%  L+5.5%
(L+2.7%)             

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



22



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



Note 7. Debt

Senior Secured Revolving Credit FacilityOn August 26, 2011, the Company established the SUNS SPV which entered into a $200,000 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 a rate of LIBOR plus 2.25%. The Credit Facility has $150,000
immediately available with an additional $50,000 available under a delayed draw feature. 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. 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.

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 will better align 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. As a result of this election,
approximately $2,800 of costs related to the establishment of the original Credit Facility was expensed during the period January 28, 2011 (commencement of operations) to December 31, 2011, and approximately $1,000 was expensed during the
year ended December 31, 2012 related to the amendment, rather than being deferred and amortized over the life of the Credit Facility.

The average annualized interest cost for all borrowings for the nine months ended September 30, 2013 and the year ended December 31, 2012 was 2.21% and 2.48%, respectively. These costs are
exclusive of commitment fees and other prepaid expenses, if any, related to establishing or amending the Credit Facility. This average annualized interest cost reflects the average interest cost for all outstanding borrowings. The maximum amount
borrowed on the Credit Facility during the nine months ended September 30, 2013 and the year ended December 31, 2012, was $58,000 and $74,500, respectively.



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



Note 8. Financial Highlights and Senior Securities Table

The following is a schedule of financial highlights for the nine months ended September 30, 2013 and for the year ended
December 31, 2012:



|                                                     |  |                                                |            |   |                            |   |           |  
|---------------------------------------------------- |  | ---------------------------------------------- | ---------- | - | -------------------------- | - | --------- | -
|                                                     |  | Nine months endedSeptember 30,2013 (unaudited) |            |   | Year endedDecember 31,2012 |  
|Per Share Data(1):                                   |  |                                                |            |   |                            |   |           |  
|Net asset value, beginning of period                 |  | $                                              | 18.33      |   |                            | $ | 18.15     |  
|                                                     |  |                                                |            |   |                            |   |           |  
|Net investment income                                |  |                                                | 0.86       |   |                            |   | 1.31      |  
|Net realized and unrealized gain (loss)              |  |                                                | (0.24      | ) |                            |   | 0.15      |  
|                                                     |  |                                                |            |   |                            |   |           |  
|Net increase in net assets resulting from operations |  |                                                | 0.62       |   |                            |   | 1.46      |  
|                                                     |  |                                                |            |   |                            |   |           |  
|Anti-dilution from issuance of common stock          |  |                                                | 0.05       |   |                            |   |          |  
|Offering costs and other                             |  |                                                | (0.02      | ) |                            |   | 0.01      |  
|Dividends and distributions to shareholders          |  |                                                | (1.07      | ) |                            |   | (1.29     | )
|                                                     |  |                                                |            |   |                            |   |           |  
|Net asset value, end of period                       |  | $                                              | 17.91      |   |                            | $ | 18.33     |  
|                                                     |  |                                                |            |   |                            |   |           |  
|                                                     |  |                                               
|Total Return(2,3)                                    |  |                                                | 2.56       | % |                            |   | 27.65     | %
|                                                     |  |                                                |            |   |                            |   |           |  
|Net assets, end of period                            |  | $                                              | 206,348    |   |                            | $ | 174,103   |  
|                                                     |  |                                                |            |   |                            |   |           |  
|Per share market value, end of period                |  | $                                              | 18.08      |   |                            | $ | 18.66     |  
|                                                     |  |                                                |            |   |                            |   |           |  
|Shares outstanding, end of period                    |  |                                                | 11,523,315 |   |                            |   | 9,500,100 |  
|                                                     |  |                                                |            |   |                            |   |           |  
|Ratio to average net assets(3):                      |  |                                                |            |   |                            |   |           |  
|Net investment income                                |  |                                                | 4.70       | % |                            |   | 7.14      | %
|                                                     |  |                                                |            |   |                            |   |           |  
|Operating expenses                                   |  |                                                | 1.71       | % |                            |   | 3.20      | %
|Interest and related expenses                        |  |                                                | 0.40       | % |                            |   | 1.40      | %
|                                                     |  |                                                |            |   |                            |   |           |  
|Total Expenses                                       |  |                                                | 2.11       | % |                            |   | 4.60      | %
|                                                     |  |                                                |            |   |                            |   |           |  
|Average debt outstanding                             |  | $                                              | 32,506     |   |                            | $ | 41,439    |  
|                                                     |  |                                                |            |   |                            |   |           |  
|Portfolio turnover ratio                             |  |                                                | 42.8       | % |                            |   | 74.5      | %
|                                                     |  |                                                |            |   |                            |   |           |  



