WhiteHorse Finance 10Q 2022 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

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

For the transition period from ______________ to ______________

Commission file number: 814-00967

WHITEHORSE FINANCE, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		45-4247759
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

1450 Brickell Avenue, 31^st Floor
Miami, Florida		33131
(Address of Principal Executive Offices)		(Zip Code)

(305) 381-6999

(Registrant’s Telephone Number, Including Area Code)

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


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	WHF	The Nasdaq Stock Market LLC
		(Nasdaq Global Select Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

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


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ◻ No ⌧

As of May 5, 2022 the Registrant had 23,243,088 shares of common stock, $0.001 par value, outstanding.

WHITEHORSE FINANCE, INC.

TABLE OF CONTENTS


		Page
Part I.	Financial Information	3
Item 1.	Financial Statements	3
	Consolidated Statements of Assets and Liabilities as of March 31, 2022 (Unaudited) and December 31, 2021	3
	Consolidated Statements of Operations for the three months ended March 31, 2022 (Unaudited) and 2021 (Unaudited)	4
	Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2022 (Unaudited) and 2021 (Unaudited)	5
	Consolidated Statements of Cash Flows for the three months ended March 31, 2022 (Unaudited) and 2021 (Unaudited)	6
	Consolidated Schedules of Investments as of March 31, 2022 (Unaudited) and December 31, 2021	8
	Notes to the Consolidated Financial Statements (Unaudited)	23
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	60
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	82
Item 4.	Controls and Procedures	84
Part II.	Other Information	84
Item 1.	Legal Proceedings	84
Item 1A.	Risk Factors	84
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	86
Item 3.	Defaults Upon Senior Securities	87
Item 4.	Mine Safety Disclosures	87
Item 5.	Other Information	87
Item 6.	Exhibits	87

Part I. Financial Information

Item 1. Financial Statements

WhiteHorse Finance, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)


		March 31, 2022		December 31, 2021
		(Unaudited)
Assets
Investments, at fair value
Non-controlled/non-affiliate company investments	$	686,253	$	736,727
Non-controlled affiliate company investments		13,342		6,874
Controlled affiliate company investments		100,776		75,607
Total investments, at fair value (amortized cost $798,251 and $831,960, respectively)		800,371		819,208
Cash and cash equivalents		2,454		12,185
Restricted cash and cash equivalents		18,262		9,814
Restricted foreign currency (cost of $550 and $464, respectively)		556		469
Interest and dividend receivable		6,767		7,521
Amounts receivable on unsettled investment transactions		7,916		—
Escrow receivable		1,309		515
Prepaid expenses and other receivables		879		1,307
Receivable for common stock issued		247		—
Total assets	$	838,761	$	851,019

Liabilities
Debt	$	467,857	$	475,958
Distributions payable		8,234		8,222
Management fees payable		3,952		3,766
Incentive fees payable		5,445		7,958
Interest payable		3,548		2,087
Accounts payable and accrued expenses		1,136		2,438
Advances received from unfunded credit facilities		666		839
Unrealized depreciation on foreign currency forward contracts		4		—
Total liabilities		490,842		501,268

Commitments and contingencies (See Note 8)

Net assets
Common stock, 23,211,413 and 23,162,667 shares issued and outstanding, par value $0.001 per share, respectively, and 100,000,000 shares authorized		23		23
Paid-in capital in excess of par		339,856		339,161
Accumulated earnings		8,040		10,567
Total net assets		347,919		349,751
Total liabilities and total net assets	$	838,761	$	851,019
Number of shares outstanding		23,211,413		23,162,667
Net asset value per share	$	14.99	$	15.10

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)


		Three months ended March 31,
		2022		2021
Investment income
From non-controlled/non-affiliate company investments
Interest income	$	16,741	$	14,812
Fee income		462		771
Dividend income		89		44
From non-controlled affiliate company investments
Interest income		60		—
Dividend income		131		250
From controlled affiliate company investments
Interest income		1,127		719
Dividend income		1,424		1,374
Total investment income		20,034		17,970
Expenses
Interest expense		4,774		3,802
Base management fees		3,952		3,344
Performance-based incentive fees		1,427		2,042
Administrative service fees		171		171
General and administrative expenses		947		821
Total expenses		11,271		10,180
Net investment income before excise tax		8,763		7,790
Excise tax		224		190
Net investment income after excise tax		8,539		7,600

Realized and unrealized gains (losses) on investments and foreign currency transactions
Net realized gains (losses)
Non-controlled/non-affiliate company investments		(18,184)		8,160
Non-controlled affiliate company investments		—		—
Foreign currency transactions		(281)		1
Foreign currency forward contracts		—		—
Net realized gains (losses)		(18,465)		8,161
Net change in unrealized appreciation (depreciation)
Non-controlled/non-affiliate company investments		17,117		(6,975)
Non-controlled affiliate company investments		(1,621)		(434)
Controlled affiliate company investments		169		(120)
Translation of assets and liabilities in foreign currencies		(28)		(62)
Foreign currency forward contracts		(4)		(1)
Net change in unrealized appreciation (depreciation)		15,633		(7,592)
Net realized and unrealized gains (losses) on investments and foreign currency transactions		(2,832)		569
Net increase in net assets resulting from operations	$	5,707	$	8,169

Per Common Share Data
Basic and diluted earnings per common share	$	0.25	$	0.40
Dividends and distributions declared per common share	$	0.36	$	0.36
Basic and diluted weighted average common shares outstanding		23,190,656		20,551,565

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Statements of Changes in Net Assets (Unaudited)

(in thousands, except share and per share data)


	Common Stock
	Shares		Par amount		Paid-in Capital in Excess of Par		Accumulated Underdistributed/ (Overdistributed) Earnings		Total Net Assets
Balance at December 31, 2021	23,162,667	$	23	$	339,161	$	10,567	$	349,751
Stock issued in connection with at-the-market offering	16,678		—		197		—		197
Stock issued in connection with distribution reinvestment plan	32,068		—		498		—		498
Net increase in net assets resulting from operations:
Net investment income after excise tax	—		—		—		8,539		8,539
Net realized gains (losses) on investments	—		—		—		(18,465)		(18,465)
Net change in unrealized appreciation (depreciation) on investments	—		—		—		15,633		15,633
Distributions declared	—		—		—		(8,234)		(8,234)
Balance at March 31, 2022	23,211,413	$	23	$	339,856	$	8,040	$	347,919



	Common Stock
	Shares		Par amount		Paid-in Capital in Excess of Par		Accumulated Underdistributed/ (Overdistributed) Earnings		Total Net Assets
Balance at December 31, 2020	20,546,032	$	21	$	300,002	$	12,874	$	312,897
Stock issued in connection with at-the-market offering	37,803		—		590		—		590
Stock issued in connection with distribution reinvestment plan	—		—		—		—		—
Net increase in net assets resulting from operations:
Net investment income after excise tax	—		—		—		7,600		7,600
Net realized gains (losses) on investments	—		—		—		8,161		8,161
Net change in unrealized appreciation (depreciation) on investments	—		—		—		(7,592)		(7,592)
Distributions declared	—		—		—		(7,307)		(7,307)
Balance at March 31, 2021	20,583,835	$	21	$	300,592	$	13,736	$	314,349

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Three months ended March 31,
	2022		2021
Cash flows from operating activities
Net increase in net assets resulting from operations	$	5,707	$	8,169
Adjustments to reconcile net increase in net assets resulting from operations to net cash (used in) operating activities:
Paid-in-kind income		(532)		(494)
Net realized (gains) losses on investments		18,184		(8,160)
Net unrealized depreciation (appreciation) on investments		(15,665)		7,529
Net unrealized (appreciation) depreciation on translation of assets and liabilities in foreign currencies		28		62
Net unrealized (appreciation) depreciation on foreign currency forward contracts		4		1
Accretion of discount		(1,345)		(2,561)
Amortization of deferred financing costs		367		329
Acquisition of investments		(103,590)		(72,388)
Proceeds from principal payments and sales of portfolio investments		63,330		125,200
Proceeds from sales of portfolio investments to STRS JV		57,661		24,623
Net changes in operating assets and liabilities:
Interest and dividend receivable		754		(815)
Escrow receivable		—		(1,939)
Prepaid expenses and other receivables		428		(71)
Amounts receivable on unsettled investment transactions		(7,916)		(13,902)
Amounts payable on unsettled investment transactions		—		(497)
Management fees payable		186		(9)
Incentive fees payable		(2,513)		375
Accounts payable and accrued expenses		(1,301)		191
Interest payable		1,461		379
Advances received from unfunded credit facilities		(173)		(15)
Net cash provided by operating activities		15,075		66,007

Cash flows from financing activities
Proceeds from issuance of common stock, net of offering costs		(50)		582
Borrowings		49,997		35,049
Repayments of debt		(58,200)		(85,801)
Deferred financing costs		(582)		(20)
Distributions paid to common stockholders, net of distributions reinvested		(7,724)		(7,294)
Net cash used in financing activities		(16,559)		(57,484)
Effect of exchange rate changes on cash		288		5
Net change in cash, cash equivalents and restricted cash		(1,196)		8,528
Cash, cash equivalents and restricted cash at beginning of period		22,468		15,946
Cash, cash equivalents and restricted cash at end of period	$	21,272	$	24,474

Supplemental and non-cash disclosure of cash flow information:
Interest paid	$	2,947	$	2,651
Distributions reinvested		498		—
Value of shares issued pursuant to the ATM Program		247		8
Non-cash exchanges of investments		25,000		4,320

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated statements of assets and liabilities that sum to the total of the same amounts presented in the consolidated statements of cash flows:


	As of March 31,
	2022		2021
Cash and cash equivalents	$	2,454	$	7,701
Restricted cash and cash equivalents		18,262		16,342
Restricted foreign currency		556		431
Total cash, cash equivalents and restricted cash presented in consolidated statements of cash flows	$	21,272	$	24,474

