The information contained in this section should be read in conjunction with our
Consolidated Financial Statements and Supplementary Data appearing elsewhere in
this annual report on Form 10-K.

Forward-Looking Statements

Some of the statements in this annual report on Form 10-K constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this annual report on Form 10-K 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;

changes in political, economic or industry conditions, the interest rate

environment or conditions affecting the financial and capital markets, which

? could result in changes to the value of our assets, including changes from the

impact of the ongoing war between Russia and Ukraine and the prolonged

lockdowns in China due to the ongoing COVID-19 pandemic;

? the elevating levels of inflation, and the potential impact of inflation on our

portfolio companies and on the industries in which we invest;




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? 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 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; and

? the impact of future acquisitions and divestitures.


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, including the factors set forth
in "Risk Factors" and elsewhere in this annual report on Form 10-K.

We have based the forward-looking statements included in this annual report on
Form 10-K on information available to us on the date of this annual report on
Form 10-K, 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 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 annual
report on Form 10-K 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 Investment Company Act of 1940, as amended, or the 1940 Act. 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 H.I.G. Bayside Debt & LBO Fund II, L.P. and H.I.G. Bayside Loan
Opportunity Fund II, L.P., each of which is 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

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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 London Interbank Offered Rate, or
LIBOR, or 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, we have agreed to
reimburse WhiteHorse Administration for our allocable portion (subject to the
review and approval of our independent directors) of overhead and other expenses
incurred by WhiteHorse Administration in performing its obligations under the
Administration Agreement.

Reference Rate Reform

In July 2017, the head of the United Kingdom Financial Conduct Authority, or the
FCA, announced that it will phase out the use of LIBOR by 2021. On March 2021,
the FCA and the IBA announced that (i) 1-week and 2-month U.S. dollar LIBOR and
non-U.S. LIBOR will cease at the end of 2021 and (ii) the remaining U.S. dollar
LIBOR tenors will cease after June 30, 2023, effectively extending the LIBOR
transition period to June 30, 2023. In light of feedback received, the FCA has
proposed that the 1-, 3- and 6-month U.S. dollar LIBOR tenors continue to be
published on a synthetic basis through September 2024. There is currently no
definitive information regarding the future utilization of LIBOR or of any
particular replacement rate.

To identify a successor rate for U.S. dollar LIBOR, the Federal Reserve System,
in conjunction with the Alternative Reference Rates Committee, a steering
committee comprised of large U.S. financial institutions, identified SOFR as its
preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing
cash overnight, collateralized by U.S. Treasury securities, and is based on
directly observable U.S. Treasury-backed repurchase transactions. As of
December 31, 2022, SOFR is utilized as the floating benchmark rate on
approximately 41 floating rate debt investments to our portfolio companies. As
of December 31, 2022, SOFR is utilized as the floating benchmark rate on the
Credit Facility for USD denominated borrowings above $285.0 million. We expect
any new credit facilities that we enter into subsequent to December 31, 2022
will reference a benchmark interest rate other than LIBOR, such as SOFR.

Other jurisdictions have also proposed their own alternative to LIBOR, including
the Sterling Overnight Index Average for Sterling markets, the Euro Short Term
Rate for Euros and Tokyo Overnight Average Rate for Japanese Yens. Although SOFR
appears to be the preferred replacement rate for U.S. dollar LIBOR, at this
time, it is not possible to predict whether any of these alternative reference
rates will attain market traction as a LIBOR replacement tool or the effect of
any such changes as the establishment of alternative reference rates or other
reforms to LIBOR may be enacted in the United States, United Kingdom or
elsewhere. As such, the potential effect on how markets will respond to the
transition to SOFR, or other reference rates, is uncertain.

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Refer to "Part I. Item 1A. Risk Factors - Risks Relating to our Business and
Structure - Since we are using debt to finance our investments, and we may use
additional debt or preferred stock financing going forward, changes in interest
rates may affect our cost of capital, net investment income, value of our common
stock and our rate of return on invested capital." of this Annual Report on

Form
10-K.

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 LIBOR, 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 NAV and NAV 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;


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 ? taxes;

? independent directors' fees and expenses;

? 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.



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Recent Developments

For the period January 1, 2023 through March 3, 2023, we contributed three additional assets, which included three existing issuers of senior secured debt facilities to the STRS JV.


