Franklin BSP Lending Corp - Quarter Report: 2016 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended March 31, 2016



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

Commission file number: 814-00821

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

(Exact Name of Registrant as Specified in its Charter)



Maryland		27-2614444
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

405 Park Avenue, 14th Floor New York, New York		10022
(Address of Principal Executive Office)		(Zip Code)

(212) 415-6500

(Registrant’s Telephone Number, Including Area Code)

Not applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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



Large accelerated filer o		Accelerated filer o

Non-accelerated filer x		Smaller reporting company o

(Do not check if a smaller reporting company)

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

The number of shares of the registrant's common stock, $0.001 par value, outstanding as of May 12, 2016 was 178,463,821.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2016

TABLE OF CONTENTS




	Page
PART I
Item 1. Condensed Consolidated Financial Statements	1
Condensed Consolidated Statements of Assets and Liabilities as of March 31, 2016 (Unaudited) and December 31, 2015	1
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2016 and 2015 (Unaudited)	2
Condensed Consolidated Statements of Changes in Net Assets for the Three Months Ended March 31, 2016 and 2015 (Unaudited)	3
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015 (Unaudited)	4
Condensed Consolidated Schedules of Investments as of March 31, 2016 (Unaudited) and December 31, 2015	5
Notes to Condensed Consolidated Financial Statements as of March 31, 2016 (Unaudited)	25
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	56
Item 3. Quantitative and Qualitative Disclosures about Market Risk	68
Item 4. Controls and Procedures	69
PART II
Item 1. Legal Proceedings	69
Item 1A. Risk Factors	69
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 3. Defaults upon Senior Securities	69
Item 4. Mine Safety Disclosures	69
Item 5. Other Information	69
Item 6. Exhibits	70
Signatures	73

PART I

Item 1. Condensed Consolidated Financial Statements.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands except share and per share data)



	March 31,			December 31,
	2016			2015
ASSETS	(Unaudited)
Investments, at fair value:
Control Investments, at fair value (amortized cost of $291,981 and $282,567, respectively)	$	323,193		$	306,382
Affiliate Investments, at fair value (amortized cost of $418,032 and $439,141, respectively)	333,689			362,984
Non-affiliate Investments, at fair value (amortized cost of $1,743,196 and $1,707,195, respectively)	1,665,156			1,641,915
Investments, at fair value (amortized cost of $2,453,209 and $2,428,903, respectively)	2,322,038			2,311,281
Cash and cash equivalents	196,538			150,412
Receivable for unsettled trades	238			1,404
Interest receivable	21,641			22,772
Prepaid expenses and other assets	2,384			4,886
Total assets	$	2,542,839		$	2,490,755

LIABILITIES
Revolving credit facility (net of deferred financing costs of $6,106 and $6,944, respectively)	$	817,606		$	736,768
Unsecured notes payable (net of deferred financing costs of $555 and $586, respectively)	98,050			97,940
Stockholder distributions payable	13,081			13,213
Management fees payable	9,280			9,532
Accounts payable and accrued expenses	10,560			8,486
Payable for unsettled trades	8,877			6,683
Interest and credit facility fees payable	4,624			6,507
Payable for common stock repurchases	—			924
Due to affiliate	187			197
Directors fees payable	58			20
Total liabilities	$	962,323		$	880,270
Commitments and contingencies (Note 6)

NET ASSETS
Preferred stock, $.001 par value, 50,000,000 shares authorized, none issued and outstanding	$	—		$	—
Common stock, $.001 par value, 450,000,000 shares authorized, 177,922,785 and 179,142,028 shares issued and outstanding, respectively	178			179
Additional paid in capital	1,721,166			1,737,893
Accumulated over distributed net investment income	(7,656		)	(7,656		)
Accumulated over distributed realized losses	(2,208		)	(3,405		)
Net unrealized depreciation, net of deferred taxes	(135,088		)	(120,645		)
Total net assets attributable to Business Development Corporation of America	1,576,392			1,606,366
Net assets attributable to non-controlling interest	4,124			4,119
Total net assets	1,580,516			1,610,485

Total liabilities and net assets	$	2,542,839		$	2,490,755

Net asset value per share	$	8.86		$	8.97

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands except share and per share data)

(Unaudited)



	For the Three Months Ended March 31,
	2016			2015
Investment income:
Interest from investments
Control investments	$	6,907		$	2,130
Affiliate investments	8,449			16,702
Non-control/Non-affiliate investments	39,165			28,833
Total interest from investments	54,521			47,665
Interest from cash and cash equivalents	42			10
Total interest income	54,563			47,675
Other income	2,355			2,206
Total investment income	56,918			49,881

Operating expenses:
Management fees	9,413			8,235
Subordinated income incentive fees	—			5,242
Interest and credit facility financing expenses	9,336			4,291
Professional fees	1,570			1,224
Other general and administrative	2,630			613
Administrative services	250			203
Insurance	55			52
Directors fees	126			18
Expenses before expense waivers	23,380			19,878
Waiver of management and incentive fees	—			(3,534		)
Total expenses net of expense waivers	23,380			16,344

Net investment (gain) loss attributable to noncontrolling interests	7			(12		)

Net investment income	33,531			33,549

Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from investments
Control investments	—			(65		)
Affiliate investments	180			200
Non-control/non-affiliate investments	1,017			184
Total net realized gain from investments	1,197			319
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
Control investments	6,501			1,682
Affiliate investments	(8,186		)	(4,965		)
Non-control/non-affiliate investments	(12,759		)	704
Total net change in unrealized depreciation on investments, net of deferred taxes	(14,444		)	(2,579		)
Net change in unrealized depreciation attributable to non-controlling interests	$	—		$	(166	)
Net realized and unrealized loss on investments	$	(13,247	)	$	(2,426	)
Net increase in net assets resulting from operations	$	20,284		$	31,123
Per share information - basic and diluted
Net investment income	$	0.19		$	0.21
Net increase in net assets resulting from operations	$	0.11		$	0.19
Weighted average shares outstanding	179,076,365			161,823,970

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(dollars in thousands except share and per share data)

(Unaudited)



	For the Three Months Ended March 31,
	2016			2015
Operations:
Net investment income	$	33,531		$	33,549
Net realized gain from investments	1,197			319
Net change in unrealized depreciation on investments, net of deferred taxes	(14,444		)	(2,579		)
Net change in unrealized depreciation attributable to non-controlling interests	—			(166		)
Net increase in net assets from operations	20,284			31,123
Stockholder distributions:
Distributions from net investment income	(33,531		)	(34,663		)
Return of capital	(5,118		)	—
Net decrease in net assets from stockholder distributions	(38,649		)	(34,663		)
Capital share transactions:
Issuance of common stock, net of issuance costs	—			68,791
Reinvestment of stockholder distributions	15,621			16,767
Repurchases of common stock	(27,230		)	(4,522		)
Net increase (decrease) in net assets from capital share transactions	(11,609		)	81,036
Total increase in net assets	(29,974		)	77,496
Increase in non-controlling interest	5			154
Total increase (decrease) in net assets	(29,969		)	77,650
Net assets at beginning of period	1,610,485			1,535,423
Net assets at end of period	$	1,580,516		$	1,613,073

Net asset value per common share	$	8.86		$	9.72
Common shares outstanding at end of period	177,922,785			165,691,398

Accumulated under/(over) distributed net investment income	$	(7,656	)	$	6,596
Accumulated over distributed realized losses	$	(2,208	)	$	(220	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)



	For the Three Months Ended March 31,
	2016			2015
Operating activities:
Net increase in net assets from operations	$	20,284		$	31,123
Adjustments to reconcile net increase in net assets from operations to net cash provided by (used in) operating activities:
Paid-in-kind interest income	(7,093		)	(178		)
Net accretion of discount on investments	(1,683		)	(1,115		)
Amortization of deferred financing costs	894			399
Sales and repayments of investments	130,008			206,558
Purchase of investments	(144,341		)	(278,275		)
Net realized gain from investments	(1,197		)	(319		)
Net unrealized (appreciation) depreciation on investments	13,548			3,090
(Increase) decrease in operating assets:
Interest receivable	1,131			(1,497		)
Prepaid expenses and other assets	2,503			(521		)
Receivable for unsettled trades	1,166			15,374
Increase (decrease) in operating liabilities:
Payable for unsettled trades	2,194			11,798
Management fees payable	(252		)	(2,118		)
Interest and credit facility fees payable	(1,883		)	(7		)
Accounts payable and accrued expenses	2,074			(918		)
Payable for common stock repurchases	(924		)	323
Directors fees payable	38			6
Net cash provided by (used in) operating activities	16,467			(16,277		)

Financing activities:
Proceeds from issuance of shares of common stock, net	—			68,791
Repurchases of common stock	(27,230		)	(4,522		)
Decrease (increase) in deferred offering costs receivable	—			2,658
Proceeds from revolving credit facility	80,000			—
Payments on revolving credit facility	—			(10,000		)
Proceeds from unsecured notes	79			—
Payments of financing cost	(25		)	(100		)
Payments to affiliate	(10		)	(1,760		)
Stockholder distributions	(23,160		)	(17,319		)
Increase in non-controlling interest	5			154
Net cash provided by financing activities	29,659			37,902

Net increase in cash and cash equivalents	46,126			21,625
Cash and cash equivalents, beginning of period	150,412			206,872
Cash and cash equivalents, end of period	$	196,538		$	228,497
Supplemental information:
Interest paid during the period	$	10,180		$	3,928
Taxes, including excise tax, paid during the period	$	85		$	255

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2016 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate (n)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)