|(1) | Calculated using the average shares outstanding method.
|--- | -------------------------------------------------------

|(2) | Total return is based on the change in market price per share during the period and takes into account any dividends, if any, reinvested in accordance with the dividend
reinvestment plan.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Not annualized for periods less than one year.
|--- | ----------------------------------------------



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



Information about the Companys 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) | 
|Credit Facility                          |  |                              |        |  |                            |   |        |                                              |  |   |                                 |  |  |  |     | 
|Fiscal 2013 (through September 30, 2013) |  | $                            | 34,800 |  |                            | $ | 6,930  |                                              |  | $ |                                |  |  |  | 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 would be 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. Gemino Senior Secured Healthcare Finance

Pursuant to a definitive agreement, dated September 30, 2013, we acquired Gemino Healthcare Finance, LLC (d/b/a
Gemino Senior Secured Healthcare Finance) (Gemino Senior Secured Healthcare Finance) from affiliates of EDG Partners, D. E. Shaw AQ-SP Series 5-01, L.L.C. and other members of Gemino Healthcare Finance, LLC. Gemino Senior Secured
Healthcare Finance 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 Senior Secured
Healthcare Finance of $32,839 was funded from our existing credit facility. We have an additional $5,000 commitment to purchase equity in Gemino Senior Secured Healthcare Finance, conditional upon approval of the Gemino Senior Secured Healthcare
Finance board of directors, among other conditions. The current management team of Gemino Senior Secured Healthcare Finance has committed to lead Gemino Senior Secured Healthcare Finance going forward and co-invested in the transaction.

Concurrent with the closing of the transaction, Gemino Senior Secured Healthcare Finance entered into a new, four-year $100,000 credit
facility, which is expandable to $150,000 under its accordion feature. Pro forma for this transaction, Gemino Senior Secured Healthcare Finance had $83,000 outstanding on this credit facility, which is non-recourse to us.

We expect Gemino Senior Secured Healthcare Finance to be treated as a pass-through entity for tax purposes and is expected to distribute
a substantial portion of its current cash earnings to us on a recurring basis.

Gemino Senior Secured Healthcare Finance
currently manages a highly diverse portfolio of directly-originated and underwritten senior-secured commitments. As of September 30, 2013, the portfolio totaled



25



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##### Table of Contents

SOLAR SENIOR CAPITAL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

September 30, 2013

(in thousands, except share and per share amounts)



approximately $162,000 of commitments, of which $106,000 were funded. The portfolio consisted of 33 issuers with an average balance outstanding of approximately $3,200. All of the
commitments in Gemino Senior Secured Healthcare Finances portfolio are floating-rate, senior-secured, cash-pay loans. None of these loans were on non-accrual status as of September 30, 2013. For the three months ended September 30,
2013, Gemino Senior Secured Healthcare Finance had a net loss of $1,676 on gross income of $3,287. For the nine months ended September 30, 2013, Gemino Senior Secured Healthcare Finance had net income of $328 on gross income of $9,287. These
results include non-recurring costs related to the acquisition of $3,012 and $3,222 for the three and nine months ended September 30, 2013, respectively. Due to the timing of non-cash items, there may be material differences between GAAP net
income and distributions to shareholders.