In February 2023, we increased our capital commitment to the STRS JV in the
amount of an additional $15 million, which brings our total capital commitment
to the STRS JV to $115 million, comprised of $92 million of subordinated notes
and $23 million of LLC equity interests, and STRS Ohio increased its capital
commitment to the STRS JV in the amount of an additional $10 million, which
brings its total capital commitment to the STRS JV to $60 million, comprised of
$48 million of subordinated notes and $12 million of LLC equity interests. In
connection with these increases in capital commitments, our and STRS Ohio's
amended economic ownership in the STRS JV is approximately 65.71% and 34.29%,
respectively.

Subsequent to December 31, 2022, the Company received financial information
related to its investment in Playmonster Group LLC. Based on this information,
the Company expects to place the first lien secured term loan investment on
non-accrual status during the first quarter. This conclusion remains subject to
change if additional information becomes available.

Consolidated Results of Operations

Comparison of the Years Ended December 31, 2022 and December 31, 2021



Set forth below are the consolidated results of operations for the years ended
December 31, 2022 and 2021. For information regarding the consolidated results
of operations for the year ended December 31, 2020, see the Company's Form 10-K
for the fiscal year ended December 31, 2021 as filed with the SEC on March 4,
2022.

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
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 in net assets resulting from
operations may not be meaningful.

Consolidated operating results for the years ended December 31, 2022 and 2021
are as follows:

                                             Year ended December 31,          2022 vs. 2021
($ in thousands)                                 2022            2021           Variance
Total investment income                   $        87,527   $      72,143   $        15,384
Total expenses                                     50,269          43,352             6,917
Net investment income                              37,258          28,791             8,467
Net realized gains/(losses) on
investments and foreign currency
transactions                                     (14,268)           8,815  

(23,083)


Net change in unrealized
gains/(losses) on investments and
foreign currency transactions                     (7,307)         (7,512)               205
Net increase in net assets resulting
from operations                           $        15,683   $      30,094   $      (14,411)


Net Investment Income

Net investment income for the years ended December 31, 2022 and 2021 totaled
$37.3 million and $28.8 million, respectively. Net investment income increased
by $8.5 million for the year ended December 31, 2022 from the year ended
December 31, 2021, as described below under "Investment Income" and "Operating
Expenses".

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Investment Income

Investment income increased by $15.4 million for the years ended
December 31, 2022 and 2021 primarily attributable to a larger investment
portfolio and an increase in base rates. Investment income generated from our
STRS JV subordinated notes and equity investments increased by $5.1 million as a
result of a larger investment portfolio, higher interest income earned from
investments in portfolio companies and the increased economic interest to 66.67%
from 60.0%, starting in February 2022. Investment income from non-recurring fee
income increased by $0.9 million. We expect to generate some level of
non-recurring fee income during most quarters from prepayments, amendments and
other sources. This was offset by lower dividend income from our investment in
Arcole Holding Corporation by $0.8 million for the year ended December 31, 2022
as compared to the year ended December 31, 2021.

Operating Expenses



The following table summarizes our expenses for the years ended December 31,
2022 and 2021:

                                                  Year ended December 31,        2022 vs. 2021
($ in thousands)                                      2022           2021          Variance
Interest expense                                $       21,940   $    16,594   $         5,346
Base management fees                                    15,600        13,975             1,625
Performance-based incentive fees                         7,059         7,524             (465)
Administrative service fees                                683           683                 -
General and administrative expenses                      3,963         3,572               391
Total expenses, before excise tax                       49,245        42,348             6,897
Excise tax                                               1,024         1,004                20
Total expenses, including excise tax            $       50,269   $    

43,352 $ 6,917




Interest expense increased $5.3 million for the year ended December 31, 2022
from the year ended December 31, 2021, primarily due to a higher borrowing base
and higher weighted average interest rates. For the year ended December 31,
2022, the weighted average outstanding borrowings were $454.4 million at a
weighted average interest rate of 4.35%. For the year ended December 31, 2021,
the weighted average outstanding borrowings were $379.3 million at a weighted
average interest rate of 3.70%.

Base management fees increased by $1.6 million for the year ended December 31, 2022 from the year ended December 31, 2021, primarily due to higher gross assets.



Performance-based incentive fees decreased by $0.5 million for the year ended
December 31, 2022 from the year ended December 31, 2021, was mainly attributable
to lower capital gains incentive fee of $2.1 million, offset by a higher net
investment income incentive fee of $1.6 million.

General and administrative increased $0.4 million for the year ended December 31, 2022 from the year ended December 31, 2021, primarily due to higher professional fees.

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.

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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.

For both years ended December 31, 2022 and 2021, we accrued a net federal excise tax expense of $1.0 million.