Senior Secured First Lien Debt - 92.1% (b)
Ability Networks Inc. (j)	Health Care Providers & Services	L+5.00% (6.00%), 5/14/2021	$	13,818	$	13,723	$	13,567	0.9	%
Adams Publishing Group, LLC (i)	Media	L+6.75% (7.75%), 11/3/2020	18,525		18,184		18,525		1.2	%
AM General LLC (j)	Aerospace & Defense	L+9.00% (10.25%), 3/22/2018	5,075		4,772		3,705		0.2	%
Amports, Inc. (k)	Transportation Infrastructure	L+8.00% (9.00%), 5/19/2020	15,000		14,922		14,775		0.9	%
Amteck, LLC (f) (i) (m)	Commercial Services & Supplies	L+8.50% (9.50%), 7/2/2020	24,375		24,012		23,766		1.5	%
Answers Corporation (i) (j)	Internet Software & Services	L+5.25% (6.25%), 10/3/2021	34,563		33,603		22,783		1.4	%
AP Gaming I, LLC (i) (j)	Hotels, Restaurants & Leisure	L+8.25% (9.25%), 12/21/2020	30,587		30,342		28,079		1.8	%
APCO Holdings (i)	Diversified Consumer Services	L+6.00% (7.00%), 1/29/2022	9,000		8,731		8,730		0.6	%
Aperture Group LLC (i)	Diversified Financial Services	L+6.25% (7.25%), 8/29/2019	7,388		7,362		7,240		0.5	%
Applied Merchant Systems West Coast, Inc. (m)	Diversified Financial Services	L+11.50% (12.50%), 10/26/2020	21,148		21,000		20,724		1.3	%
Ascensus, Inc. (f) (j)	IT Services	L+4.50%, (5.50%), 12/3/2022	16,899		15,926		16,307		1.0	%
Asurion (j)	IT Services	L+3.75% (5.00%), 5/24/2019	19,352		18,651		19,062		1.1	%
Avaya, Inc. Term Loan B-3 (j)	Communications Equipment	L+4.50% (5.12%), 10/26/2017	9,685		8,092		7,777		0.5	%
Avaya, Inc. Term Loan B-6 (j)	Communications Equipment	L+5.50% (6.50%), 3/31/2018	8,457		8,464		6,195		0.4	%
Avaya, Inc. Term Loan B-7 (i) (j)	Communications Equipment	L+5.25% (6.25%), 5/29/2020	9,882		9,798		6,575		0.4	%
AxleTech International, LLC (i)	Machinery	L+6.50% (7.50%), 1/5/2021	19,750		19,591		19,059		1.2	%
Basho Technologies, Inc. (l)	Software	14.00%, 3/9/2018	10,338		10,167		10,441		0.7	%
Broder Bros, Co. (m)	Distributors	L+5.75% (7.00%), 6/3/2021	7,410		7,271		7,410		0.4	%
Broder Bros, Co. (m)	Distributors	L+12.25% (13.50%), 6/3/2021	7,440		7,300		7,440		0.5	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (e) (l) (o) (t)	Food Products	L+12.50% (13.50%), 4/28/2019	46,063		45,334		31,093		2.0	%
Catapult Learning, LLC (i) (m)	Diversified Investment Vehicles	L+8.10% (9.10%), 7/16/2020	27,500		27,027		26,813		1.7	%
CCW, LLC (f) (i)	Hotels, Restaurants & Leisure	L+7.00% (8.00%), 3/21/2021	25,000		24,627		24,627		1.6	%
Central Security Group, Inc. (i) (j)	Commercial Services & Supplies	L+5.63% (6.63%), 10/6/2020	25,750		25,323		24,977		1.6	%
CH Hold Corp. (i)	Diversified Consumer Services	L+5.25% (6.25%), 11/20/2019	15,222		15,073		15,070		1.0	%
Chicken Soup for the Soul Publishing, LLC (i) (k)	Media	L+6.00% (7.25%), 1/8/2019	29,400		29,195		29,253		1.9	%
Clover Technologies Group, LLC (j)	Commercial Services & Supplies	L+4.50% (5.50%), 5/8/2020	14,206		14,110		12,714		0.8	%
ConvergeOne Holdings Corp. (j)	Diversified Consumer Services	L+5.00% (6.00%), 6/17/2020	16,728		16,619		16,059		1.0	%
Danish CRJ LTD. (a) (p)	Aerospace & Defense	13.50%	20		20		20		—	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2016 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate (n)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
DigiCert, Inc (j)	Internet Software & Services	L+5.00% (6.00%), 10/21/2021	$	10,973	$	10,666	$	10,643	0.7	%
Doskocil Manufacturing Company, Inc. (k) (m)	Household Durables	L+8.70% (9.70%), 11/10/2020	15,000		14,758		15,000		0.9	%
Eagle Rx, LLC (i)	Health Care Providers & Services	L+6.00% (7.00%), 8/15/2019	15,419		15,366		15,496		1.0	%
ECI Acquisition Holdings, Inc. (i)	Internet Software & Services	L+6.25% (7.25%), 3/11/2019	12,874		12,835		12,680		0.8	%
Emergency Communications Network, LLC (m)	Internet Software & Services	L+7.00% (8.00%), 6/12/2021	19,850		19,592		19,255		1.2	%
ERG Holding Company (f) (i)	Health Care Providers & Services	L+6.75% (8.00%), 4/4/2019	17,103		16,883		16,847		1.1	%
Excelitas Technologies Corp. (j)	Electronic Equipment, Instruments & Components	L+5.00% (6.00%), 11/2/2020	13,868		13,811		12,238		0.8	%
GEM Holdings Group, LLC (i)	Hotels, Restaurants & Leisure	L+9.00% (10.00%), 11/22/2020	15,707		15,669		15,707		1.0	%
GK Holdings, Inc. (j)	Professional Services	L+5.50% (6.50%), 1/30/2021	3,950		3,918		3,911		0.2	%
Greenwave Holdings, Inc. (l)	Internet Software & Services	13.00%, 7/8/2019	15,299		15,149		15,299		1.0	%
GTCR Valor Companies, Inc. (i) (j)	Software	L+5.00% (6.00%), 5/30/2021	32,488		31,910		32,190		2.0	%
Hanna Anderson, LLC (f) (i)	Specialty Retail	L+7.25% (8.25%), 4/21/2019	15,272		15,176		15,272		1.0	%
Icynene US Acquisition Corp. (f) (m) (i)	Building Products	L+6.25% (7.25%), 11/4/2020	23,760		23,395		23,760		1.5	%
ILC Dover LP (i)	Aerospace & Defense	P+6.00% (9.50%), 3/20/2020	14,250		14,203		12,113		0.8	%
InMotion Entertainment Group, LLC (f) (i)	Specialty Retail	L+7.75% (9.00%), 10/1/2018	15,035		14,866		15,035		1.0	%
IPC Corp. (j)	Diversified Telecommunication Services	L+4.50% (5.50%), 8/6/2021	9,257		9,086		8,578		0.5	%
Jackson Hewitt, Inc. (j)	Diversified Consumer Services	L+7.00% (8.00%), 7/30/2020	7,000		6,900		6,790		0.4	%
K&N Engineering, Inc. (i)	Specialty Retail	L+4.25% (5.25%), 7/11/2019	4,963		4,942		4,789		0.3	%
K2 Pure Solutions NoCal, L.P. (i)	Chemicals	L+6.00% (7.00%), 8/19/2019	6,500		6,426		6,500		0.4	%
Kahala Ireland OpCo Limited (a) (o) (l)	Aerospace & Defense	L+8.00% (13.00%), 12/23/2028	175,938		175,938		175,938		11.1	%
Kahala US OpCo LLC (o) (l)	Aerospace & Defense	L+8.00% (13.00%), 12/23/2028	2,690		2,690		2,690		0.2	%
Land Holdings I, LLC (m)	Hotels, Restaurants & Leisure	12.00%, 6/26/2019	30,000		29,610		30,600		1.9	%
Liquidnet Holdings, Inc. (a) (j)	Capital Markets	L+6.75% (7.75%), 5/22/2019	6,106		6,077		5,938		0.4	%
MCS AMS Sub-Holdings LLC (j)	Real Estate Management & Development	L+6.50% (7.50%), 10/15/2019	12,750		12,472		10,710		0.7	%
Motion Recruitment Partners, LLC (f) (i)	Professional Services	L+6.00% (7.00%), 2/13/2020	18,876		18,536		18,875		1.2	%
Motorsports Aftermarket Group, Inc. (i) (j)	Auto Components	L+4.00% (5.00%), 5/14/2021	26,512		24,876		13,919		0.9	%
National Technical Systems, Inc. (i) (f)	Professional Services	L+6.00% (7.00%), 6/12/2021	19,900		19,728		19,502		1.2	%
NexSteppe Inc. (l)	Chemicals	13.00%, 3/30/2018	10,310		9,839		9,846		0.6	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2016 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate (n)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Noosa Acquirer, Inc. (i) (m)	Food Products	L+5.25% (6.25%), 11/21/2020	$	25,000	$	24,710	$	25,000	1.6	%
North Atlantic Trading Company, Inc. (i) (j)	Food Products	L+6.50% (7.75%), 1/13/2020	17,476		17,442		17,214		1.1	%
Orchid Underwriters Agency, LLC (f) (m)	Insurance	10.00%, 11/6/2019	14,768		14,609		14,547		0.9	%
Otter Box Holdings, Inc. (j)	Electronic Equipment, Instruments & Components	L+4.75% (5.75%), 6/3/2020	15,672		15,407		13,478		0.9	%
PeopLease Holdings, LLC (i)	Commercial Services & Supplies	L+9.00% (10.00%), 2/26/2021	20,000		19,802		20,000		1.2	%
PGX Holdings, Inc. (j)	Transportation Infrastructure	L+4.75% (5.75%), 9/29/2020	13,856		13,769		13,763		0.9	%
Plaskolite (j)	Chemicals	L+4.75% (5.75%), 11/3/2022	7,000		6,934		6,939		0.4	%
Premier Dental Services, Inc. (i) (j)	Health Care Providers & Services	L+6.50% (7.50%), 11/1/2018	22,488		22,421		20,239		1.3	%
Pre-Paid Legal Services, Inc. (j)	Diversified Consumer Services	L+5.25% (6.50%), 7/1/2019	11,683		11,724		11,607		0.7	%
Pride Plating, Inc. (i)	Aerospace & Defense	L+5.50% (6.50%), 6/13/2019	9,557		9,503		9,325		0.6	%
PSKW, LLC (i)	Health Care Providers & Services	L+4.25% (5.25%), 11/25/2021	2,194		2,173		2,172		0.1	%
PSKW, LLC (k) (m)	Health Care Providers & Services	L+8.42% (9.42%), 11/25/2021	17,750		17,416		17,394		1.1	%
Pure Barre, LLC (f) (i) (m)	Hotels, Restaurants & Leisure	L+7.00% (8.00%), 6/11/2020	29,775		29,337		29,477		1.9	%
RedPrairie Corp. (j)	Software	L+5.00% (6.00%), 12/21/2018	17,900		17,507		16,577		1.0	%
Resco Products, Inc. (i)	Metals & Mining	L+6.25% (6.87%), 9/7/2016	10,000		9,976		9,750		0.6	%
RVNB Holdings, Inc. (dba All My Sons Moving & Storage) (f) (i)	Diversified Consumer Services	L+7.75% (8.75%), 2/25/2020	23,138		22,776		22,560		1.4	%
Sage Automotive Holdings, Inc. (j)	Auto Components	L+5.00% (6.00%), 10/8/2020	7,338		7,269		7,118		0.5	%
SHO Holding II Corporation (j)	Specialty Retail	L+5.00% (6.00%), 10/27/2022	12,000		11,885		11,880		0.8	%
Squan Holding Corp. (i)	Diversified Telecommunication Services	L+8.75% (9.75%), 10/10/2019	20,974		20,680		19,401		1.2	%
Squan Holding Corp. (f) (i)	Diversified Telecommunication Services	L+8.75% (9.75%), 12/31/2016	1,045		1,045		1,045		0.1	%
STG-Fairway Acquisitions, Inc. (j)	Professional Services	L+5.25% (6.25%), 6/30/2022	13,359		13,177		12,959		0.8	%
Stratose Intermediate Holdings II, LLC (j)	Life Sciences Tools & Services	L+5.00% (6.00%), 1/26/2022	9,975		9,878		9,975		0.6	%
SunGard Availability Services Capital, Inc. (j)	IT Services	L+5.00% (6.00%), 3/31/2019	8,827		8,771		7,782		0.5	%
Taqua, LLC (l)	Wireless Telecommunication Services	13.50%, 7/31/2019	13,226		13,051		12,763		0.8	%
Tax Defense Network, LLC (f) (i) (m)	Diversified Consumer Services	L+7.50% (8.50%), 8/28/2019	26,000		25,636		25,610		1.6	%
Total Outdoor Holdings Corp.	Media	L+5.25% (6.25%), 8/28/2019	13,000		12,822		13,260		0.8	%
Transportation Insight, LLC (i) (m)	Air Freight & Logistics	L+5.25% (6.25%), 9/30/2019	20,846		20,616		20,533		1.3	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2016 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate (n)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Trojan Battery Company, LLC (j)	Auto Components	L+4.75% (5.75%), 6/12/2021	$	10,667	$	10,586	$	10,494	0.7	%
Turning Tech LLC (f) (i) (m)	Software	L+8.75% (9.36%), 6/30/2020	23,875		23,469		23,278		1.5	%
Twenty Eighty, Inc. (j) (m)	Media	L+6.00% (7.00%), 9/30/2019	22,367		21,172		16,831		1.1	%
United Central Industrial Supply Company, LLC (i) (j)	Commercial Services & Supplies	L+6.25% (7.50%), 10/9/2018	8,708		8,636		5,529		0.3	%
VetCor Professional Practices LLC (f) (i)	Diversified Consumer Services	L+6.00% (7.00%), 4/20/2021	14,130		14,005		13,918		0.9	%
Sub Total Senior Secured First Lien Debt					$	1,522,760	$	1,455,325	92.1	%

Senior Secured Second Lien Debt - 21.0% (b)
Ability Networks Inc. (k)	Health Care Providers & Services	L+8.25% (9.25%), 5/16/2022	$	12,050	$	11,957	$	11,387	0.7	%
Appriss Holdings, Inc. (m)	IT Services	L+8.25% (9.25%), 5/21/2021	19,650		19,410		19,355		1.2	%
Asurion LLC	IT Services	L+7.50% (8.50%), 3/3/2021	10,000		9,197		9,342		0.6	%
Boston Market Corporation (k) (m)	Hotels, Restaurants & Leisure	L+7.63% (8.63%), 12/16/2018	24,538		24,323		24,538		1.6	%
BrandMuscle Holdings Inc. (k) (m)	Internet Software & Services	L+8.50% (9.50%), 6/1/2022	24,500		24,035		24,500		1.6	%
Cayan Holdings (m)	IT Services	L+8.50% (9.50%), 3/24/2022	20,000		19,532		19,600		1.3	%
CIG Financial, LLC (a) (f) (m)	Consumer Finance	10.50%, 6/30/2019	15,000		14,902		14,325		0.9	%
CPX Interactive Holdings, LP (l)	Media	L+12.00% (13.00%), 3/26/2018	20,722		19,969		17,925		1.1	%
CREDITCORP (k)	Consumer Finance	12.00%, 7/15/2018	13,250		13,203		7,751		0.5	%
Epic Health Services, Inc. (m)	Health Care Providers & Services	L+8.25% (9.25%), 8/17/2021	12,333		12,180		12,148		0.8	%
High Ridge Brands Co. (k) (m)	Personal Products	L+8.50% (9.50%), 4/11/2020	22,500		22,273		22,500		1.4	%
J. C. Bromac Corporation (dba EagleRider, Inc.) (f) (m)	Hotels, Restaurants & Leisure	L+8.75% (9.50%), 2/10/2021	10,000		9,883		9,925		0.6	%
K&N Engineering, Inc. (k)	Specialty Retail	L+8.63% (9.63%), 7/11/2020	13,000		12,791		12,414		0.8	%
Linc Energy Finance USA, Inc. (t)	Oil, Gas & Consumable Fuels	12.50%, 10/31/2017	9,000		8,914		90		—	%
NCP Finance Limited Partnership (j) (k)	Consumer Finance	L+9.75% (11.00%), 10/1/2018	17,554		17,450		14,921		0.9	%
Prime Security Services Borrower, LLC (j)	Commercial Services & Supplies	L+8.75% (9.75%), 7/1/2022	12,500		12,332		11,563		0.7	%
Rx30 HoldCo, Inc. (m)	HealthCare Technology	L+8.25% (9.25%), 6/15/2022	11,500		11,296		11,213		0.7	%
Sage Automotive Holdings, Inc. (m)	Auto Components	L+8.00% (9.00%), 10/8/2021	13,000		12,896		12,740		0.8	%
Schulman Associates Institutional Review Board, Inc. (m)	Life Sciences Tools & Services	L+8.00% (9.00%), 6/3/2021	17,000		16,729		16,320		1.0	%
Stratose Intermediate Holdings II, LLC (k) (m)	HealthCare Providers & Services	L+9.50% (10.50%), 12/30/2021	30,000		29,526		29,550		1.9	%
U.S. Auto (m)	Diversified Consumer Services	L+10.50% (11.50%), 6/8/2020	30,000		29,557		29,250		1.9	%
Sub Total Senior Secured Second Lien Debt					$	352,355	$	331,357	21.0	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2016 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate (n)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Subordinated Debt - 5.8% (b)
Gold, Inc. (k)	Textiles, Apparel & Luxury Goods	11.00%, 6/30/2019	$	10,858	$	10,750	$	10,858	0.7	%
Park Ave RE Holdings, LLC (d) (o) (l)	Real Estate Management & Development	L+8.00% (13.00%), 12/29/2017	35,192		35,192		35,192		2.2	%
Steel City Media (l)	Media	16.00%, 3/29/2020	20,783		20,455		19,952		1.3	%
Visionary Integration Professionals, LLC (l)	IT Services	17.00%, 12/3/2018	13,721		13,005		10,977		0.7	%
Xplornet Communications, Inc. (a) (l)	Diversified Telecommunication Services	13.00%, 10/25/2020	12,864		12,864		13,314		0.8	%
Zimbra, Inc. (t)	Software	12.00%, 7/10/2018	1,203		1,203		1,828		0.1	%
Sub Total Subordinated Debt					$	93,469	$	92,121	5.8	%