Note 10. Subsequent Events

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

On October 1, 2013, our investment in Gemino Senior Secured Healthcare Finance was
funded.

On October 8, 2013, the Board declared a monthly dividend of $0.1175 per share payable on November 1, 2013
to holders of record as of October 24, 2013.

On October 30, 2013, the Board declared a monthly dividend of $0.1175
per share payable on December 3, 2013 to holders of record as of November 21, 2013.



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##### Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Solar Senior Capital Ltd.:

We have reviewed the accompanying consolidated
statement of assets and liabilities, including the consolidated schedule of investments, of Solar Senior Capital Ltd. (the Company) as of September 30, 2013, and the consolidated statements of operations for the three and nine month
periods ended September 30, 2013 and 2012, the consolidated statement of changes in net assets for the nine month period ended September 30, 2013, and the statements of cash flows for the nine month periods ended September 30, 2013
and 2012. These consolidated financial statements are the responsibility of the Companys management.

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

Based on our reviews, we
are not aware of any material modifications that should be made to the accompanying consolidated financial statements in order for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, of Solar Senior Capital Ltd., as of December 31, 2012 and the related consolidated statement of changes in net assets for the
year ended December 31, 2012, and we expressed an unqualified opinion on them in our report dated February 25, 2013.

/s/ KPMG LLP

New York, New York

October 30,
2013



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The information contained in this section should be read in conjunction with our 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). 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.

On August 26, 2011, the Company established the 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



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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. 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.

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, uni-tranche, 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 $60
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
investments will generally range between $3 million and $35 million each, although we expect that this investment size will vary proportionately with the size of our capital base. 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 September 30,
2013, our adviser Solar Capital Partners has invested approximately $3.8 billion in more than 135 different portfolio companies since it was founded in 2006. Over the same period, Solar Capital Partners completed transactions with more than 95
different financial sponsors.

Recent Developments

Pursuant to a definitive agreement, dated September 30, 2013, we acquired Gemino Healthcare Finance, LLC (d/b/a Gemino Senior Secured Healthcare Finance) (Gemino Senior Secured Healthcare
Finance) from affiliates of EDG Partners, D. E. Shaw AQ-SP Series 5-01, L.L.C. and other members of Gemino Healthcare Finance, LLC. Gemino Senior Secured Healthcare Finance 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 Senior Secured Healthcare Finance of $32.8 million was funded from our existing credit facility. We
have an additional $5.0 million commitment to purchase equity



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in Gemino Senior Secured Healthcare Finance, conditional upon approval of the Gemino Senior Secured Healthcare Finance board of directors, among other conditions. The current management team of
Gemino Senior Secured Healthcare Finance has committed to lead Gemino Senior Secured Healthcare Finance going forward and co-invested in the transaction.

Concurrent with the closing of the transaction, Gemino Senior Secured Healthcare Finance entered into a new, four-year $100 million credit facility, which is expandable to $150 million under its accordion
feature. Pro forma for this transaction, Gemino Senior Secured Healthcare Finance had $83 million outstanding on this credit facility, which is non-recourse to us.

We expect Gemino Senior Secured Healthcare Finance to be treated as a pass-through entity for tax purposes and is expected to distribute a substantial portion of its current cash earnings to us on a
recurring basis.

Gemino Senior Secured Healthcare Finance currently manages a highly diverse portfolio of directly-originated
and underwritten senior-secured commitments. As of September 30, 2013, the portfolio totaled approximately $162 million of commitments, of which $106 million were funded. The portfolio consisted of 33 issuers with an average balance
outstanding of $3.2 million. All of the commitments in Gemino Senior Secured Healthcare Finances portfolio are floating-rate, senior-secured, cash-pay loans. None of these loans were on non-accrual status as of September 30, 2013. For the
three months ended September 30, 2013, Gemino Senior Secured Healthcare Finance had a net loss of $1.7 million on gross income of $3.3 million. For the nine months ended September 30, 2013, Gemino Senior Secured Healthcare Finance had net
income of $0.3 million on gross income of $9.3 million. These results include non-recurring costs related to the acquisition of $3.0 million and $3.2 million for the three and nine months ended September 30, 2013, respectively. Due to the
timing of non-cash items, there may be material differences between GAAP net income and distributions to shareholders.