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Net Realized and Unrealized Gains (Losses) on Investments

The following shows the breakdown of net realized gains and losses on investments for the years ended December 31, 2022 and 2021:



                                                                        Year ended
($ in millions)                                          December 31, 2022      December 31, 2021
AG Kings Holdings Inc.(1)                               $               0.6    $               8.0
BW Gas & Convenience Holdings, LLC                                        -

                   0.2
Cennox, Inc.                                                            0.1                      -
Escalon Services Inc.                                                   1.6                      -
Geo Logic Systems Ltd.                                                    -                    0.2
Grupo HIMA San Pablo, Inc.                                           (18.3)                      -
Lab Logistics, LLC                                                      0.2                      -
Manchester Acquisition Sub LLC (d/b/a Draslovka
Holding AS)                                                             0.1                      -
Meta Buyer LLC (d/b/a Metagenics, Inc.)                                   -

                 (0.3)
RCS Capital Corporation(2)                                              1.7                    0.6
RLJ Pro-Vac, Inc.                                                       0.1                      -
Vero Parent, Inc.                                                         -                    0.5
Vessco Holdings, LLC                                                  (0.1)                  (0.6)
Other(3)                                                                0.1                      -

Total net realized gains/(losses) on investments        $            (13.9)    $               8.6


(1) Escrow receivable amounts were recognized in connection with realization

events.

(2) Amount represents a recovery from a previously realized equity investment.

(3) Includes various investments with aggregate realized gains or losses less

than $50,000.

The following shows the breakdown in the changes in unrealized appreciation and depreciation on investments for the year ended December 31, 2022 and 2021:



                                                                       Year 

ended


($ in millions)                                         December 31, 2022      December 31, 2021
Gross unrealized appreciation on investments(1)        $               2.3    $              11.4
Gross unrealized depreciation on investments                        (20.3)                 (10.4)
Reversal of prior period net unrealized
(appreciation) depreciation upon a realization                         8.8                  (8.6)
Total unrealized appreciation (depreciation) on
investments                                            $             (9.2)    $             (7.6)


The year ended December 31, 2022 and 2021 includes unrealized appreciation

(1) from the AG Kings Holdings Inc. escrow receivable of $0.9 million and $0.5

million, respectively.

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, 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

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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 include amounts that are collected and held
by the trustee appointed as custodian of the assets securing the Credit
Facility. Restricted cash is held by the trustee for the payment of interest
expense and principal on the outstanding borrowings or reinvestment into new
assets. Restricted cash that represents interest or fee income is transferred to
unrestricted cash accounts by the trustee generally once a quarter after the
payment of operating expenses and amounts due under the Credit Facility.

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
December 31, 2022 and December 31, 2021, we had commitments to fund
approximately $56.2 million and $53.1 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.

                               Senior Securities
                                 (In Thousands)

Information about our senior securities is shown in the following tables as of
December 31, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013 and
2012. The report of our independent registered public accounting firm, Crowe
LLP, on the senior securities table as of December 31, 2022, 2021, 2020, 2019
and 2018 is attached as an exhibit to this report. The "- " indicates
information that the SEC expressly does not require to be disclosed for certain
types of senior securities.

                                                             Involuntary
                                                             Liquidating     Average
                       Total Amount      Asset Coverage      Preference    Market Value
Class and Year        Outstanding(1)       per Unit(2)       per Unit(3)   per Unit(4)
Credit Facility(5)
Fiscal 2022           $       255,145    $         1,754    $           -           N/A
Fiscal 2021                   291,637              1,735                -           N/A
Fiscal 2020                   265,246              1,813                -           N/A
Fiscal 2019                   238,917              2,047                -           N/A
Fiscal 2018                   115,000              2,792                -           N/A
Fiscal 2017                   155,000              2,576                -           N/A
Fiscal 2016                   155,000              2,368                -           N/A
Fiscal 2015                   102,000              2,305                -           N/A
Fiscal 2014                   105,500              2,183                -           N/A
Fiscal 2013                    25,000              3,064                -           N/A
Fiscal 2012                    51,250              2,622                -           N/A
6.000% 2023 Notes
Fiscal 2022           $        30,000    $         1,754    $           -           N/A
Fiscal 2021                    30,000              1,735                -           N/A
Fiscal 2020                    30,000              1,813                -           N/A
Fiscal 2019                    30,000              2,047                -           N/A
Fiscal 2018                    30,000              2,792                -           N/A
5.375% 2025 Notes
Fiscal 2022           $        40,000    $         1,754    $           -           N/A
Fiscal 2021                    40,000              1,735                -           N/A
Fiscal 2020                    40,000              1,813                -           N/A
5.375% 2026 Notes
Fiscal 2022           $        10,000    $         1,754    $           -           N/A
Fiscal 2021                    10,000              1,735                -           N/A
Fiscal 2020                    10,000              1,813                -           N/A
5.625% 2027 Notes
Fiscal 2022           $        10,000    $         1,754    $           -           N/A
Fiscal 2021                    10,000              1,735                -           N/A