Collateralized Securities - 15.0% (b)
Collateralized Securities - Debt Investment
Fifth Street Senior Loan Fund I, LLC - 1A Class F (a) (p)	Diversified Investment Vehicles	L+7.50%, 1/19/2027	$	10,728	$	8,978	$	8,307	0.5	%
Collateralized Securities - Equity Investment
B&M CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	8.35%, 4/16/2026	40,250		24,308		16,673		1.1	%
CVP Cascade CLO, LTD. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	6.04%, 1/16/2026	31,000		14,339		8,865		0.6	%
CVP Cascade CLO-2, LTD. Subordinated Notes (a) (e) (p) (v)	Diversified Investment Vehicles	7/18/2026	35,250		17,076		10,868		0.7	%
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	13.31%, 1/19/2027	31,575		25,558		21,634		1.4	%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	5.40%, 1/15/2027	35,057		23,134		13,931		0.9	%
MidOcean Credit CLO II, LLC (a) (p) (v)	Diversified Investment Vehicles	11.95%, 1/29/2025	37,600		26,550		22,221		1.4	%
MidOcean Credit CLO III, LLC (a) (p) (v)	Diversified Investment Vehicles	15.83%, 7/21/2026	40,250		27,637		22,739		1.4	%
MidOcean Credit CLO IV, LLC (a) (p) (v)	Diversified Investment Vehicles	18.24%, 4/15/2027	21,500		16,940		14,102		0.9	%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	16.52%, 7/25/2025	31,603		26,210		23,210		1.5	%
Ocean Trails CLO V, LTD. (a) (p) (v)	Diversified Investment Vehicles	12.87%, 10/13/2026	40,518		30,438		24,716		1.6	%
OFSI Fund VI, Ltd. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	2.07%, 3/20/2025	38,000		22,676		17,850		1.1	%
Related Fee Agreements (a) (p) (s)	Diversified Investment Vehicles		—		13,208		11,612		0.7	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2016 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate (n)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Silver Spring CLO, Ltd. (a) (e) (p) (v)	Diversified Investment Vehicles	10/16/2026	$	31,500	$	20,154	$	6,489	0.4	%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (e) (p) (v)	Diversified Investment Vehicles	5/1/2026	36,000		19,673		12,042		0.8	%
Sub Total Collateralized Securities					$	316,879	$	235,259	15.0	%

Equity/Other - 13.2% (b)
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (e)	Software		$	306	$	—	$	28	—	%
Basho Technologies, Inc. - Series G Senior Preferred Stock (e)	Software	Expire 3/9/2025	$	2,000	2,000		2,200		0.2	%
Capstone Nutrition (fka HIG Integrity Nutraceuticals, Inc.) (e) (o) (u)	Food Products		$	25	1,630		—		—	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (e) (o)	Food Products		$	2	—		—		—	%
Carlyle GMS Finance, Inc. (a) (f)	Diversified Investment Vehicles		$	5,450	5,450		4,924		0.3	%
CPX Interactive Holdings, LP - Series A Convertible Preferred Shares (e) (u)	Media	8.00%	$	6,000	6,000		3,676		0.2	%
CPX Interactive Holdings, LP - Warrants (e) (u)	Media	Expire Various	317		1,087		—		—	%
Danish CRJ LTD. (a) (e) (p) (r)	Aerospace & Defense		$	5	1		911		0.1	%
Evolution Research Group - Preferred Equity (e)	Health Care Providers & Services	8.00%	$	500	500		500		—	%
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (e)	Internet Software & Services	Expire 8/16/2025	172		—		40		—	%
Kahala Ireland OpCo Limited - Common Equity (a) (e) (o) (h)	Aerospace & Defense		—		—		35,100		2.2	%
Kahala Ireland OpCo Limited - Profit Participating Note (a) (e) (o) (h)	Aerospace & Defense		3,250		3,090		3,250		0.2	%
Kahala US OpCo LLC (e) (o) (x)	Aerospace & Defense	13.00%	4,413		4,244		6,300		0.4	%
MBLOX Inc. - Warrants (e)	Internet Software & Services	Expire 2/28/2023	1,531		—		—		—	%
NexSteppe Inc. Series C Preferred Stock Warrant (e)	Chemicals	Expire 3/9/2025	177		500		420		—	%
NMFC Senior Loan Program I, LLC (a) (p)	Diversified Investment Vehicles		$	50,000	50,000		44,985		2.9	%
Orchid Underwriters Agency, LLC - Preferred Shares (e) (u)	Insurance		5		500		592		—	%
Orchid Underwriters Agency, LLC - Common Shares (e) (u)	Insurance		5		—		247		—	%
Park Ave RE Holdings, LLC - Common Shares (e) (o) (w)	Real Estate Management & Development		1		217		9,985		0.7	%
Park Ave RE Holdings, LLC - Preferred Shares (o) (w)	Real Estate Management & Development	8.00%	47		23,645		23,645		1.5	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2016 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate (n)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
PennantPark Credit Opportunities Fund II, LP (a) (f) (g) (p)	Diversified Investment Vehicles		$	7,252	7,252		8,753		0.6	%
SkyCross Inc. - Warrants (e)	Electronic Equipment, Instruments & Components	Expire 9/23/2023	2,254		—		—		—	%
South Grand MM CLO I, LLC (a) (f) (p)	Diversified Investment Vehicles		$	29,524	29,095		28,452		1.8	%
Squan Holding Corp. - Class A Common Stock (e) (u)	Diversified Telecommunication Services		1,150		12		—		—	%
Squan Holding Corp. - Series A Preferred Stock (e) (u)	Diversified Telecommunication Services		1		1,138		—		—	%
Tax Defense Network, LLC (e) (u)	Diversified Consumer Services		$	425	425		740		0.1	%
Tennenbaum Waterman Fund, L.P. (a)	Diversified Investment Vehicles		$	10,000	10,000		10,175		0.6	%
The SAVO Group, Ltd. - Warrants (e)	Internet Software & Services	Expire 3/23/2023	138		—		—		—	%
THL Credit Greenway Fund II LLC (a) (p)	Diversified Investment Vehicles		$	15,800	15,800		16,251		1.0	%
U.S. Auto Series A Common Units (e)	Diversified Consumer Services		10		10		245		—	%
U.S. Auto Series A Preferred Units (e)	Diversified Consumer Services		1		490		448		—	%
Visionary Integration Professionals, LLC - Warrants (e) (u)	IT Services	Expire 12/3/2023	657		910		—		—	%
World Business Lenders, LLC (e)	Consumer Finance		923		3,750		4,648		0.3	%
Xplornet Communications, Inc. - Warrants (a) (e)	Diversified Telecommunication Services	Expire 10/25/2023	10		—		1,416		0.1	%
Zimbra, Inc. - Warrants (Third Lien Bridge Note) (e)	Software	Expire 7/11/2023	1,000		—		45		—	%
Sub Total Equity/Other					$	167,746	$	207,976	13.2	%

TOTAL INVESTMENTS - 147.1% (b)					$	2,453,209	$	2,322,038	147.1	%

_____________


(a)	All of the Company's investments, except the investments noted by this footnote, are in eligible portfolio companies, as defined in the Investment Company Act of 1940, as amended (the "1940 Act"). Eligible assets represent 76.1% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.


(b)	Percentages are based on net assets of $1,580.52 million as of March 31, 2016.


(c)	The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's board of directors as required by the 1940 Act. (See Note 3 to the condensed consolidated financial statements).


(d)	As of March 31, 2016, the company elected to pay cash interest, noting the company has the option to elect a portion of the interest to be PIK.


(e)	Non-income producing at March 31, 2016.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2016

(Unaudited)


(f)	The Company has various unfunded commitments to portfolio companies. The remaining amount of these unfunded commitments as of March 31, 2016 are comprised of the following: (dollars in millions)



Portfolio Company Name	Commitment Type	Original Commitment		Remaining Commitment

Amteck, LLC	Revolver term loan	$	5.0	$	5.0
Ascensus, Inc	Delayed draw term loan	1.1		1.1
Carlyle GMS Finance, Inc.	Equity	10.0		4.6
CCW, LLC	Revolver term loan	3.0		3.0
CIG Financial, LLC	Delayed draw term loan	5.0		5.0
ERG Holding Company	Delayed draw term loan	20.2		16.4
Hanna Anderson, LLC	Delayed draw term loan	3.5		2.5
Icynene US Acquisition Corp.	Revolver term loan	5.0		5.0
Icynene US Acquisition Corp.	Delayed draw term loan	5.0		5.0
InMotion Entertainment Group, LLC	Delayed draw term loan	2.2		1.8
J. C. Bromac Corporation	Delayed draw term loan	5.0		5.0
Motion Recruitment Partners, LLC	Revolver term loan	2.0		1.6
National Technical Systems, Inc.	Delayed draw term loan	5.0		5.0
Orchid Underwriters Agency, LLC	Delayed draw term loan	5.6		5.6
PennantPark Credit Opportunities Fund II, LP	Equity	10.8		1.6
Pure Barre, LLC	Revolver term loan	2.5		2.5
RVNB Holdings, Inc.	Revolver term loan	0.9		0.5
South Grand MM CLO I, LLC	Equity	35.0		5.5
Squan Holding Corp.	Delayed draw term loan	1.4		0.3
Tax Defense Network, LLC	Delayed draw term loan	5.0		2.0
Turning Tech LLC	Revolver term loan	6.0		6.0
VetCor Professional Practices LLC	Delayed draw term loan	5.0		0.8

Total		$	144.2	$	85.8


(g)	The investment is subject to a three year lock-up restriction on withdrawals in year 4.


(h)	The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala LuxCo, which own 100% of the equity of the operating company, Kahala Ireland OpCo LLC.


(i)	The Company's investment or a portion thereof is pledged as collateral under the Wells Fargo Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.


(j)	The Company's investment or a portion thereof is pledged as collateral under the Citi Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.


(k)	The Company's investment or a portion thereof is pledged as collateral under the Deutsche Bank Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2016

(Unaudited)

(l)For the three months ended March 31, 2016, the following investments paid or have the option to pay all or a portion of interest and dividends via payment-in-kind ("PIK"):



Portfolio Company	Investment Type	Cash		PIK		All-in Rate		PIK Earned for the three months ended March 31, 2016 (dollars in thousands)
Basho Technologies, Inc.	Senior Secured First Lien Debt	10.00	%	4.00	%	14.00	%	$	87
Greenwave Holdings, Inc.	Senior Secured First Lien Debt	10.00	%	3.00	%	13.00	%	115
Capstone Nutrition	Senior Secured First Lien Debt	—	%	13.50	%	13.50	%	—
Kahala Ireland OpCo LLC	Senior Secured First Lien Debt	—	%	13.00	%	13.00	%	5,658
Kahala US OpCo LLC	Senior Secured First Lien Debt	—	%	13.00	%	13.00	%	86
NexSteppe Inc.	Senior Secured First Lien Debt	10.00	%	3.00	%	13.00	%	78
Taqua, LLC	Senior Secured First Lien Debt	10.50	%	3.00	%	13.50	%	101
The Tennis Channel Holdings, Inc.	Senior Secured First Lien Debt	6.88	%	2.00	%	8.88	%	85
CPX Interactive Holdings, LP	Senior Secured Second Lien Debt	11.00	%	2.00	%	13.00	%	104
Park Ave RE Holdings, LLC	Subordinated Debt	13.00	%	—	%	13.00	%	—
Steel City Media	Subordinated Debt	12.00	%	4.00	%	16.00	%	206
Visionary Integration Professionals, LLC	Subordinated Debt	—	%	17.00	%	17.00	%	573
Xplornet Communications, Inc.	Subordinated Debt	—	%	13.00	%	13.00	%	—
								$	7,093


(m)	The Company's investment or a portion thereof is pledged as collateral under the UBS Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.