On
October 1, 2013, our investment in Gemino Senior Secured Healthcare Finance was funded.

On October 8, 2013, the
Board declared a monthly dividend of $0.1175 per share payable on November 1, 2013 to holders of record as of October 24, 2013.

On October 30, 2013, the Board declared a monthly dividend of $0.1175 per share payable on December 3, 2013 to holders of record as of November 21, 2013.

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 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 LIBOR, commercial paper rate, or the prime rate. Interest on our debt investments is generally payable quarterly but may



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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 Solar Capital Partners, LLC (the Investment Adviser) and their 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 Solar Capital Partners. We bear all other
costs and expenses of our operations and transactions, including those relating to:



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



| |  |  | expenses incurred by Solar Capital Partners 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;
| | - |  | ----------------------------------------------------------------------



| |  |  | 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.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

Portfolio and Investment Activity

During the three months ended September 30, 2013, we invested $76.8 million across 9 portfolio companies. This compares to investing
$27.5 million in 5 portfolio companies for the three months ended September 30, 2012. Investment sales and prepayments during the three months ended September 30, 2013 totaled $50.5 million versus $15.4 million for the three months ended
September 30, 2012.

At September 30, 2013, our portfolio consisted of 36 portfolio companies and was invested 86%
in senior secured loans, 2% in unsecured loans and 12% in common equity measured at fair value versus 31 portfolio companies invested 97% in senior secured loans and 3% in unsecured loans at September 30, 2012.

The weighted average yields on our income producing portfolio of investments were 7.4% and 8.1%, respectively, at September 30, 2013
and September 30, 2012 measured at fair value.

At September 30, 2013, 93.0% or $252.9 million of our income
producing portfolio* is floating rate and 7.0% or $19.0 million is fixed rate measured at fair value. At September 30, 2012, 96.9% or $227.7 million of our income producing portfolio was floating rate and 3.1% or $7.3 million was fixed rate
measured at fair value.

Since the initial public offering of Solar Senior Capital Ltd. on February 24, 2011 and through
September 30, 2013, invested capital totaled approximately $580 million in 55 portfolio companies. Over the same period, Solar Senior Capital Ltd. completed transactions with more than 40 different financial sponsors.



|* | We have included Gemino Senior Secured Healthcare Finance as 100% floating rate at September 30, 2013.
|- | ------------------------------------------------------------------------------------------------------

Critical Accounting Policies

The preparation of consolidated financial statements and related disclosures in conformity with U.S. 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.

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



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Company uses the quote obtained. Debt investments with remaining maturities of 60 days or less shall each be valued at cost with interest accrued or discount amortized to the date of maturity,
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.

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 of sufficient credit quality purchased within 60 days of maturity are valued at cost plus accreted discount, or minus amortized premium, which is expected to approximate fair value.

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 nine
months ended September 30, 2013, 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) 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.



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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.

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 will better align the measurement methodologies of assets and liabilities, which may mitigate certain earnings volatility. As a result of this election,
approximately $2.8 million of costs related to the establishment of the original Credit Facility was expensed during the period January 28, 2011 (commencement of operations) to December 31, 2011, and approximately $1.0 million was expensed
during the year ended December 31, 2012 related to the amendment, rather than being deferred and amortized over the life of the Credit Facility.

