WHF

The information contained in this section should be read in conjunction with our Consolidated Financial Statements appearing elsewhere in this quarterly report on Form 10-Q. In this quarterly report on Form 10-Q, the “Company”, “we”, “us”, “our” and “WhiteHorse Finance” refer to WhiteHorse Finance, Inc. and its consolidated subsidiaries, and "WhiteHorse Advisers" refers to H.I.G. WhiteHorse Advisers, LLC, our investment adviser. Forward-Looking Statements Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties, including statements as to: ● our future operating results; ● our ability to consummate new investments and the impact of such investments; ● the ability of our portfolio companies to achieve their objectives; ● our contractual arrangements and relationships with third parties; ● the impact of a changing interest rate environment; ● changes in political, economic or industry conditions, and conditions affecting the financial and capital markets, which could result in changes to the values of our assets, including changes from the impact of the ongoing global conflicts, trade barriers, tariffs and wars. elevated levels of inflation, and the potential impact of inflation on our portfolio companies and on the industries in which we invest; ● the impact of interruptions in the supply chain on our portfolio companies; ● the dependence of our future success on the general economy and its impact on the industries in which we invest; ● the impact of increased competition; ● the ability of our investment adviser to locate suitable investments for us and to monitor our investments; ● our ability to maintain our qualification as a BDC, and as a RIC under the Code; ● our expected financings and investments and the rate at which our investments are refunded by portfolio companies; ● our ability to pay dividends or make distributions; ● the adequacy of our cash resources and working capital; ● the timing of cash flows, if any, from the operations of our prospective portfolio companies; ● the impact of future acquisitions and divestitures; and ● the risks, uncertainties and other factors we identify under “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K and elsewhere in this quarterly report on Form 10-Q. We use words such as “may,” “might,” “will,” “intends,” “should,” “could,” “can,” “would,” “expects,” “believes,” “estimates,” “anticipates,” “predicts,” “potential,” “plan” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, 75 ​ including the factors set forth in “Item 1A-Risk Factors” in our annual report on Form 10-K and elsewhere in this quarterly report on Form 10-Q. We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file with the U.S. Securities and Exchange Commission, or the SEC, in the future, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. You should understand that under Sections 27A(b)(2)(B) and (D) of the Securities Act of 1933, as amended, or the Securities Act, and Sections 21E(b) (2)(B) and (D) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended, do not apply to statements made in connection with this quarterly report on Form 10-Q or any periodic reports we file under the Exchange Act. Overview We are an externally managed, non-diversified, closed-end management investment company that has elected to be treated as a business development company under the 1940 Act, defined above. In addition, for tax purposes, we elected to be treated as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. We were formed on December 28, 2011 and commenced operations on January 1, 2012. We were originally capitalized with approximately $176.3 million of contributed assets from two private funds that were advised by an affiliate of H.I.G. Capital, L.L.C., or H.I.G. Capital. These assets were contributed as of January 1, 2012 in exchange for 11,752,383 units in WhiteHorse Finance, LLC. On December 4, 2012, we converted from a Delaware LLC into a Delaware corporation and elected to be treated as a business development company under the 1940 Act. On December 4, 2012, we priced our initial public offering, or the IPO, selling 6,666,667 shares. Concurrent with the IPO, certain of our directors and officers, the managers of H.I.G. WhiteHorse Advisers, LLC (“WhiteHorse Advisers” or the “Investment Adviser”) and their immediate family members or entities owned by, or family trusts for the benefit of, such persons, purchased an additional 472,673 shares through a private placement exempt from registration under the Securities Act. Our shares of common stock are listed on the Nasdaq Global Select Market under the symbol “WHF”. We are a direct lender targeting debt investments in privately held, lower middle market companies located in the United States. We define the lower middle market as those companies with enterprise values between $50 million and $350 million. Our investment objective is to generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing lower middle market companies across a broad range of industries. Such loans typically carry a floating interest index rate such as the Secured Overnight Financing Rate, or SOFR, plus a spread and typically have a term of three to six years. While we focus principally on originating senior secured loans to lower middle market companies, we may also opportunistically make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests, and in companies outside of the lower middle market, to the extent we believe the investment presents an opportunity to achieve an attractive risk-adjusted return. We also may receive warrants to purchase common stock in connection with our debt investments. We expect to generate current income through the receipt of interest payments, as well as origination and other fees, capital appreciation and dividends. Our investment activities are managed by WhiteHorse Advisers and are supervised by our board of directors, a majority of whom are independent of us, WhiteHorse Advisers and its affiliates. Under the Investment Advisory Agreement, we have agreed to pay WhiteHorse Advisers an annual base management fee based on our average consolidated gross assets as well as an incentive fee based on our investment performance. Under our administration agreement (the "Administration Agreement") with H.I.G. WhiteHorse Administration ("WhiteHorse Administration"), we have agreed to reimburse WhiteHorse Administration for our allocable portion (subject to the review and approval of 76 ​ our independent directors) of overhead and other expenses incurred by WhiteHorse Administration in performing its obligations under the Administration Agreement. Revenues We generate revenue in the form of interest payable on the debt securities that we hold and capital gains and distributions, if any, on the portfolio company investments that we originate or acquire. Our debt investments, whether in the form of senior secured loans or mezzanine loans, typically have terms of three to six years and bear interest at a fixed or floating rate based on a spread over SOFR or an equivalent index rate. Interest on debt securities is generally payable monthly or quarterly, with the amortization of principal generally being deferred for several years from the date of the initial investment. In some cases, we may also defer payments of interest for the first few years after our investment. The principal amount of the debt securities and any accrued but unpaid interest generally becomes due at the maturity date. In addition, we generate revenue in the form of commitment, origination, structuring or diligence fees, fees for providing managerial assistance and possibly consulting fees. We capitalize loan origination fees, original issue discount and market discount, and we then amortize such amounts as interest income. Upon the prepayment of a loan or debt security, we record any unamortized loan origination fees as interest income. We record prepayment premiums on loans and debt securities as fee income when earned. Dividend income is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Expenses Our primary operating expenses include (1) investment advisory fees to WhiteHorse Advisers; (2) the allocable portion of overhead under the Administration Agreement; (3) the interest expense on our outstanding debt; and (4) other operating costs as detailed below. Our investment advisory fees compensate our investment adviser for its work in identifying, evaluating, negotiating, consummating and monitoring our investments. We bear all other costs and expenses of our operations and transactions, including: ● our organization; ● calculating our net asset value and net asset value per share (including the costs and expenses of independent valuation firms); ● fees and expenses, including travel expenses, incurred by WhiteHorse Advisers or payable to third parties in performing due diligence on prospective portfolio companies, monitoring our investments and, if necessary, enforcing our rights; ● the costs of all future offerings of common shares and other securities, and other incurrences of debt; ● the base management fee and any incentive fee; ● distributions on our shares; ● transfer agent and custody fees and expenses; ● amounts payable to third parties relating to, or associated with, evaluating, making and disposing of investments; ● brokerage fees and commissions; ● registration fees; ● listing fees; ● taxes; ● independent directors’ fees and expenses; 77 ​ ● costs associated with our reporting and compliance obligations under the 1940 Act and applicable U.S. federal and state securities laws; ● the costs of any reports, proxy statements or other notices to our stockholders, including printing costs; ● costs of holding stockholder meetings; ● our fidelity bond; ● directors and officers/errors and omissions liability insurance and any other insurance premiums; ● litigation, indemnification and other non-recurring or extraordinary expenses; ● direct costs and expenses of administration and operation, including audit and legal costs; ● fees and expenses associated with marketing efforts, including deal sourcing and marketing to financial sponsors; ● dues, fees and charges of any trade association of which we are a member; and ● all other expenses reasonably incurred by us or WhiteHorse Administration in connection with administering our business, including rent and our allocable portion of the costs and expenses of our chief financial officer and chief compliance officer along with their respective staffs. WhiteHorse Advisers or WhiteHorse Administration may pay for certain expenses that we incur, which are subject to reimbursement by us. Recent Developments Subsequent to the quarter ended June 30, 2026, we restructured its investments in The Kyjen Company, LLC (d/b/a Outward Hound), with our first lien secured term loan and revolver investments in The Kyjen Company, LLC (d/b/a Outward Hound) converted into a new first lien secured term loan, revolver and equity investments. ​ On August 10, 2026, WhiteHorse Advisers voluntarily agreed to waive and reduce the incentive fee on net investment income from its stated annual rate of 20.00% to 17.50% for the next fiscal quarter ending September 30, 2026. ​ For the period July 1, 2026 through August 10, 2026, we contributed five additional assets to the STRS JV, which included 4 issuers of senior secured debt facilities held as of June 30, 2026. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 78 ​ Consolidated Results of Operations Comparison of the Three and Six Months Ended June 30, 2026 and June 30, 2025 Set forth below are the consolidated results of operations for the three and six months ended June 30, 2026 and 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended June 30, ​ Three Months ​ Six months ended June 30, ​ Six Months ($ in thousands) ​ ​ 2026 ​ ​ 2025 ​ Variance ​ ​ 2026 ​ ​ 2025 ​ Variance Total investment income ​ $ 14,369 ​ $ 18,838 ​ $ (4,469) ​ $ 30,231 ​ $ 37,639 ​ $ (7,408) Total expenses ​ ​ 9,688 ​ ​ 12,276 ​ ​ (2,588) ​ ​ 19,947 ​ ​ 24,234 ​ ​ (4,287) Net investment income ​ ​ 4,681 ​ ​ 6,562 ​ ​ (1,881) ​ ​ 10,284 ​ ​ 13,405 ​ ​ (3,121) Net realized gains/(losses) on investments and foreign currency transactions ​ ​ (51) ​ ​ (22,045) ​ ​ 21,994 ​ ​ (4,778) ​ ​ (22,447) ​ ​ 17,669 Net change in unrealized appreciation/depreciation on investments and foreign currency translations ​ ​ 5,779 ​ ​ 17,733 ​ ​ (11,954) ​ ​ 4,216 ​ ​ 15,556 ​ ​ (11,340) Net increase (decrease) in net assets resulting from operations ​ $ 10,409 ​ $ 2,250 ​ $ 8,159 ​ $ 9,722 ​ $ 6,514 ​ $ 3,208 ​ The consolidated results of operations described below may not be indicative of the results we report in future periods. Net investment income and net increase or decrease in net assets can vary substantially from period to period due to various reasons, including the level of new investments and the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, period to period comparisons of net increases or decreases in net assets resulting from operations may not be meaningful. Consolidated operating results for the three and six months ended June 30, 2026 and 2025 are as follows: Net Investment Income Net investment income for the three and six months ended June 30, 2026 totaled $4.7 million and $10.3 million, respectively. Net investment income for the three and six months ended June 30, 2025 totaled $6.6 million and $13.4 million, respectively. Net investment income decreased by $1.9 million and $3.1 million for the three and six months ended June 30, 2026 from the three and six months ended June 30, 2025, as described below under “Investment Income” and “Operating Expenses.” Investment Income The following table summarizes our investment income for the three and six months ended June 30, 2026 and 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended June 30, ​ ​ Three Months ​ Six months ended June 30, ​ Six Months ($ in thousands) ​ ​ 2026 ​ ​ 2025 ​ ​ Variance ​ ​ 2026 ​ ​ 2025 ​ ​ Variance Investment income (excluding STRS JV): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income other than payment-in-kind ("PIK") ​ $ 10,460 ​ $ 13,986 ​ $ (3,526) ​ $ 21,709 ​ $ 27,934 ​ $ (6,225) PIK income ​ ​ 527 ​ ​ 653 ​ ​ (126) ​ ​ 1,146 ​ ​ 1,344 ​ ​ (198) Fee and dividend income ​ ​ 157 ​ ​ 772 ​ ​ (615) ​ ​ 540 ​ ​ 1,268 ​ ​ (728) Investment income of STRS JV: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest and dividend income ​ $ 3,225 ​ $ 3,427 ​ $ (202) ​ $ 6,836 ​ $ 7,093 ​ $ (257) Total investment income ​ $ 14,369 ​ $ 18,838 ​ $ (4,469) ​ $ 30,231 ​ $ 37,639 ​ $ (7,408) ​ Interest income other than PIK income, decreased $3.5 million and $6.2 million for the three and six months ended June 30, 2026 from the three and six months ended June 30, 2025, primarily attributable to lower yields, investments placed on non-accrual status and lower portfolio size. For the three and six months ended June 30, 2026, the weighted 79 ​ average size of the debt portfolio, excluding STRS JV, and the weighted average cash yield on income producing investments, excluding STRS JV, was $435.6 million and $443.9 million, and 8.6% and 8.8%, respectively. For the three and six months ended June 30, 2025, the weighted average size of the debt portfolio, excluding STRS JV, and the weighted average cash yield on income producing investments, excluding STRS JV, was $549.6 million and $553.7 million, and 8.9% and 8.9%, respectively. ​ PIK income decreased by $0.1 million for the three months ended June 30, 2026 from the three months ended June 30, 2025. PIK income earned for the three months ended June 30, 2026 was primarily derived from investments in Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.) of $0.1 million and various investments aggregating $0.4 million. PIK income decreased by $0.2 million for the six months ended June 30, 2026 from the six months ended June 30, 2025. PIK income earned for the six months ended June 30, 2026 was primarily derived from investments in Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.) of $0.2 million, Claridge Products and Equipment, LLC of $0.1 million, Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.) of $0.1 million and various investments aggregating $0.7 million. ​ We may invest in loans that contain a PIK interest rate provision where PIK interest is accrued at the contractual rates and added to loan principal on the reset dates to the extent such amounts are expected to be collected. For the three and six months ended June 30, 2026, PIK income as a percentage of total investment income was 3.7% and 3.8%, respectively. For the three and six months ended June 30, 2025, PIK income as a percentage of total investment income was 3.5% and 3.6%, respectively. ​ Fee and dividend income decreased by $0.6 million and $0.7 million for the three and six months ended June 30, 2026 from the three and six months ended June 30, 2025. We expect to generate some level of non-recurring fee income during most quarters from prepayments, amendments and other sources. For the three and six months ended June 30, 2026, we earned non-recurring fee income of $0.1 million and $0.4 million. For the three and six months ended June 30, 2025, we earned non-recurring fee income of $0.7 million and $1.1 million. ​ Interest and dividend income from STRS JV decreased by $0.2 million and $0.3 million for the three and six months ended June 30, 2026 from the three months ended June 30, 2025, primarily attributable to a decrease in base rates and portfolio yields, partially offset by a larger investment portfolio. Operating Expenses The following table summarizes our expenses for the three and six months ended June 30, 2026 and 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended June 30, ​ Three Months ​ Six months ended June 30, ​ Six Months ($ in thousands) ​ ​ 2026 ​ ​ 2025 ​ Variance ​ ​ 2026 ​ ​ 2025 ​ Variance Interest expense ​ $ 4,810 ​ $ 6,141 ​ $ (1,331) ​ $ 9,811 ​ $ 12,326 ​ $ (2,515) Base management fees ​ ​ 2,545 ​ ​ 2,844 ​ ​ (299) ​ ​ 5,103 ​ ​ 5,677 ​ ​ (574) Performance-based incentive fees, net of fee waiver ​ ​ 992 ​ ​ 1,640 ​ ​ (648) ​ ​ 2,180 ​ ​ 3,351 ​ ​ (1,171) Administrative service fees ​ ​ 170 ​ ​ 170 ​ ​ — ​ ​ 341 ​ ​ 341 ​ ​ — General and administrative expenses ​ ​ 1,129 ​ ​ 1,295 ​ ​ (166) ​ ​ 2,345 ​ ​ 2,248 ​ ​ 97 Total expenses, before excise tax ​ ​ 9,646 ​ ​ 12,090 ​ ​ (2,444) ​ ​ 19,780 ​ ​ 23,943 ​ ​ (4,163) Excise tax ​ ​ 42 ​ ​ 186 ​ ​ (144) ​ ​ 167 ​ ​ 291 ​ ​ (124) Total expenses, including excise tax ​ $ 9,688 ​ $ 12,276 ​ $ (2,588) ​ $ 19,947 ​ $ 24,234 ​ $ (4,287) ​ Interest expense decreased by $1.3 million and $2.5 million for the three and six months ended June 30, 2026 from the three and six months ended June 30, 2025, primarily due to lower weighted average borrowing base and weighted average interest rate. For the three and six months ended June 30, 2026, the weighted average outstanding borrowings were $328.5 million and $328.5 million at a weighted average interest rate of 5.24% and 5.27%, respectively. For the three and six months ended June 30, 2025, the weighted average outstanding borrowings were $371.3 million and $370.6 million at a weighted average interest rate of 5.72% and 5.79%, respectively. 