(n)	For equity investments in Collateralized Securities, the effective yield is presented in place of the investment coupon rate for each investment. Refer to footnote (v) for a further description of an equity investment in a Collateralized Security.


(o)	The Company's investments are classified in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Control Investments” are defined as investments in companies in which the Company owns more than 25% of the voting securities, maintains greater than 50% of the board representation or has the power to exercise control over the management or policies of such portfolio company.


(p)	The Company's investments are classified in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Affiliated Investments” are defined as those non-control investments in companies in which the Company owns between 5% and 25% of the voting securities.

(q)

The Company's investments are classified in accordance with the requirements of the 1940 Act. Under the 1940 Act, "Non-affiliated Investments" are defined as investments that are neither Control Investments nor Affiliated Investments. The Company classifies all investments within the Consolidated Schedule of Investments which are not classified as Control Investments or Affiliated Investments as Non-affiliated Investments.


(r)	The Company's investment is held through the Consolidated Holding Company, Kahala Aviation Holdings, LLC, which owns 49% of the operating company, Danish CRJ LTD.


(s)	Related Fee Agreements consists of one investment with a fair value of $942 thousand that is classified as a Non-affiliated Investment and six investments with a total fair value of $10,670 thousand that are classified as Affiliated Investments.


(t)	The investment is on non-accrual status as of March 31, 2016.


(u)	Investments are held in the taxable wholly-owned, consolidated subsidiary, 54^th Street Equity Holdings, Inc.

(v)

The Collateralized Securities - debt investments and equity investments are considered equity positions in the Collateralized Loan Obligation funds. Equity investments are entitled to recurring distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s securities less contractual payments to debt holders and fund expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.


(w)	The Company's investment is held through the consolidated subsidiary, Park Ave RE, Inc., which owns 100% of the equity of the operating company, Park Ave RE Holdings, LLC.


(x)	The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc. which own 100% of the equity of the operating company, Kahala US OpCo LLC.

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2016

(Unaudited)

The following table shows the portfolio composition by industry grouping based on fair value at March 31, 2016 (dollars in thousands):



	At March 31, 2016
	Investments at Fair Value		Percentage of Total Portfolio
Diversified Investment Vehicles	$	375,612	16.1	%
Aerospace & Defense	249,352		10.7
Hotels, Restaurants & Leisure	162,953		7.0
Diversified Consumer Services	151,027		6.5
Health Care Providers & Services	139,300		6.0
Media	119,422		5.1
Internet Software & Services	105,200		4.5
IT Services	102,425		4.4
Commercial Services & Supplies	98,549		4.2
Software	86,587		3.7
Real Estate Management & Development	79,532		3.4
Food Products	73,307		3.2
Specialty Retail	59,390		2.6
Professional Services	55,247		2.4
Auto Components	44,271		1.9
Diversified Telecommunication Services	43,754		1.9
Consumer Finance	41,645		1.8
Transportation Infrastructure	28,538		1.3
Diversified Financial Services	27,964		1.3
Life Sciences Tools & Services	26,295		1.1
Electronic Equipment, Instruments & Components	25,716		1.1
Building Products	23,760		1.0
Chemicals	23,705		1.0
Personal Products	22,500		1.0
Communications Equipment	20,547		0.9
Air Freight & Logistics	20,533		0.9
Machinery	19,059		0.8
Insurance	15,386		0.7
Household Durables	15,000		0.6
Distributors	14,850		0.6
Wireless Telecommunication Services	12,763		0.5
Health Care Technology	11,213		0.5
Textiles, Apparel & Luxury Goods	10,858		0.5
Metals & Mining	9,750		0.4
Capital Markets	5,938		0.3
Oil, Gas & Consumable Fuels	90		0.1
Total	$	2,322,038	100.0	%

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2015

Portfolio Company (q)	Industry	Investment Coupon Rate (ak)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)

Senior Secured First Lien Debt - 87.3% (b)
Ability Networks Inc. (aa)	Health Care Providers & Services	L+5.00% (6.00%), 5/14/2021	$	8,848	$	8,817	$	8,715	0.5	%
Adams Publishing Group, LLC	Media	L+6.75% (7.75%), 11/3/2020	19,013		18,643		18,640		1.2	%
AM General LLC (aa)	Aerospace & Defense	L+9.00% (10.25%), 3/22/2018	5,250		4,899		4,253		0.3	%
Amports, Inc. (ab)	Transportation Infrastructure	L+8.00% (9.00%), 5/19/2020	15,000		14,918		14,877		0.9	%
Amteck, LLC (z) (aj) (aq)	Commercial Services & Supplies	L+8.50% (9.50%), 7/2/2020	24,688		24,298		24,226		1.5	%
Answers Corporation (z) (aa)	Internet Software & Services	L+5.25% (6.25%), 10/3/2021	34,650		33,645		23,216		1.4	%
AP Gaming I, LLC (z) (aa)	Hotels, Restaurants & Leisure	L+8.25% (9.25%), 12/21/2020	30,667		30,407		29,516		1.8	%
Aperture Group LLC (fka OH Acquisition, LLC)	Diversified Financial Services	L+6.25% (7.25%), 8/29/2019	7,406		7,379		7,335		0.5	%
Applied Merchant Systems West Coast, Inc. (aj)	Diversified Financial Services	L+11.50% (12.50%), 10/26/2020	20,500		20,297		20,021		1.2	%
Ascensus, Inc. (ar)	IT Services	L+4.50%, (5.50%), 12/3/2022	16,941		15,931		15,755		1.0	%
Asurion	IT Services	L+3.75% (5.00%), 5/24/2019	19,449		18,689		18,179		1.1	%
Avaya, Inc. Term Loan B-3 (aa)	Communications Equipment	L+4.50% (4.82%), 10/26/2017	1,500		1,339		1,155		0.1	%
Avaya, Inc. Term Loan B-6 (aa)	Communications Equipment	L+5.50% (6.50%), 3/31/2018	8,457		8,465		6,345		0.4	%
Avaya, Inc. Term Loan B-7 (z) (aa)	Communications Equipment	L+5.25% (6.25%), 5/29/2020	9,911		9,822		6,847		0.4	%
AxleTech International, LLC (z)	Machinery	L+6.50% (7.50%), 1/5/2021	19,800		19,632		19,242		1.2	%
Basho Technologies, Inc. (ai)	Software	13.00%, 3/9/2018	10,251		10,065		10,286		0.6	%
Broder Bros, Co.	Distributors	L+5.75% (7.00%), 6/3/2021	7,455		7,308		7,296		0.5	%
Broder Bros, Co.	Distributors	L+12.25% (13.50%), 6/3/2021	7,470		7,323		7,311		0.5	%
Catapult Learning, LLC (z) (aj)	Diversified Investment Vehicles	L+8.10% (9.10%), 7/16/2020	27,500		27,000		26,959		1.7	%
Central Security Group, Inc. (z) (aa)	Commercial Services & Supplies	L+5.25% (6.25%), 10/6/2020	18,315		18,094		17,674		1.1	%
Chicken Soup for the Soul Publishing, LLC (z) (ab)	Media	L+6.00% (7.25%), 1/8/2019	29,550		29,326		29,533		1.8	%
Clover Technologies Group, LLC (aa)	Commercial Services & Supplies	L+4.50% (5.50%), 5/8/2020	14,242		14,140		13,102		0.8	%
ConvergeOne Holdings Corp. (aa)	Diversified Consumer Services	L+5.00% (6.00%), 6/17/2020	16,771		16,654		16,687		1.0	%
Danish CRJ LTD. (a) (p)	Aerospace & Defense	13.50%	20		20		20		—	%
DigiCert, Inc	Internet Software & Services	L+5.00% (6.00%), 10/21/2021	11,000		10,679		10,670		0.7	%
Doskocil Manufacturing Company, Inc.	Household Durables	L+8.70% (9.70%), 11/10/2020	15,000		14,745		14,738		0.9	%
Eagle Rx, LLC (z)	Health Care Providers & Services	L+6.00% (7.00%), 8/15/2019	15,519		15,462		15,613		1.0	%
ECI Acquisition Holdings, Inc. (k) (z)	Internet Software & Services	L+6.25% (7.25%), 3/11/2019	12,874		12,832		12,680		0.8	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2015

Portfolio Company (q)	Industry	Investment Coupon Rate (ak)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Emergency Communications Network, LLC (aj)	Internet Software & Services	L+8.25% (9.25%), 6/12/2021	$	19,900	$	19,629	$	19,387	1.2	%
ERG Holding Company (z) (ad)	Health Care Providers & Services	L+6.75% (8.00%), 4/4/2019	17,177		16,937		16,808		1.0	%
Excelitas Technologies Corp. (aa)	Electronic Equipment, Instruments & Components	L+5.00% (6.00%), 11/2/2020	13,903		13,843		12,252		0.8	%
GEM Holdings Group, LLC (z)	Hotels, Restaurants & Leisure	L+9.00% (10.00%), 11/22/2020	16,004		15,963		16,158		1.0	%
GK Holdings, Inc. (aa)	Professional Services	L+5.50% (6.50%), 1/20/2021	3,960		3,926		3,881		0.2	%
Greenwave Holdings, Inc.	Internet Software & Services	13.00%, 7/8/2019	15,183		15,033		14,884		0.9	%
GTCR Valor Companies, Inc. (z) (aa)	Software	L+5.00% (6.00%), 5/30/2021	32,570		31,963		32,245		2.0	%
Hanna Anderson, LLC (z) (an)	Specialty Retail	L+7.25% (8.25%), 4/21/2019	14,824		14,724		14,720		0.9	%
Icynene US Acquisition Corp. (h) (z) (ac) (aj)	Building Products	L+6.25% (7.25%), 11/4/2020	23,820		23,435		23,620		1.5	%
ILC Dover LP (z)	Aerospace & Defense	L+7.00% (8.00%), 3/20/2020	14,344		14,293		13,142		0.8	%
InMotion Entertainment Group, LLC (z) (ae)	Specialty Retail	L+7.75% (9.00%), 10/1/2018	15,230		15,044		15,278		0.9	%
Integrity Nutraceuticals, Inc. (e) (o) (t) (z) (ab) (ai)	Food Products	L+12.50% (13.50%), 4/28/2019	41,732		41,120		29,731		1.8	%
IPC Corp. (aa)	Diversified Telecommunication Services	L+4.50% (5.50%), 8/6/2021	6,948		6,916		6,519		0.4	%
Jackson Hewitt, Inc. (aa)	Diversified Consumer Services	L+7.00% (8.00%), 7/30/2020	7,000		6,884		6,694		0.4	%
Jefferson Gulf Coast Energy Partners LLC (aj)	Transportation Infrastructure	L+7.50% (11.00%), 2/27/2018	17,775		17,692		15,998		1.0	%
K&N Engineering, Inc. (z)	Specialty Retail	L+4.25% (5.25%), 7/11/2019	4,975		4,953		4,802		0.3	%
K2 Pure Solutions NoCal, L.P. (z)	Chemicals	L+7.00% (8.00%), 8/19/2019	9,625		9,507		9,341		0.6	%
Kahala Ireland OpCo Limited (a) (o) (ai)	Aerospace & Defense	L+8.00% (13.00%), 12/23/2028	170,281		170,281		170,281		10.7	%
Kahala US OpCo LLC (o) (ai)	Aerospace & Defense	L+8.00% (13.00%), 12/23/2028	2,604		2,604		2,604		0.2	%
Land Holdings I, LLC (aj)	Hotels, Restaurants & Leisure	12.00%, 6/26/2019	30,000		29,580		30,820		1.9	%
Liquidnet Holdings, Inc. (a) (z) (aa)	Capital Markets	L+6.75% (7.75%), 5/22/2019	6,190		6,158		5,973		0.4	%
MCS AMS Sub-Holdings LLC (aa)	Real Estate Management & Development	L+6.50% (7.50%), 10/15/2019	13,031		12,727		10,555		0.7	%
Motion Recruitment Partners, LLC (l) (z)	Professional Services	L+6.00% (7.00%), 2/13/2020	18,625		18,261		18,198		1.1	%
Motorsports Aftermarket Group, Inc. (z) (aa)	Auto Components	L+4.00% (5.00%), 5/14/2021	26,579		24,867		17,941		1.1	%
National Technical Systems, Inc. (v) (z)	Professional Services	L+6.00% (7.00%), 6/12/2021	19,950		19,769		19,707		1.2	%
NexSteppe Inc. (ai)	Chemicals	13.00%, 3/30/2018	10,232		9,704		9,705		0.6	%
Noosa Acquirer, Inc. (z) (aj)	Food Products	L+5.25% (6.25%), 11/21/2020	25,000		24,694		25,136		1.6	%
North Atlantic Trading Company, Inc. (z) (aa)	Food Products	L+6.50% (7.75%), 1/13/2020	17,847		17,810		17,624		1.1	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2015