Revenue Recognition

The Company records interest income, adjusted
for amortization of premium and accretion of discount, on an accrual basis. 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 interest obligations. Interest cash payments received on non-accrual designated investments may be recognized as income or applied to principal depending upon managements
judgment. Some of our investments may have contractual PIK interest. PIK interest computed at the contractual rate is accrued into income and reflected as a receivable up to the capitalization date. PIK investments offer issuers the option at each
payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates,
the Company capitalizes the accrued interest 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 is reversed from the related
receivable through interest income. The Company does not reverse previously capitalized PIK interest. 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.



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

We generally measure realized gain or loss by the difference between the net proceeds from the repayment or sale and the amortized cost
basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized origination or commitment fees and prepayment penalties. 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.

Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.

RESULTS OF OPERATIONS

Results comparisons are for three and nine months ended September 30, 2013 and September 30, 2012:

Investment Income

For the three and nine months ended September 30,
2013, gross investment income totaled $4.9 million and $14.1 million, respectively. For the three and nine months ended September 30, 2012, gross investment income totaled $4.9 million and $14.4 million, respectively.

Expenses

Expenses
totaled $1.6 million and $4.4 million, respectively, for the three and nine months ended September 30, 2013, of which $0.7 million and $2.0 million, respectively, were base management and performance-based incentive fees and $0.3 million and
$0.8 million, respectively, were interest and other debt related expenses. Administrative services, insurance and other general and administrative expenses totaled $0.6 million and $1.6 million, respectively, for the three and nine months ended
September 30, 2013. Expenses totaled $1.9 million and $5.3 million, respectively, for the three and nine months ended September 30, 2012, of which $0.8 million and $2.4 million, respectively, were base management and performance-based
incentive fees and $0.4 million and $1.1 million, respectively, were interest and other debt related expenses. Administrative services, insurance and other general and administrative expenses totaled $0.6 million and $1.9 million, respectively, for
the three and nine months ended September 30, 2012. Expenses consist of base management fees, performance-based incentive fees, administrative services expenses, insurance and legal expenses, directors expenses, audit and tax expenses,
transfer agent fees and expenses, and other general and administrative expenses. The reduction in total expenses for the three and nine months ended September 30, 2013 as compared to the year ago periods was primarily due to lower
performance-based incentive fees and lower interest expense.

Net Investment Income

The Companys net investment income totaled $3.3 million and $9.7 million or $0.29 and $0.86 per average share, for the three and
nine months ended September 30, 2013, respectively. The Companys net investment income totaled $3.0 million and $9.1 million or $0.32 and $0.95 per average share, for the three and nine months ended September 30, 2012, respectively.

Net Realized Gain (Loss)

The Company had investment sales and prepayments totaling $50.5 million and $108.3 million, respectively, for the three and nine months ended September 30, 2013. The Company had investment sales and
prepayments totaling $15.4 million and $81.9 million, for the three and nine months ended September 30, 2012, respectively. Net realized loss for the three and nine months ended September 30, 2013 totaled $0.5 million and



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$0.3 million, respectively. Net realized gain for the three and nine months ended September 30, 2012 totaled $0.1 million and $0.5 million, respectively. Net realized loss for the three and
nine months ended September 30, 2013 was primarily related to sales of our investment in Sotera Defense Solutions. Net realized gain for the three and nine months ended September 30, 2012 was also primarily related to modest sales of
selected assets.

Net Change in Unrealized Gain (Loss)

For the three and nine months ended September 30, 2013, the net change in unrealized loss on the Companys assets and liabilities totaled ($0.2) million and ($2.5) million, respectively. For the
three and nine months ended September 30, 2012, the net change in unrealized gain on the Companys assets and liabilities totaled $0.7 million and $3.5 million, respectively. Net unrealized loss for the three and nine months ended
September 30, 2013 was primarily attributable to the decline in fundamentals of our investments in Engineering Solutions & Products LLC and SLT Environmental, Inc. Net unrealized gain for the three and nine months ended
September 30, 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 three and nine months
ended September 30, 2013, the Company had a net increase in net assets resulting from operations of $2.6 million and $7.0 million, respectively. For the three and nine months ended September 30, 2012, the Company had a net increase in net
assets resulting from operations of $3.8 million and $13.2 million, respectively. For the three and nine months ended September 30, 2013, basic and diluted earnings per average share were $0.23 and $0.61, respectively. For the three and nine
months ended September 30, 2012, basic and diluted earnings per average share were $0.40 and $1.38, 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 September 30, 2013, the Company had $34.8 million in borrowings outstanding on its Credit Facility and
$115.2 million of unused capacity, subject to effective borrowing base limits. The Company also has a delayed draw feature on its Credit Facility which may provide an additional $50.0 million of unused capacity.