80 ​ Base management fees decreased by $0.3 million and $0.6 million for the three and six months ended June 30, 2026 from the three months ended June 30, 2025, primarily due to lower gross assets. Performance-based incentive fees decreased by $0.6 million and $1.2 million for the three and six months ended June 30, 2026 from the three and six months ended June 30, 2025, primarily due to lower pre-incentive fee net investment income. For the three and six months ended June 30, 2026, the Company recognized an irrevocable fee waiver of $0.1 million and $0.3 million, respectively. For the three and six months ended June 30, 2026 and 2025, there were no capital gains incentive fee expenses incurred. Excise Tax Expense We have elected to be treated as a RIC under Subchapter M of the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. In order to be subject to tax as a RIC, we are required to meet certain source of income and asset diversification requirements, as well as timely distribute to our stockholders dividends for U.S. federal income tax purposes of an amount generally at least equal to 90% of investment company taxable income, as defined by the Code, and determined without regard to any deduction for dividends paid for each tax year. We have made and intend to continue to make the requisite distributions to our stockholders that will generally relieve us from U.S. federal income taxes. Depending on the level of taxable income earned in a tax year, we may choose to retain taxable income in excess of current year distributions into the next tax year in an amount less than what would trigger payments of U.S. federal income tax under Subchapter M of the Code. We may then be required to incur a 4% excise tax on such income. To the extent that we determine that our estimated current year annual taxable income may exceed estimated current year distributions, we accrue excise tax, if any, on estimated excess taxable income as taxable income is earned. Excise tax was $0.1 million and $0.2 million for the three and six months ended June 30, 2026, respectively. Excise tax was $0.2 million and $0.3 million for the three and six months ended June 30, 2025, respectively. As of June 30, 2026 and December 31, 2025, we accrued a net federal excise tax expense of $0.3 million and $0.8 million, respectively. Net Realized and Unrealized Gains (Losses) on Investments The following table shows the breakdown of net realized gains and losses on investments for the three and six months ended June 30, 2026 and 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended June 30, ​ Six months ended June 30, ($ in millions) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 American Crafts, LC ​ $ — ​ $ (21.0) ​ $ — ​ $ (21.0) Patagonia Holdco LLC (d/b/a Lumen LATAM) ​ ​ — ​ ​ — ​ ​ (3.0) ​ ​ — Token Buyer, Inc. (d/b/a Therm-O-Disc, Inc.) ​ ​ — ​ ​ (0.3) ​ ​ (0.2) ​ (0.7) Trimlite Buyer LLC (d/b/a Trimlite LLC) ​ ​ — ​ ​ — ​ ​ (1.1) ​ ​ — Other(1) ​ — ​ — ​ — ​ — Total net realized gains/(losses) on investments ​ $ — ​ $ (21.3) ​ $ (4.3) ​ $ (21.7) (1) Includes various investments with aggregate realized gains or losses less than $50,000. The following table shows the breakdown in the changes in unrealized appreciation and depreciation of investments for the three and six months ended June 30, 2026 and 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended June 30, ​ Six months ended June 30, ($ in millions) ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 Gross unrealized appreciation on investments ​ $ 7.1 ​ $ 3.9 ​ $ 9.8 ​ $ 4.9 Gross unrealized depreciation on investments ​ (1.4) ​ (6.7) ​ (8.9) ​ (9.5) Reversal of prior period net unrealized (appreciation) depreciation upon a realization ​ — ​ 20.5 ​ 2.9 ​ 20.1 Total unrealized appreciation (depreciation) on investments ​ $ 5.7 ​ $ 17.7 ​ $ 3.8 ​ $ 15.5 ​ 81 ​ Financial Condition, Off-Balance Sheet Arrangements, Liquidity and Capital Resources As a business development company, we distribute substantially all of our net income to our stockholders. We generate cash primarily from offerings of securities, borrowings under the Credit Facility (as defined in Note 6 to the Accompanying Financial Statements) and WHF CLO (as defined in Note 2 to the accompanying financial statements), and cash flows from operations, including interest earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less. We expect to fund a portion of our investments through future borrowings. In the future, we may obtain borrowings under other credit facilities and from issuances of senior securities to the extent permitted by the 1940 Act. We may also borrow funds to the extent we determine that additional capital would allow us to take advantage of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities or if our board of directors determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders. ​ Our board of directors may decide to issue common stock, such as through at-the-market offerings, direct placements or otherwise, to finance our operations rather than issuing debt or other senior securities. Any decision to sell shares below the then-current net asset value per share of our common stock is subject to stockholder approval and a determination by our board of directors that such issuance and sale is in our and our stockholders’ best interests. Any sale or other issuance of shares of our common stock at a price below net asset value per share results in immediate dilution to our stockholders’ interests in our common stock and a reduction in our net asset value per share. If we were to issue additional shares of our common stock during the next 12 months, we do not intend to issue shares below the then-current net asset value per share. Restricted cash and cash equivalents and restricted foreign currency include amounts that are collected and held by the custodians or trustees who have been appointed as custodian of the assets securing certain of the Company’s financing transactions including the Credit Facility and the 2025 CLO Securitization (as defined in Note 6 to the accompanying financial statements). Restricted cash and cash equivalents and restricted foreign currency are held by the trustee for the payment of interest expense and principal on the outstanding borrowings or reinvestment into new assets. Restricted amounts that represent interest or fee income are transferred to unrestricted cash accounts by the trustees generally once a quarter after the payment of operating expenses and other amounts due under the respective credit, indenture or other governing agreements for the Company’s financing transactions as more fully discussed below, pertaining to the Credit Facility and the 2025 CLO Securitization. We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve elements of liquidity and credit risk in excess of the amount recognized on the consolidated statements of assets and liabilities. As of June 30, 2026 and December 31, 2025, we had commitments to fund approximately $35.8 million and $41.0 million, respectively, of revolving lines of credit or delayed draw facilities to our portfolio companies. We reasonably believe that we have sufficient assets to adequately cover and allow us to satisfy our outstanding unfunded commitments. Our operating activities provided cash and cash equivalents of $15.3 million during the six months ended June 30, 2026, primarily from realizations and repayments on our investments, partially offset from acquisition of investments and cash used from the net change in working capital. Our financing activities used cash and cash equivalents of $16.9 million during the six months ended June 30, 2026, primarily due to payment of distributions to stockholders and purchases of common stock. Our operating activities provided cash and cash equivalents of $14.7 million during the six months ended June 30, 2025, primarily from realizations and repayments on our investments, partially offset from acquisition of investments and cash used from the net change in working capital. Our financing activities used cash and cash equivalents of $9.3 million during the six months ended June 30, 2025, primarily due to payment of distributions to stockholders and repayment of net borrowings on the Credit Facility, offset with the issuance of the 2025 CLO Notes. As of June 30, 2026, we had cash and cash equivalent resources of $28.1 million, including $19.6 million of restricted cash. As of June 30, 2026, we had approximately $50.0 million undrawn under the Credit Facility based on the collateral and portfolio quality requirements stipulated in the related credit agreement. As of June 30, 2026, due to 82 ​ borrowing base limitations, approximately $39.8 million was available to be drawn under the Credit Facility based on these requirements. As of December 31, 2025, we had cash and cash equivalent resources of $29.7 million, including $22.7 million of restricted cash. As of December 31, 2025, we had approximately $100.0 million undrawn and available to be drawn under the Credit Facility based on the collateral and portfolio quality requirements stipulated in the related credit agreement. As of December 31, 2025 due to borrowing base limitations, approximately $43.8 million was available to be drawn under the Credit Facility based on these requirements. STRS JV In January 2019, we and STRS Ohio formed a joint venture, STRS JV, that invests primarily in senior secured loans, including first lien and second lien facilities, to performing lower middle market companies across a broad range of industries that typically carry a floating interest index rate based on SOFR, or an equivalent index rate and have a term of three to six years. STRS JV invests in portfolio companies in the same industries in which we may directly invest. STRS JV was formed as a Delaware LLC and is not consolidated by either us or STRS Ohio for financial reporting purposes. On July 19, 2019, STRS JV formally launched operations. As of June 30, 2026, STRS JV had total assets of $350.3 million. As of December 31, 2025, STRS JV had total assets of $335.9 million. We provide capital to STRS JV in the form of LLC equity interests and subordinated notes. In February 2023, we increased our capital commitment to the STRS JV in the amount of an additional $15.0 million, bringing our total capital commitment to the STRS JV to $115.0 million, comprised of $92.0 million of subordinated notes and $23.0 million of LLC equity interests. We previously increased our capital commitment in February 2022 to the STRS JV in the amount of an additional $25.0 million, bringing our total capital commitment to the STRS JV to $100.0 million, comprised of $80.0 million of subordinated notes and $20.0 million of LLC equity interests. As of both June 30, 2026 and December 31, 2025, we and STRS Ohio owned approximately 65.71% and 34.29%, respectively, of the LLC equity interests of STRS JV. As of June 30, 2026, our investment in STRS JV consisted of equity contributions and subordinated note advance commitments of $23.0 million and $92.0 million, respectively, of which $1.4 million and $5.7 million were unfunded, respectively. As of December 31, 2025, our investment in STRS JV consisted of equity contributions and subordinated note advance commitments of $23.0 million and $92.0 million, respectively, of which $1.9 million and $7.6 million were unfunded, respectively. STRS JV is managed by a four-person board of managers, two of whom are selected by us and two of whom are selected by STRS Ohio. All material decisions with respect to STRS JV, including those involving its investment portfolio, require unanimous approval of a quorum of the board of managers. Quorum is defined as (i) the presence of two members of the board of managers; provided that at least one individual is present that was elected, designated or appointed by each member; (ii) the presence of three members of the board of managers; provided that the individual that was elected, designated or appointed by the member with only one individual present is entitled to cast two votes on each matter; or (iii) the presence of four members of the board of managers; provided that two individuals are present that were elected, designated or appointed by each member. Below is a summary of STRS JV’s portfolio as of June 30, 2026 and December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ($ in thousands) ​ ​ ​ As of June 30, 2026 ​ ​ ​ As of December 31, 2025 ​ Total investments(1) ​ $ 340,272 ​ $ 323,552 ​ Weighted average effective yield on total portfolio(2) ​ ​ 9.8 % ​ 9.9 % Number of portfolio companies in STRS JV ​ ​ 43 ​ ​ 43 ​ Largest portfolio company investment(1) ​ ​ 17,451 ​ ​ 17,840 ​ Total of five largest portfolio company investments(1) ​ ​ 75,539 ​ ​ 75,398 ​ (1) At fair value. 