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
North America
Debt Investments
Asset Management & Custody Banks
JZ Capital Partners Ltd.⁽⁴⁾⁽⁵⁾	First Lien Secured Term Loan	1.00%	L+ 7.00%	8.00%	01/26/22	01/26/27	10,286	$	10,087	$	10,087	2.90	%
JZ Capital Partners Ltd.^(4)(5)(7)	First Lien Secured Delayed Draw Loan	1.00%	L+ 7.00%	8.00%	01/26/22	01/26/27	—		—		—	—
									10,087		10,087	2.90
Air Freight & Logistics
Access USA Shipping, LLC (d/b/a MyUS.com)	First Lien Secured Term Loan	1.50%	L+ 8.00%	9.50%	02/08/19	02/08/24	4,864		4,837		4,864	1.40
Motivational Marketing, LLC (d/b/a Motivational Fulfillment)	First Lien Secured Term Loan	1.00%	L+ 6.25%	7.25%	07/12/21	07/12/26	11,461		11,265		11,347	3.26
Motivational Marketing, LLC (d/b/a Motivational Fulfillment)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.25%	7.25%	07/12/21	07/12/26	—		—		8	—
									16,102		16,219	4.66
Application Software
Atlas Purchaser, Inc. (d/b/a Aspect Software)	Second Lien Secured Term Loan	0.75%	L+ 9.00%	9.75%	05/03/21	05/07/29	15,000		14,600		14,850	4.26
Education Networks of America, Inc.	First Lien Secured Term Loan	1.00%	L+ 5.50%	6.50%	11/30/21	10/27/26	4,680		4,483		4,680	1.35
Naviga Inc. (f/k/a Newscycle Solutions, Inc.)	First Lien Secured Term Loan	1.00%	L+ 7.00%	8.01%	06/14/19	12/29/22	3,205		3,191		3,205	0.92
Naviga Inc. (f/k/a Newscycle Solutions, Inc.)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 7.00%	8.00%	06/14/19	12/29/22	169		168		169	0.05
									22,442		22,904	6.58
Automotive Retail
Team Car Care Holdings, LLC (Heartland Auto)⁽¹²⁾	First Lien Secured Term Loan	1.00%	Base rate+ 7.98%	9.02%	02/16/18	06/28/24	15,055		14,973		14,980	4.31
									14,973		14,980	4.31
Broadcasting
Coastal Television Broadcasting Group LLC	First Lien Secured Term Loan	1.00%	SF+ 6.50%	7.50%	12/30/21	12/30/26	8,191		8,035		8,035	2.31
Coastal Television Broadcasting Group LLC⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	SF+ 6.50%	7.50%	12/30/21	12/30/26	—		—		—	—
									8,035		8,035	2.31
Building Products
PFB Holdco, Inc. (d/b/a PFB Corporation)⁽¹³⁾	First Lien Secured Term Loan	1.00%	C+ 6.50%	7.50%	12/17/21	12/17/26	9,004		6,911		7,069	2.02
PFB Holdco, Inc. (d/b/a PFB Corporation)^(7)(13)	First Lien Secured Revolving Loan	1.00%	C+ 6.50%	7.50%	12/17/21	12/17/26	—		—		—	—
PFB Holdco, Inc. (d/b/a PFB Corporation)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	12/17/21	12/17/26	2,193		2,151		2,151	0.62
PFB Holdco, Inc. (d/b/a PFB Corporation)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.50%	7.50%	12/17/21	12/17/26	—		—		—	—
Trimlite Buyer LLC (d/b/a Trimlite LLC)^(5)(13)	First Lien Secured Term Loan	1.00%	C+ 6.50%	7.71%	07/27/21	07/27/26	22,833		17,881		18,249	5.25
Trimlite Buyer LLC (d/b/a Trimlite LLC)⁽⁵⁾⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.50%	7.50%	07/27/21	07/27/26	491		482		508	0.15
									27,425		27,977	8.04
Cable & Satellite
Bulk Midco, LLC⁽¹⁵⁾	First Lien Secured Term Loan	1.00%	L+ 7.64%	9.13%	06/08/18	06/08/23	14,922		14,869		14,475	4.16
									14,869		14,475	4.16
Commodity Chemicals
Flexitallic Group SAS	First Lien Secured Term Loan	1.00%	L+ 7.50%	8.51% (8.01% Cash + 0.50% PIK)	10/28/19	10/29/26	15,702		15,062		15,337	4.41
									15,062		15,337	4.41
Construction & Engineering
Tensar Corporation	First Lien Secured Term Loan	1.00%	L+ 6.75%	7.76%	11/20/20	08/20/25	6,913		6,789		7,051	2.03
									6,789		7,051	2.03
Construction Materials
Claridge Products and Equipment, LLC	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.51%	12/30/20	12/29/25	7,621		7,506		7,468	2.14
Claridge Products and Equipment, LLC^(7)(12)	First Lien Secured Revolving Loan	1.00%	Base rate+ 5.64%	9.21%	12/30/20	12/29/25	596		588		584	0.17
									8,094		8,052	2.31
Consumer Finance
Maxitransfers Blocker Corp.	First Lien Secured Term Loan	1.00%	L+ 8.50%	9.51%	10/07/20	10/07/25	8,478		8,337		8,478	2.44
Maxitransfers Blocker Corp.⁽⁴⁾⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 8.50%	9.51%	10/07/20	10/07/25	—		—		17	—
									8,337		8,495	2.44

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
Data Processing & Outsourced Services
Escalon Services Inc.	First Lien Secured Term Loan	1.00%	L+ 10.30%	11.30% (10.60% Cash + 0.70% PIK)	12/04/20	12/04/25	17,259	$	16,471	$	16,991	4.88	%
Future Payment Technologies, L.P.	First Lien Secured Term Loan	1.00%	L+ 8.25%	9.25%	12/23/16	06/07/24	23,845		23,668		23,785	6.84
									40,139		40,776	11.72
Department Stores
Mills Fleet Farm Group, LLC	First Lien Secured Term Loan	1.00%	L+ 6.25%	7.25%	10/24/18	10/24/24	13,538		13,342		13,538	3.89
									13,342		13,538	3.89
Distributors
Crown Brands LLC⁽¹⁹⁾	Second Lien Secured Term Loan	1.50%	L+ 10.50%	12.00%	12/15/20	01/08/26	4,383		4,304		3,507	1.01
Crown Brands LLC⁽¹⁹⁾	Second Lien Secured Delayed Draw Loan	1.50%	L+ 10.50%	12.00%	12/15/20	01/08/26	651		651		521	0.15
									4,955		4,028	1.16
Diversified Chemicals
Manchester Acquisition Sub LLC (d/b/a Draslovka Holding AS)	First Lien Secured Term Loan	0.75%	SF+ 5.75%	6.50%	11/16/21	11/16/26	7,980		7,582		7,712	2.22
Sklar Holdings, Inc. (d/b/a Starco)	First Lien Secured Term Loan	1.00%	L+ 9.75%	10.75% (8.75% Cash + 2.00% PIK)	11/13/19	05/13/23	7,390		7,307		7,020	2.02
									14,889		14,732	4.24
Diversified Support Services
NNA Services, LLC	First Lien Secured Term Loan	1.00%	L+ 6.75%	7.76%	08/27/21	08/27/26	11,521		11,394		11,465	3.30
									11,394		11,465	3.30
Education Services
EducationDynamics, LLC	First Lien Secured Term Loan	1.00%	L+ 7.00%	8.00% (7.50% Cash + 0.50% PIK)	09/15/21	09/15/26	13,251		13,015		13,004	3.73
EducationDynamics, LLC⁽⁴⁾⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 7.00%	8.00% (7.50% Cash + 0.50% PIK)	09/15/21	09/15/26	—		—		(1)	—
EducationDynamics, LLC⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	P+ 5.50%	9.00%	09/15/21	09/15/26	240		236		235	0.07
EducationDynamics, LLC⁽⁴⁾	Subordinated Unsecured Term Loan	N/A	4.00%	4.00%	09/15/21	03/15/27	167		167		167	0.05
									13,418		13,405	3.85
Electric Utilities
CleanChoice Energy, Inc. (d/b/a CleanChoice)	First Lien Secured Term Loan	1.00%	L+ 7.25%	8.25%	10/12/21	10/12/26	10,500		10,310		10,290	2.96
									10,310		10,290	2.96
Environmental & Facilities Services
Industrial Specialty Services USA LLC	First Lien Secured Term Loan	1.00%	L+ 6.25%	7.26%	12/31/21	12/31/26	11,977		11,750		11,750	3.38
Industrial Specialty Services USA LLC⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.25%	7.25%	12/31/21	12/31/26	709		696		696	0.20
RLJ Pro-Vac, Inc. (d/b/a Pro-Vac)	First Lien Secured Term Loan	1.00%	L+ 6.25%	7.26%	12/31/21	12/31/26	8,753		8,587		8,587	2.47
RLJ Pro-Vac, Inc. (d/b/a Pro-Vac)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.25%	7.26%	12/31/21	12/31/26	—		—		—	—
									21,033		21,033	6.05
Health Care Facilities
Bridgepoint Healthcare, LLC	First Lien Secured Term Loan	1.00%	L+ 7.75%	8.75%	10/05/21	10/05/26	10,840		10,644		10,731	3.08
Bridgepoint Healthcare, LLC⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 7.75%	8.75%	10/05/21	10/05/26	—		—		6	—
Bridgepoint Healthcare, LLC⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 7.75%	8.75%	10/05/21	10/05/26	—		—		13	—
									10,644		10,750	3.08