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 use 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 expect that all current liquidity needs will be met with cash flows from operations, borrowings on our Credit Facility,
and other 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 the end of each fiscal quarter, we
consider using various treasury strategies for our business. One strategy includes taking proactive steps by utilizing cash equivalents with the objective of enhancing our investment flexibility during the following quarter pursuant to
Section 55 of the 1940 Act. More specifically, we may purchase U.S. Treasury bills from time-to-time on the last business day of the quarter and typically close out that position on the following business day, settling the sale



36



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##### Table of Contents

transaction on a net cash basis with the purchase, subsequent to quarter end. We may also utilize repurchase agreements or other balance sheet transactions, including drawing down on our Credit
Facility, as deemed appropriate. The amount of these transactions or such drawn cash for this purpose is excluded from total assets for purposes of computing the asset base upon which the management fee is determined. There were no cash equivalents
held as of September 30, 2013.

Debt

Senior Secured Revolving Credit FacilityOn August 26, 2011, the Company established the 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 a rate of 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 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. 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. At
September 30, 2013, the Company was in compliance with all financial and operational covenants required by the Credit Facility.

Contractual Obligations



|                   |  |                                                                       |      |  |                 |   |   |           |  |   |           |  |  |                  |      |  |  |   |   | 
|------------------ |  | --------------------------------------------------------------------- | ---- |  | --------------- | - | - | --------- |  | - | --------- |  |  | ---------------- | ---- |  |  | - | - | 
|                   |  | Payments due by Period as of September 30, 2013 (dollars in millions) |     
|                   |  | Total                                                                 |      |  | Less than1 Year |   |   | 1-3 Years |  |   | 3-5 Years |  |  | More Than5 Years |     
|Credit Facility(1) |  | $                                                                     | 34.8 |  |                 | $ |  |           |  | $ |          |  |  | $                | 34.8 |  |  | $ |  | 



|(1) | At September 30, 2013, $115.2 million remained unused. An additional $50.0 million of capacity is available under the delayed draw feature of the Credit Facility.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

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) | 
|Credit Facility                          |  |                                                   |        |  |                            |   |        |                                              |  |   |                                 |  |  |  |     | 
|Fiscal 2013 (through September 30, 2013) |  | $                                                 | 34,800 |  |                            | $ | 6,930  |                                              |  | $ |                                |  |  |  | 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
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| | 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 would be 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 has agreed to serve as our investment adviser, and the Administration Agreement, pursuant to which Solar Capital Management 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 Solar Capital Management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

As of September 30, 2013, we have a $5.0 million commitment to purchase equity in Gemino Senior Secured Healthcare Finance, conditional upon approval of the Gemino Senior Secured Healthcare Finance
board of directors, among other conditions.



