SLR Senior Investment 10-K 2017 FY Annual report

Exhibit 99.1

Gemino Healthcare Finance, LLC

and Subsidiary

Consolidated Financial Statements

December 31, 2017 and 2016

Gemino Healthcare Finance, LLC and Subsidiary

Table of Contents

December 31, 2017 and 2016

	Page
Independent Auditors’ Report		1
Consolidated Financial Statements
Consolidated Balance Sheet		3
Consolidated Statement of Operations		4
Consolidated Statement of Changes in Members’ Equity		5
Consolidated Statement of Cash Flows		6
Notes to Consolidated Financial Statements		7

Independent Auditors’ Report

Board of Managers

Gemino Healthcare Finance, LLC

We have audited the accompanying consolidated financial statements of Gemino Healthcare Finance, LLC and Subsidiary, which comprise the consolidated balance sheet as of December 31, 2017 and 2016, and the related consolidated statements of operations, changes in members’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

1

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Gemino Healthcare Finance, LLC and Subsidiary as of December 31, 2017 and 2016, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Philadelphia, Pennsylvania

February 14, 2018

2

Gemino Healthcare Finance, LLC and Subsidiary

Consolidated Balance Sheet

December 31, 2017 and 2016

	2017			2016
Assets
Assets
Cash and cash equivalents	$	12,957,611		$	14,990,039
Loans receivable, net of allowance of $944,935 and $1,001,079, respectively		87,299,916			92,863,789
Accrued interest receivable		699,965			736,095
Intangible asset - trade name		2,800,000			2,800,000
Goodwill		5,663,531			5,663,531
Furniture and equipment, net		43,968			23,702
Deferred financing costs, net		1,024,468			1,324,312
Other assets		94,717			88,390
Total assets	$	110,584,176		$	118,489,858
Liabilities and Members’ Equity
Liabilities
Credit facility payable	$	75,000,000		$	83,000,000
Accounts payable and accrued expenses		1,824,185			1,793,277
Accrued dividend payable		592,837			581,370
Total liabilities		77,417,022			85,374,647
Members’ Equity
Units, $1,000 par value, issued and outstanding 35,301 and 34,893, respectively		34,359,388			33,918,486
Retained deficit		(1,192,234	)		(803,275	)
Total members’ equity		33,167,154			33,115,211
Total liabilities and members’ equity	$	110,584,176		$	118,489,858

See notes to consolidated financial statements

3

Gemino Healthcare Finance, LLC and Subsidiary

Consolidated Statement of Operations

Years Ended December 31, 2017 and 2016

	2017			2016
Interest Income
Interest income on loans	$	8,194,577		$	9,641,138
Interest expense		(3,503,254	)		(3,378,279	)
Net interest income		4,691,323			6,262,859
Credit for Loan Losses		56,144			193,597
Net interest income after credit for loan losses		4,747,467			6,456,456
Other Income		3,194,400			3,633,196
General and Administrative Expenses		(4,370,777	)		(5,527,594	)
Net income	$	3,571,090		$	4,562,058

See notes to consolidated financial statements

4

Gemino Healthcare Finance, LLC and Subsidiary

Consolidated Statement of Changes in Members’ Equity

Years Ended December 31, 2017 and 2016

Balance at December 31, 2015	$	32,621,745
Additional capital contributions		51,340
Dividends declared		(4,119,932	)
Net income		4,562,058
Balance at December 31, 2016		33,115,211
Additional capital contributions		440,902
Dividends declared		(3,960,049	)
Net income		3,571,090
Balance at December 31, 2017	$	33,167,154