83 ​ (2) Weighted average effective yield is computed by dividing (a) annualized interest income (including interest income resulting from the amortization of fees and discounts) by (b) the weighted average cost of investment. STRS JV’s investments consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2026 ​ As of December 31, 2025 ($ in thousands) ​ ​ ​ Amortized Cost ​ ​ ​ Fair Value ​ ​ ​ Amortized Cost ​ ​ ​ Fair Value First lien secured loans ​ $ 339,859 ​ $ 340,272 ​ $ 323,601 ​ $ 323,552 Total ​ $ 339,859 ​ $ 340,272 ​ $ 323,601 ​ $ 323,552 ​ 84 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Industry ($ in thousands) ​ As of June 30, 2026 ​ As of December 31, 2025 ​ Advertising ​ ​ ​ $ 18,534 ​ ​ ​ 5.4 % $ 19,052 ​ ​ ​ 5.9 % Air Freight & Logistics ​ ​ ​ ​ — ​ ​ ​ — ​ ​ 3,273 ​ ​ ​ 1.0 ​ Asset Management & Custody Banks ​ ​ 11,581 ​ 3.4 ​ ​ 9,074 ​ 2.8 ​ Broadline Retail ​ ​ 16,977 ​ 5.0 ​ ​ 17,260 ​ 5.3 ​ Building Products ​ ​ 25,163 ​ 7.4 ​ ​ 22,800 ​ 7.1 ​ Construction & Engineering ​ ​ 18,444 ​ 5.4 ​ ​ 12,796 ​ 4.0 ​ Distributors ​ ​ 4,013 ​ 1.2 ​ ​ 4,067 ​ 1.3 ​ Diversified Support Services ​ ​ 29,627 ​ 8.7 ​ ​ 23,644 ​ 7.3 ​ Electronic Components ​ ​ 9,290 ​ 2.7 ​ ​ 9,332 ​ 2.9 ​ Environmental & Facilities Services ​ ​ 29,999 ​ 8.8 ​ ​ 29,529 ​ 9.1 ​ Food Distributors ​ ​ 4,877 ​ 1.4 ​ ​ 4,928 ​ 1.5 ​ Health Care Facilities ​ ​ 13,548 ​ 4.0 ​ ​ 13,387 ​ 4.1 ​ Health Care Services ​ ​ 4,931 ​ 1.4 ​ ​ 4,982 ​ 1.5 ​ Health Care Technology ​ ​ 4,751 ​ 1.4 ​ ​ 4,183 ​ 1.3 ​ Household Appliances ​ ​ 8,024 ​ 2.4 ​ ​ 8,225 ​ 2.5 ​ Household Products ​ ​ 10,419 ​ 3.1 ​ ​ 10,384 ​ 3.2 ​ Human Resource & Employment Services ​ ​ 2,478 ​ 0.7 ​ ​ 2,493 ​ 0.8 ​ IT Consulting & Other Services ​ ​ 34,262 ​ 10.1 ​ ​ 34,895 ​ 10.8 ​ Multi-Utilities ​ ​ 5,657 ​ 1.7 ​ ​ 5,488 ​ 1.7 ​ Packaged Foods & Meats ​ ​ 6,745 ​ 2.0 ​ ​ 6,961 ​ 2.2 ​ Paper & Plastic Packaging Products & Materials ​ ​ 18,955 ​ 5.6 ​ ​ 21,677 ​ 6.7 ​ Personal Care Products ​ ​ 17,739 ​ 5.2 ​ ​ 3,887 ​ 1.2 ​ Real Estate Services ​ ​ ​ ​ 5,647 ​ ​ ​ 1.7 ​ ​ 12,139 ​ ​ ​ 3.8 ​ Research & Consulting Services ​ ​ 3,919 ​ 1.2 ​ ​ 3,859 ​ 1.2 ​ Technology Hardware, Storage & Peripherals ​ ​ 17,451 ​ 5.1 ​ ​ 17,840 ​ 5.5 ​ Trading Companies & Distributors ​ ​ 5,932 ​ 1.7 ​ ​ 5,925 ​ 1.8 ​ Water Utilities ​ ​ 5,043 ​ 1.5 ​ ​ 5,172 ​ 1.6 ​ Wireless Telecommunication Services ​ ​ 6,266 ​ 1.8 ​ ​ 6,300 ​ 1.9 ​ Total ​ $ 340,272 ​ 100.0 % $ 323,552 ​ 100.0 % ​ See Note 4 to our consolidated financial statements for further discussion on STRS JV’s portfolio and selected balance sheet information as of June 30, 2026 and December 31, 2025 and selected statement of operations information for the three and six months ended June 30, 2026 and 2025. At-the-Market Offering On March 31, 2023, we entered into an equity distribution agreement (the “Equity Distribution Agreement”), with WhiteHorse Advisers, WhiteHorse Administration and B. Riley Securities, Inc., as the sales agent, or the Sales Agent, in connection with the sale of shares of our common stock, with an aggregate offering price of up to $35.0 million. The Equity Distribution Agreement provides that we may offer and sell shares of our common stock from time to time through the Sales Agent in amounts and at times to be determined by us. Actual sales will depend on a variety of factors to be determined by us from time to time, including market conditions and the trading price of our common stock. We expect to use all or substantially all of the net proceeds from the ATM Program to invest in portfolio companies in accordance with our investment objective and strategies and for general corporate purposes. ​ Stock Repurchase Program In October 2025, our board of directors authorized a stock repurchase program for the purpose of repurchasing up to an aggregate of $15.0 million of its common stock on the open market or in privately negotiated purchases at prices below our then-current net asset value per share, in each case in accordance with Rule 10b-18 under the Securities Exchange Act of 1934 (the “Repurchase Program”). On February 26, 2026, our board of directors approved a $7.5 million increase in the authorized amount available for repurchases under the Repurchase Program up to $22.5 million. The timing, manner, price and amount of any share repurchases will be determined by us, in our sole discretion, based upon an evaluation of economic and market conditions, stock price, applicable legal and regulatory requirements and other factors. The Repurchase Program does not require us to repurchase any specific number of shares of common stock or any shares of common stock at all and there can be no assurance that any shares of common stock will be repurchased under the Repurchase Program. The timing and amount of any common stock repurchased depend on the terms and conditions of the Repurchase Program, the market price of the common stock and trading volumes. The Repurchase 85 ​ Program may be suspended, extended, modified or discontinued at any time. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints. ​ During the three and six months ended June 30, 2026, we repurchased additional common stock after deducting commissions, in the aggregate of $2.6 million and $5.6 million, respectively. As of June 30, 2026, $9.5 million remained available under the Repurchase Program. During the three months ended December 31, 2025, we repurchased common stock in the aggregate of $7.4 million, after deducting commissions and $7.6 million remained available under the Repurchase Program. Credit Facility Our wholly owned subsidiary WhiteHorse Credit entered into the Credit Facility on December 23, 2015. As of June 30, 2026 and December 31, 2025, the Credit Facility had a maximum borrowing capacity of $50.0 million and $100.0 million, respectively. The reinvestment period for the Credit Facility expires on January 17, 2028 and the maturity date for the Credit Facility is January 17, 2030. On January 17, 2025, the terms of the Credit Facility were amended to, among other things, (i) reduce the applicable margins for interest rates to 2.25%, (ii) extend the non-call period to January 17, 2027, (iii) extend the reinvestment period to January 17, 2028, and (iv) extend the scheduled termination date to January 17, 2030​. On June 27, 2025, the terms of the Credit Facility were amended to, among other things, reduce the availability under the Credit Facility to $100.0 million from $335.0 million. On March 10, 2026, the terms of the Credit Facility were amended to, among other things, reduce the availability under the Credit Facility to $50.0 million from $100.0 million. As of June 30, 2026, the Credit Facility provided for borrowings in an aggregate principal amount up to $50.0 million. As of June 30, 2026, the required minimum outstanding borrowings under the Credit Facility were $25.0 million. Under the Credit Facility, there are two coverage tests that WhiteHorse Credit must meet on specified compliance dates in order to permit WhiteHorse Credit to make new borrowings and to make distributions in the ordinary course: (i) a borrowing base test and (ii) a market value test. The borrowing base test compares, at any given time, the aggregate outstanding amount of all Lender advances under the Credit Facility less the amount of principal proceeds in respect of the collateral on deposit in the accounts to the net asset value of the collateral, as set forth in the credit agreement, as amended and restated from time to time, in connection therewith (the “Amended Loan Agreement”), and related documentation. To meet the borrowing base test, this ratio must be less than or equal to 60%, as set forth in the Amended Loan Agreement and related documentation. To meet the market value test, the value of WhiteHorse Credit’s portfolio investments must exceed a minimum of 167.5% of the aggregate outstanding amount of all Lender advances as set forth in the Amended Loan Agreement and related documentation. Advances under the Credit Facility are based on SOFR for USD denominated borrowings, EurIBOR for EUR denominated borrowings, CORRA for CAD denominated borrowings and SONIA for GBP denominated borrowings, plus a spread of 2.25% on outstanding borrowings. Interest is payable quarterly in arrears. WhiteHorse Credit is required to pay a non-usage fee which accrues at 0.55% per annum on the average daily unused amount of the financing commitments, to the extent the aggregate principal amount available under the Credit Facility has not been borrowed. WhiteHorse Credit is required to pay a minimum outstanding borrowing fee which accrues at 2.25% per annum on the average daily outstanding principal borrowing amounts below the minimum funding amount. WhiteHorse Credit paid an upfront fee and incurred certain other customary costs and expenses in connection with obtaining the Credit Facility. Any amounts borrowed under the Credit Facility will mature, and all accrued and unpaid interest thereunder are due and payable, on January 17, 2030. Prior to the Credit Facility amendment on January 17, 2025, advances under the Credit Facility were based on SOFR for