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
Health Care Services
CHS Therapy, LLC	First Lien Secured Term Loan A	1.50%	L+ 9.00%	10.50% (10.00% Cash + 0.50% PIK)	06/14/19	06/14/24	7,203	$	7,143	$	7,203	2.07	%
CHS Therapy, LLC	First Lien Secured Term Loan C	1.50%	L+ 9.00%	10.50% (10.00% Cash + 0.50% PIK)	10/07/20	06/14/24	886		876		886	0.25
IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)	First Lien Secured Term Loan	1.00%	L+ 6.75%	7.75%	12/04/20	12/04/24	17,322		17,098		17,322	4.98
IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 6.75%	7.75%	12/04/20	12/04/24	2,908		2,873		2,883	0.83
IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	P+ 5.75%	9.25%	12/04/20	12/04/24	142		140		147	0.04
Lab Logistics, LLC	First Lien Secured Term Loan	1.00%	L+ 7.25%	8.25%	10/16/19	09/25/23	1,153		1,139		1,153	0.33
Lab Logistics, LLC	First Lien Secured Delayed Draw Loan	1.00%	L+ 7.25%	8.25%	10/16/19	09/25/23	5,170		5,156		5,170	1.49
PG Dental New Jersey Parent, LLC	First Lien Secured Term Loan	1.00%	L+ 9.75%	10.75% (9.25% Cash + 1.50% PIK)	11/25/20	11/25/25	15,177		14,932		13,963	4.01
PG Dental New Jersey Parent, LLC	First Lien Secured Revolving Loan	1.00%	L+ 9.75%	10.75% (9.25% Cash + 1.50% PIK)	11/25/20	11/25/25	704		692		647	0.19
									50,049		49,374	14.19
Health Care Supplies
ABB/Con-cise Optical Group LLC (d/b/a ABB Optical Group, LLC)	First Lien Secured Term Loan	0.75%	L+ 7.50%	8.26%	02/23/22	02/23/28	21,736		21,202		21,202	6.09
ABB/Con-cise Optical Group LLC (d/b/a ABB Optical Group, LLC)⁽⁷⁾	First Lien Secured Revolving Loan	0.75%	Base rate+ 6.83%	9.77%	02/23/22	02/23/28	838		817		817	0.23
									22,019		22,019	6.32
Heavy Electrical Equipment
PPS CR Acquisition, Inc. (d/b/a Power Plant Services)	First Lien Secured Term Loan	1.00%	L+ 6.25%	7.26%	06/25/21	06/25/26	11,095		10,906		10,984	3.16
PPS CR Acquisition, Inc. (d/b/a Power Plant Services)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.25%	7.26%	06/25/21	06/25/24	104		103		118	0.03
									11,009		11,102	3.19
Home Furnishings
Sleep OpCo LLC (d/b/a Brooklyn Bedding LLC)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	10/12/21	10/12/26	19,984		19,622		19,739	5.67
Sleep OpCo LLC (d/b/a Brooklyn Bedding LLC)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.50%	7.50%	10/12/21	10/12/26	—		—		15	—
Sure Fit Home Products, LLC	First Lien Secured Term Loan	1.00%	L+ 9.75%	10.76%	04/12/21	07/13/23	4,877		4,807		4,146	1.19
									24,429		23,900	6.86
Household Products
The Kyjen Company, LLC (d/b/a Outward Hound)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	04/05/21	04/05/26	11,374		11,237		11,374	3.27
The Kyjen Company, LLC (d/b/a Outward Hound)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.50%	7.50%	04/05/21	04/05/26	258		255		266	0.08
									11,492		11,640	3.35
Interactive Media & Services
What If Holdings, LLC (d/b/a What If Media Group, LLC)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	10/02/19	10/02/24	18,725		18,509		18,725	5.38
									18,509		18,725	5.38
Internet & Direct Marketing Retail
BBQ Buyer, LLC (d/b/a BBQ Guys)	First Lien Secured Term Loan	1.50%	L+ 10.00%	11.50% (9.50% Cash + 2.00% PIK)	08/28/20	08/28/25	12,654		12,435		12,527	3.60
BBQ Buyer, LLC (d/b/a BBQ Guys)⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.50%	L+ 10.00%	11.50% (9.50% Cash + 2.00% PIK)	12/02/21	08/28/25	2,580		2,532		2,561	0.74
Luxury Brand Holdings, Inc. (d/b/a Ross-Simons, Inc.)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	12/04/20	06/04/26	5,925		5,835		5,925	1.70
Potpourri Group, Inc.	First Lien Secured Term Loan	1.50%	L+ 8.25%	9.75%	07/03/19	07/03/24	17,034		16,861		17,034	4.90
									37,663		38,047	10.94
Investment Banking & Brokerage
JVMC Holdings Corp. (fka RJO Holdings Corp)	First Lien Secured Term Loan	1.00%	L+ 7.00%	8.00%	02/28/19	02/28/24	12,512		12,464		12,512	3.60
									12,464		12,512	3.60
IT Consulting & Other Services
ATSG, Inc.	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	11/12/21	11/12/26	13,965		13,707		13,713	3.94
									13,707		13,713	3.94

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
Leisure Facilities
Honors Holdings, LLC (d/b/a Orange Theory)⁽¹⁶⁾	First Lien Secured Term Loan	1.00%	L+ 7.92%	8.92% (8.42% Cash + 0.50% PIK)	09/06/19	09/06/24	9,440	$	9,322	$	9,345	2.69	%
Honors Holdings, LLC (d/b/a Orange Theory)⁽¹⁶⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 7.63%	8.63% (8.05% Cash + 0.58% PIK)	09/06/19	09/06/24	4,649		4,613		4,603	1.32
Lift Brands, Inc. (d/b/a Snap Fitness)	First Lien Secured Term Loan A	1.00%	L+ 7.50%	8.50%	06/29/20	06/29/25	5,617		5,560		5,581	1.60
Lift Brands, Inc. (d/b/a Snap Fitness)	First Lien Secured Term Loan B	N/A	9.50%	9.50% (0.00% Cash + 9.50% PIK)	06/29/20	06/29/25	1,309		1,291		1,274	0.37
Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)⁽⁹⁾	First Lien Secured Term Loan C	N/A	9.50%	9.50% (0.00% Cash + 9.50% PIK)	06/29/20	NA	1,268		1,265		1,227	0.35
									22,051		22,030	6.33
Leisure Products
Playmonster Group LLC^(6)(20)(22)	First Lien Secured Term Loan	1.00%	L+ 8.00%	9.00% (0.00% Cash + 9.00% PIK)	01/24/22	06/08/26	2,985		2,985		2,985	0.86
PlayMonster LLC⁽⁶⁾⁽⁷⁾	First Lien Secured Revolving Loan	0.25%	L+ 1.75%	2.10%	01/24/22	06/08/26	1,044		1,044		1,044	0.30
									4,029		4,029	1.16
Life Sciences Tools & Services
LSCS Holdings, Inc. (d/b/a Eversana Life Science Services, LLC)	Second Lien Secured Term Loan	0.50%	L+ 8.00%	8.50%	11/23/21	12/16/29	5,000		4,928		4,902	1.41
									4,928		4,902	1.41
Office Services & Supplies
American Crafts, LC	First Lien Secured Term Loan	1.00%	L+ 8.50%	9.50%	05/28/21	05/28/26	8,351		8,248		8,238	2.37
American Crafts, LC	First Lien Secured Delayed Draw Loan	1.00%	L+ 8.50%	9.50%	01/25/22	05/28/26	1,403		1,376		1,376	0.40
Empire Office, Inc.	First Lien Secured Term Loan	1.50%	L+ 6.50%	8.00%	04/12/19	04/12/24	12,443		12,313		12,350	3.55
Empire Office, Inc.⁽⁴⁾⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.50%	L+ 6.50%	8.00%	08/17/21	04/12/24	—		—		(40)	(0.01)
									21,937		21,924	6.31
Packaged Foods & Meats
Lenny & Larry's, LLC⁽¹⁷⁾	First Lien Secured Term Loan	1.00%	L+ 7.83%	8.83% (7.68% Cash + 1.15% PIK)	05/15/18	05/15/23	11,185		11,137		10,907	3.14
									11,137		10,907	3.14
Personal Products
Inspired Beauty Brands, Inc.	First Lien Secured Term Loan	1.00%	L+ 7.00%	8.00%	12/30/20	12/30/25	12,117		11,935		12,117	3.48
Inspired Beauty Brands, Inc.⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 7.00%	8.00%	12/30/20	12/30/25	—		—		8	—
									11,935		12,125	3.48
Research & Consulting Services
Aeyon LLC	First Lien Secured Term Loan	1.00%	SF+ 8.88%	9.88%	02/10/22	02/10/27	8,978		8,803		8,801	2.53
ALM Media, LLC	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.51%	11/25/19	11/25/24	13,978		13,830		13,838	3.98
Nelson Worldwide, LLC	First Lien Secured Term Loan	1.00%	L+ 10.25%	11.25% (10.25% Cash + 1.00% PIK)	01/09/18	01/09/23	9,719		9,682		9,547	2.74
									32,315		32,186	9.25
Specialized Consumer Services
Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	11/16/21	11/16/27	12,968		12,722		12,729	3.66
Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.)⁽⁴⁾⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 6.50%	7.50%	11/16/21	11/16/27	—		—		2	—
HC Salon Holdings, Inc. (d/b/a Hair Cuttery)	First Lien Secured Term Loan	1.00%	L+ 8.00%	9.01%	09/30/21	09/30/26	11,608		11,399		11,384	3.27
HC Salon Holdings, Inc. (d/b/a Hair Cuttery)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 8.00%	9.01%	09/30/21	09/30/26	—		—		(1)	—
True Blue Car Wash, LLC	First Lien Secured Term Loan	1.00%	SF+ 6.88%	7.88%	10/17/19	10/17/24	10,101		9,984		10,018	2.88
True Blue Car Wash, LLC⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	SF+ 6.50%	7.50%	10/17/19	10/17/24	1,845		1,817		1,831	0.53
									35,922		35,963	10.34

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
Specialized Finance
WHF STRS Ohio Senior Loan Fund LLC^{(4)(5)(9)(14)}	Subordinated Note	N/A	L+ 6.50%	6.94%	07/19/19	N/A	80,000	$	80,000	$	80,000	22.99	%
									80,000		80,000	22.99
Systems Software
Arcstor Midco, LLC (d/b/a Arcserve (USA), LLC	First Lien Secured Term Loan	1.00%	L+ 7.00%	8.01%	03/16/21	03/16/27	19,305		18,986		18,919	5.44
									18,986		18,919	5.44
Technology Hardware, Storage & Peripherals
Telestream Holdings Corporation	First Lien Secured Term Loan	1.00%	L+ 8.75%	9.75%	10/15/20	10/15/25	15,041		14,699		15,041	4.32
Telestream Holdings Corporation⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 8.75%	9.75%	10/15/20	10/15/25	—		—		30	0.01
									14,699		15,071	4.33

Total Debt Investments								$	751,619	$	752,717	216.35	%

Equity Investments⁽²³⁾
Advertising
Avision Holdings, LLC (d/b/a Avision Sales Group)⁽⁴⁾	Class A LLC Interests	N/A	N/A	N/A	12/15/21	N/A	200	$	250	$	208	0.06	%
									250		208	0.06
Air Freight & Logistics
Motivational CIV, LLC (d/b/a Motivational Fulfillment)⁽⁴⁾	Class B Units	N/A	N/A	N/A	07/12/21	N/A	1,250		1,250		863	0.25
									1,250		863	0.25
Building Products
PFB Holdco, Inc. (d/b/a PFB Corporation)^(4)(13)	Class A Units	N/A	N/A	N/A	12/17/21	N/A	1		423		432	0.12
									423		432	0.12
Data Processing & Outsourced Services
Escalon Services Inc.⁽⁴⁾	Warrants	N/A	N/A	N/A	12/04/20	N/A	709		476		1,644	0.47
									476		1,644	0.47
Diversified Support Services
Quest Events, LLC⁽⁴⁾	Preferred Units	N/A	N/A	N/A	12/28/18	12/08/25	317		317		71	0.02
ImageOne Industries, LLC⁽⁴⁾	Common A Units	N/A	N/A	N/A	09/20/19	N/A	225		—		122	0.04
									317		193	0.06
Education Services
Eddy Acquisitions, LLC (d/b/a EducationDynamics, LLC)⁽⁴⁾	Preferred Units	N/A	12.00%	12.00%	09/15/21	N/A	167		167		156	0.04
									167		156	0.04
Environmental & Facilities Services
BPII-JL Group Holdings LP (d/b/a Juniper Landscaping Holdings LLC)⁽⁴⁾	Class A Units	N/A	N/A	N/A	12/29/21	N/A	83		825		825	0.24
									825		825	0.24
Health Care Services
Lab Logistics, LLC^(4)(21)	Preferred Units	N/A	14.00%	14.00% PIK	10/29/19	N/A	2		857		915	0.26
									857		915	0.26
Industrial Machinery
BL Products Parent, LP (d/b/a Bishop Lifting Products, Inc.)⁽⁴⁾	Class A Units	N/A	N/A	N/A	02/01/22	N/A	667		667		667	0.19
									667		667	0.19
Interactive Media & Services
What If Media Group, LLC⁽⁴⁾	Common Units	N/A	N/A	N/A	07/02/21	N/A	8		850		1,439	0.41
									850		1,439	0.41