Portfolio Company (q)	Industry	Investment Coupon Rate (ak)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Orchid Underwriters Agency, LLC (af) (aj)	Insurance	10.00%, 11/6/2019	$	14,768	$	14,598	$	14,538	0.9	%
Otter Box Holdings, Inc. (aa)	Electronic Equipment, Instruments & Components	L+4.75% (5.75%), 6/3/2020	15,673		15,394		14,850		0.9	%
PeopLease Holdings, LLC (d) (z) (ai)	Commercial Services & Supplies	L+13.00% (14.00%), 12/26/2018	10,000		9,880		10,483		0.7	%
PGX Holdings, Inc. (z) (aa)	Transportation Infrastructure	L+4.75% (5.75%), 9/29/2020	13,892		13,801		13,753		0.9	%
Plaskolite	Chemicals	L+4.75% (5.75%), 11/3/2022	7,000		6,931		6,930		0.4	%
Premier Dental Services, Inc. (z) (aa)	Health Care Providers & Services	L+5.00% (6.00%), 11/1/2018	22,488		22,415		19,452		1.2	%
Pre-Paid Legal Services, Inc. (aa)	Diversified Consumer Services	L+5.25% (6.50%), 7/1/2019	11,896		11,940		11,784		0.7	%
Pride Plating, Inc. (z)	Aerospace & Defense	L+5.50% (6.50%), 6/13/2019	9,619		9,562		9,375		0.6	%
PSKW Intermediate	Health Care Providers & Services	L+4.25% (5.25%), 11/25/2021,	2,250		2,228		2,227		0.1	%
PSKW Intermediate	Health Care Providers & Services	L+8.42% (9.42%), 11/25/2021	17,750		17,401		17,572		1.1	%
Pure Barre, LLC (z) (aj) (al)	Hotels, Restaurants & Leisure	L+7.00% (8.00%), 6/11/2020	29,850		29,385		29,453		1.8	%
RedPrairie Corp. (aa)	Software	L+5.00% (6.00%), 12/21/2018	17,946		17,517		15,897		1.0	%
Resco Products, Inc. (z)	Metals & Mining	L+6.25% (6.58%), 9/7/2016	10,000		9,962		9,741		0.6	%
RVNB Holdings, Inc. (dba All My Sons Moving & Storage) (f) (z)	Diversified Consumer Services	L+7.75% (8.75%), 2/25/2020	23,536		23,145		22,974		1.4	%
Sage Automotive Holdings, Inc. (aa)	Auto Components	L+5.00% (6.00%), 10/8/2020	7,356		7,283		7,338		0.5	%
SHO Holding II Corporation	Specialty Retail	L+5.00% (6.00%), 10/27/2022	12,000		11,881		11,880		0.7	%
Squan Holding Corp. (n) (z) (aj)	Diversified Telecommunication Services	L+8.75% (9.75%), 10/10/2019	22,249		21,931		21,399		1.3	%
STG-Fairway Acquisitions, Inc. (aa)	Professional Services	L+5.25% (6.25%), 6/30/2022	13,359		13,170		13,009		0.8	%
SunGard Availability Services Capital, Inc. (aa)	IT Services	L+5.00% (6.00%), 3/31/2019	8,827		8,767		7,624		0.5	%
Taqua, LLC (ai)	Wireless Telecommunication Services	L+13.50%, 7/31/2019	13,300		13,109		12,933		0.8	%
Tax Defense Network, LLC (j) (z) (aj)	Diversified Consumer Services	L+7.50% (8.50%), 8/28/2019	26,117		25,726		25,886		1.6	%
The Tennis Channel Holdings, Inc. (ab) (ai)	Media	L+8.50% (8.88%), 5/29/2017	16,031		15,852		16,000		1.0	%
Total Outdoor Holdings Corp.	Media	L+11.00% (12.00%), 8/28/2019	13,000		12,809		13,271		0.8	%
Transportation Insight, LLC (z) (aj)	Air Freight & Logistics	L+5.50% (6.50%), 9/30/2019	21,049		20,801		20,495		1.3	%
Trojan Battery Company, LLC	Auto Components	L+4.75% (5.75%), 6/12/2021	10,093		10,013		9,941		0.6	%
Turning Tech LLC (z) (aj) (am)	Software	L+8.75% (9.08%), 6/30/2020	26,250		25,814		25,772		1.6	%
Twenty Eighty, Inc. (fka Miller Heiman, Inc.)	Media	L+5.75% (6.75%), 9/30/2019	19,645		19,153		17,287		1.1	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2015

Portfolio Company (q)	Industry	Investment Coupon Rate (ak)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
United Central Industrial Supply Company, LLC (z) (aa)	Commercial Services & Supplies	L+6.25% (7.50%), 10/9/2018	$	8,730	$	8,651	$	6,111	0.4	%
VetCor Professional Practices LLC (m) (z)	Diversified Consumer Services	L+6.00% (7.00%), 4/20/2021	13,197		13,078		12,998		0.8	%
Sub Total Senior Secured First Lien Debt					$	1,461,343	$	1,405,868	87.3	%

Senior Secured Second Lien Debt - 21.7% (b)
Ability Networks Inc. (ab)	Health Care Providers & Services	L+8.25% (9.25%), 5/16/2022	$	12,050	$	11,954	$	11,809	0.7	%
Appriss Holdings, Inc. (aj)	IT Services	L+8.25% (9.25%), 5/21/2021	19,650		19,398		19,337		1.2	%
Asurion LLC	IT Services	L+7.50% (8.50%), 3/3/2021	10,000		9,156		8,475		0.5	%
Boston Market Corporation (ab) (aj)	Hotels, Restaurants & Leisure	L+7.63% (8.63%), 12/16/2018	24,601		24,365		24,599		1.5	%
BrandMuscle Holdings Inc.	Internet Software & Services	L+8.50% (9.50%), 6/1/2022	32,000		31,368		31,360		1.9	%
Cayan Holdings (aj)	IT Services	L+8.50% (9.50%), 3/24/2022	20,000		19,517		19,550		1.2	%
CIG Financial, LLC (a) (ah) (aj)	Consumer Finance	10.50%, 6/30/2019	15,000		14,895		14,321		0.9	%
CPX Interactive Holdings, LP (ai)	Media	L+10.00% (13.00%), 3/26/2018	20,618		19,785		17,660		1.1	%
CREDITCORP (ab)	Consumer Finance	12.00%, 7/15/2018	13,250		13,199		8,596		0.5	%
Epic Health Services, Inc. (aj)	Health Care Providers & Services	L+8.25% (9.25%), 8/17/2021	12,333		12,172		12,137		0.8	%
High Ridge Brands Co. (ab) (aj)	Personal Products	L+8.50% (9.50%), 4/11/2020	22,500		22,259		22,434		1.5	%
Interblock USA L.C. (ab) (aj)	Electronic Equipment, Instruments & Components	L+8.75% (9.75%), 3/28/2018	23,000		22,741		22,351		1.5	%
J. C. Bromac Corporation (dba EagleRider, Inc.) (aj) (ap)	Hotels, Restaurants & Leisure	L+9.00% (10.00%), 8/11/2019	14,975		14,817		14,958		0.9	%
K&N Engineering, Inc. (ab)	Specialty Retail	L+8.63% (9.63%), 7/11/2020	13,000		12,779		12,417		0.8	%
Linc Energy Finance USA, Inc. (e) (t) (ab)	Oil, Gas & Consumable Fuels	12.50%, 10/31/2017	9,000		8,914		1,475		0.1	%
NCP Finance Limited Partnership (aa) (ab)	Consumer Finance	L+9.75% (11.00%), 10/1/2018	17,599		17,485		16,367		1.0	%
Prime Security Services Borrower, LLC (aa)	Commercial Services & Supplies	L+8.75% (9.75%), 7/1/2022	12,500		12,325		11,813		0.7	%
Rx30 HoldCo, Inc. (aj)	HealthCare Technology	L+8.25% (9.25%), 6/15/2022	11,500		11,288		11,242		0.7	%
Sage Automotive Holdings, Inc. (aj)	Auto Components	L+8.00% (9.00%), 10/8/2021	13,000		12,892		12,740		0.8	%
Schulman Associates Institutional Review Board, Inc. (aj)	Life Sciences Tools & Services	L+8.00% (9.00%), 6/3/2021	17,000		16,716		16,292		1.0	%
Stratose Intermediate Holdings II, LLC (aj)	HealthCare Providers & Services	L+9.50% (10.50%), 12/30/2021	10,000		9,908		9,900		0.6	%
U.S. Auto (aj)	Diversified Consumer Services	L+10.50% (11.50%), 6/8/2020	30,000		29,532		29,205		1.8	%
Sub Total Senior Secured Second Lien Debt					$	367,465	$	349,038	21.7	%

Subordinated Debt - 5.7% (b)
Gold, Inc. (ab)	Textiles, Apparel & Luxury Goods	11.00%, 6/30/2019	12,163		12,028		11,730		0.7	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2015

Portfolio Company (q)	Industry	Investment Coupon Rate (ak)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Park Ave RE Holdings, LLC (d) (o) (ai)	Real Estate Management & Development	L+8.00% (13.00%), 12/29/2017	$	35,192	$	35,192	$	35,192	2.2	%
Steel City Media (ai) (aj)	Media	14.00%, 3/29/2020	20,577		20,236		19,878		1.2	%
Visionary Integration Professionals, LLC (ab) (ai)	IT Services	17.00%, 12/3/2018	13,148		12,386		10,663		0.7	%
Xplornet Communications, Inc. (a) (ai)	Diversified Telecommunication Services	13.00%, 10/25/2020	12,864		12,864		12,974		0.8	%
Zimbra, Inc. (e) (t)	Software	12.00%, 7/10/2018	1,203		1,203		1,835		0.1	%
Sub Total Subordinated Debt					$	93,909	$	92,272	5.7	%

Collateralized Securities - 16.4% (b)
Collateralized Securities - Debt Investment
Fifth Street Senior Loan Fund I, LLC - 1A Class F (a) (p)	Diversified Investment Vehicles	L+7.50%, 1/19/2027	$	10,728	$	8,938	$	8,523	0.5	%
Collateralized Securities - Equity Investment
B&M CLO 2014-1, LTD. Subordinated Notes (a) (p) (ao)	Diversified Investment Vehicles	8.05%, 4/16/2026	$	40,250	$	25,816	$	19,169	1.1	%
CVP Cascade CLO, LTD. Subordinated Notes (a) (p) (ao)	Diversified Investment Vehicles	3.38%, 1/16/2026	31,000		15,193		11,114		0.7	%
CVP Cascade CLO-2, LTD. Subordinated Notes (a) (e) (p) (ao)	Diversified Investment Vehicles	7/18/2026	35,250		19,014		12,216		0.8	%
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes (a) (p) (ao)	Diversified Investment Vehicles	11.30%, 1/19/2027	31,575		26,739		23,566		1.5	%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (p) (ao)	Diversified Investment Vehicles	3.77%, 1/15/2027	35,057		24,459		16,112		1.0	%
MidOcean Credit CLO II, LLC (a) (p) (ao)	Diversified Investment Vehicles	11.87%, 1/29/2025	37,600		27,719		23,603		1.5	%
MidOcean Credit CLO III, LLC (a) (p) (ao)	Diversified Investment Vehicles	11.96%, 7/21/2026	40,250		29,131		23,748		1.5	%
MidOcean Credit CLO IV, LLC (a) (p) (ao)	Diversified Investment Vehicles	16.51%, 4/15/2027	21,500		17,649		14,212		0.9	%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (p) (ao)	Diversified Investment Vehicles	14.77%, 7/25/2025	31,603		27,200		24,461		1.5	%
Ocean Trails CLO V, LTD. (a) (p) (ao)	Diversified Investment Vehicles	11.64%, 10/13/2026	40,518		31,488		25,957		1.6	%
OFSI Fund VI, Ltd. Subordinated Notes (a) (p) (ao)	Diversified Investment Vehicles	7.63%, 3/20/2025	38,000		24,510		20,205		1.3	%
Related Fee Agreements (a) (p) (s)	Diversified Investment Vehicles		—		13,805		12,674		0.8	%
Silver Spring CLO, Ltd. (a) (e) (p) (ao)	Diversified Investment Vehicles	10/16/2026	31,500		22,286		12,269		0.8	%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (p) (ao)	Diversified Investment Vehicles	8.28%, 5/1/2026	36,000		21,587		13,955		0.9	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2015

Portfolio Company (q)	Industry	Investment Coupon Rate (ak)/Maturity	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Sub Total Collateralized Securities					$	335,534	$	261,784	16.4	%