USD denominated borrowings plus an annual spread of 2.50%. The Credit Facility bore interest at EurIBOR for EUR denominated borrowings, CORRA for CAD denominated borrowings and SONIA for GBP denominated 86 ​ borrowings, plus a spread of 2.35% on outstanding borrowings. Interest is payable quarterly in arrears. WhiteHorse Credit was required to pay a non-usage fee which accrues at 0.75% per annum on the average daily unused amount of the financing commitments, to the extent the aggregate principal amount available under the Credit Facility has not been borrowed. WhiteHorse Credit paid an upfront fee and incurred certain other customary costs and expenses in connection with obtaining the Credit Facility. The Credit Facility and the related documents require WhiteHorse Finance and WhiteHorse Credit to agree to make certain customary representations and to comply with customary affirmative and negative covenants. The Credit Facility also includes customary events of default for credit facilities of this nature, including breaches of representations, warranties or covenants by WhiteHorse Finance or WhiteHorse Credit, the occurrence of a change in control, or failure to maintain certain required ratios. If we fail to perform our obligations under the Amended Loan Agreement or the related agreements, an event of default may occur, which could cause the Lender to accelerate all of the outstanding debt and other obligations under the Credit Facility or to exercise other remedies under the Amended Loan Agreement. Any such developments could have a material adverse effect on our financial condition and results of operations. If any of our contractual obligations discussed above is terminated, our costs under new agreements that we enter into may increase. In addition, we will likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under our Investment Advisory Agreement and our Administration Agreement. Any new investment management agreement would also be subject to approval by our stockholders. As of June 30, 2026, there were no outstanding borrowings under the Credit Facility and, based on collateral and portfolio requirements stipulated in the Credit Facility agreement, approximately $50.0 million was undrawn in credit facility on such date. The Credit Facility is secured by all of the assets of WhiteHorse Credit, which included loans with a fair value of $118.1 million as of June 30, 2026. As of December 31, 2025, there were no outstanding borrowings under the Credit Facility and, based on collateral and portfolio requirements stipulated in the Credit Facility agreement, approximately $100.0 million was available to be drawn on such date. The Credit Facility is secured by all of the assets of WhiteHorse Credit, which included loans with a fair value of $139.5 million as of December 31, 2025. 2025 CLO Securitization On June 10, 2025, we completed a $298.15 million term debt securitization transaction (the “2025 CLO Securitization”). The 2025 CLO Securitization functions as a source of long-term balance sheet financing for a portion of our portfolio investments and, as a result, the debt issued in connection with the 2025 CLO Securitization that is held by external counterparties to the Company is subject to the Company’s regulatory asset coverage requirement. The debt tranches offered in the 2025 CLO Securitization were issued by WHF CLO, a wholly-owned subsidiary of WhiteHorse Finance, and executed through a private placement comprised of both senior secured floating rate notes and loans (the “2025 Senior CLO Notes”) as well as subordinated notes (the “2025 Subordinated CLO Notes”). The 2025 Senior CLO Notes consisted of (i) $174.0 million of AAA-rated Class A Notes and Class A-L Loans, issued in the aggregate and pari passu to one another (the “Class A Notes”); (ii) $30.0 million of AA-rated Class B Notes (the “Class B Notes”); (iii) $24.0 million of A-rated Class C Notes (the “Class C Notes”). Additionally, $70.15 million of 2025 Subordinated CLO Notes were issued, which do not bear interest but are entitled to all of the residual principal and interest payments made on the loan portfolio of assets collateralizing the 2025 CLO Securitization, net of the interest expense and debt principal payments distributed to the holders of the 2025 Senior CLO Notes. The 2025 Senior CLO Notes, together with the 2025 Subordinated CLO Notes, are collectively referred to herein as the “2025 CLO Notes”. The Company indirectly retained $30.0 million of the Class B Notes, $24.0 million of the Class C Notes and $70.15 million of the 2025 Subordinated CLO Notes. The Class A Notes are included in the consolidated statements of assets and liabilities as debt of the Company. The Class B Notes, Class C Notes and 2025 Subordinated CLO Notes were eliminated in consolidation. ​ 87 ​ The following table presents additional information on the 2025 CLO Notes issued in the 2025 CLO Securitization as of June 30, 2026 and December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CLO Note Tranches ​ Maturity ​ Principal ​ ​ Interest Rate Class A Notes ​ 5/25/2037 ​ $ 174,000 ​ ​ SOFR (3M) + 1.70% Class B Notes(1) ​ 5/25/2037 ​ ​ 30,000 ​ ​ SOFR (3M) + 2.15% Class C Notes(1) ​ 5/25/2037 ​ ​ 24,000 ​ ​ SOFR (3M) + 2.80% 2025 Subordinated CLO Notes(1) ​ 5/25/2037 ​ ​ 70,150 ​ ​ None Total Notes ​ ​ ​ $ 298,150 ​ ​ ​ ​ (1) The Company retained the Class B Notes, Class C Notes and Subordinated Notes issued in the CLO Transaction, which are eliminated in consolidation. As part of the 2025 CLO Securitization, the Company entered into master loan sale agreements that provide for the sale of assets on the 2025 CLO Securitization closing date as well as for future sales from the Company to WHF CLO. The 2025 CLO Securitization is collateralized and secured by a diversified portfolio of senior secured loans or participation interests therein with the potential for reinvestment in (i) first and second lien loans or participation interests therein, (ii) corporate bonds or (iii) loans made to a debtor-in-possession pursuant to Section 364 of the Bankruptcy Code (“DIP loans”). Through May 25, 2029, all principal collections received on the underlying collateral may be used by WHF CLO to purchase new collateral (allowing the Company to maintain the initial leverage obtained in the 2025 CLO Securitization) under the direction of H.I.G. Capital, L.L.C., an affiliate of the Investment Adviser, in its capacity as the collateral manager to WHF CLO (the “CLO Investment Manager”), and in accordance with the Company’s investment strategy and subject to customary conditions set forth in the documents governing the 2025 CLO Securitization; any fees that the CLO Investment Manager would otherwise be entitled to for providing such services has been waived. The 2025 CLO Notes are scheduled to mature on May 5, 2037; however, they may be redeemed by the Company, at the written direction of (i) a majority of the Subordinated Notes (with the consent of the CLO Investment Manager) or (ii) the CLO Investment Manager (with the consent of a majority of the 2025 Subordinated CLO Notes), in each case, on any business day on or after June 10, 2027. As of June 30, 2026, there were 36 portfolio companies with a total fair value of approximately $296.0 million securing the 2025 CLO Securitization. As of December 31, 2025, there were 35 portfolio companies with a total fair value of approximately $294.6 million securing the 2025 CLO Securitization. The pool of loans in the 2025 CLO Securitization must meet certain requirements, including asset mix and concentration, collateral coverage, term, agency rating, minimum coupon, minimum spread and sector diversity requirements. 5.375% 2025 Notes On October 20, 2020, we entered into the 2025 Note Purchase Agreement to sell in a private offering $40 million of aggregate principal amount of unsecured notes to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act. Interest on the 5.375% 2025 Notes is payable semiannually on April 20 and October 20, at a fixed, annual rate of 5.375%. On September 29, 2025, the 5.375% 2025 Notes were fully repaid by the Company. 88 ​ 5.375% 2026 Notes On December 4, 2020, we entered into the 2026 Note Purchase Agreement to sell in a private offering $10 million of aggregate principal amount of unsecured notes to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act. Interest on the 5.375% 2026 Notes is payable semiannually on June 4 and December 4, at a fixed, annual rate of 5.375%. This interest rate is subject to increase (up to 6.375%) in the event that, subject to certain exceptions, the 5.375% 2026 Notes cease to have an investment grade rating. The 5.375% 2026 Notes mature on December 4, 2026, unless redeemed, purchased or prepaid prior to such date by us or our affiliates in accordance with their terms. The 5.375% 2026 Notes are general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness that we may issue. 5.625% 2027 Notes On December 4, 2020, we entered into the 2027 Note Purchase Agreement to sell in a private offering $10 million of aggregate principal amount of unsecured notes to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act. Interest on the 5.625% 2027 Notes is payable semiannually on June 4 and December 4, at a fixed, annual rate of 5.625%. This interest rate is subject to increase (up to 6.625%) in the event that, subject to certain exceptions, the 5.625% 2027 Notes cease to have an investment grade rating. The 5.625% 2027 Notes mature on December 4, 2027, unless redeemed, purchased or prepaid prior to such date by us or our affiliates in accordance with their terms. The 5.625% 2027 Notes are general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness that we may issue. 4.000% 2026 Notes On November 24, 2021, we completed a public offering of $75 million of aggregate principal amount of unsecured notes. Interest on the 4.000% 2026 Notes is paid semiannually on June 15, and December 15, at a fixed, annual rate of 4.00%. The 4.000% 2026 Notes will mature on December 15, 2026 and may be redeemed in whole or in part at any time prior to September 15, 2026, at par plus a “make-whole” premium, and thereafter at par. The 4.000% 2026 Notes are direct unsecured obligations and are structurally subordinate to borrowings under the Credit Facility and 2025 CLO Securitization and will rank pari passu with all outstanding and future unsecured unsubordinated indebtedness. 