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
Internet & Direct Marketing Retail
BBQ Buyer, LLC (d/b/a BBQ Guys)⁽⁴⁾	Shares	N/A	N/A	N/A	08/28/20	N/A	1,100	$	1,100	$	2,266	0.65	%
Ross-Simons Topco, LP (d/b/a Ross-Simons, Inc.)⁽⁴⁾	Preferred Units	N/A	8.00%	8.00% PIK	12/04/20	N/A	600		514		1,246	0.36
									1,614		3,512	1.01
Investment Banking & Brokerage
Arcole Holding Corporation^{(4)(5)(6)(18)}	Shares	N/A	N/A	N/A	10/01/20	N/A	—		6,944		7,045	2.02
									6,944		7,045	2.02
IT Consulting & Other Services
CX Holdco LLC (d/b/a Cennox Inc.)⁽⁴⁾	Common Units	N/A	N/A	N/A	05/04/21	N/A	972		972		1,584	0.46
Keras Holdings, LLC (d/b/a KSM Consulting, LLC)⁽⁴⁾	Shares	N/A	N/A	N/A	12/31/20	N/A	496		496		496	0.14
									1,468		2,080	0.60
Leisure Facilities
Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)⁽⁴⁾	Class A Common Stock	N/A	N/A	N/A	06/29/20	N/A	2		1,941		199	0.06
Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)⁽⁴⁾	Warrants	N/A	N/A	N/A	06/29/20	06/28/28	1		793		81	0.02
									2,734		280	0.08
Leisure Products
Playmonster Group Equity, Inc. (d/b/a PlayMonster LLC)^{(4)(6)(8)(22)}	Preferred Stock	N/A	14.00%	14.00% PIK	01/24/22	N/A	36		3,600		2,268	0.66
Playmonster Group Equity, Inc. (d/b/a PlayMonster LLC)^(4)(6)(22)	Common Stock	N/A	N/A	N/A	01/24/22	N/A	72		460		—	—
									4,060		2,268	0.66
Other Diversified Financial Services
SFS Global Holding Company (d/b/a Sigue Corporation)⁽⁴⁾	Warrants	N/A	N/A	N/A	06/28/18	12/28/25	—		—		—	—
Sigue Corporation⁽⁴⁾	Warrants	N/A	N/A	N/A	06/28/18	12/28/25	22		2,890		3,490	1.00
									2,890		3,490	1.00
Specialized Consumer Services
Camp Facility Services Parent, LLC (d/b/a Camp Construction Services, Inc.)⁽⁴⁾	Preferred Units	N/A	10.00%	10.00% PIK	11/16/21	N/A	15		840		861	0.26
									840		861	0.26
Specialized Finance
WHF STRS Ohio Senior Loan Fund^(4)(5)(14)	LLC Interests	N/A	N/A	N/A	07/19/19	N/A	20,000		20,000		20,776	5.97
									20,000		20,776	5.97

Total Equity Investments								$	46,632	$	47,654	13.70	%

Total Investments								$	798,251	$	800,371	230.05	%

Forward Currency Contracts


Counterparty	Currency to be sold		Currency to be purchased		Settlement date	Unrealized appreciation		Unrealized depreciation
Morgan Stanley	C$	400 CAD	$	317 USD	4/28/22	$	—	$	(4)
Total						$	—	$	(4)

(1)	Except as otherwise noted, all investments are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940, as amended (the “1940 Act”), and provide collateral for the Company’s credit facility.

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)

(2)

The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), which resets monthly, quarterly or semiannually, the Secured Overnight Financing Rate (“SOFR” or “SF”), the Canadian Dollar Offered Rate (“CDOR” or “C”), Canada Prime Rate (“CP”) or the U.S. Prime Rate (“Prime” or “P”). The one, three and six-month USD LIBOR were 0.45%, 0.96% and 1.47%, respectively, as of March 31, 2022. The SOFR, CDOR, CP and Prime were 0.29%, 1.26%, 2.70% and 3.50%, respectively, as of March 31, 2022.

(3)	The interest rate is the “all-in-rate” including the current index and spread, the fixed rate, and the payment-in-kind (“PIK”) interest rate, as the case may be.

(4)	The investment or a portion of the investment does not provide collateral for the Company’s credit facility.

(5)

Not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets. Qualifying assets represented 83.7% of total assets as of the date of the consolidated schedule of investments.

(6)	Investment is a non-controlled affiliate investment as defined by the 1940 Act.

(7)	The investment has an unfunded commitment in addition to any amounts presented in the consolidated schedule of investments as of March 31, 2022. See Note 8.

(8)	Preferred equity investment is a non-income producing security.

(9)	Security is perpetual with no defined maturity date.

(10)	Except as otherwise noted, all of the Company’s portfolio company investments, which as of the date of the consolidated schedule of investments represented 230.0% of the Company’s net assets or 95.4% of the Company’s total assets, are subject to legal restrictions on sales.

(11)	The fair value of each investment was determined using significant unobservable inputs. See Note 5.

(12)	The investment was comprised of two contracts, which were indexed to different base rates, L and P, respectively. The Floor, Spread Above Index and Interest Rate presented represent the weighted average of both contracts.

(13)	Principal amount is non-USD denominated and is based in Canadian dollars.

(14)

Investment is a controlled affiliate investment as defined by the 1940 Act. On January 14, 2019, the Company entered into an agreement (as described in Note 4 hereto) with State Teachers Retirement System of Ohio, a public pension fund established under Ohio law (“STRS Ohio”), to create WHF STRS Ohio Senior Loan Fund, LLC (“STRS JV”), a joint venture, which invests primarily in senior secured first and second lien term loans.

(15)

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 2.75% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(16)

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 3.50% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(17)

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 3.00% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

(18)	On October 1, 2020, as part of a restructuring agreement between the Company and Arcole Acquisition Corp, the Company’s investments in first lien secured term loans to Arcole Acquisition Corp were converted into common shares of Arcole Holding Corp.

(19)	At the option of the issuer, interest can be paid in cash or cash and PIK. The issuer may elect to pay up to 2.00% PIK.

(20)	At the option of the issuer, interest can be paid in cash or cash and PIK. The issuer may elect to pay up to 9.00% PIK.

(21)	Investment earns 14.00% that converts to PIK on an annual basis and is recorded in interest and dividend receivable in the consolidated statements of assets and liabilities.

(22)

On January 24, 2022, as part of a restructuring agreement between the Company and PlayMonster LLC, the Company’s first lien secured term loan and delayed draw loan investments to PlayMonster LLC were converted into a new first lien secured term loan, preferred stock and common stock of Playmonster Group LLC.

(23)	Ownership of certain equity investments may occur through a holding company or partnership.

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
North America
Debt Investments
Advertising
I&I Sales Group, LLC (d/b/a Avision Sales Group)	First Lien Secured Term Loan	1.00%	L+ 6.00%	7.00%	12/15/21	12/15/26	9,286	$	9,102	$	9,100	2.60	%
I&I Sales Group, LLC (d/b/a Avision Sales Group)⁽⁴⁾⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 6.00%	7.00%	12/15/21	12/15/26	396		388		388	0.11
I&I Sales Group, LLC (d/b/a Avision Sales Group)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.00%	7.00%	12/15/21	12/15/26	—		—		—	—
									9,490		9,488	2.71
Air Freight & Logistics
Access USA Shipping, LLC (d/b/a MyUS.com)	First Lien Secured Term Loan	1.50%	L+ 8.00%	9.50%	02/08/19	02/08/24	4,937		4,906		4,937	1.41
ITS Buyer Inc. (d/b/a ITS Logistics, LLC)	First Lien Secured Term Loan	1.00%	L+ 6.00%	7.00%	12/22/21	06/15/26	3,612		3,540		3,539	1.01
ITS Buyer Inc. (d/b/a ITS Logistics, LLC)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.00%	7.00%	12/22/21	06/15/26	—		—		—	—
Motivational Marketing, LLC (d/b/a Motivational Fulfillment)	First Lien Secured Term Loan	1.00%	L+ 6.25%	7.25%	07/12/21	07/12/26	11,789		11,575		11,646	3.33
Motivational Marketing, LLC (d/b/a Motivational Fulfillment)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.25%	7.25%	07/12/21	07/12/26	—		—		7	—
									20,021		20,129	5.75
Application Software
Atlas Purchaser, Inc. (d/b/a Aspect Software)	Second Lien Secured Term Loan	0.75%	L+ 9.00%	9.75%	05/03/21	05/07/29	15,000		14,586		14,700	4.20
Education Networks of America, Inc.	First Lien Secured Term Loan	1.00%	L+ 5.50%	6.50%	11/30/21	10/27/26	4,719		4,511		4,508	1.29
Naviga Inc. (f/k/a Newscycle Solutions, Inc.)	First Lien Secured Term Loan	1.00%	L+ 7.00%	8.00%	06/14/19	12/29/22	3,213		3,195		3,213	0.92
Naviga Inc. (f/k/a Newscycle Solutions, Inc.)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 7.00%	8.00%	06/14/19	12/29/22	169		168		169	0.05
									22,460		22,590	6.46
Automotive Retail
Team Car Care Holdings, LLC (Heartland Auto)⁽¹²⁾	First Lien Secured Term Loan	1.03%	Base rate+ 7.98%	9.02%	02/16/18	06/28/24	15,286		15,193		15,286	4.37
									15,193		15,286	4.37
Broadcasting
Coastal Television Broadcasting Group LLC	First Lien Secured Term Loan	1.00%	SF+ 6.50%	7.50%	12/30/21	12/30/26	8,191		8,027		8,027	2.30
Coastal Television Broadcasting Group LLC⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	SF+ 6.50%	7.50%	12/30/21	12/30/26	—		—		—	—
									8,027		8,027	2.30
Building Products
Drew Foam Companies Inc.	First Lien Secured Term Loan	1.00%	L+ 6.00%	7.00%	11/05/20	11/05/25	7,207		7,094		7,183	2.05
LHS Borrower, LLC (d/b/a Leaf Home, LLC)	First Lien Secured Term Loan	1.00%	L+ 6.75%	7.75%	09/30/20	09/30/25	9,506		9,346		9,416	2.69
LHS Borrower, LLC (d/b/a Leaf Home, LLC)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.75%	7.75%	09/30/20	09/30/25	—		—		4	—
PFB Holdco, Inc. (d/b/a PFB Corporation)⁽¹³⁾	First Lien Secured Term Loan	2.45%	CP+ 5.50%	7.95%	12/17/21	12/17/26	9,027		6,923		6,998	2.00
PFB Holdco, Inc. (d/b/a PFB Corporation)^(7)(13)	First Lien Secured Revolving Loan	2.45%	CP+ 5.50%	7.95%	12/17/21	12/17/26	—		—		—	—
PFB Holdco, Inc. (d/b/a PFB Corporation)	First Lien Secured Term Loan	3.25%	P+ 5.50%	8.75%	12/17/21	12/17/26	2,198		2,154		2,154	0.62
PFB Holdco, Inc. (d/b/a PFB Corporation)⁽⁷⁾	First Lien Secured Revolving Loan	3.25%	P+ 5.50%	8.75%	12/17/21	12/17/26	—		—		—	—
Trimlite Buyer LLC (d/b/a Trimlite LLC)^(5)(13)	First Lien Secured Term Loan	1.00%	C+ 6.50%	7.50%	07/27/21	07/27/26	22,977		17,975		17,841	5.10
Trimlite Buyer LLC (d/b/a Trimlite LLC)⁽⁵⁾⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.50%	7.50%	07/27/21	07/27/26	164		161		161	0.05
									43,653		43,757	12.51
Cable & Satellite
Bulk Midco, LLC⁽¹⁵⁾	First Lien Secured Term Loan	1.00%	L+ 7.24%	8.24%	06/08/18	06/08/23	15,000		14,936		14,526	4.15
									14,936		14,526	4.15
Commodity Chemicals
Flexitallic Group SAS	First Lien Secured Term Loan	1.00%	L+ 7.50%	8.50% (8.00% Cash + 0.50% PIK)	10/28/19	10/29/26	15,722		15,047		15,172	4.34
									15,047		15,172	4.34