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                                                                    Involuntary
                                                                    Liquidating        Average
                             Total Amount      Asset Coverage        Preference      Market Value
Class and Year              Outstanding(1)       per Unit(2)        per Unit(3)      per Unit(4)
Fiscal 2020                          10,000              1,813                   -            N/A
4.250% 2028 Notes
Fiscal 2022                 $        25,000    $         1,754    $              -            N/A
Fiscal 2021                          25,000              1,735                   -            N/A
4.000% 2026 Notes
Fiscal 2022                 $        75,000    $         1,754    $              -            N/A
Fiscal 2021                          75,000              1,735                   -            N/A
2025 Public Notes(6)
Fiscal 2020                 $        35,000    $         1,813    $              -          1,029
Fiscal 2019                          35,000              2,047                   -          1,049
Fiscal 2018                          35,000              2,792                   -            982
2020 Notes(7)
Fiscal 2017                 $        30,000    $         2,576    $              -          1,026
Fiscal 2016                          30,000              2,368                   -          1,005
Fiscal 2015                          30,000              2,305                   -          1,010
Fiscal 2014                          30,000              2,183                   -          1,006
Fiscal 2013                          30,000              3,064                   -            982
Unsecured Term Loan(8)
Fiscal 2015                 $        55,000    $         2,305    $              -            N/A
Fiscal 2014                          55,000              2,183                   -            N/A
Fiscal 2013                          55,000              3,064                   -            N/A
Fiscal 2012                          90,000              2,622                   -            N/A

(1) Total amount of each class of senior securities outstanding at the end of the


     period presented (in thousands), exclusive of debt issuance costs.

The asset coverage ratio for a class of senior securities representing

indebtedness is calculated as our consolidated total assets, less all

(2) liabilities and indebtedness not represented by senior securities, divided by

total senior securities representing indebtedness. This asset coverage ratio

is multiplied by $1,000 to determine the Asset Coverage Per Unit (including

for the 2020 Notes, which were issued in $25 increments).




(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.

Not applicable, except for with respect to the 2020 Notes and 2025 Notes, as

other senior securities are not registered for public trading on a stock

(4) exchange. The average market value per unit for the 2020 Notes and 2025 Notes

is based on the average daily prices two weeks prior to the fiscal year end


     of such notes and is expressed per $1,000 of indebtedness.


     On September 27, 2012, WhiteHorse Finance Warehouse, LLC entered into a

$150,000 revolving credit and security agreement with Natixis, New York

(5) Branch, acting as facility agent- (the "Natixis Credit Facility"). On

December 23, 2015, WhiteHorse Credit entered into the Credit Facility, and we

drew $102.0 million on the Credit Facility and used the proceeds to repay the

Natixis Credit Facility in full.

On December 17, 2021, we redeemed 100% of the $35 million aggregate principal

(6) amount of the 2025 Notes outstanding and delisted the 2025 Notes from the

Nasdaq Global Select Market.

On August 9, 2018, we redeemed 100% of the $30 million aggregate principal

(7) amount of the 2020 Notes outstanding and delisted the 2020 Notes from the

Nasdaq Global Select Market.

(8) On June 30, 2016, we repaid in full the outstanding balance of $55.0 million


     due under the Unsecured Term Loan.


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Comparison of the Years Ended December 31, 2022 and December 31, 2021


Set forth below are our liquidity and capital resources for the years ended
December 31, 2022 and 2021. For information regarding our liquidity and capital
resources for the year ended December 31, 2020, see the Company's Form 10-K for
the fiscal year ended December 31, 2021, as filed with the SEC on March 4, 2022.

Our operating activities provided cash and cash equivalents of $72.0 million
during the year ended December 31, 2022, primarily from the net proceeds
received from realizations and repayments on our investments, partially offset
by acquisition of investments and cash used from the net change in working
capital. Our financing activities used cash and cash equivalents of $68.5
million during the year ended December 31, 2022, primarily due to repayments on
the Credit Facility and the payment of distributions to stockholders.