4.250% 2028 Notes On December 6, 2021, we entered into the 2028 Note Purchase Agreement to sell in a private offering $25 million of aggregate principal amount of unsecured notes to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act. Interest on the 4.250% 2028 Notes is payable semiannually on June 6 and December 6, at a fixed, annual rate of 4.25%. This interest rate is subject to increase (up to 5.25%) in the event that, subject to certain exceptions, the 4.250% 2028 Notes cease to have an investment grade rating. The 4.250% 2028 Notes mature on December 6, 2028, unless redeemed, purchased or prepaid prior to such date by us or our affiliates in accordance with their terms. The 4.250% 2028 Notes are general unsecured obligations that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness that we may issue. 7.875% 2028 Notes On August 24, 2023, the Company completed a public offering of 7.875% 2028 Notes in aggregate principal amount of $30 million, the net proceeds of which were used to fund investments in debt and equity securities and repay outstanding indebtedness under its revolving credit facility. Additionally, the offering included an overallotment feature for up to an additional $4.5 million of aggregate principal amount under the same terms as the initial offering. On August 31, 2023, the underwriters fully exercised their option to purchase an additional $4.5 million, bringing the aggregate principal amount of the 7.875% 2028 Notes to $34.5 million. Interest on the 7.875% 2028 Notes is paid quarterly on March 15, June 15, September 15 and December 15 each year, at an annual rate of 7.875%. The 7.875% 2028 Notes will mature on September 15, 2028 and may be redeemed in whole or in part at any time, or from time to time, at the Company’s option on or after September 15, 2025. The 7.875% 2028 Notes are direct unsecured obligations and are structurally subordinate to borrowings under the Credit Facility and 2025 CLO Securitization and rank pari passu with all outstanding and future unsecured unsubordinated indebtedness we may issue. The 7.875% 2028 Notes are listed on the Nasdaq Global Select Market under the trading symbol “WHFCL”. 89 ​ Portfolio Investments and Yield As of June 30, 2026, our investment portfolio consisted primarily of senior secured loans across 131 positions in 67 companies with an aggregate fair value of $569.2 million. As of June 30, 2026, the majority of our portfolio was comprised of senior secured loans to lower middle market borrowers and nearly all of those loans were variable-rate investments (primarily indexed to SOFR) with five fixed-rate loan investments representing 1.4% based on fair value. As of June 30, 2026, our portfolio had an average investment size of $3.6 million based on fair value and average debt investment size of $4.9 million, with investment sizes ranging from zero to $20.4 million and a weighted average effective yield of 8.8% (and a weighted average effective yield on income-producing debt investments of 10.8%). As of December 31, 2025, our investment portfolio consisted primarily of senior secured loans across 129 positions in 68 companies with an aggregate fair value of $578.6 million. As of December 31, 2025, the majority of our portfolio was comprised of senior secured loans to lower middle market borrowers and nearly all of those loans were variable-rate investments, primarily indexed to SOFR, with fixed-rate loan investments representing 1.3% based on fair value. As of December 31, 2025, our portfolio had an average investment size of $3.7 million based on fair value and average debt investment size of $5.2 million, with investment sizes ranging from zero to $20.0 million and a weighted average effective yield of 9.1% (and a weighted average effective yield on income-producing debt investments of 11.0%). For the six months ended June 30, 2026, we invested $58.6 million in new and existing portfolio companies, offset by repayments and sales of $69.9 million. Proceeds from sales totaled $35.5 million while repayments included $3.8 million of scheduled repayments and $30.6 million of unscheduled repayments. For the six months ended June 30, 2025, we invested $90.5 million in new and existing portfolio companies, offset by repayments and sales of $100.5 million. Proceeds from sales totaled $42.5 million while repayments included $3.1 million of scheduled repayments and $54.9 million of unscheduled repayments. In October 2025, as part of a restructuring agreement between the Company and Alvaria Holdco (Cayman) (d/b/a Aspect Software, Inc.), a portion of the Company’s first lien secured term loan investments to Alvaria Holdco (Cayman) (d/b/a Aspect Software, Inc.), which had a cost basis of $1,682 were converted into common equity in Atlas Parent, LLC (d/b/a Alvaria, Inc.). The remaining portion of the Alvaria Holdco (Cayman) (d/b/a Aspect Software, Inc.) first lien secured investments, with a cost basis of $11,182, was recognized as a net realized loss in the consolidated statements of operations. In September 2025, as part of a restructuring agreement between the Company and MSI Information Services, Inc., the Company’s first lien secured term loan and revolver investments to MSI Information Services, Inc., which had a cost basis of $9,602 were converted into a new first lien secured term loan and revolver investments of Media Source, LLC (d/b/a Media Source Inc.) and into common equity in TVG I-E-MSI Acquisition, LLC (d/b/a Media Source, LLC). The remaining portion of the MSI Information Services, Inc. first lien secured investments, with a cost basis of $2,111, was recognized as a net realized loss in the consolidated statements of operations. In June 2025, as part of a restructuring agreement between the Company and Telestream Holdings Corporation, the Company’s first lien secured term loan and revolver investments to Telestream Holdings Corporation, were converted into a new first lien secured term loan in Telestream 2 LLC (d/b/a Telestream Holdings Corporation) and common equity of Telestream Topco 2 LLC (d/b/a Telestream Holdings Corporation). In September 2024, as part of a restructuring and partial foreclosure agreement between the Company and Honors Holdings, LLC (d/b/a Orange Theory), the Company’s first lien secured term loan, first lien delayed draw loan and revolver investments in Honors Holdings, LLC, which had a historical cost basis of $17,816, were converted into a new first lien secured term loan of Camarillo Fitness Holdings, LLC (f/k/a Honors Holdings, LLC) and common equity interests in H.I.G. Camarillo, L.P. (f/k/a Honors Holdings, LLC). As of the restructuring date, these investments had an adjusted cost basis of $10,234. The remaining portion of the Honors Holdings, LLC first lien secured investments, with a cost basis of $7,582, was recognized as a net realized loss in the consolidated statements of operations. ​ 90 ​ In January 2024, as part of a restructuring agreement between the Company and Arcstor Midco, LLC (d/b/a Arcserve (USA), the Company’s first lien secured term loan and priority first lien delayed draw loan investments in Arcstor Midco, LLC (d/b/a Arcserve (USA), converted into a new first lien secured delayed draw loan and unsecured notes in Arcserve Cayman Opco LP (d/b/a Arcserve (USA), LLC) and common equity of Arcserve Cayman GP LLC (d/b/a Arcserve (USA), LLC) and Arcserve Cayman Topco LP (d/b/a Arcserve (USA), LLC). We actively monitor and manage our portfolio with regard to individual company performance as well as general market conditions. Investment decisions on new originations generally include an analysis of the impact of the new loan on our broader portfolio, including a “top-down” assessment of portfolio diversification and risk exposure. This assessment includes a review of portfolio concentration by issuer, industry, geography and type of credit as well as an evaluation of our portfolio’s exposure to macroeconomic factors and cyclical trends. We believe that consistent, active monitoring of individual companies and the broader market is integral to portfolio management and a critical component of our investment process. Our investment adviser uses several methods to evaluate and monitor the performance and fair value of our investments, which may include the following: ● frequent discussions with management and sponsors, including board observation rights where possible; ● comparing/analyzing financial performance to the portfolio company’s business plan, as well as our internal projections developed at underwriting; ● tracking portfolio company compliance with covenants as well as other metrics identified at initial investment stage, such as acquisitions, divestitures, product development and specified management hires; and ● periodic review by the investment committee of each asset in the portfolio and more rigorous monitoring of “watch list” positions. As part of the monitoring process, our investment adviser regularly assesses the risk profile of each of our investments and, on a quarterly basis, grades each investment on a risk scale of 1 to 5. This risk rating system is intended to identify and assess risks relative to when we initially made the investment and could be impacted by such factors as company-specific performance, changes in collateral, changes in potential exit opportunities or macroeconomic conditions. All investments are initially assigned a rating of 2, as this grade represents a company that is meeting initial expectations with regard to performance and outlook. A rating may be improved to a 1 if, in the opinion of our investment adviser, a portfolio company’s risk of loss has been reduced relative to initial expectations. An investment will be assigned a rating of 3 if the risk of loss has increased relative to initial expectations and will be assigned a rating of 4 if our investment principal is at a material risk of not being fully repaid. A rating of 5 indicates an investment is in payment default and has significant risk of not receiving full repayment. The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale at fair value: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2026 ​ As of December 31, 2025 ​ Investment Performance Rating ($ in millions) ​ ​ ​ Investments at Fair Value ​ ​ ​ Percentage of Total Portfolio ​ ​ ​ Investments at Fair Value ​ ​ ​ Percentage of Total Portfolio ​ 1 ​ $ 22.9 ​ 4.0 % $ 27.3 ​ 4.7 % 2 ​ ​ 469.9 ​ 82.6 ​ ​ 469.5 ​ 81.2 ​ 3 ​ ​ 47.8 ​ 8.4 ​ ​ 45.7 ​ 7.9 ​ 4 ​ ​ 14.2 ​ 2.5 ​ ​ 15.9 ​ 2.7 ​ 5 ​ ​ 14.4 ​ 2.5 ​ ​ 20.2 ​ 3.5 ​ Total Portfolio ​ $ 569.2 ​ 100.0 % $ 578.6 ​ 100.0 % ​ 91 ​ Distributions In order to maintain our status as a RIC and to avoid the imposition of corporate-level tax on income, we must distribute to our stockholders each taxable year an amount generally at least equal to the sum of 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses out of the assets legally available for distribution. In order to avoid the imposition of certain excise taxes imposed on RICs, we must distribute in respect of each calendar year an amount at least equal to the sum of (1) 98% of our ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gains in excess of capital losses, or capital gain net income, adjusted for certain ordinary losses, for the one-year period ending on October 31 of the calendar year and (3) any ordinary income and capital gain net income for preceding years that were not distributed during such years on which we incurred no U.S. federal income tax. The timing and amount of our quarterly distributions, if any, are determined by our board of directors. While we intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution, we may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of our distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage requirements applicable to us as a business development company under the 1940 Act. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including the possible loss of our tax status as a RIC. We cannot assure stockholders that they will receive any distributions. During the three and six months ended June 30, 2026, we declared to stockholders distributions of $0.25 and $0.51 per share for total distributions of $5.4 million and $11.1 million, respectively. During the three and six months ended June 30, 2025, we declared to stockholders distributions of $0.385 and $0.77 per share for total distributions of $8.9 million and $17.9 million, respectively. To the extent our taxable earnings fall below the total amount of our distributions for a fiscal year, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our income or gains. During the six months ended June 30, 2026, we estimate that distributions to stockholders included $11.1 million of ordinary income, for tax purposes, based on earnings for the fiscal year ended December 31, 2025 and current earnings for the six months ended June 30, 2026. The specific tax characteristics of the distribution are reported to stockholders subject to tax reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports with the SEC. Stockholders should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is our ordinary income or gains. In addition, in order to satisfy the annual distribution requirement applicable to RICs, we may declare a significant portion of our dividends in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion may be as low as 20% of such dividend under published guidance from the Internal Revenue Service) and certain requirements are met, the entire distribution will be treated as a dividend for U.S. federal income tax purposes. As a result, a stockholder generally would be subject to tax on 100% of the fair market value of the dividend on the date the dividend is received by the stockholder in the same manner as a cash dividend, even though most of the dividend was paid in shares of our common stock. We have adopted an “opt out” dividend reinvestment plan, or the DRIP, for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock unless a stockholder specifically “opts out” of our DRIP. If a stockholder opts out, that stockholder receives cash distributions. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, stockholders participating in our DRIP will not receive any corresponding cash distributions with which to pay any such applicable taxes. 92 ​ Related Party Transactions We have entered into a number of business relationships with affiliated or related parties, including the following: ● WhiteHorse Advisers manages our day-to-day operations and provides investment management services to us pursuant to the Investment Advisory Agreement. ● WhiteHorse Administration and certain of its affiliates provide us with the office facilities and administrative services, including access to the resources necessary for us to perform our obligations towards certain portfolio companies, pursuant to the Administration Agreement. ● We have entered into a license agreement with an affiliate of H.I.G. Capital pursuant to which we have been granted a non-exclusive, royalty-free license to use the “WhiteHorse” name. We entered into the Investment Advisory Agreement with WhiteHorse Advisers in accordance with the 1940 Act on December 4, 2012, which was most recently amended and restated on February 22, 2024. Under the Investment Advisory Agreement, WhiteHorse Advisers manages our day-to-day investment operations and provides us with access to personnel and an investment committee and certain other resources so that we may fulfill our obligation to act as a portfolio manager of WhiteHorse Credit under the Credit Facility. Payments under the Investment Advisory Agreement in future periods will be equal to (1) a management fee equal to 1.75% of the value of our consolidated gross assets; provided, however, that the management fee on consolidated gross assets financed using leverage over 200% asset coverage (in other words, over 1.0x debt to equity) will be equal to 1.25% and (2) an incentive fee based on our performance. See “Investment Advisory Agreement” in Note 7 to the consolidated financial statements. We also entered into the Administration Agreement with WhiteHorse Administration on December 4, 2012. Pursuant to the Administration Agreement, WhiteHorse Administration furnishes us with office facilities and administrative services necessary to conduct our day-to-day operations. WhiteHorse Administration also furnishes us with resources necessary for us to act as portfolio manager to WhiteHorse Credit under the Credit Facility and the 2025 CLO Securitization. If requested to provide managerial assistance to our portfolio companies, WhiteHorse Administration will be paid an additional amount based on the services provided, which amount will not, in any case, exceed the amount we receive from the portfolio companies for such services. Payments under the Administration Agreement will be based upon our allocable portion of WhiteHorse Administration’s overhead expenses in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of our chief financial officer and chief compliance officer along with their respective staffs. WhiteHorse Advisers, WhiteHorse Administration or their respective affiliates may have other clients with similar, different or competing investment objectives. In serving in these multiple capacities, WhiteHorse Advisers, WhiteHorse Administration or their respective affiliates may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the best interests of us or our stockholders. Such persons may face conflicts in the allocation of investment opportunities among us and other investment funds or accounts advised by or affiliated with WhiteHorse Advisers or WhiteHorse Administration. WhiteHorse Advisers or its affiliates will seek to allocate investment opportunities among eligible accounts in a manner that is fair and equitable over time and consistent with its allocation policy. However, we can offer no assurance that such opportunities will be allocated to us fairly or equitably in the short-term or over time. We depend on the communications and information systems and policies of WhiteHorse Advisers and its affiliates as well as certain third-party service providers to monitor and prevent cybersecurity incidents. Our board of directors and management periodically review and assess the effectiveness of such communications and information systems and policies. Critical Accounting Policies and Estimates The preparation of our financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters 93 ​ used in determining such estimates could cause actual results to differ. We have identified the following as critical accounting policies and estimates. Principles of Consolidation Under the investment company financial accounting guidance, as formally codified in Accounting Standards Codification, or ASC, Topic 946, Financial Services - Investment Companies, we are precluded from consolidating any entity other than another investment company. As provided under ASC Topic 946, we generally consolidate any investment company when we own 100% of its partners’ or members’ capital or equity units. We own a 100% equity interest in each of WhiteHorse Credit, WhiteHorse Finance (CA), LLC (“WhiteHorse California”), WHF American Craft Blocker, LLC, WhiteHorse RCKC Holdings, LLC, WHF CLO and WhiteHorse Finance Holdings, LLC, which are investment companies for accounting purposes. As such, we have consolidated the accounts of WhiteHorse Credit, WhiteHorse California, WHF American Craft Blocker, LLC, WhiteHorse RCKC Holdings LLC, WHF CLO and WhiteHorse Finance Holdings, LLC into our financial statements. As a result of this consolidation, the amount outstanding under the Credit Facility and the 2025 CLO Securitization is treated as our indebtedness. Valuation of Portfolio Investments We value our investments in accordance with ASC Topic 820 - Fair Value Measurements and Disclosures. ASC Topic 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about assets and liabilities measured at fair value. ASC Topic 820’s definition of fair value focuses on exit price in the principal, or most advantageous, market and prioritizes the use of market-based inputs over entity-specific inputs within a measurement of fair value. Effective September 8, 2022, the Board designated the Investment Adviser as the Company’s valuation designee to perform the fair value determinations relating to all of our