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
Construction & Engineering
Road Safety Services, Inc.	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	12/30/21	03/18/25	4,099	$	4,017	$	4,017	1.15	%
Tensar Corporation	First Lien Secured Term Loan	1.00%	L+ 6.75%	7.75%	11/20/20	08/20/25	6,930		6,797		7,069	2.02
									10,814		11,086	3.17
Construction Materials
Claridge Products and Equipment, LLC	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	12/30/20	12/29/25	7,640		7,518		7,469	2.14
Claridge Products and Equipment, LLC⁽⁷⁾	First Lien Secured Revolving Loan	3.25%	P+ 5.50%	8.75%	12/30/20	12/29/25	211		207		204	0.06
									7,725		7,673	2.20
Consumer Finance
Maxitransfers Blocker Corp.	First Lien Secured Term Loan	1.00%	L+ 8.50%	9.50%	10/07/20	10/07/25	8,590		8,436		8,590	2.46
Maxitransfers Blocker Corp.⁽⁴⁾	First Lien Secured Revolving Loan	1.00%	L+ 8.50%	9.50%	10/07/20	10/07/25	1,038		1,019		1,038	0.30
									9,455		9,628	2.76
Data Processing & Outsourced Services
Escalon Services Inc.	First Lien Secured Term Loan	1.00%	L+ 13.50%	14.50% (13.00% Cash + 1.50% PIK)	12/04/20	12/04/25	8,046		7,490		8,046	2.30
Future Payment Technologies, L.P.	First Lien Secured Term Loan	1.00%	L+ 8.25%	9.25%	12/23/16	06/07/24	24,000		23,811		23,925	6.84
									31,301		31,971	9.14
Department Stores
Mills Fleet Farm Group, LLC	First Lien Secured Term Loan	1.00%	L+ 6.25%	7.25%	10/24/18	10/24/24	13,538		13,331		13,538	3.87
									13,331		13,538	3.87
Distributors
Crown Brands LLC⁽¹⁹⁾	Second Lien Secured Term Loan	1.50%	L+ 10.50%	12.00%	12/15/20	01/08/26	4,382		4,299		3,505	1.00
Crown Brands LLC⁽¹⁹⁾	Second Lien Secured Delayed Draw Loan	1.50%	L+ 10.50%	12.00%	12/15/20	01/08/26	650		650		520	0.15
									4,949		4,025	1.15
Diversified Chemicals
Manchester Acquisition Sub LLC (d/b/a Draslovka Holding AS)	First Lien Secured Term Loan	0.75%	SF+ 5.75%	6.50%	11/16/21	11/16/26	12,000		11,348		11,340	3.24
Sklar Holdings, Inc. (d/b/a Starco)	First Lien Secured Term Loan	1.00%	L+ 7.75%	8.75%	11/13/19	05/13/23	7,389		7,295		7,020	2.01
									18,643		18,360	5.25
Diversified Support Services
NNA Services, LLC	First Lien Secured Term Loan	1.00%	L+ 6.75%	7.75%	08/27/21	08/27/26	11,594		11,459		11,460	3.28
									11,459		11,460	3.28
Education Services
EducationDynamics, LLC	First Lien Secured Term Loan	1.00%	L+ 7.00%	8.00% (7.50% Cash + 0.50% PIK)	09/15/21	09/15/26	13,318		13,068		13,064	3.74
EducationDynamics, LLC⁽⁴⁾⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 7.00%	8.00% (7.50% Cash + 0.50% PIK)	09/15/21	09/15/26	—		—		—	—
EducationDynamics, LLC⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 7.00%	8.00% (7.50% Cash + 0.50% PIK)	09/15/21	09/15/26	—		—		—	—
EducationDynamics, LLC⁽⁴⁾	Subordinated Unsecured Term Loan	N/A	4.00%	4.00%	09/15/21	03/15/27	167		167		167	0.05
									13,235		13,231	3.79
Electric Utilities
CleanChoice Energy, Inc. (d/b/a CleanChoice)	First Lien Secured Term Loan	1.00%	L+ 7.25%	8.25%	10/12/21	10/12/26	10,500		10,299		10,296	2.94
									10,299		10,296	2.94
Electronic Equipment & Instruments
LMG Holdings, Inc.	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	04/30/21	04/30/26	6,802		6,684		6,687	1.91
LMG Holdings, Inc.⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.50%	7.50%	04/30/21	04/30/26	—		—		—	—
									6,684		6,687	1.91

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
Environmental & Facilities Services
Industrial Specialty Services USA LLC	First Lien Secured Term Loan	1.00%	L+ 6.25%	7.25%	12/31/21	12/31/26	12,007	$	11,767	$	11,767	3.36	%
Industrial Specialty Services USA LLC⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.25%	7.25%	12/31/21	12/31/26	—		—		—	—
Juniper Landscaping Holdings LLC	First Lien Secured Term Loan	1.00%	L+ 6.00%	7.00%	12/29/21	12/29/26	11,420		11,221		11,220	3.21
Juniper Landscaping Holdings LLC⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 6.00%	7.00%	12/29/21	12/29/26	—		—		—	—
Juniper Landscaping Holdings LLC⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.00%	7.00%	12/29/21	12/29/26	597		586		586	0.17
RLJ Pro-Vac, Inc. (d/b/a Pro-Vac)	First Lien Secured Term Loan	1.00%	L+ 6.25%	7.25%	12/31/21	12/31/26	8,775		8,600		8,600	2.46
RLJ Pro-Vac, Inc. (d/b/a Pro-Vac)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.25%	7.25%	12/31/21	12/31/26	—		—		—	—
									32,174		32,173	9.20
Health Care Facilities
Bridgepoint Healthcare, LLC	First Lien Secured Term Loan	1.00%	L+ 7.75%	8.75%	10/05/21	10/05/26	10,979		10,770		10,769	3.08
Bridgepoint Healthcare, LLC⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 7.75%	8.75%	10/05/21	10/05/26	—		—		—	—
Bridgepoint Healthcare, LLC⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 7.75%	8.75%	10/05/21	10/05/26	—		—		—	—
Epiphany Business Services, LLC (d/b/a Epiphany Dermatology, PA)	First Lien Secured Term Loan	1.00%	L+ 7.50%	8.50%	12/04/20	06/22/23	4,278		4,214		4,235	1.21
Epiphany Business Services, LLC (d/b/a Epiphany Dermatology, PA)	First Lien Secured Delayed Draw Loan	1.00%	L+ 7.50%	8.50%	12/04/20	06/22/23	3,052		3,008		3,027	0.87
Epiphany Business Services, LLC (d/b/a Epiphany Dermatology, PA)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 7.50%	8.50%	12/04/20	06/22/23	—		—		3	—
Grupo HIMA San Pablo, Inc.⁽⁷⁾	Superpriority Delayed Draw Loan	N/A	12.00%	12.00%	11/24/21	11/24/23	568		568		568	0.16
Grupo HIMA San Pablo, Inc.^(8)(21)	Amended Term Loan	1.50%	9.00%	10.50% (0.00% Cash + 10.50% PIK)	11/24/21	11/24/23	1,708		1,704		1,708	0.49
Grupo HIMA San Pablo, Inc.⁽⁸⁾	First Lien Secured Term Loan A	N/A	L+ 9.00%	9.13%	05/05/19	04/30/19	3,476		3,476		1,169	0.33
Grupo HIMA San Pablo, Inc.⁽⁸⁾	First Lien Secured Term Loan B	1.50%	L+ 9.00%	10.50%	02/01/13	04/30/19	12,185		12,185		4,097	1.17
Grupo HIMA San Pablo, Inc.⁽⁸⁾	Second Lien Secured Term Loan	N/A	L+ 15.75%	15.75% (13.75% Cash + 2.00% PIK)	02/01/13	07/31/18	1,028		1,024		—	—
									36,949		25,576	7.31
Health Care Services
CHS Therapy, LLC	First Lien Secured Term Loan A	1.50%	L+ 9.00%	10.50% (10.00% Cash + 0.50% PIK)	06/14/19	06/14/24	7,242		7,175		7,242	2.07
CHS Therapy, LLC	First Lien Secured Term Loan C	1.50%	L+ 9.00%	10.50% (10.00% Cash + 0.50% PIK)	10/07/20	06/14/24	891		879		891	0.25
DCA Investment Holding, LLC (d/b/a Dental Care Alliance, LLC)	First Lien Secured Term Loan	0.75%	L+ 6.25%	7.00%	03/12/21	03/12/27	7,025		6,933		6,988	2.00
DCA Investment Holding, LLC (d/b/a Dental Care Alliance, LLC)⁽⁷⁾	First Lien Secured Delayed Draw Loan	0.75%	L+ 6.25%	7.00%	03/12/21	03/12/27	678		672		688	0.20
IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)	First Lien Secured Term Loan	1.00%	L+ 6.75%	7.75%	12/04/20	12/04/24	17,366		17,121		17,366	4.97
IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 6.75%	7.75%	12/04/20	12/04/24	2,550		2,517		2,534	0.72
IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)⁽⁷⁾	First Lien Secured Revolving Loan	3.25%	P+ 5.75%	9.00%	12/04/20	12/04/24	142		139		147	0.04
Lab Logistics, LLC	First Lien Secured Term Loan	1.00%	L+ 7.25%	8.25%	10/16/19	09/25/23	1,155		1,140		1,155	0.33
Lab Logistics, LLC	First Lien Secured Delayed Draw Loan	1.00%	L+ 7.25%	8.25%	10/16/19	09/25/23	5,183		5,166		5,183	1.48
PG Dental New Jersey Parent, LLC	First Lien Secured Term Loan	1.00%	L+ 9.25%	10.25% (8.75% Cash + 1.50% PIK)	11/25/20	11/25/25	15,448		15,178		14,212	4.06
PG Dental New Jersey Parent, LLC⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 9.25%	10.25% (8.75% Cash + 1.50% PIK)	11/25/20	11/25/25	702		689		631	0.18
									57,609		57,037	16.30
Heavy Electrical Equipment
PPS CR Acquisition, Inc. (d/b/a Power Plant Services)	First Lien Secured Term Loan	1.00%	L+ 6.25%	7.25%	06/25/21	06/25/26	11,123		10,924		10,975	3.14
PPS CR Acquisition, Inc. (d/b/a Power Plant Services)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.25%	7.25%	06/25/21	06/25/24	104		103		113	0.03
									11,027		11,088	3.17