Our operating activities used cash and cash equivalents of $90.2 million during
the year ended December 31, 2021, primarily for acquisition of investments and
cash used from the net change in working capital, partially offset by net
proceeds received from realizations and repayments on our investments. Our
financing activities provided cash and cash equivalents of $97.0 million during
the year ended December 31, 2021, primarily due to issuance of $100.0 million of
unsecured notes and proceeds of $37.5 million from the sales of common stock,
offset by repayments of debt and the payment of distributions to stockholders.

As of December 31, 2022, we had cash and cash equivalent resources of $26.3 million, including $16.8 million of restricted cash. As of December 31, 2022, we had approximately $79.9 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, 2021, we had cash and cash equivalent resources of $22.5 million, including $10.3 million of restricted cash. As of December 31, 2021, we had approximately $43.4 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.

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 LIBOR,
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 December 31, 2022, STRS JV had total assets
of $305.3 million. As of December 31, 2021, STRS JV had total assets of $273.5
million.

We provide capital to STRS JV in the form of limited liability company, or LLC
equity interests, and subordinated notes. As of December 31, 2022, we and STRS
Ohio owned 66.67% and 33.33%, respectively, of the LLC equity interests of STRS
JV. As of December 31, 2022, we had commitments to fund equity interests and
subordinated notes in STRS JV of $20 million and $80 million, respectively, both
of which were fully funded.

As of December 31, 2021, we and STRS Ohio owned 60% and 40%, respectively, of
the LLC equity interests of STRS JV. As of December 31, 2021, we had commitments
to fund equity interests and subordinated notes in STRS JV of $15 million and
$60 million, respectively, both of which were fully funded.

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.

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Below is a summary of STRS JV's portfolio as of December 31, 2022 and
December 31, 2021:

($ in thousands)                             As of December 31, 2022      As of December 31, 2021
Total investments(1)                        $                 284,259    $                 259,510
Weighted average effective yield on
total portfolio(1)                                               11.3 %                        7.9 %
Number of portfolio companies in STRS JV                           28                           28
Largest portfolio company investment(2)                        19,113                       22,967
Total of five largest portfolio company
investments(2)                                                 77,635                       83,057


Weighted average effective yield is computed by dividing (a) annualized (1) interest income (including interest income resulting from the amortization of

fees and discounts) by (b) the weighted average cost of investment.

(2) At fair value.

Investments consisted of the following:



                                         As of December 31, 2022              As of December 31, 2021
($ in thousands)                     Amortized Cost       Fair Value      Amortized Cost       Fair Value
First lien secured loans            $        287,940     $    284,259    $ 

      260,472     $    259,510
Total                               $        287,940     $    284,259    $        260,472     $    259,510


The following table shows the portfolio composition by industry grouping at fair
value:

Industry ($ in thousands)                       As of December 31, 2022         As of December 31, 2021
Advertising                                   $       11,703           4.1 %  $            -             - %
Air Freight & Logistics                                3,545           1.2                 -             -
Application Software                                  13,375           4.7            13,518           5.2
Building Products                                     14,132           5.0            16,603           6.4

Construction & Engineering                             8,432           3.0            13,975           5.4
Data Processing & Outsourced Services                 14,536           5.1            16,160           6.2
Diversified Support Services                          11,729           4.1            10,489           4.0
Electronic Equipment & Instruments                    13,187           4.6             6,687           2.6
Environmental & Facilities Services                   20,708           7.3 

           6,872           2.6
Household Appliances                                   7,885           2.8                 -             -
Industrial Machinery                                  14,999           5.3             6,815           2.6

Internet & Direct Marketing Retail                    19,113           6.7            15,353           5.9
Investment Banking & Brokerage                         5,545           2.0            10,054           3.9
IT Consulting & Other Services                        33,461          11.8 

          40,697          15.7
Leisure Products                                           -             -             8,930           3.4
Packaged Foods & Meats                                12,069           4.2            25,606           9.9
Paper Packaging                                        8,059           2.8                 -             -
Personal Products                                      3,949           1.4             4,273           1.8
Pharmaceuticals                                       14,712           5.2            15,061           5.8

Real Estate Operating Companies                       11,121           3.9             4,780           1.8
Real Estate Services                                   8,548           3.0                 -             -
Research & Consulting Services                         8,686           3.1             8,901           3.4
Systems Software                                           -             -             9,898           3.8
Technology Hardware, Storage & Peripherals            14,884           5.2            14,725           5.7
Trading Companies & Distributors                       9,881           3.5 

          10,113           3.9
Total                                         $      284,259         100.0 %  $      259,510         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
December 31, 2022 and December 31, 2021 and selected statement of operations
information for the years ended December 31, 2022 and 2021.