Equity/Other - 12.6% (b)
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (e)	Software		$	306	$	—	$	16	—	%
Basho Technologies, Inc. - Series G Senior Preferred Stock (e)	Software		2,000		2,000		2,322		0.1	%
Carlyle GMS Finance, Inc. (a) (i)	Diversified Investment Vehicles		5,274		5,274		4,883		0.3	%
CPX Interactive Holdings, LP - Series A Convertible Preferred Shares (e) (u)	Media	8.00%	6,000		6,000		5,370		0.3	%
CPX Interactive Holdings, LP - Warrants (e) (u)	Media		317		1,087		—		—	%
Danish CRJ LTD. (a) (e) (p) (r)	Aerospace & Defense		5		1		1,034		0.1	%
Evolution Research Group - Preferred Equity (e)	Health Care Providers & Services	8.00%	500		500		409		—	%
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (e)	Internet Software & Services		172		—		—		—	%
HIG Integrity Nutraceuticals (e) (o) (u)	Food Products		2		1,630		—		—	%
Integrity Nutraceuticals (e) (o)	Food Products		25		—		—		—	%
Kahala Ireland OpCo Limited - Common Equity (a) (e) (o) (y)	Aerospace & Defense		—		—		29,428		1.8	%
Kahala Ireland OpCo Limited - Profit Participating Note (a) (e) (o) (y)	Aerospace & Defense		3,250		3,065		3,250		0.2	%
Kahala US OpCo LLC (e) (o) (x)	Aerospace & Defense	13.00%	4,413		4,444		4,136		0.3	%
MBLOX Inc. - Warrants (e)	Internet Software & Services		1,531		—		—		—	%
NexSteppe Inc. Series C Preferred Stock Warrant (e)	Chemicals		177		500		447		—	%
NMFC Senior Loan Program I, LLC (a) (p)	Diversified Investment Vehicles		50,000		50,000		45,994		3.0	%
Orchid Underwriters Agency, LLC - Preferred Shares (e) (u)	Insurance		5		500		684		—	%
Orchid Underwriters Agency, LLC - Common Shares (e) (u)	Insurance		5		—		—		—	%
Park Ave RE Holdings, LLC - Common Shares (e) (o) (w)	Real Estate Management & Development		1		587		8,115		0.5	%
Park Ave RE Holdings, LLC - Preferred Shares (o) (w)	Real Estate Management & Development	8.00%	47		23,645		23,645		1.5	%
PennantPark Credit Opportunities Fund II, LP (a) (g) (p)	Diversified Investment Vehicles		8,686		8,686		9,082		0.6	%
SkyCross Inc. - Warrants (e)	Electronic Equipment, Instruments & Components		2,254		—		—		—	%
South Grand MM CLO I, LLC (a) (p) (ag)	Diversified Investment Vehicles		29,524		29,095		29,155		1.9	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2015

Portfolio Company (q)	Industry	Investment Coupon Rate (ak)/Maturity	Principal / Number of Shares	Amortized Cost		Fair Value (c)		% of Net Assets (b)
Squan Holding Corp. - Class A Common Stock (e) (u)	Diversified Telecommunication Services		1,150	12		—		—	%
Squan Holding Corp. - Series A Preferred Stock (e) (u)	Diversified Telecommunication Services		1	1,139		—		—	%
Tax Defense Network, LLC (e) (u)	Diversified Consumer Services		425	425		888		0.1	%
Tennenbaum Waterman Fund, L.P. (a)	Diversified Investment Vehicles		10,000	10,000		10,338		0.6	%
The SAVO Group, Ltd. - Warrants (e)	Internet Software & Services		138	—		—		—	%
THL Credit Greenway Fund II LLC (a) (p)	Diversified Investment Vehicles		16,902	16,902		16,910		1.0	%
U.S. Auto Series A Common Units (e)	Diversified Consumer Services		10	10		237		—	%
U.S. Auto Series A Preferred Units (e)	Diversified Consumer Services		1	490		403		—	%
Visionary Integration Professionals, LLC - Warrants (e) (u)	IT Services		657	910		—		—	%
World Business Lenders, LLC (e)	Consumer Finance		923	3,750		4,733		0.3	%
Xplornet Communications, Inc. - Warrants (a) (e)	Diversified Telecommunication Services		10	—		759		—	%
Zimbra, Inc. - Warrants (Third Lien Bridge Note) (e)	Software		1,000	—		81		—	%
Sub Total Equity/Other				$	170,652	$	202,319	12.6	%

TOTAL INVESTMENTS - 143.7% (b)				$	2,428,903	$	2,311,281	143.7	%

_____________


(a)	All of the Company's investments, except the investments noted by this footnote, are in eligible portfolio companies, as defined in the Investment Company Act of 1940, as amended (the "1940 Act"). Eligible assets represent 74.9% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.


(b)	Percentages are based on net assets of $1,610.49 million as of December 31, 2015.


(c)	The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's board of directors as required by the 1940 Act. (See Note 3 to the condensed consolidated financial statements).


(d)	As of December 31, 2015, the company elected to pay cash interest, noting the company has the option to elect a portion of the interest to be PIK.


(e)	Non-income producing at December 31, 2015.


(f)	The Company has committed to fund a revolver term loan of $0.9 million in RVNB Holdings, Inc. The remaining commitment as of December 31, 2015 was $0.4 million.


(g)	The investment is subject to a three year lock-up restriction on withdrawals in year 4.


(h)	The Company has committed to fund a revolver term loan of $5.0 million in Icynene US Acquisition Corp. The remaining commitment as of December 31, 2015 was $5.0 million.


(i)	The Company has committed to fund $10.0 million in Carlyle GMS Finance, Inc. The remaining commitment as of December 31, 2015 was $4.7 million.


(j)	The Company has committed to fund a delayed draw term loan of $5.0 million in Tax Defense Network, LLC. The remaining commitment as of December 31, 2015 was $2.0 million.


(k)	The Company has committed to fund a delayed draw term loan of $2.6 million in ECI Acquisition Holdings, Inc. The remaining commitment as of December 31, 2015 was $1.8 million.


(l)	The Company has committed to fund a revolver term loan of $2.0 million in Motion Recruitment Partners, LLC. The remaining commitment as of December 31, 2015 was $2.0 million.


(m)	The Company has committed to fund a delayed draw term loan of $5.0 million in VetCor Professional Practices LLC. The remaining commitment as of December 31, 2015 was $1.8 million.


(n)	The Company has committed to fund a delayed draw term loan of $1.4 million in Squan Holding Corp. The remaining commitment as of December 31, 2015 was $0.3 million.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2015


(o)	The Company's investments are classified in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Control Investments” are defined as investments in companies in which the Company owns more than 25% of the voting securities, maintains greater than 50% of the board representation or has the power to exercise control over the management or policies of such portfolio company.


(p)	The Company's investments are classified in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Affiliated Investments” are defined as those non-control investments in companies in which the Company owns between 5% and 25% of the voting securities.

(q)


(r)	The Company's investment is held through the Consolidated Holding Company, Kahala Aviation Holdings, LLC, which owns 49% of the operating company, Danish CRJ LTD.


(s)	Related Fee Agreements consists of one investment with a fair value of $995 thousand that is classified as a Non-affiliated Investment and six investments with a total fair value of $11,679 thousand that are classified as Affiliated Investments.


(t)	The investment is on non-accrual status as of December 31, 2015.


(u)	Investments are held in the taxable wholly-owned, consolidated subsidiary, 54^th Street Equity Holdings, Inc.


(v)	The Company has committed to fund a delayed draw term loan of $5.0 million in National Technical Systems, Inc. The remaining commitment as of December 31, 2015 was $5.0 million.


(w)	The Company's investment is held through the consolidated subsidiary, Park Ave RE, Inc., which owns 100% of the equity of the operating company, Park Ave RE Holdings, LLC.


(x)	The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc. which own 100% of the equity of the operating company, Kahala US OpCo LLC.


(y)	The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala LuxCo, which own 100% of the equity of the operating company, Kahala Ireland OpCo LLC.


(z)	The Company's investment or a portion thereof is pledged as collateral under the Wells Fargo Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.


(aa)	The Company's investment or a portion thereof is pledged as collateral under the Citi Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.


(ab)	The Company's investment or a portion thereof is pledged as collateral under the Deutsche Bank Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.


(ac)	The Company has committed to fund a delayed draw term loan of $5.0 million in Icynene US Acquisition Corp. The remaining commitment as of March 31, 2016 was $5.0 million.


(ad)	The Company has committed to fund a delayed draw term loan of $20.2 million in ERG Holding Company. The remaining commitment as of December 31, 2015 was $16.4 million.


(ae)	The Company has committed to fund a delayed draw term loan of $2.2 million in InMotion Entertainment Group, LLC. The remaining commitment as of December 31, 2015 was $1.8 million.


(af)	The Company has committed to fund a delayed draw term loan of $5.6 million in Orchid Underwriters Agency, LLC. The remaining commitment as of December 31, 2015 was $5.6 million.


(ag)	The Company has committed to fund $35.0 million in South Grand MM CLO I, LLC. The remaining commitment as of December 31, 2015 was $5.5 million.


(ah)	The Company has committed to fund a delayed draw term loan of $5.0 million in CIG Financial, LLC. The remaining commitment as of December 31, 2015 was $5.0 million.

(ai)For year ended December 31, 2015, the following investments paid or have the option to pay all or a portion of interest and dividends via payment-in-kind ("PIK"):



Portfolio Company	Investment Type	Cash		PIK		All-in Rate
Basho Technologies, Inc.	Senior Secured First Lien Debt	10.00	%	3.00	%	13.00	%
Greenwave Holdings, Inc.	Senior Secured First Lien Debt	10.00	%	3.00	%	13.00	%
Integrity Nutraceuticals, Inc.	Senior Secured First Lien Debt	10.50	%	1.00	%	11.50	%
Kahala Ireland OpCo LLC	Senior Secured First Lien Debt	—	%	13.00	%	13.00	%
Kahala US OpCo LLC	Senior Secured First Lien Debt	—	%	13.00	%	13.00	%
NexSteppe Inc.	Senior Secured First Lien Debt	10.00	%	3.00	%	13.00	%
PeopLease Holdings, LLC	Senior Secured First Lien Debt	14.00	%	—	%	14.00	%
The Tennis Channel Holdings, Inc.	Senior Secured First Lien Debt	6.88	%	2.00	%	8.88	%
Taqua, LLC	Senior Secured First Lien Debt	10.50	%	3.00	%	13.50	%
CPX Interactive Holdings, LP	Senior Secured Second Lien Debt	11.00	%	2.00	%	13.00	%
Park Ave RE Holdings, LLC	Subordinated Debt	13.00	%	—	%	13.00	%
Steel City Media	Subordinated Debt	12.00	%	2.00	%	14.00	%
Visionary Integration Professionals, LLC	Subordinated Debt	—	%	17.00	%	17.00	%
Xplornet Communications, Inc.	Subordinated Debt	—	%	13.00	%	13.00	%


(aj)	The Company's investment or a portion thereof is pledged as collateral under the UBS Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.


(ak)	For equity investments in Collateralized Securities, the effective yield is presented in place of the investment coupon rate for each investment. Refer to footnote (ao) for a further description of an equity investment in a Collateralized Security.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2015


(al)	The Company has committed to fund a revolver term loan of $2.5 million in Pure Barre, LLC. The remaining commitment as of December 31, 2015 was $2.5 million.


(am)	The Company has committed to fund a revolver term loan of $6.0 million in Turning Tech LLC. The remaining commitment as of December 31, 2015 was $4.0 million.


(an)	The Company has committed to fund a delayed draw term loan of $3.5 million in Hanna Anderson, LLC. The remaining commitment as of December 31, 2015 was $2.9 million.


(ao)	The Company’s investment is considered an equity investment in a Collateralized Security. Equity investments represent the Collateralized Security’s tranche that is entitled to recurring distributions which are generally equal to the residual cash flow of the payments made by the investment’s underlying securities less contractual payments to debt holders and expenses.


(ap)	The Company has committed to fund a $10.8 million in PennantPark Credit Opportunities Fund II, LP. The remaining commitment as of December 31, 2015 was $1.6 million.


(aq)	The Company has committed to fund a revolver term loan of $5.0 million in Amteck, LLC. The remaining commitment as of December 31, 2015 was $5.0 million.


(ar)	The Company has committed to fund a delayed draw term loan of $1.1 million in Ascensus, Inc. The remaining commitment as of December 31, 2015 was $1.1 million.