See notes to consolidated financial statements

5

Gemino Healthcare Finance, LLC and Subsidiary

Consolidated Statement of Cash Flows

Years Ended December 31, 2017 and 2016

	2017			2016
Cash Flows from Operating Activities
Net income	$	3,571,090		$	4,562,058
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		15,854			16,654
Amortization of deferred origination fees and costs		(690,255	)		(539,072	)
Amortization of deferred financing costs		299,844			289,745
Credit for loan losses		(56,144	)		(193,597	)
Changes in assets and liabilities:
Decrease in accrued interest receivable		36,130			166,042
(Increase) decrease in other assets		(6,327	)		14,665
Increase in deferred origination fees and costs, net		732,000			489,250
Increase (decrease) in accounts payable and accrued expenses		72,908			(204,633	)
Net cash provided by operating activities		3,975,100			4,601,112
Cash Flows from Investing Activities
Decrease in loans receivable, net		5,578,272			24,069,583
Purchase of furniture and equipment		(36,120	)		(13,768	)
Net cash provided by investing activities		5,542,152			24,055,815
Cash Flows from Financing Activities
Repayments of credit facility, net		(8,000,000	)		(15,500,000	)
Financing costs paid and deferred for credit facility		—			(872,801	)
Dividends paid		(3,948,582	)		(4,096,749	)
Proceeds from contributed capital		398,902			51,340
Net cash used in financing activities		(11,549,680	)		(20,418,210	)
Net (decrease) increase in cash and cash equivalents		(2,032,428	)		8,238,717
Cash and Cash Equivalents, Beginning		14,990,039			6,751,322
Cash and Cash Equivalents, Ending	$	12,957,611		$	14,990,039
Supplemental Disclosure of Cash Flow Information
Interest paid	$	3,170,797		$	3,108,074
Supplemental Disclosure ofNon-Cash Financing Activities
Issuance of Units using long-term incentive plan accrual	$	42,000		$	—

See notes to consolidated financial statements

6

Gemino Healthcare Finance, LLC and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Description of Business

Gemino Healthcare Finance, LLC (“Gemino”), a Delaware limited liability company formed in December 2006, is a commercial finance company that originates, underwrites, and manages primarily secured, asset-based loans for small andmid-sized companies operating across the U.S. in the healthcare industry. Gemino’s loans are primarily in the form of revolving lines of credit, secured by accounts receivable of the borrowers. The accounts receivable serving as collateral are primarily third party obligations from government payers, such as Medicare or Medicaid, and commercial insurers.

In certain cases, Gemino may provide senior term loan financing to qualified borrowers in addition to a revolving line of credit. Senior term loans are typically secured by accounts receivable, all other assets of the borrowers and a pledge of the stock of the borrowers.

Gemino Healthcare Funding, LLC (“Gemino Funding”), is a wholly-owned special purpose limited liability company, that purchases and holds certain eligible loans and related property from Gemino.

On September 30, 2013, Solar Senior Capital Ltd. (“Solar”), a Maryland corporation, acquired a controlling interest in Gemino. The remaining interest is held by various employees of Gemino, through their investment in Gemino Management Investment, LLC.

2. Summary of Significant Accounting Policies Principles of Consolidation

The consolidated financial statements include the accounts of Gemino and Gemino Funding (collectively, the “Company”). All significant intercompany balances have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and to report amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The allowance for loan loss represents an estimate that is particularly susceptible to material change.

Cash and Cash Equivalents

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

Loans Receivable and Income Recognition

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances less the allowance for loan loss and any deferred fees or costs.

Commitment terms of the Company’s financing agreements generally range from two to five years with interest charged on a floating rate basis. Funding under revolving loan commitments is subject to the Company’s estimation of the accounts receivable pledged as collateral.

Income on loans receivable is recognized using the simple interest method. The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the loan is secured and/or in the

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Gemino Healthcare Finance, LLC and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

process of collection. Typically, loans are placed onnon-accrual or charged off at an earlier date if collection of principal or interest is considered doubtful. When a loan is placed onnon-accrual status, all interest previously accrued, but not collected, is reversed against current interest income and all future proceeds received will generally be applied against principal or interest, in the judgment of management. Loans are returned to accrual status when all principal and interest amounts contractually due are reasonably assured.