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
Home Furnishings
Sleep OpCo LLC (d/b/a Brooklyn Bedding LLC)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	10/12/21	10/12/26	20,034	$	19,651	$	19,645	5.62	%
Sleep OpCo LLC (d/b/a Brooklyn Bedding LLC)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.50%	7.50%	10/12/21	10/12/26	—		—		—	—
Sure Fit Home Products, LLC	First Lien Secured Term Loan	1.00%	L+ 9.75%	10.75%	04/12/21	07/13/23	4,912		4,828		4,372	1.25
									24,479		24,017	6.87
Household Products
The Kyjen Company, LLC (d/b/a Outward Hound)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	04/05/21	04/05/26	11,403		11,257		11,383	3.25
The Kyjen Company, LLC (d/b/a Outward Hound)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.50%	7.50%	04/05/21	04/05/26	385		380		390	0.11
									11,637		11,773	3.36
Interactive Media & Services
What If Holdings, LLC (d/b/a What If Media Group, LLC)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	10/02/19	10/02/24	18,848		18,609		18,759	5.36
									18,609		18,759	5.36
Internet & Direct Marketing Retail
BBQ Buyer, LLC (d/b/a BBQ Guys)	First Lien Secured Term Loan	1.50%	L+ 10.00%	11.50% (9.50% Cash + 2.00% PIK)	08/28/20	08/28/25	12,623		12,388		12,623	3.61
BBQ Buyer, LLC (d/b/a BBQ Guys)⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.50%	L+ 10.00%	11.50% (9.50% Cash + 2.00% PIK)	12/02/21	08/28/25	2,573		2,523		2,523	0.72
Luxury Brand Holdings, Inc. (d/b/a Ross-Simons, Inc.)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	12/04/20	06/04/26	5,940		5,844		5,940	1.70
Marlin DTC-LS Midco 2, LLC (d/b/a Clarus Commerce, LLC)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	08/06/21	07/01/25	4,277		4,200		4,206	1.20
Potpourri Group, Inc.	First Lien Secured Term Loan	1.50%	L+ 8.25%	9.75%	07/03/19	07/03/24	17,148		16,955		17,148	4.90
									41,910		42,440	12.13
Investment Banking & Brokerage
JVMC Holdings Corp. (fka RJO Holdings Corp)	First Lien Secured Term Loan	1.00%	L+ 6.75%	7.75%	02/28/19	02/28/24	12,729		12,674		12,729	3.64
									12,674		12,729	3.64
IT Consulting & Other Services
AST-Applications Software Technology LLC	First Lien Secured Term Loan	1.00%	L+ 8.00%	9.00% (8.00% Cash + 1.00% PIK)	01/10/17	01/10/23	3,958		3,943		3,958	1.13
ATSG, Inc.	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	11/12/21	11/12/26	14,008		13,736		13,736	3.93
									17,679		17,694	5.06
Leisure Facilities
Honors Holdings, LLC (d/b/a Orange Theory)⁽¹⁶⁾	First Lien Secured Term Loan	1.00%	L+ 7.96%	8.96% (8.46% Cash + 0.50% PIK)	09/06/19	09/06/24	9,440		9,315		9,296	2.66
Honors Holdings, LLC (d/b/a Orange Theory)⁽¹⁶⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 7.58%	8.58% (8.08% Cash + 0.50% PIK)	09/06/19	09/06/24	4,649		4,611		4,578	1.31
Lift Brands, Inc. (d/b/a Snap Fitness)	First Lien Secured Term Loan A	1.00%	L+ 7.50%	8.50%	06/29/20	06/29/25	5,631		5,570		5,546	1.59
Lift Brands, Inc. (d/b/a Snap Fitness)	First Lien Secured Term Loan B	N/A	9.50%	9.50% (0.00% Cash + 9.50% PIK)	06/29/20	06/29/25	1,279		1,259		1,239	0.35
Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)⁽⁹⁾	First Lien Secured Term Loan C	N/A	9.50%	9.50% (0.00% Cash + 9.50% PIK)	06/29/20	NA	1,268		1,265		1,219	0.35
									22,020		21,878	6.26
Leisure Products
PlayMonster LLC⁽⁸⁾	First Lien Secured Term Loan	1.00%	L+ 6.00%	7.00%	06/07/21	06/07/26	6,000		5,894		3,900	1.12
PlayMonster LLC⁽⁷⁾⁽⁸⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 6.00%	7.00%	06/07/21	06/07/26	224		221		(828)	(0.24)
									6,115		3,072	0.88
Life Sciences Tools & Services
LSCS Holdings, Inc. (d/b/a Eversana Life Science Services, LLC)	Second Lien Secured Term Loan	0.50%	L+ 8.00%	8.50%	11/23/21	12/16/29	5,000		4,925		4,925	1.41
									4,925		4,925	1.41

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
Office Services & Supplies
American Crafts, LC	First Lien Secured Term Loan	1.00%	L+ 8.50%	9.50%	05/28/21	05/28/26	8,434	$	8,325	$	8,325	2.38	%
Empire Office, Inc.	First Lien Secured Term Loan	1.50%	L+ 6.75%	8.25%	04/12/19	04/12/24	12,656		12,507		12,589	3.60
Empire Office, Inc.⁽⁴⁾⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.50%	L+ 6.75%	8.25%	08/17/21	04/12/24	—		—		7	—
									20,832		20,921	5.98
Packaged Foods & Meats
Lenny & Larry's, LLC⁽¹⁷⁾	First Lien Secured Term Loan	1.00%	L+ 8.40%	9.40% (7.68% Cash + 1.72% PIK)	05/15/18	05/15/23	11,142		11,084		10,862	3.11
									11,084		10,862	3.11
Personal Products
Inspired Beauty Brands, Inc.	First Lien Secured Term Loan	1.00%	L+ 7.00%	8.00%	12/30/20	12/30/25	12,252		12,055		12,252	3.50
Inspired Beauty Brands, Inc.⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 7.00%	8.00%	12/30/20	12/30/25	—		—		8	—
									12,055		12,260	3.50
Real Estate Operating Companies
HRG Management, LLC (d/b/a HomeRiver Group, LLC)	First Lien Secured Term Loan	1.00%	L+ 6.25%	7.25%	10/19/21	10/19/26	4,875		4,781		4,780	1.37
HRG Management, LLC (d/b/a HomeRiver Group, LLC)⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 6.25%	7.25%	10/19/21	10/19/26	653		644		651	0.19
HRG Management, LLC (d/b/a HomeRiver Group, LLC)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.25%	7.25%	10/19/21	10/19/26	—		—		—	—
									5,425		5,431	1.56
Research & Consulting Services
ALM Media, LLC	First Lien Secured Term Loan	1.00%	L+ 7.00%	8.00%	11/25/19	11/25/24	14,175		14,011		13,996	4.00
Nelson Worldwide, LLC	First Lien Secured Term Loan	1.00%	L+ 10.25%	11.25% (10.25% Cash + 1.00% PIK)	01/09/18	01/09/23	10,027		9,976		9,826	2.81
									23,987		23,822	6.81
Specialized Consumer Services
Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	11/16/21	11/16/27	13,000		12,745		12,742	3.64
Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.)⁽⁴⁾⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 6.50%	7.50%	11/16/21	11/16/27	—		—		(1)	—
Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 6.50%	7.50%	11/16/21	11/16/27	—		—		—	—
HC Salon Holdings, Inc. (d/b/a Hair Cuttery)	First Lien Secured Term Loan	1.00%	L+ 8.00%	9.00%	09/30/21	09/30/26	11,638		11,417		11,416	3.26
HC Salon Holdings, Inc. (d/b/a Hair Cuttery)⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 8.00%	9.00%	09/30/21	09/30/26	—		—		—	—
True Blue Car Wash, LLC	First Lien Secured Term Loan	1.00%	L+ 6.82%	7.82%	10/17/19	10/17/24	8,203		8,087		8,130	2.32
True Blue Car Wash, LLC⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 6.82%	7.82%	10/17/19	10/17/24	3,103		3,073		3,098	0.89
									35,322		35,385	10.11
Specialized Finance
WHF STRS Ohio Senior Loan Fund LLC^{(4)(5)(9)(14)}	Subordinated Note	N/A	L+ 6.50%	6.61%	07/19/19	N/A	60,000		60,000		60,000	17.16
									60,000		60,000	17.16
Systems Software
Arcstor Midco, LLC (d/b/a Arcserve (USA), LLC	First Lien Secured Term Loan	1.00%	L+ 7.00%	8.00%	03/16/21	03/16/27	19,354		19,018		19,160	5.48
									19,018		19,160	5.48
Technology Hardware, Storage & Peripherals
Source Code Holdings, LLC (d/b/a Source Code Corporation)	First Lien Secured Term Loan	1.00%	L+ 6.50%	7.50%	07/30/21	07/30/27	7,629		7,487		7,489	2.14
Source Code Holdings, LLC (d/b/a Source Code Corporation)⁽⁷⁾	First Lien Secured Delayed Draw Loan	1.00%	L+ 6.50%	7.50%	07/30/21	07/30/27	—		—		—	—
Telestream Holdings Corporation	First Lien Secured Term Loan	1.00%	L+ 8.75%	9.75%	10/15/20	10/15/25	15,079		14,713		15,079	4.31
Telestream Holdings Corporation⁽⁷⁾	First Lien Secured Revolving Loan	1.00%	L+ 8.75%	9.75%	10/15/20	10/15/25	530		517		549	0.16
									22,717		23,117	6.61