investments, subject to the oversight of the Board. Our portfolio consists primarily of debt investments. These investments are valued at their bid quotations obtained from unaffiliated market makers or other financial institutions that trade in similar investments or based on prices provided by independent third party pricing services. For investments where there are no available bid quotations, fair value is derived using proprietary models that consider the analyses of independent valuation agents as well as credit risk, liquidity, market credit spreads and other applicable factors for similar transactions. Due to the nature of our strategy, our portfolio includes relatively illiquid investments that are privately held. Valuations of privately held investments are inherently uncertain, may fluctuate over short periods of time and may be based on estimates. The determination of fair value may differ materially from the values that would have been used if a ready market for these investments existed. Our net asset value could be materially affected if the determinations regarding the fair value of our investments were materially higher or lower than the values that we ultimately realize upon the disposal of such investments. The Investment Adviser, as the valuation designee, is responsible for determining the fair value of the portfolio investments that are not publicly traded, whose market prices are not readily available on a quarterly basis in good faith or any other situation where portfolio investments require a fair value determination. The Investment Adviser has retained one or more independent valuation firms to review the valuation of each portfolio investment that does not have a readily available market quotation at least once during each 12-month period. Independent valuation firms retained by the Investment Adviser provide a valuation review on approximately 25% of our investments for which market quotations are not readily available each quarter to ensure that the fair value of each investment for which a market quote is not readily available is reviewed by an independent valuation firm at least once during each 12-month period. However, the Investment Adviser does not intend to have de minimis investments of less than 1.5% of our total assets (up to an aggregate of 10% of our total assets) independently reviewed. The valuation process is conducted at the end of each fiscal quarter, with a portion of our valuations of portfolio companies without market quotations subject to review by one or more independent valuation firms each quarter. When an external event occurs with respect to one of our portfolio companies, such as when a purchase transaction, public offering or subsequent equity sale occurs, we expect to use the pricing indicated by such external event to corroborate our valuation. 94 ​ With respect to investments for which market quotations are not readily available, our Investment Adviser undertakes a multi-step valuation process each quarter, as described below: ● Our quarterly valuation process begins with each portfolio company or investment being initially valued by investment professionals of our Investment Adviser responsible for credit monitoring in accordance with our valuation procedures. ● Preliminary valuation conclusions are then documented and discussed with our investment committee and our Investment Adviser. ● The valuation committee, comprised of a number of representatives from different functions of the Investment Adviser, reviews these preliminary valuations, and on a quarterly basis, reviews the bases of the valuations by our Investment Adviser and the independent valuation firms. ● At least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm. ● Our Board, through the Audit Committee, performs oversight of the fair valuation process in accordance with Rule 2a-5 under the 1940 Act. Fair value of publicly traded instruments is generally based on quoted market prices. Fair value of non-publicly traded instruments, and of publicly traded instruments for which quoted market prices are not readily available, may be determined based on other relevant factors, including without limitation, quotations from unaffiliated market makers or independent third party pricing services, the price activity of equivalent instruments and valuation pricing models. For those investments valued using quotations, the bid price is generally used unless we determine that it is not representative of an exit price. Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. Our fair value analysis includes an analysis of the value of any unfunded loan commitments. Financial investments recorded at fair value in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value. The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the investment as of the measurement date. The three levels are defined as follows: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active public markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about what market participants would use in pricing an asset or liability. Investments for which fair value is determined using inputs defined above as Level 3 are fair valued using the income and market approaches, which may include the discounted cash flow method, reference to performance statistics of industry comparables, relative comparable yield analysis and, in certain cases, third party valuations performed by independent valuation firms. The valuation methods can reference various factors and use various inputs such as assumed growth rates, capitalization rates and discount rates, loan-to-value ratios, liquidation value, relative capital structure priority, market comparables, compliance with applicable loan, covenant and interest coverage performance, book value, market derived multiples, reserve valuation, assessment of credit ratings of an underlying borrower, review of ongoing performance, review of financial projections as compared to actual performance, review of interest rate and 95 ​ yield risk. Such factors may be given different weighting depending on our assessment of the underlying investment, and we may analyze apparently comparable investments in different ways. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the financial instrument. Fair value for each investment is derived using a combination of valuation methodologies that, in the judgment of the investment committee of the investment adviser are most relevant to such investment, including being based on one or more of the following: (i) market prices obtained from market makers for which the investment committee has deemed there to be enough breadth (number of quotes) and depth (firm bids) to be indicative of fair value, (ii) the price paid or realized in a completed transaction or binding offer received in an arm’s-length transaction, (iii) a discounted cash flow analysis, (iv) the guideline public company method, (v) the similar transaction method or (vi) the option pricing method. Investment Transactions and Related Investment Income and Expense We record our investment transactions on a trade date basis, which is the date when we have determined that all material terms have been defined for the transactions. These transactions could possibly settle on a subsequent date depending on the transaction type. All related revenue and expenses attributable to these transactions are reflected on our consolidated statements of operations commencing on the trade date unless otherwise specified by the transaction documents. Realized gains and losses on investment transactions are recorded on the specific identification method. We accrue interest income if we expect that ultimately we will be able to collect it. Generally, when an interest payment default occurs on a loan in our portfolio, or if our management otherwise believes that the issuer of the loan will not be able to service the loan and other obligations, we place the loan on non-accrual status and will cease recognizing interest income on that loan until all principal and interest is current through payment or until a restructuring occurs, such that the interest income is deemed to be collectible. However, we remain contractually entitled to this interest. We may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. Accrued interest is written off when it becomes probable that such interest will not be collected and the amount of uncollectible interest can be reasonably estimated. Any original issue discount, as well as any other market purchase discount or premium on debt investments, are accreted or amortized to interest income or expense, respectively, over the maturity periods of the investments. Dividend income is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Interest expense is recorded on an accrual basis. Certain expenses related to legal and tax consultation, due diligence, rating fees, valuation expenses and independent collateral appraisals may arise when we make certain investments. These expenses are recognized in the consolidated statements of operations as they are incurred. Loan Origination, Facility, Commitment and Amendment Fees We may receive fees in addition to interest income from the loans during the life of the investment. We may receive origination fees upon the origination of an investment. We defer these origination fees and deduct them from the cost basis of the investment and subsequently accrete them into income over the term of the loan. We may receive facility, commitment and amendment fees, which are paid to us on an ongoing basis. We accrue facility fees, sometimes referred to as asset management fees, as a percentage periodic fee on the base amount (either the funded facility amount or the committed principal amount). Commitment fees are based upon the undrawn portion committed by us and we record them on an accrual basis. Amendment fees are paid in connection with loan amendments and waivers and we account for them upon completion of the amendments or waivers, generally when such fees are receivable. We include any such fees in fee income on the consolidated statements of operations. Recent Accounting Pronouncements See Note 2 to our consolidated financial statements, which discusses recent accounting pronouncements applicable to us, if any. 96 ​