Revolving loan origination fees and costs are deferred and amortized on a straight-line basis over the terms of the related loan commitments as an adjustment to interest income on loans. Term loan origination fees and costs are deferred and amortized using either the effective interest method or the straight-line method over the life of the loan as an adjustment to interest income. The straight-line method may be used for term loan facilities when it approximates the effective interest method. Other fees, such as collateral monitoring fees, unused balance fees and collateral examination fees, are recognized when the services are provided. Termination fees are recognized when a loan is terminated. These other fees are included in other income.

Impaired Loans

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due in accordance with the contractual terms of the loan agreement. Loans are evaluated for impairment by the Company based on an ongoing analysis of each borrower’s repayment capacity, the value of the collateral support and the strength of any guarantees. Loans identified as impaired are further evaluated to determine the estimated extent of impairment.

Allowance for Loan Loss

The allowance for loan loss represents the Company’s recognition of the assumed risks of extending credit. The allowance is maintained at a level considered adequate to provide for probable losses inherent in the loan portfolio. Management establishes a general portfolio reserve for unimpaired loans based on various factors including historical loss experience, the overall credit quality of the loan portfolio, economic trends and conditions and the regulatory environment.

The overall credit quality of the Company’s borrowers is reflected in the individual and weighted average credit risk ratings of the loans in the portfolio. Credit risk ratings for each borrower are established based on a number of qualitative and quantitative factors including an assessment of management and strategy, historical and projected repayment capacity, collateral coverage and performance, financial condition and sponsorship, strength of guarantees and any contingencies.

Specific allowances for loan losses on impaired loans are typically measured based on a comparison of the recorded carrying value of the loan to the present value of the loan’s expected cash flow using the loan’s effective interest rate, the loan’s estimated market price or the estimated fair value of the underlying collateral, if the loan is collateral-dependent combined with the strength of any guarantee arrangements. Specific allowances are recorded when the discounted cash flows, collateral value, or aggregate market price of the impaired loan is lower than the carrying value of that loan.

Loans are charged off when collection is questionable and when the Company can no longer justify maintaining the loan as an asset on the consolidated balance sheet. Loans qualify for charge off when, after thorough analysis, all possible sources of collection are determined to be insufficient to repay the loan. These include impairment of potential future cash flow, value of collateral and/or financial strength of guarantors. Recoveries of previous charge-offs are recorded when received.

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Gemino Healthcare Finance, LLC and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Goodwill and Intangible Asset

Goodwill represents the excess of consideration paid for an acquired business over the fair value of the related assets acquired and liabilities assumed. Intangible asset - trade name has an indefinite life. Goodwill and intangible asset - trade name arose from the acquisition of the Company on September 30, 2013 (Note 1). The Company is required to assess its goodwill and indefinite-lived intangible asset for impairment annually, or more frequently if events or changes in circumstances indicate impairment may have occurred.

The Company assesses its indefinite-lived intangible asset for impairment by comparing the carrying value of the asset to its fair value, and assesses goodwill for impairment by comparing the carrying value of the Company to its fair value. The fair value of intangible asset - trade name is estimated using the relief from royalty method, which is an income approach based on the present value of royalties the Company would theoretically have to pay to license the trade name from a third party. The fair value of the Company is estimated using a weighted average amount of the present value of expected future cash flows and the adjusted market multiples of comparable companies. If the fair value is less than the carrying value, an impairment loss would be recorded. For the years ended December 31, 2017 and 2016, there were no impairments.

Furniture and Equipment

Furniture and equipment are recorded at cost, net of accumulated depreciation, and are depreciated on a straight-line basis over their estimated useful lives ranging from three to five years.

Deferred Financing Costs

Deferred financing costs represents capitalized expenses incurred with debt financing transactions. The Company incurred and capitalized $872,801 of deferred financing costs in 2016, in connection with its credit facility (Note 6). These costs are being amortized on a straight-line basis over the life of the related credit facility agreement as an adjustment to interest expense.