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Capital Raises

On October 25, 2021, we completed an offering of 1,900,000 shares of our common
stock at a public offering price of $15.81 per share, inclusive of underwriting
discounts and commissions. In connection with the offering, we granted the
underwriters an overallotment option to purchase up to an additional 285,000
shares of our common stock. The issuance of 1,900,000 shares resulted in net
proceeds to us of $29.4 million, inclusive of underwriting discounts and
commissions and before offering expenses. On November 3, 2021, we raised an
additional $4.3 million from the issuance of an additional 282,300 shares
pursuant to the underwriters' exercise of the overallotment option to purchase
additional shares. WhiteHorse Advisers agreed to bear a portion of the
underwriting discounts and commissions in connection with the offering, such
that the issuance of the 2,182,300 shares (which includes the additional shares
issued pursuant to the overallotment option) resulted in net proceeds to us of
$33.7 million before offering expenses, which was at or above our NAV per share
at the time of the offering and the overallotment option.

At-the-Market Offering


On March 15, 2021, we entered into an equity distribution agreement, or the
Equity Distribution Agreement, with WhiteHorse Advisers, WhiteHorse
Administration and Raymond James & Associates, Inc., as the sales agent, or the
Sales Agent, in connection with the sale of shares of our common stock, par
value $0.001 per share, 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, or the ATM Offering. 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 Offering to invest in
portfolio companies in accordance with our investment objective and strategies
and for general corporate purposes. As of December 31, 2022, gross proceeds of
$4.4 million have been raised from the ATM Offering.

Credit Facility


On December 23, 2015, our wholly owned subsidiary WhiteHorse Credit I, LLC, or
WhiteHorse Credit, entered into a revolving credit and security agreement with
JPMorgan Chase Bank, National Association ("JPMorgan"), as administrative agent
and lender (the "Credit Facility").

On December 21, 2020, the terms of the Credit Facility were amended to, among
other things, (i) increase the minimum funding amount from $175.0 million to
$200.0 million, (ii) increase the size of the facility from $250.0 million to
$285.0 million, (iii) retain an accordion feature which allows for the expansion
of the borrowing limit up to $350.0 million and (iv) provide for the
implementation of certain changes relating to the transition away from LIBOR in
the market.

On April 28, 2021, the terms of the Credit Facility were amended and restated
to, among other things, enable WhiteHorse Credit to borrow in British Pounds or
Euros.

On July 15, 2021, the terms of the Credit Facility were amended to, among other
things, allow WhiteHorse Credit to reduce the applicable margins for interest
rates to 2.35%, extend the non-call period from November 22, 2021 to
November 22, 2022, extend the end of the reinvestment period from November 22,
2023 to November 22, 2024 and extend the scheduled termination date from
November 22, 2024, to November 22, 2025.

On October 4, 2021, the terms of the Credit Facility were amended to, among
other things, establish a temporary upsize to the borrowing capacity under the
Credit Facility, which allowed WhiteHorse Credit to borrow up to $335.0 million
for a three-month period beginning on October 4, 2021.

On January 4, 2022, the terms of the Credit Facility were amended to, among other things, continue to establish a temporary upsize to the borrowing capacity under the Credit Facility, which allowed WhiteHorse Credit to borrow up to $335.0 million for a four-month period that originally began on October 4, 2021.



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On February 4, 2022, the terms of the Credit Facility were further amended to,
among other things (i) increase WhiteHorse Credit's availability under the
Credit Facility from $285.0 million to $310.0 million (the "$25 Million
Increase"), (ii) increase the minimum funding amount from $200.0 million to
$217.0 million, (iii) extend an additional temporary increase of $25.0 million
in availability under the Credit Facility, allowing WhiteHorse Credit to borrow
up to $335.0 million through April 4, 2022 (the "$25 Million Temporary
Increase"), and (iv) apply an annual interest rate equal to applicable SOFR plus
2.50% to any borrowings under the $25 Million Increase in the Credit Facility
and the $25 Million Temporary Increase in availability under the Credit
Facility.

On March 30, 2022, the terms of the Credit Facility were further amended to,
among other things: (i) increase WhiteHorse Credit's availability under the
Credit Facility from $310.0 million to $335.0 million; (ii) retain an accordion
feature which allows for the expansion of the borrowing limit up to $375.0
million; and (iii) increase the minimum funding amount from $217.0 million to
$234.5 million.