38



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##### Table of Contents

Dividends and Distributions

The following table below summarizes our dividends to stockholders. Tax characteristics of all dividends are reported to shareholders on Form 1099 after the end of each calendar year. Our dividends, if
any, will be determined by the Board. We expect that our dividends and distributions to stockholders will generally be from accumulated taxable net investment income and from net realized capital gains, if any, as applicable.



|                   |  |             |                    |  |              |  |                   |        |  |   |        | 
|------------------ |  | ----------- | ------------------ |  | ------------ |  | ----------------- | ------ |  | - | ------ | 
|Date Declared      |  | Record Date |                    |  | Payment Date |  |                   | Amount | 
|Fiscal 2013        |  |             |                    |  |              |  |                   |        |  |   |        | 
|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)       |  |             |                    |  |              |  |                   |        |  | $ | 1.2925 | 
|                   |  |             |                    |  |              |  |                   |        |  |   |        | 
|Fiscal 2012        |  |             |                    |  |              |  |                   |        |  |   |        | 
|December 6, 2012   |  |             | December 20, 2012  |  |              |  | January 3, 2013   |        |  | $ | 0.1175 | 
|November 1, 2012   |  |             | November 22, 2012  |  |              |  | December 4, 2012  |        |  |   | 0.1175 | 
|October 4, 2012    |  |             | October 25, 2012   |  |              |  | November 2, 2012  |        |  |   | 0.1175 | 
|September 11, 2012 |  |             | September 20, 2012 |  |              |  | October 2, 2012   |        |  |   | 0.1175 | 
|July 31, 2012      |  |             | August 23, 2012    |  |              |  | September 5, 2012 |        |  |   | 0.115  | 
|July 9, 2012       |  |             | July 19, 2012      |  |              |  | August 2, 2012    |        |  |   | 0.105  | 
|June 11, 2012      |  |             | June 21, 2012      |  |              |  | July 2, 2012      |        |  |   | 0.10   | 
|May 1, 2012        |  |             | May 18, 2012       |  |              |  | June 4, 2012      |        |  |   | 0.10   | 
|April 5, 2012      |  |             | April 18, 2012     |  |              |  | May 2, 2012       |        |  |   | 0.10   | 
|February 22, 2012  |  |             | March 20, 2012     |  |              |  | April 3, 2012     |        |  |   | 0.10   | 
|February 3, 2012   |  |             | February 17, 2012  |  |              |  | March 2, 2012     |        |  |   | 0.10   | 
|January 6, 2012    |  |             | January 19, 2012   |  |              |  | February 2, 2012  |        |  |   | 0.10   | 
|                   |  |             |                    |  |              |  |                   |        |  |   |        | 
|Total (2012)       |  |             |                    |  |              |  |                   |        |  | $ | 1.29   | 
|                   |  |             |                    |  |              |  |                   |        |  |   |        | 
|Fiscal 2011        |  |             |                    |  |              |  |                   |        |  |   |        | 
|December 6, 2011   |  |             | December 15, 2011  |  |              |  | December 29, 2011 |        |  | $ | 0.10   | 
|November 1, 2011   |  |             | November 18, 2011  |  |              |  | December 2, 2011  |        |  |   | 0.09   | 
|October 7, 2011    |  |             | October 19, 2011   |  |              |  | November 2, 2011  |        |  |   | 0.08   | 
|September 12, 2011 |  |             | September 20, 2011 |  |              |  | October 4, 2011   |        |  |   | 0.08   | 
|August 2, 2011     |  |             | August 19, 2011    |  |              |  | September 2, 2011 |        |  |   | 0.08   | 
|July 7, 2011       |  |             | July 18, 2011      |  |              |  | August 1, 2011    |        |  |   | 0.07   | 
|June 6, 2011       |  |             | June 16, 2011      |  |              |  | June 30, 2011     |        |  |   | 0.05   | 
|                   |  |             |                    |  |              |  |                   |        |  |   |        | 
|Total (2011)       |  |             |                    |  |              |  |                   |        |  | $ | 0.55   | 
|                   |  |             |                    |  |              |  |                   |        |  |   |        | 

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



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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.

We maintain an opt out dividend reinvestment plan for our
common stockholders. As a result, if we declare a dividend, then stockholders cash dividends 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 dividends.