Income Taxes

The Company is not subject to federal or state income taxes. Members of the Company have elected to report the taxable income or loss on their individual tax returns. Accordingly, no provision for income taxes has been recorded in the accompanying consolidated financial statements.

The Company applies authoritative guidance relating to the accounting for uncertain tax positions. Accordingly, a provision for uncertain tax positions and related penalties and interest is recognized when it ismore-likely-than-not, based on the technical merits, that the tax position will not be realized or sustained upon examination by the appropriate taxing authority. Management determined there were no tax uncertainties that met the recognition threshold in 2017 and 2016.

The Company files both federal and state income tax returns. The Company remains subject to examination by taxing authorities for the years 2014 and after.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2014-09,Revenue from Contracts with Customers

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Gemino Healthcare Finance, LLC and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

(Topic 606) (ASU2014-09). ASU2014-09 provides a single comprehensive revenue recognition framework and supersedes existing revenue recognition guidance. Included in the new principles-based revenue recognition model are changes to the basis for deciding on the timing for revenue recognition. In addition, the standard expands and improves revenue disclosures. In August 2015, FASB subsequently issued ASU2015-14,Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Datewhich defers the effective date of ASU2014-09. After the deferral, ASU2014-09 is effective retroactively for annual or interim reporting periods beginning after December 15, 2017, with early adoption permitted for reporting periods beginning after December 15, 2015. The Company is currently evaluating the impact of adopting ASU2014-09 on its consolidated financial statements.

In June 2016, the FASB issued ASU2016-13, Financial Instruments—Credit Losses (Topic 326) to replace the incurred loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loans receivable andheld-to maturity debt securities. It also applies tooff-balance sheet credit exposures including loan commitments, standby letters of credit, financial guarantees, and other similar instruments. For the assets within the scope of CECL, a cumulative-effect adjustment will be recognized in retained earnings as of the beginning of the first reporting period in which the guidance is effective. This new standard will be effective for the Company for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact this new standard will have on its consolidated financial statements.

In January 2017, the FASB issued ASU2017-04,Simplifying the Test for Goodwill Impairment (Topic 350), which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. ASU2017-04 is effective for the Company’s annual and any interim goodwill impairment tests beginning in 2021, with early adoption permitted for annual or interim tests performed on testing dates after January 1, 2017. The amendments included in this ASU are to be applied prospectively. The Company does not expect implementation of this new standard to have a material impact on its consolidated financial statements.

3. Loans Receivable

The following table shows the composition of loans receivable, net as of December 31, 2017 and 2016:

	2017			2016
Revolving loans receivable	$	88,217,980		$	86,855,086
Term loans receivable		699,667			7,640,833
Total loans receivable		88,917,647			94,495,919
Less allowance for loan losses		(944,935	)		(1,001,079	)
Less deferred origination fees and costs, net		(672,796	)		(631,051	)
Loans receivable, net	$	87,299,916		$	92,863,789

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Gemino Healthcare Finance, LLC and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

4. Allowance for Loan Losses and Recorded Investment in Loans Receivables

The following table summarizes the activity in the allowance for loan losses by loan class for the respective years ended December 31, 2017 and 2016:

	Beginning Balance		Charge-Offs		Recoveries		Provisions (Credits)			Ending Balance		Ending Balance: Individually Evaluated for Impairment		Ending Balance: Collectively Evaluated for Impairment
	Allowance for Loan Losses - December 31, 2017
Revolving loans	$	924,671	$	—	$	—	$	13,267		$	937,938	$	66,081	$	871,857
Term loans		76,408		—		—		(69,411	)		6,997		—		6,997
Total	$	1,001,079	$	—	$	—	$	(56,144	)	$	944,935	$	66,081	$	878,854
	Allowance for Loan Losses - December 31, 2016
Revolving loans	$	1,106,195	$	—	$	—	$	(181,524	)	$	924,671	$	49,252	$	875,419
Term loans		88,481		—		—		(12,073	)		76,408		—		76,408
Total	$	1,194,676	$	—	$	—	$	(193,597	)	$	1,001,079	$	49,252	$	951,827