As of December 31, 2022, the Credit Facility provided for borrowings in an
aggregate principal amount up to $335.0 million with an accordion feature which
allows for the expansion of the borrowing limit up to $375.0 million, subject to
consent from the Lender and other customary conditions. As of December 31, 2022,
the required minimum outstanding borrowings under the Credit Facility were
$234.5 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 the three-month LIBOR for USD
denominated borrowings plus an annual spread of 2.35% on outstanding USD
denominated borrowings up to $285.0 million and SOFR plus 2.50% on USD
denominated borrowings above $285.0 million. The Credit Facility bears interest
at EURIBOR, for EUR denominated borrowings, CDOR for CAD denominated borrowings,
Sterling Overnight Index Average, for GBP denominated, plus a spread of 2.35% on
outstanding borrowings. Interest is payable quarterly in arrears. WhiteHorse
Credit is 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.
Any amounts borrowed under the Credit Facility will mature, and all accrued and
unpaid interest thereunder will be due and payable, on November 22, 2025.

The Credit Facility and the related documents require WhiteHorse Finance and
WhiteHorse Credit to, among other things, 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

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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 December 31, 2022, there was $255.1 million in outstanding borrowings
under the Credit Facility and, based on collateral and portfolio requirements
stipulated in the Credit Facility agreement, approximately $79.9 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 $624.1
million as of December 31, 2022.

As of December 31, 2021, there was $291.6 million in outstanding borrowings
under the Credit Facility and, based on collateral and portfolio requirements
stipulated in the Credit Facility agreement, approximately $43.4 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 $719.5
million as of December 31, 2021.

6.000% 2023 Notes


On July 13, 2018, we entered into the 2023 Note Purchase Agreement to sell in a
private offering $30 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 6.000% 2023 Notes is payable semiannually on
February 7 and August 7, at a fixed, annual rate of 6.000%. This interest rate
is subject to increase (up to 6.50%) in the event that, subject to certain
exceptions, the 6.000% 2023 Notes cease to have an investment grade rating. The
6.000% 2023 Notes mature on August 7, 2023, unless redeemed, purchased or
prepaid prior to such date by us or our affiliates in accordance with their
terms. The 6.000% 2023 Notes are general unsecured obligations that rank pari
passu with all outstanding and future unsecured unsubordinated indebtedness that
we may issue. The closing of the transaction occurred on August 7, 2018. We used
the net proceeds from this offering, together with cash on hand, to redeem
existing debt.

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%. This interest rate
is subject to increase (up to 6.375%) in the event that, subject to certain
exceptions, the 5.375% 2025 Notes cease to have an investment grade rating. The
5.375% 2025 Notes mature on October 20, 2025, unless redeemed, purchased or
prepaid prior to such date by us or our affiliates in accordance with their
terms. The 5.375% 2025 Notes are general unsecured obligations that rank pari
passu with all outstanding and future unsecured unsubordinated indebtedness that
we may issue. The closing of the transaction occurred on October 20, 2020. We
used the net proceeds from this offering to redeem existing debt.

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. The closing of the transaction occurred on December 4, 2020. We
used the net proceeds from this offering to redeem existing debt.

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

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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. The closing of the transaction
occurred on December 4, 2020. We used the net proceeds from this offering to
redeem existing debt.

4.000% 2026 Notes

On November 24, 2021, we completed a public offering of $75 million of aggregate
principal amount of unsecured notes, the net proceeds of which were used to fund
investments in debt and equity securities and repay outstanding indebtedness
under the Credit Facility. 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 will rank equally in right
of payment with our other outstanding and future unsecured, unsubordinated
indebtedness, including the 6.000% 2023 Notes, the 5.375% 2025 Notes, the 5.375%
2026 Notes, the 5.625% 2027 Notes and the 4.250% 2028 Notes. The 4.000% 2026
Notes will effectively rank behind all of our existing and future secured
indebtedness (including indebtedness that is initially unsecured in respect of
which we subsequently grant security) in right of payment, to the extent of the
value of the assets securing such indebtedness, including our Credit Facility.

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. The closing of the transaction occurred on December 6, 2021. We
used the net proceeds from this offering to redeem existing debt.

2025 Public Notes



On November 13, 2018, we completed a public offering of $35 million of aggregate
principal amount of unsecured notes, the net proceeds of which were used to fund
investments in debt and equity securities and repay outstanding indebtedness
under the Credit Facility. Interest on the 2025 Public Notes was paid quarterly
on February 28, May 31, August 31 and November 30 each year, at a fixed, annual
rate of 6.50%. The 2025 Public Notes had a maturity date of November 30, 2025
and were redeemable in whole or in part at any time, or from time to time, at
our option on or after November 30, 2021. The 2025 Public Notes were redeemed on
December 17, 2021 and were de-listed from the Nasdaq Global Select Market where
they were trading under the symbol "WHFBZ."