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2015

The following table shows the portfolio composition by industry grouping based on fair value at December 31, 2015 (dollars in thousands):



	At December 31, 2015
	Investments at Fair Value		Percentage of Total Portfolio
Diversified Investment Vehicles	$	405,105	17.4	%
Aerospace & Defense	237,523		10.3
Hotels, Restaurants & Leisure	145,504		6.3
Media	137,639		6.0
Diversified Consumer Services	127,756		5.5
Health Care Providers & Services	114,642		5.0
Internet Software & Services	112,197		4.9
IT Services	99,583		4.3
Software	88,454		3.8
Commercial Services & Supplies	83,409		3.6
Real Estate Management & Development	77,507		3.4
Food Products	72,491		3.1
Specialty Retail	59,097		2.6
Professional Services	54,795		2.4
Electronic Equipment, Instruments & Components	49,453		2.1
Auto Components	47,960		2.1
Transportation Infrastructure	44,628		1.9
Consumer Finance	44,017		1.9
Diversified Telecommunication Services	41,651		1.8
Diversified Financial Services	27,356		1.2
Chemicals	26,423		1.1
Building Products	23,620		1.0
Personal Products	22,434		1.0
Air Freight & Logistics	20,495		0.9
Machinery	19,242		0.8
Life Sciences Tools & Services	16,292		0.7
Insurance	15,222		0.7
Household Durables	14,738		0.6
Distributors	14,607		0.6
Communications Equipment	14,347		0.6
Wireless Telecommunication Services	12,933		0.6
Textiles, Apparel & Luxury Goods	11,730		0.5
Health Care Technology	11,242		0.5
Metals & Mining	9,741		0.4
Capital Markets	5,973		0.3
Oil, Gas & Consumable Fuels	1,475		0.1
Total	$	2,311,281	100.0	%

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

Note 1 — Organization and Basis of Presentation

Business Development Corporation of America (the “Company”), incorporated in Maryland on May 5, 2010, is an externally managed, non-diversified closed-end investment company that elected to be treated as a regulated investment company (“RIC”) for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2011 and that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”) and is applying the guidance of Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic 946, "Financial Services - Investment Companies" ("ASC 946"). The Company is, therefore, required to comply with certain regulatory requirements as promulgated under the 1940 Act. The Company is managed by BDCA Adviser, LLC (the “Adviser”) pursuant to the terms of the Investment Advisory and Management Services Agreement, as amended (the “Investment Advisory Agreement”). The Adviser was formed in Delaware as a private investment management firm and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Adviser oversees the management of the Company's activities and is responsible for making investment decisions for its portfolio. The Adviser is indirectly, wholly-owned by the sponsor, AR Global Investments, LLC (the successor business to AR Capital, LLC, "AR Global" or the "Sponsor").

The Company's investment objective is to generate both current income and to a lesser extent long-term capital appreciation through debt and equity investments. The Company invests primarily in first and second lien senior secured loans and mezzanine debt issued by middle market companies. The Company defines middle market companies as those with annual revenues between $10 million and $1 billion. The Company may also purchase interests in loans through secondary market transactions in the "over-the-counter" market for institutional loans. First and second lien secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in bankruptcy priority and are generally secured by liens on the operating assets of a borrower which may include inventory, receivables, plant, property and equipment. Mezzanine debt is subordinated to senior loans and is generally unsecured. The Company may invest in the equity and junior debt tranches of collateralized loan obligation investment vehicles (“Collateralized Securities”). Structurally, Collateralized Securities are entities that are formed to manage a portfolio of senior secured loans made to companies whose debt is rated below investment grade or, in limited circumstances, unrated. The senior secured loans within these Collateralized Securities meet specified credit and diversity criteria and are subject to concentration limitations in order to create a diverse investment portfolio. The Company expects that each investment generally will range between approximately 0.5% to 3.0% of our total assets. In most cases, companies to whom the Company provides customized financing solutions will be privately held at the time it invests in them.

On January 25, 2011, the Company commenced its initial public offering (the “IPO”) on a “reasonable best efforts basis” of up to 150.0 million shares of common stock, $0.001 par value per share, at an initial offering price of $10.00 per share, subject to certain volume and other discounts, pursuant to a registration statement on Form N-2 (File No. 333-166636) (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended. The Company sold 22,222 shares of common stock to its Adviser on July 8, 2010 at $9.00 per share, which represented the initial public offering price of $10.00 per share minus selling commissions of $0.70 per share and dealer manager fees of $0.30 per share. On August 25, 2011, the Company had raised sufficient funds to break escrow on its IPO and commenced operations as of that date. On February 1, 2012, the Adviser contributed an additional $1,300,000 to purchase 140,784 shares of our common stock at $9.234 per share so that the aggregate contribution by the Adviser was $1,500,000. The Adviser will not tender any amount of its shares for repurchase as long it continues to serve as our investment adviser. On July 1, 2014, the Company's registration statement on Form N-2 (File No. 333-193241) for its follow-on offering (the "Follow-on") was declared effective by the SEC. Simultaneously with the effectiveness of the registration statement of the Follow-on, the Company's IPO terminated. Under the Follow-on, the Company offered up to 101,100,000 shares of its common stock. As of March 31, 2016, the Company had issued 177.9 million shares of common stock for gross proceeds of $1.9 billion including the shares purchased by the Sponsor and shares issued under the Company's distribution reinvestment plan ("DRIP"). Following the time the Company's updated registration statement was declared effective on June 30, 2015, the Company issued shares for subscription agreements that had been accepted through that date. Other than shares issued pursuant to the DRIP, the Company has not issued any new shares of common stock since July 1, 2015 and does not intend to issue any new shares of common stock.

In addition, we are only allowed to borrow money such that our asset coverage, which, as defined in the 1940 Act, measures the ratio of total assets less total liabilities (excluding borrowings) to total borrowings, equals at least 200% after such borrowing, with certain limited exceptions. We may use borrowed funds, known as “leverage,” to make investments and to attempt to increase returns to our stockholders by reducing our overall cost of capital. We currently have credit facilities with

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

Wells Fargo, Deutsche Bank, Citibank, N.A. (“Citi”), and UBS AG, London Branch ("UBS") and has sold $100.0 million in aggregate principal of senior notes. We previously had entered into a total return swap agreement (“TRS”) through a wholly owned, consolidated subsidiary, 405 TRS I, LLC (“405 Sub”) with Citi but we terminated the TRS with Citi in June 2014.

The Company has formed and expects to continue to form consolidated subsidiaries (the "Consolidated Holding Companies") to hold equity securities of portfolio companies. These Consolidated Holding Companies enable the Company to hold equity securities of portfolio companies organized as pass-through entities while continuing to satisfy the requirements of a RIC under the Code. Any tax payable by a Consolidated Holding Company is included as an expense in the Company's Consolidated Statements of Operations. As of March 31, 2016, 54th Street Equity Holdings, Inc., Kahala Aviation Holdings, LLC, Kahala Aviation US, Inc., Kahala LuxCo, and Park Ave RE, Inc. were the only Consolidated Holding Companies.

The Company has entered into the Amended and Restated Administration Servicing Agreement and the Amended and Restated Accounting Servicing Agreement with US Bancorp Fund Services, LLC (the “Administrator”). The Administrator provides services, such as accounting, financial reporting, legal and compliance support and investor relations support, necessary for the Company to operate. On August 13, 2012, the Company entered into a custody agreement with U.S. Bank National Association (“U.S. Bank”). Under the custody agreement, U.S. Bank holds all of the portfolio securities and cash of the Company for certain of its subsidiaries, and transfers such securities or cash pursuant to the Company’s instructions. The custody agreement is terminable by either party, without penalty, on not less than ninety days prior notice to the other party.

On February 9, 2016, the Company and ARC Advisory Services, LLC (“ARC Advisory”), a wholly-owned subsidiary of the Company’s investment adviser, entered into an agreement for ARC Advisory to provide the Company with administrative services necessary for the Company’s operation (the “ARC Administration Agreement”). Pursuant to the ARC Administration Agreement, ARC Advisory provides the Company with, among other things, office facilities, equipment, clerical, bookkeeping and record keeping services. In addition, ARC Advisory assists the Company in determining and publishing the Company’s net asset value and the filing of the Company’s tax returns. The Company will reimburse ARC Advisory for the costs and expenses incurred by ARC Advisory in performing its obligations pursuant to the ARC Administration Agreement.

On February 10, 2016, AR Global received written notice from American National Stock Transfer, LLC ("ANST"), the Company's transfer agent and an affiliate of the Company's Former Dealer Manager, that it would wind down operations by the end of the month. ANST withdrew as the transfer agent effective February 29, 2016. Subsequently, effective February 26, 2016, we entered into a definitive agreement with our previous provider of sub-transfer agency services to provide us directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services).

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

The Company consolidates the following subsidiaries for accounting purposes: Funding I, 2L Funding I, CB Funding, Helvetica Funding LTD., and the Consolidated Holding Companies. All significant intercompany balances and transactions have been eliminated in consolidation. In conjunction with the consolidation of subsidiaries, the Company recognizes non-controlling interests attributable to third party ownership in the following Consolidated Holding Companies: Kahala Aviation Holdings, LLC, Kahala Aviation US, Inc., and Kahala LuxCo.

Interim financial statements are prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X, as appropriate. Accordingly, the financial statements may not include all of the information and notes required by U.S. GAAP for annual consolidated financial statements. U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

cause actual results to differ materially. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on December 31, 2016.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Consolidation

As provided under Regulation S-X and ASC Topic 946 - Financial Services - Investment Companies, the Company will generally not consolidate its investment in a company other than a wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company's wholly-owned subsidiaries in its condensed consolidated financial statements.

Valuation of Portfolio Investments

Portfolio investments are reported on the condensed consolidated statements of assets and liabilities at fair value. On a quarterly basis the Company performs an analysis of each investment to determine fair value as follows:

Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. The Company may also obtain quotes with respect to certain of the Company's investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, the Company uses the quote obtained.

Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that the Company may take into account in fair value pricing the Company's investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

For investments in Collateralized Securities, both the assets and liabilities of each Collateralized Securities' capital structure are modeled. The model uses a waterfall engine to store the collateral data, generate collateral cash flows from the assets, and distribute the cash flows to the liability structure based on the priority of payments. The waterfall cash flows are discounted using rates that incorporate risk factors such as default risk, interest rate risk, downgrade risk, and credit spread risk, among others. In addition, broker quotations and/or comparable trade activity is considered as an input to determining fair value when available.

As part of the Company's quarterly valuation process the Adviser may be assisted by one or more independent valuation firms engaged by the Company. The board of directors determines the fair value of each investment, in good faith, based on the input of the Adviser and the the independent valuation firm(s) (to the extent applicable).

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:


•	Each portfolio company or investment will be valued by the Adviser, potentially with assistance from one or more independent valuation firms engaged by our board of directors;


•	The independent valuation firm(s), if involved, will conduct independent appraisals and make an independent assessment of the value of each investment; and


•	Our board of directors determines the fair value of each investment, in good faith, based on the input of our Adviser, independent valuation firm (to the extent applicable) and the audit committee of our board of directors.

Because there is not a readily available market value for most of the investments in its portfolio, the Company values substantially all of its portfolio investments at fair value as determined in good faith by its board of directors, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company's investments may fluctuate from period to period. Additionally, the fair value of the Company's investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded it.

Investment Classification

The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, "control" is defined as the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. In addition, any person "who owns beneficially, either directly or through one or more controlled companies, more than 25 per centum of the voting securities of a company shall be presumed to control such company. Any person who does not so own more than 25 per centum of the voting securities of any company shall be presumed not to control such company". Using this definition, the Company has determined to treat “Control Investments” as investments in companies in which the Company owns more than 25% of the voting securities, maintains greater than 50% of the board representation or has the power to exercise control over the management or policies of such portfolio company. Consistent with the 1940 Act, “Affiliated Investments” are defined as those non-control investments in companies in which the Company owns between 5% and 25% of the voting securities. Consistent with the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments nor Affiliated Investments.

Where appropriate, prior period condensed consolidated financial statements have been reclassified to disclose the Company's Control Investments and Affiliate Investments as defined above. In addition, prior period condensed consolidated financial statements have been reclassified to present investment industry classifications in a consistent manner with the current year.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, liquid investments in a money market deposit account. Cash and cash equivalents are carried at cost which approximates fair value.

Offering Costs

The Company incurs certain costs in connection with the registration of shares of its common stock. Offering costs principally relate to professional fees, printing costs, direct marketing expenses, due diligence costs, fees paid to regulators and other expenses, including the expenses of the Adviser and its affiliates engaged in registering and marketing the Company’s common stock. Such allocated expenses of the Adviser and its affiliates may include the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for the Company.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

Pursuant to the Investment Advisory Agreement, the Company and the Adviser have agreed that the Company will not be liable for organization and offering costs, including transfer agent fees, in excess of 1.5% of the aggregate gross proceeds from the Company’s on-going offering. Should the Company resume continually offering its shares, any offering costs incurred will be capitalized and amortized as an expense on a straight-line basis over a 12 month period. As of March 31, 2016, offering costs have not been incurred in excess of the 1.5% limit. As of December 31, 2015, offering costs have not been incurred in excess of the 1.5% limit.

Deferred Financing Costs

Financing costs incurred in connection with the Company’s Unsecured Notes and revolving credit facilities with Wells Fargo, Deutsche Bank, Citi, and UBS are capitalized and amortized into expense using the straight-line method over the life of the respective facility. See Note 5 - Borrowings - for details on the Credit Facilities.

Distributions

The Company’s board of directors has authorized, and the Company has declared, cash distributions payable on a monthly basis to stockholders of record on each day since it commenced operations. Since November 2013, the distribution rate has been $0.002378082 per day, which is equivalent to $0.868 per annum, per share of common stock (or an annualized rate for distributions declared of 7.78% based on our last public offering price of $11.15 per share). In March 2016, the Company’s board of directors ratified the existing distribution amount equivalent to $0.868 per annum, and, for calendar year 2016, affirmed a change to the daily distribution amount to $0.002371585 per day per share of common stock, effective January 1, 2016, to accurately reflect that 2016 is a leap year.