The following table summarizes the activity in the recorded investment in loans receivable by loan class at December 31, 2017 and 2016:

	Ending Balance		Ending Balance Individually Evaluated for Impairment		Ending Balance Collectively Evaluated for Impairment
	Loans Receivables - December 31, 2017
Revolving loans	$	88,217,980	$	1,732,196	$	86,485,784
Term loans		699,667		—		699,667
Total	$	88,917,647	$	1,732,196	$	87,185,451
	Loans Receivables - December 31, 2016
Revolving loans	$	86,855,086	$	49,252	$	86,805,834
Term loans		7,640,833		—		7,640,833
Total	$	94,495,919	$	49,252	$	94,446,667

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Gemino Healthcare Finance, LLC and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

Credit Quality Indicators

The following table summarizes the loan portfolio by the Company’s internal credit rating (scale: 1 to 7) as of December 31, 2017 and 2016: Loans with a rating of 4 or better generally pose minimal risk to the Company as they exhibit, among other things, one or more of the following attributes: (1) secured collateral position; (2) satisfactory cash flows; and (3) history of timely payment of debt obligations. Loans credit rated below 4 are considered “watchlist” loans; an overall degree of risk exists with these loans that warrants management’s review each quarter.

	December 31, 2017
	Revolving Loans		Term Loans
Rated 4 or better	$	85,984,629	$	226,667
Rated 5		501,155		473,000
Rated 6		1,732,196		—
Total	$	88,217,980	$	699,667
	December 31, 2016
Rated 4 or better	$	85,673,388	$	7,640,833
Rated 5		1,132,446		—
Rated 6		49,252		—
Total	$	86,855,086	$	7,640,833

5. Furniture and Equipment

Furniture and equipment are comprised of the following at December 31, 2017 and 2016:

	2017			2016
Computer software and equipment	$	60,159		$	65,345
Furniture and fixtures		40,384			16,840
Leasehold improvement		20,375			12,026
Total		120,918			94,211
Less accumulated depreciation		(76,950	)		(70,509	)
Furniture and equipment, net	$	43,968		$	23,702

Depreciation expense was $15,854 and $16,654 for the years ended December 31, 2017 and 2016, respectively.

6. Debt

The Company had a four-year,non-recourse, $110,000,000 secured revolving credit facility, which was expandable to $150,000,000 under its accordion feature. On May 27, 2016, the Company entered into a new $125,000,000 secured revolving credit facility with its existing lenders which replaced the previously existing credit facility. The new credit facility has similar terms as compared to the previous credit facility, includes an accordion feature to increase to $200,000,000 and has a maturity date of May 27, 2020. Under the terms of the credit facilities, the Company has made certain customary representations and warranties, and is required to comply with various covenants, including financial and reporting requirements and other

12

Gemino Healthcare Finance, LLC and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

customary requirements for similar credit facilities. The credit facilities also include usual and customary events of default for credit facilities of this nature.

Amounts available to borrow under the credit facilities are also subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company’s portfolio that are pledged as collateral. As of December 31, 2017 and 2016, there were principal borrowings of $75,000,000 and $83,000,000 outstanding, respectively, under the respective credit facilities. As of December 31, 2017 and 2016, there were approximately $103,915,000 and $113,031,000 of eligible loans and related security pledged as collateral under the credit facilities, respectively.

Interest on the credit facilities accrues at a variable rate per annum ofone-month LIBOR plus 2.60% as of December 31, 2017 and 2016, respectively (4.16% and 3.37% at December 31, 2017 and 2016, respectively), payable monthly. The Company also pays customary loan fees for the credit facilities.