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Portfolio Investments and Yield



As of December 31, 2022, our investment portfolio consisted primarily of senior
secured loans across 115 positions in 72 companies with an aggregate fair value
of $760.2 million. As of December 31, 2022, 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 either
SOFR or LIBOR, with fixed-rate loan investments representing 0.4% based on fair
value. As of December 31, 2022, our portfolio had an average investment size of
$5.8 million based on fair value and average debt investment size of $7.0
million, with investment sizes ranging from zero to $22.9 million and a weighted
average effective yield of 12.2% (and a weighted average effective yield on
income-producing debt investments of 12.6%).

As of December 31, 2021, our investment portfolio consisted primarily of senior
secured loans across 127 positions in 76 companies with an aggregate fair value
of $819.2 million. As of December 31, 2021, 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 LIBOR,
with four fixed-rate loan investments representing 0.4% based on fair value. As
of December 31, 2021, our portfolio had an average investment size of $5.9
million based on fair value and average debt investment size of $6.8 million,
with investment sizes ranging from zero to $24.0 million and a weighted average
effective yield of 9.0% (and a weighted average effective yield on
income-producing debt investments of 9.1%).

For the year ended December 31, 2022, we invested $280.1 million in new and existing portfolio companies, offset by repayments and sales of $323.1 million. Proceeds from sales totaled $121.9 million while repayments included $11.7 million of scheduled repayments and $189.5 million of unscheduled repayments.

For the year ended December 31, 2021, we invested $544.2 million in new and existing portfolio companies, offset by repayments and sales of $423.6 million. Proceeds from sales totaled $157.4 million while repayments included $10.6 million of scheduled repayments and $255.6 million of unscheduled repayments.



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.

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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 December 31, 2022                As of December 31, 2021
Investment Performance Rating ($ in       Investments at      Percentage of      Investments at      Percentage of
millions)                                   Fair Value       Total Portfolio       Fair Value       Total Portfolio
1                                        $           65.2                8.6 %  $          125.8               15.4 %
2                                                   503.5               66.2               611.9               74.7
3                                                   168.6               22.2                73.2                8.9
4                                                    22.9                3.0                 8.3                1.0
5                                                       -                  -                   -                  -
Total Portfolio                          $          760.2              100.0 %  $          819.2              100.0 %


Distributions

In order to maintain our status as a RIC and to avoid the imposition of
corporate-level tax on income, we must distribute dividends to our stockholders
each taxable year of 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 dividends in respect of each calendar year of 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 ability to be subject to tax as
a RIC. We cannot assure stockholders that they will receive any distributions.

During the year ended December 31, 2022 we declared distributions of $1.470 per
share for total distributions of $34.2 million. During the year ended December
31, 2021 we declared distributions of $1.555 per share for total distributions
of $33.4 million. We monitor available net investment income to determine if a
return of capital for taxation purposes may occur for the fiscal year.

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. Notices to
stockholders will be provided in accordance with Section 19(a) of the 1940 Act.
For the years ended December 31, 2022 and 2021, distributions to stockholders
did not include a return of capital, but did include approximately zero and
$1.4 million, respectively, relating to long-term capital gains, for tax
purposes. 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.

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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.

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 on November 1, 2018. 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 2.0%
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.

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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. 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 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, WHF PMA Holdco Blocker, LLC, WHF American Craft Blocker, LLC, WhiteHorse
RCKC Holdings, LLC and WhiteHorse Finance Holdings, LLC, which are investment
companies for accounting purposes. As such, we have consolidated the accounts of
WhiteHorse Credit, WHF PMA Holdco Blocker, LLC, WHF American Craft Blocker, LLC,
WhiteHorse RCKC Holdings LLC and WhiteHorse Finance Holdings, LLC into our
financial statements. As a result of this consolidation, the amount outstanding
under the Credit Facility 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.

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In addition, on December 3, 2020, the SEC announced that it adopted Rule 2a-5
under the 1940 Act, which establishes an updated regulatory framework for
determining fair value in good faith for purposes of the 1940 Act. The new rule
clarifies how fund boards can satisfy their fair valuation obligations in light
of recent market developments. The rule permits boards to designate the fund's
investment adviser to perform fair value determinations, subject to board
oversight and certain other conditions. 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 ultimately 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.

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.




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? Our Board, through the Audit Committee, performs oversight of the fair

valuation process in accordance with Rule 2a-5.




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 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.

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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.



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