Total Debt Investments								$	794,969	$	781,049	223.32	%

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
Equity Investments
Advertising
Avision Holdings, LLC (d/b/a Avision Sales Group)⁽⁴⁾	Class A LLC Interests	N/A	N/A	N/A	12/15/21	N/A	200	$	250	$	250	0.07	%
									250		250	0.07
Air Freight & Logistics
Motivational CIV, LLC (d/b/a Motivational Fulfillment)⁽⁴⁾	Class B Units	N/A	N/A	N/A	07/12/21	N/A	1,250		1,250		1,250	0.36
									1,250		1,250	0.36
Data Processing & Outsourced Services
PFB Holdco, Inc. (d/b/a PFB Corporation)^(4)(13)	Class A Units	N/A	N/A	N/A	12/17/21	N/A	1		423		427	0.12
									423		427	0.12
Data Processing & Outsourced Services
Escalon Services Inc.⁽⁴⁾	Warrants	N/A	N/A	N/A	12/04/20	N/A	709		476		893	0.26
									476		893	0.26
Diversified Support Services
Quest Events, LLC⁽⁴⁾	Preferred Units	N/A	N/A	N/A	12/28/18	12/08/25	317		317		—	—
ImageOne Industries, LLC⁽⁴⁾	Common A Units	N/A	N/A	N/A	09/20/19	N/A	225		—		158	0.05
									317		158	0.05
Education Services
Eddy Acquisitions, LLC (d/b/a EducationDynamics, LLC)⁽⁴⁾	Preferred Units	N/A	12.00%	12.00%	09/15/21	N/A	167		167		167	0.05
									167		167	0.05
Environmental & Facilities Services
BPII-JL Group Holdings LP (d/b/a Juniper Landscaping Holdings LLC)⁽⁴⁾	Class A Units	N/A	N/A	N/A	12/29/21	N/A	83		825		825	0.24
									825		825	0.24
Health Care Services
Lab Logistics, LLC^(4)(20)	Preferred Units	N/A	14.00%	14.00% PIK	10/29/19	N/A	2		857		1,018	0.29
									857		1,018	0.29
Interactive Media & Services
What If Media Group, LLC⁽⁴⁾	Common Units	N/A	N/A	N/A	07/02/21	N/A	8		850		1,398	0.40
									850		1,398	0.40
Internet & Direct Marketing Retail
BBQ Buyer, LLC (d/b/a BBQ Guys)⁽⁴⁾	Shares	N/A	N/A	N/A	08/28/20	N/A	1,100		1,100		2,442	0.70
Ross-Simons Topco, LP⁽⁴⁾	Preferred Units	N/A	8.00%	8.00% PIK	12/04/20	N/A	600		600		786	0.22
									1,700		3,228	0.92
Investment Banking & Brokerage
Arcole Holding Corporation^{(4)(5)(6)(18)}	Shares	N/A	N/A	N/A	10/01/20	N/A	—		6,944		6,874	1.97
									6,944		6,874	1.97
IT Consulting & Other Services
CX Holdco LLC (d/b/a Cennox Inc.)⁽⁴⁾	Common Units	N/A	N/A	N/A	05/04/21	N/A	972		972		972	0.28
Keras Holdings, LLC (d/b/a KSM Consulting, LLC)⁽⁴⁾	Shares	N/A	N/A	N/A	12/31/20	N/A	496		496		496	0.14
									1,468		1,468	0.42
Leisure Facilities
Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)⁽⁴⁾	Class A Common Stock	N/A	N/A	N/A	06/29/20	N/A	2		1,941		188	0.05
Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)⁽⁴⁾	Warrants	N/A	N/A	N/A	06/29/20	06/28/28	1		793		76	0.02
									2,734		264	0.07
Other Diversified Financial Services
SFS Global Holding Company⁽⁴⁾	Warrants	N/A	N/A	N/A	06/28/18	12/28/25	—		—		—	—
Sigue Corporation⁽⁴⁾	Warrants	N/A	N/A	N/A	06/28/18	12/28/25	22		2,890		3,492	1.00
									2,890		3,492	1.00

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)


Issuer	Investment Type⁽¹⁾	Floor	Spread Above Index⁽²⁾	Interest Rate⁽³⁾	Acquisition Date⁽¹⁰⁾	Maturity Date	Principal/ Share Amount	Amortized Cost		Fair Value⁽¹¹⁾		Fair Value As A Percentage of Net Assets
Specialized Consumer Services
Camp Facility Services Parent, LLC (d/b/a Camp Construction Services, Inc.)⁽⁴⁾	Preferred Units	N/A	10.00%	10.00% PIK	11/16/21	N/A	15	$	840	$	840	0.24	%
									840		840	0.24
Specialized Finance
WHF STRS Ohio Senior Loan Fund^(4)(5)(14)	LLC Interests	N/A	N/A	N/A	07/19/19	N/A	15,000		15,000		15,607	4.46
									15,000		15,607	4.46

Total Equity Investments								$	36,991	$	38,159	10.92	%

Total Investments								$	831,960	$	819,208	234.24	%

(1)	Except as otherwise noted, all investments are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940, as amended (the “1940 Act”), and provide collateral for the Company’s credit facility.

(2)

The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), which resets monthly, quarterly or semiannually, the Secured Overnight Financing Rate (“SOFR” or “SF”), the Canadian Dollar Offered Rate (“CDOR” or “C”), Canada Prime Rate (“CP”), or the U.S. Prime Rate (“Prime” or “P”). The one, three and six-month USD LIBOR were 0.10%, 0.21% and 0.34%, respectively, as of December 31, 2021. The SOFR, CDOR, Canadian Prime and Prime were 0.05%, 0.52%, 2.45% and 3.25%, respectively, as of December 31, 2021.

(3)	The interest rate is the “all-in-rate” including the current index and spread, the fixed rate, and the payment-in-kind (“PIK”) interest rate, as the case may be.

(4)	The investment or a portion of the investment does not provide collateral for the Company’s credit facility.

(5)

Not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets. Qualifying assets represented 88.2% of total assets as of the date of the consolidated schedule of investments.

(6)	Investment is a non-controlled/affiliate investment as defined by the 1940 Act.

(7)	The investment has an unfunded commitment in addition to any amounts presented in the consolidated schedule of investments as of December 31, 2021. See Note 8.

(8)	The investment is on non-accrual status.

(9)	Security is perpetual with no defined maturity date.

(10)	Except as otherwise noted, all of the Company’s portfolio company investments, which as of the date of the consolidated schedule of investments represented 234.2% of the Company’s net assets or 96.3% of the Company’s total assets, are subject to legal restrictions on sales.

(11)	The fair value of each investment was determined using significant unobservable inputs. See Note 5.

(12)	The investment was comprised of two contracts, which were indexed to different base rates, L and P, respectively. The Floor, Spread Above Index and Interest Rate presented represent the weighted average of both contracts.

(13)	Principal amount is non-USD denominated and is based in Canadian dollars.

(14)

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)

(15)

(16)

(17)

(18)	On October 1, 2020, as part of a restructuring agreement between the Company and Arcole Acquisition Corp, the Company’s investments in first lien secured term loans to Arcole Acquisition Corp were converted into common shares of Arcole Holding Corp.

(19)	At the option of the issuer, interest can be paid in cash or cash and PIK. The issuer may elect to pay up to 2.00% PIK.

(20)	Investment earns 14.00% that converts to PIK on an annual basis and is recorded in interest and dividend receivable in the consolidated statements of assets and liabilities.

(21)	A portion of the existing Grupo HIMA San Pablo, Inc. First Lien Secured Term Loan A and First Lien Secured Term Loan B investments were converted into an Amended Term Loan, which is pari passu with the Grupo HIMA San Pablo, Inc. Superpriority Delayed Draw Loan commitment in a liquidation event.

See notes to the consolidated financial statements

WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

NOTE 1 - ORGANIZATION

WhiteHorse Finance, Inc. (“WhiteHorse Finance” and, together with its subsidiaries, the “Company”) is 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 (the “1940 Act”). In addition, for tax purposes, WhiteHorse Finance elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). WhiteHorse Finance’s common stock trades on the Nasdaq Global Select Market under the symbol “WHF.”

The Company’s 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 that typically carry a floating interest rate based on a risk-free index rate such as LIBOR or SOFR and have a term of three to six years. While the Company focuses principally on originating senior secured loans to lower middle market companies, it may also opportunistically make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests and may receive warrants to purchase common stock in connection with its debt investments.

WhiteHorse Finance’s investment activities are managed by H.I.G. WhiteHorse Advisers, LLC (“WhiteHorse Advisers” or the “Investment Adviser”). H.I.G. WhiteHorse Administration, LLC (“WhiteHorse Administration” or the “Administrator”) provides administrative services necessary for the Company to operate.

Engaging in commodity interest transactions such as swap transactions or futures contracts for the Company may cause WhiteHorse Advisers to fall within the definition of “commodity pool operator” under the Commodity Exchange Act (the “CEA”) and related regulations promulgated by the U.S. Commodity Futures Trading Commission (the “CFTC”). On January 23, 2020, WhiteHorse Advisers claimed an exclusion from the definition of the term “commodity pool operator” under the CEA and the CFTC regulations in connection with its management of the Company (the “Exclusion”) and, therefore, WhiteHorse Advisers is not subject to CFTC registration or regulation under the CEA as a commodity pool operator with respect to its management of the Company. WhiteHorse Advisers has affirmed the Exclusion on February 17, 2022 and intends to continue to affirm the Exclusion on an annual basis.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of WhiteHorse Finance and its wholly owned subsidiaries, WhiteHorse Finance Credit I, LLC (“WhiteHorse Credit”), and its subsidiary WhiteHorse Finance (CA), LLC (“WhiteHorse California”), WHF PMA Holdco Blocker, LLC, WhiteHorse RCKC Holdings, LLC and WhiteHorse Finance Holdings, LLC. The Company meets the definition of an investment company under Accounting Standards Codification (“ASC”) Topic 946, Financial Services - Investment Companies, and therefore applies the accounting and reporting guidance discussed therein to its consolidated financial statements. All significant intercompany balances and transactions have been eliminated.

Additionally, the accompanying consolidated financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10-K and Articles 6, 10 and 12 of Regulation S-X. In the opinion of management, the consolidated financial statements reflect all adjustments, consisting solely of normal recurring accruals considered necessary for the fair presentation of financial results as of and for the periods presented.

Principles of Consolidation: Under the investment company rules and regulations pursuant to ASC Topic 946, WhiteHorse Finance is precluded from consolidating any entity other than another investment company. As provided under ASC Topic 946, WhiteHorse Finance generally consolidates any investment company when it owns 100% of its partners’ or members’ capital or equity units. The Company does not consolidate its investment in STRS JV. See further description in Note 4.

WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements. Actual results could differ from those estimates.

Fair Value of Financial Instruments: The Company determines the fair value of its financial instruments in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.

Investments are measured at fair value as determined in good faith by the Investment Adviser’s investment committee (the “Investment Committee”), generally on a quarterly basis, and such valuations are reviewed by the audit committee of the Company’s board of directors and ultimately approved by the Company’s board of directors, based on, among other factors, consistently applied valuation procedures on each measurement date. Any changes to the valuation methodology are reviewed by management and the Company’s board of directors to confirm that the changes are justified. The Company continues to review and refine its valuation procedures in response to market changes.

The Company engages independent external valuation firms to periodically review material investments. These external reviews are used by the Company’s board of directors to review the Company’s internal valuation of each investment over the year.