7. Commitments and Concentrations

At December 31, 2017 and 2016, the Company has committed facilities to its borrowers totaling approximately $176,332,000 and $186,360,000, respectively, of which approximately $87,414,000 and $91,864,000, respectively, was unused. Borrowers may borrow up to the lesser of (i) the committed facility or (ii) the underlying collateral value multiplied by the advance rate. Of the unused committed facility amount at December 31, 2017 and 2016, borrowers could borrow up to approximately $17,842,000 and $22,064,000, respectively.

At December 31, 2017 and 2016, the Company had one loan approximating 15% and 12% of the total loans receivable, respectively.

8. Lease Commitments

The Company leases its headquarters, regional sales offices and equipment undernon-cancelable operating leases, which expire at various dates through 2020. As of December 31, 2017, future lease payments undernon-cancelable operating leases, are as follows:

Years ending December 31:
2018	$	134,515
2019		129,976
2020		10,750
Total	$	275,241

Total rent expense for all leases amounted to approximately $158,000 and $157,000 for the years ended December 31, 2017 and 2016, respectively.

9. 401(k) Savings Plan

The Company has a savings incentive plan covering substantially all employees of the Company. Contributions are currently made by the Company in an amount equal to 100% of the first 5% of employee contributions after the employee has completed three months of continued employment. The Company’s contribution for the years ended December 31, 2017 and 2016 was approximately $152,000 and $144,000, respectively.

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Gemino Healthcare Finance, LLC and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

10. Long-Term Incentive Plan

The Company has a Long-Term Incentive Plan (“LTIP Plan”) that provides for an annual bonus pool to employees based on the Company achieving certain performance criteria. For the years ended December 31, 2017 and 2016, the Company has expensed approximately$-0- and $167,000, respectively, for the LTIP Plan.

11. Fair Value Disclosure

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. The estimated fair value amounts have been measured as of the Company’syear-end and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to that date. As such, the estimated fair value of these consolidated financial instruments subsequent to the reporting date may be different than the amounts reported atyear-end. These estimates are subjective in nature and include uncertainties and matters of significant judgment and, therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following information should not be interpreted as an estimate of the fair value of the entire Company, since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments as of December 31, 2017 and 2016:

Cash and cash equivalents- The carrying value approximates fair value for cash and cash equivalents. (Level 1)

Loan receivables, net - Fair values for loans are estimated using market interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. (Level 2)

Accrued interest receivable, accrued interest payable - Due to the short-term nature of these amounts, their carrying amounts approximate fair value. (Level 1)

Credit facility payable - The fair value of the credit facility payable is determined from market sources based on current interest rates at the balance sheet date for borrowers with similar credit ratings as the Company. (Level 2)

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Gemino Healthcare Finance, LLC and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

The estimated fair values of the Company’s financial instruments as of December 31, 2017 and 2016 are as follows:

	2017
	Carrying Value		Fair Value
Financial assets:
Cash and cash equivalents	$	12,957,611	$	12,957,611
Loan receivables, net		87,299,916		87,972,712
Accrued interest receivable		699,965		699,965
Financial liabilities:
Credit facility payable		75,000,000		75,000,000
Accrued interest payable		276,258		276,258
	2016
Financial assets:
Cash and cash equivalents	$	14,990,039	$	14,990,039
Loan receivables, net		92,863,789		93,494,840
Accrued interest receivable		736,095		736,095
Financial liabilities:
Credit facility payable		83,000,000		83,000,000
Accrued interest payable		243,645		243,645

Except for the loans evaluated individually for impairment (Note 4), at December 31, 2017 and 2016, respectively, the Company had no financial assets or liabilities measured at fair value on a nonrecurring basis.

12. Subsequent Events

The Company evaluated subsequent events for recognition or disclosure through February 14, 2018, which was the date the consolidated financial statements were available to be issued.

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