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 Credit Facility may limit our ability to declare dividends 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 dividends to stockholders, income from origination, structuring, closing, commitment 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 Solar Capital Partners. Mr. Gross, our chairman and chief executive
officer, is the managing member and a senior investment professional of, and has financial and controlling interests in, Solar Capital Partners. In addition, Mr. Spohler, our chief operating officer is a partner and a senior investment
professional of, and has financial interests in, Solar Capital Partners.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Solar Capital Management provides us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our
Administration Agreement. We 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 compliance officer, our chief financial officer and any administrative support staff. Solar Capital Partners, our investment adviser, is the sole member of and
controls Solar Capital Management.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have entered into a license agreement with Solar Capital Partners, pursuant to which Solar Capital Partners has granted us a non-exclusive,
royalty-free license to use the name Solar Senior Capital.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Solar Capital Partners 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, Solar Capital Partners presently serves as investment adviser to Solar Capital Ltd., a publicly traded BDC, which 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. Solar Capital Partners and its 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, Solar Capital Partners 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 Solar Capital Partners 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 3. | Quantitative and Qualitative Disclosure about Market Risk
|------- | ---------------------------------------------------------

We are subject to financial market risks, including changes in interest rates. During the three and nine months ended September 30, 2013, all but two of the loans in our portfolio had floating
interest rates. These loans were 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 Credit Facility that is generally based on floating LIBOR and commercial paper rates. Assuming no changes to our balance sheet as of September 30, 2013, a hypothetical one percent increase in LIBOR on our floating rate assets and
liabilities would decrease our net investment income by approximately three cents per average share over the next twelve months. Assuming no changes to our balance sheet as of September 30, 2013, a hypothetical one-quarter of one percent
decrease in LIBOR on our floating rate assets and liabilities would increase our net investment income by approximately one cent 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 lower 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 |  | $0.01   |  | ($0.03)



|Item 4. | Controls and Procedures
|------- | -----------------------

(a)
Evaluation of Disclosure Controls and Procedures

As of September 30, 2013 (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.



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(b) Changes in Internal Controls Over Financial Reporting

Management has not identified any change in the Companys internal control over financial reporting that occurred during the third
quarter of 2013 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



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PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

We,
Solar Capital Management, LLC and Solar Capital Partners, LLC are not currently subject to any material pending legal proceedings threatened against us. From time to time, we may be a party to certain legal proceedings incidental to the normal
course of our business including the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a
material effect upon our business, financial condition or results of operations.



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

In addition
to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which could materially
affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. There have been no material changes to the risk factors discussed in the Risk Factors section in our Registration
Statement filed on Form N-2 on September 19, 2013.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

We did not engage in unregistered sales of securities during the quarter ended September 30, 2013.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None.



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

Not applicable.



|Item 5. | Other Information
|------- | -----------------

None.



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|Item 6. | Exhibits
|------- | --------

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



|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|               | 
|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(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|               | 
|10.4           |  | Administration Agreement by and between Registrant and Solar Capital Management, LLC(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|               | 
|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          |  | Amendment and First Amendment to Loan and Servicing Agreement, dated as of November 7, 2012, 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 collateral custodian and the backup servicer(4)            
|               | 
|10.11          |  | Form of Loan and Servicing Agreement, dated as of August 26, 2011 (as amended through November 7, 2012), 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(4)
|               | 
|11             |  | Computation of Per Share Earnings (included in the notes to the financial statements contained in this report).                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|               | 
|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



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



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized on October 30, 2013.



|                          |  |                                                                                       
|------------------------- |  | --------------------------------------------------------------------------------------
|SOLAR SENIOR CAPITAL LTD.
|                          | 
|By:                       |  | /S/    MICHAEL S.
GROSS                                                               
|                          |  | Michael S. Gross Chief Executive Officer (Principal Executive
Officer)                
|                          | 
|By:                       |  | /S/    RICHARD L.
PETEKA                                                              
|                          |  | Richard L. Peteka Chief Financial Officer (Principal Financial and Accounting
Officer)



46