Investment Transactions: The Company records investment transactions on a trade date basis. These transactions may settle subsequent to the trade date depending on the transaction type. Certain expenses related to legal and tax consultation, due diligence, rating fees, valuation expenses and independent collateral appraisals may arise when the Company makes certain investments. These expenses are recognized in the consolidated statements of operations as they are incurred.

Foreign currency translation: The Company’s books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

(1)

cash and cash equivalents, restricted cash and cash equivalents, fair value of investments, interest receivable, and other assets and liabilities — at the spot exchange rate on the last business day of the period; and

(2)

purchases and sales of investments, income and expenses — at the exchange rates prevailing on the respective dates of such transactions.

Although net assets and fair values are presented based on the applicable foreign exchange rates described above, the Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Fluctuations arising from the translation of assets other than investments and liabilities are included with the net change in unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies on the consolidated statements of operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices to be more volatile than those of comparable U.S. companies or U.S. government securities.

WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

Revenue Recognition: The Company’s revenue recognition policies are as follows:

Sales: Realized gains or losses on the sales of investments are calculated by using the specific identification method.

Investment Income: Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. The Company may also receive closing, commitment, prepayment, amendment and other fees from portfolio companies in the ordinary course of business.

Dividend income is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

Closing fees associated with investments in portfolio companies are deferred and recognized as interest income over the respective terms of the applicable loans. Upon the prepayment of a loan or debt security, any unamortized loan closing fees are recorded as part of interest income. Commitment fees are based upon the undrawn portion committed by the Company and are recorded as interest income on an accrual basis. Prepayment, amendment and other fees are recognized when earned, generally when such fees are receivable, and are included in fee income on the consolidated statements of operations.

The Company may invest in loans that contain a PIK interest rate provision. PIK interest is accrued at the contractual rates and added to loan principal on the reset dates to the extent such amounts are expected to be collected.

Non-accrual loans: Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected. The Company may conclude that non-accrual status is not required if the loan has sufficient collateral value and is in the process of collection. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.

Cash and Cash Equivalents: Cash and cash equivalents include cash, deposits with financial institutions, and short-term liquid investments in money market funds with original maturities of three months or less.

Restricted Cash and Cash Equivalents: 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 (as defined in Note 6). 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.

Offering Costs: The Company may incur legal, accounting, regulatory, investment banking and other costs in relation to equity offerings. Offering costs are deferred and charged against paid-in capital in excess of par on completion of the related offering.

Deferred Financing Costs: Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. These amounts are amortized and are included in interest expense in the consolidated statements of operations over the estimated life of the borrowings. Deferred financing costs are presented in the consolidated statements of assets and liabilities as a direct reduction from the carrying amount of the related debt liability.

Income Taxes: The Company elected to be treated as a RIC under Subchapter M of the Code. In order to maintain its status as a RIC, among other requirements, the Company is required to distribute dividends for U.S. federal income tax purposes to its stockholders each taxable year generally of an amount at least equal to 90% of the sum of ordinary

WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In addition, the Company will incur a nondeductible excise tax equal to 4% of the amount by which (1) 98% of ordinary income for the calendar year (taking into account certain deferrals and elections), (2) 98.2% of capital gains in excess of capital losses, 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 income for preceding years that were not distributed during such years and on which the Company incurred no U.S. federal income tax exceed distributions for the year. The Company accrues estimated excise tax on the amount, if any, that estimated taxable income is expected to exceed the level of stockholder distributions described above.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statement is the largest benefit or expense that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. Any tax positions not deemed to satisfy the more likely than not threshold are reversed and recorded as tax benefit or tax expense, as appropriate, in the current year. Management has analyzed the Company’s tax positions, and the Company has concluded that the Company did not have any unrecognized tax benefits or unrecognized tax liabilities related to uncertain tax positions as of March 31, 2022 and December 31, 2021.

Penalties or interest that may be assessed related to any income taxes would be classified as general and administrative expenses on the consolidated statements of operations. The Company had no amounts accrued for interest or penalties as of March 31, 2022 or December 31, 2021. The Company does not expect the total amount of unrecognized tax benefits to significantly change in the next twelve months. The Company’s tax returns are subject to examination by federal, state and local taxing authorities. Because many types of transactions are susceptible to varying interpretations under U.S. federal and state income tax laws and regulations, the amounts reported in the accompanying consolidated financial statements may be subject to change at a later date by the respective taxing authorities. Tax returns for each of the federal tax years since 2018 remain subject to examination by the Internal Revenue Service.

As of March 31, 2022 and December 31, 2021, the cost of investments for federal income tax purposes was $800,053 and $835,502 resulting in net unrealized appreciation of $319 and gross unrealized depreciation of $16,293, respectively. This is comprised of gross unrealized appreciation of $14,763 and $10,770, and gross unrealized depreciation of $14,444 and $27,062, on a tax basis, as of March 31, 2022 and December 31, 2021, respectively.

Dividends and Distributions: Dividends and distributions to common stockholders are recorded on the ex-dividend date. Quarterly distribution payments are determined by the Company’s board of directors and are paid from taxable earnings estimated by management and may include a return of capital and/or capital gains. Net realized capital gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for investment.

The Company maintains an “opt out” dividend reinvestment plan (“DRIP”) for common stockholders. As a result, if the Company declares a distribution or other dividend, stockholders’ cash distributions will be automatically reinvested in additional shares of common stock, unless they specifically “opt out” of the DRIP so as to receive cash distributions.

Earnings per Share: The Company calculates earnings per share as earnings available to stockholders divided by the weighted average number of shares outstanding during the period.

Risks and Uncertainties: In the normal course of business, the Company encounters primarily two significant types of economic risks: credit and market. Credit risk is the risk of default on the Company’s investments that result from an issuer’s, borrower’s or derivative counterparty’s inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of investments due to changes in interest rates, spreads or other market factors, including the value of the collateral underlying investments held by the Company. Refer to “COVID-19 Developments” section in Note 8. Management believes that the carrying value of the Company’s investments are fairly stated, taking into consideration these risks along with estimated collateral values, payment histories and other market information.

WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

Reclassifications: Certain amounts in the consolidated financial statements have been reclassified. These reclassifications had no material impact on the Company’s consolidated financial position, results of operations or cash flows as previously reported.

Recent Accounting Pronouncements: In March 2020, the Financial Accounting Standards Board issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting if certain criteria are met. The guidance is effective from March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of the adoption of ASU 2020-04 on its consolidated financial statements.

NOTE 3 - FORWARD CURRENCY CONTRACTS

The Company may enter into foreign currency forward contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies and to economically hedge the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. A foreign currency forward contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. These contracts are marked-to-market by recognizing the difference between the contract forward exchange rate and the forward market exchange rate on the last day of the period presented as unrealized appreciation or depreciation. Realized gains or losses are recognized when forward contracts are settled. Risks arise as a result of the potential inability of the counterparties to meet the terms of their contracts. The Company attempts to limit counterparty risk by only dealing with well-known counterparties.

The Company utilizes forward foreign currency exchange contracts to protect itself against fluctuations in exchange rates. The Company may choose to renew contracts quarterly unless otherwise settled by the Company or the counterparty.

The following table provides a breakdown of our forward currency contracts for the three months ended March 31, 2022 and 2021:


	For the three months ended		For the three months ended
	March 31, 2022		March 31, 2021
Realized gain (loss) on forward currency contracts	$	—	$	—
Unrealized appreciation (depreciation) on forward currency contracts		(4)		(1)
Total net realized and unrealized gains (losses) on forward currency contracts	$	(4)	$	(1)

The value associated with unrealized loss on open contracts is included in unrealized appreciation or depreciation on forward currency contracts within the consolidated statements of assets and liabilities. Open contracts as of March 31, 2022 were as follows:


Counterparty	Currency to be sold		Currency to be purchased		Settlement date	Unrealized appreciation		Unrealized depreciation
Morgan Stanley	C$	400 CAD	$	317 USD	4/28/22	$	—	$	(4)
Total						$	—	$	(4)

The following table is a summary of the average USD notional exposure to foreign currency forward contracts for the three months ended March 31, 2022 and 2021:


	Three months ended March 31,
Average USD notional outstanding		2022		2021
Forward currency contracts	$	228,630	$	44,093

WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

The foreign currency forward contracts open at the end of the period are generally indicative of the volume of activity during the period. The value associated with unrealized gain or loss on open contracts is included in unrealized appreciation or depreciation on forward currency contracts within the consolidated statements of assets and liabilities.

Offsetting of Derivative Instruments

The Company has derivative instruments that are subject to master netting agreements. These agreements include provisions to offset positions with the same counterparty in the event of default by one of the parties. The Company’s unrealized appreciation or depreciation on derivative instruments are reported as gross assets and liabilities, respectively, in the consolidated statements of assets and liabilities. The following tables present the Company’s assets and liabilities related to derivatives by counterparty, net of amounts available for offset under a master netting arrangement and net of any collateral received or pledged by the Company for such assets and liabilities as of March 31, 2022.


	As of March 31, 2022
Counterparty ($ in thousands)	Derivative Assets Subject to Master Netting Agreement		Derivative Liabilities Subject to Master Netting Agreement		Derivatives Available for Offset		Non-cash Collateral Received		Non-cash Collateral Pledged⁽¹⁾		Cash Collateral Received⁽¹⁾		Cash Collateral Pledged⁽¹⁾		Net Amount of Derivative Assets⁽²⁾		Net Amount of Derivative Liabilities⁽³⁾
Morgan Stanley	$	—	$	4	$	—	$	—	$	—	$	—	$	—	$	—	$	4
Total	$	—	$	4	$	—	$	—	$	—	$	—	$	—	$	—	$	4

(1)	In some instances, the actual amount of the collateral received and/or pledged may be more than the amount shown due to overcollateralization.

(2)	Net amount of derivative assets represents the net amount due from the counterparty to the Company in the event of default.

(3)	Net amount of derivative liabilities represents the net amount due from the Company to the counterparty in the event of default.

As of December 31, 2021, the Company did not have any outstanding derivative instruments.

NOTE 4 - INVESTMENTS

Investments consisted of the following:


	As of March 31, 2022				As of December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
First lien secured loans	$	646,969	$	648,770	$	709,318	$	697,232
Second lien secured loans		24,483		23,780		25,484		23,650
Subordinated unsecured loans		167		167		167		167
Subordinated Note to STRS JV		80,000		80,000		60,000		60,000
Equity (excluding STRS JV)		26,632		26,878		21,991		22,552
Equity in STRS JV		20,000		20,776		15,000		15,607
Total	$	798,251	$	800,371	$	831,960	$	819,208

WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

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


Industry ($ in thousands)	As of March 31, 2022				As of December 31, 2021
Advertising	$	208	0.0	%	$	9,738	1.3	%
Air Freight & Logistics		17,082	2.4			21,379	2.9
Application Software

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. sophomore Avg

WhiteHorse Finance (WHF) 10-Q2022 Q1 Quarterly report

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