The amount of each such distribution will be subject to the discretion of the board of directors and applicable legal restrictions related to the payment of distributions. The Company will calculate each stockholder’s specific distribution amount for the month using record and declaration dates and accrue distributions on the date the Company accepts a subscription for shares of the Company’s common stock. The distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month. From time to time, the Company may also pay interim distributions, including capital gains distributions, at the discretion of the Company’s board of directors. The Company’s distributions may exceed earnings, especially during the period before it has substantially invested the proceeds from the offering. As a result, a portion of the distributions made by the Company may represent a return of capital for U.S. federal income tax purposes. A return of capital is a return of each stockholder’s investment rather than earnings or gains derived from the Company’s investment activities.

The Company may fund cash distributions to stockholders from any sources of funds available to the Company, including expense payments from the Adviser that are subject to reimbursement, as well as offering proceeds, borrowings, net investment income from operations, capital gain proceeds from the sale of assets, and non-capital gain proceeds from the sale of assets. The Company has not established limits on the amount of funds it may use from available sources to make distributions.

Revenue Recognition

Interest Income

Investment transactions are accounted for on the trade date. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discounts and premiums on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortizations of premiums on investments.

The Company has a number of investments in Collateralized Securities. Interest income from investments in the "equity" class of these Collateralized Securities (in the Company's case, preferred shares or subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC Topic 325-40-35, Beneficial Interests in Securitized Financial Assets. The Company monitors the expected cash inflows from its equity investments in Collateralized Securities, including the expected principal repayments. The effective yield is determined and updated quarterly.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

Fee Income

Fee income, such as structuring fees, origination, closing, amendment fees, commitment and other upfront fees are generally non-recurring and are recognized as revenue when earned, either upfront or amortized into income using the straight line method. Upon the payment of a loan or debt security, any prepayment penalties and unamortized loan origination, structuring, closing, commitment and other upfront fees are recorded as income.

Payment-in-Kind Interest/Dividends

The Company holds debt and equity investments in its portfolio that contain payment-in-kind (“PIK”) interest and dividend provisions. The PIK interest and PIK dividend, which represent contractually deferred interest or dividends that add to the investment balance that is generally due at maturity, are generally recorded on the accrual basis.

Non-accrual income

Investments are placed on non-accrual status when principal or interest/dividend payments are past due 30 days or more and/or when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest is generally reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest is not reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

Gains or losses on the sale of investments are calculated using the specific identification method. The Company measures realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Income Taxes

The Company has elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). Generally, a RIC is exempt from federal income taxes if it distributes to stockholders at least 90% of ‘‘investment company taxable income,’’ as defined in the Code, each year. Distributions declared prior to the filing of the previous year's tax return and paid up to one year after the current tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its RIC status each year. The Company may also be subject to federal excise taxes of 4%.

New Accounting Pronouncements

In January 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 retains many current requirements for the classification and measurement of financial instruments; however, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted for public business entities. The Company is currently evaluating the impact the adoption of this standard has on our condensed consolidated financial statements and disclosures

On April 7, 2015, the FASB issued ASU No. 2015-03, Presentation of Debt Issuance Costs. The ASU requires debt issuance costs to be presented on the balance sheet as a direct deduction from the debt liability. The ASU is effective for interim and annual reporting periods beginning after December 14, 2015. The Company adopted this guidance during the

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

quarter ended March 31, 2016 and adjusted prior period balance sheets to reflect the change. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810) - Amendments to the Consolidation Analysis,” which amends the current consolidation guidance and ends the deferral granted to investment companies from applying the variable interest entity ("VIE") guidance. ASU 2015-02 changes the manner in which a reporting entity assesses one of the five characteristics that determine if an entity is a VIE. Accordingly, the Company has evaluated the impact of ASU 2015-02 on its condensed consolidated financial statements and determined that the adoption of ASU 2015-02 has no impact on our condensed consolidated financial statements.

In May 2015, the FASB issued ASU No. 2015-07, “Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or its Equivalent)”. The guidance removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share practical expedient. Sufficient information must be provided to permit reconciliation of the fair value of assets categorized within the fair value hierarchy to the amounts presented in the Statements of Assets and Liabilities. The guidance is required to be presented for annual periods beginning after December 15, 2015, and for interim periods within those fiscal years. Accordingly, the Company has retrospectively adopted ASU 2015-07, which removes investments measured using the net asset value per share practical expedient from the fair value hierarchy in all periods presented. The adoption of ASU 2015-07 did not have a material impact on the Company’s condensed consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.

Note 3 — Fair Value of Financial Instruments

Accounting guidance establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, if any, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value:


•	Level 1—Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.


•	Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.


•	Level 3—Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the above hierarchy requires significant judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

All of the Company’s investment portfolio at March 31, 2016 was comprised of debt and equity instruments for which Level 1 inputs, such as quoted prices, were not available. Therefore, at March 31, 2016, the investments were valued at fair value as determined in good faith using the valuation policy approved by the board of directors using Level 2 and Level 3 inputs. The Company evaluates the source of inputs, including any markets in which the Company's investments are trading, in determining fair value. Due to the inherent uncertainty in the valuation process, the estimate of fair value of the Company’s investment portfolio at March 31, 2016 may differ materially from values that would have been used had a ready market for the securities existed.

In addition to using the above inputs in investment valuations, the Company continues to employ the valuation policy approved by the board of directors. Portfolio investments are reported on the condensed consolidated statements of assets and liabilities at fair value. On a quarterly basis the Company performs an analysis of each investment to determine fair value as described below.

For an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC Topic 946, Financial Services-Investment Companies, as of the Company's measurement date. Prior to its termination in June 2014, the value of our TRS was primarily based on the increase or decrease in the value of the loans underlying the TRS, as determined by Citi based upon indicative pricing by an independent third-party pricing service.

For investments in Collateralized Securities, the Adviser models both the assets and liabilities of each Collateralized Securities' capital structure. The model uses a waterfall engine to store the collateral data, generate collateral cash flows from the assets, and distribute the cash flows to the liability structure based on priority of payments. The waterfall cash flows are discounted using rates that incorporate risk factors such as default risk, interest rate risk, downgrade risk, and credit spread risk, among others. In addition, the Adviser considers broker quotations and/or comparable trade activity is considered as an input to determining fair value when available.

As part of the Company's quarterly valuation process, the Adviser may be assisted by one or more independent valuation firms engaged by the Company. The board of directors determines the fair value of each investment, in good faith, based on the input of the Adviser and the independent valuation firm(s) (to the extent applicable).

Determination of fair values involves subjective judgments and estimates. Accordingly, the notes to the condensed consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations on the condensed consolidated financial statements.

As of March 31, 2016, the Company had three portfolio companies, which represented three portfolio investments, on non-accrual status with a total principal amount of $56.3 million, amortized cost of $55.5 million, and fair value of $33.0

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

million which represented 2.2%, 2.3% and 1.4% of the investment portfolio total principal, amortized cost and fair value, respectively. As of December 31, 2015, the Company had three portfolio companies, which represented three portfolio investments, on non-accrual status with a total principal amount of $51.9 million, amortized cost of $51.2 million, and fair value of $33.0 million which represented 2.0%, 2.1% and 1.4% of the investment portfolio total principal, amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - in our condensed consolidated financial statements included in this report for additional details regarding the Company’s non-accrual policy.

For discussion of the fair value measurement of the Company's borrowings, refer to Note 5 - Borrowings - in the condensed consolidated financial statements included in this report.

The following table presents fair value measurements of investments, by major class, as of March 31, 2016, according to the fair value hierarchy (dollars in thousands):



	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Senior Secured First Lien Debt	$	—	$	328,705	$	1,126,620	$	1,455,325
Senior Secured Second Lien Debt	—		32,292		299,065		331,357
Subordinated Debt	—		—		92,121		92,121
Collateralized Securities	—		—		235,259		235,259
Other Investments measured at net asset value ⁽¹⁾	—		—		—		85,088
Equity/Other	—		—		122,888		122,888
Total	$	—	$	360,997	$	1,875,953	$	2,322,038

⁽¹⁾ In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

The following table presents fair value measurements of investments, by major class, as of December 31, 2015, according to the fair value hierarchy (dollars in thousands):



	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Senior Secured First Lien Debt	$	—	$	310,828	$	1,095,040	$	1,405,868
Senior Secured Second Lien Debt	—		8,475		340,563		349,038
Subordinated Debt	—		—		92,272		92,272
Collateralized Securities	—		—		261,784		261,784
Other Investments measured at net asset value (1)	—		—		—		87,207
Equity/Other	—		—		115,112		115,112
Total	$	—	$	319,303	$	1,904,771	$	2,311,281

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the three months ended March 31, 2016 (dollars in thousands):



	Senior Secured First Lien Debt			Senior Secured Second Lien Debt			Subordinated Debt			Collateralized Securities			Equity/Other			Total
Balance as of December 31, 2015	$	1,095,040		$	340,563		$	92,272		$	261,784		$	115,112		$	1,904,771
Net unrealized gains (losses)	(6,736		)	(2,716		)	289			(7,870		)	8,320			(8,713		)
Purchases and other adjustments to cost	112,245			22,971			850			41			—			136,107
Sales and redemptions	(66,724		)	(38,520		)	(1,304		)	(18,696		)	(544		)	(125,788		)
Net realized gains	591			389			14			—			—			994
Net transfers in and/or out	(7,796		)	(23,622		)	—			—			—			(31,418		)
Balance as of March 31, 2016	$	1,126,620		$	299,065		$	92,121		$	235,259		$	122,888		$	1,875,953
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized gains (losses):	$	(8,281	)	$	(3,106	)	$	289		$	(7,870	)	$	8,320		$	(10,648	)

Purchases represent the acquisition of new investments at cost. Redemptions represent principal payments received during the period.

For the three months ended March 31, 2016, there were no transfers out of Level 1 to Level 2. For the three months ended March 31, 2016, four companies were transferred from Level 2 to Level 3 as the number of observable market quotes available for these investments decreased. For the three months ended March 31, 2016, eight companies were transferred from Level 3 to Level 2 as the number of observable market quotes increased.

Transfers between levels, if any, are recognized at the beginning of the period in which transfers occur.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended December 31, 2015 (dollars in thousands):



	Senior Secured First Lien Debt			Senior Secured Second Lien Debt			Subordinated Debt			Collateralized Securities			Equity/Other			Total
Balance as of December 31, 2014	$	672,244		$	225,695		$	60,930		$	364,897		$	134,101		$	1,457,867
Net unrealized gains (losses)	(25,796		)	(15,964		)	2,932			(65,713		)	21,966			(82,575		)
Purchases and other adjustments to cost	674,884			160,542			33,268			56,144			47,346			972,184
Sales and redemptions	(293,559		)	(38,472		)	(797		)	(93,744		)	(88,505		)	(515,077		)
Net realized gains (losses)	2,075			349			(4,061		)	200			(296		)	(1,733		)
Net transfers in and/or out	65,192			8,413			—			—			500			74,105
Balance as of December 31, 2015	$	1,095,040		$	340,563		$	92,272		$	261,784		$	115,112		$	1,904,771
Unrealized gains (losses) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized gains (losses):	$	(25,745	)	$	(15,874	)	$	(1,129	)	$	(65,713	)	$	22,030		$	(86,431	)

Purchases represent the acquisition of new investments at cost. Redemptions represent principal payments received during the period.

For the year ended December 31, 2015, there were no transfers out of Level 1 to Level 2. For the year ended December 31, 2015, nine companies were transferred from Level 2 to Level 3 as the number of observable market quotes available for these investments decreased. For the year ended December 31, 2015, six companies were transferred from Level 3 to Level 2 as the number of observable market quotes increased.

The composition of the Company’s investments as of March 31, 2016, at amortized cost and fair value, were as follows (dollars in thousands):



	Investments at Amortized Cost		Investments at Fair Value		Fair Value Percentage of Total Portfolio
Senior Secured First Lien Debt	$	1,522,760	$	1,455,325	62.7	%
Senior Secured Second Lien Debt	352,355		331,357		14.3
Subordinated Debt	93,469		92,121		4.0
Collateralized Securities	316,879		235,259		10.1
Equity/Other	167,746		207,976		8.9
Total	$	2,453,209	$	2,322,038	100.0	%

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

The composition of the Company’s investments as of December 31, 2015, at amortized cost and fair value, were as follows (dollars in thousands):



	Investments at Amortized Cost		Investments at Fair Value		Fair Value Percentage of Total Portfolio
Senior Secured First Lien Debt	$	1,461,343	$	1,405,868	60.8	%
Senior Secured Second Lien Debt	367,465		349,038		15.1
Subordinated Debt	93,909		92,272		4.0
Collateralized Securities	335,534		261,784		11.3
Equity/Other	170,652		202,319		8.8
Total	$	2,428,903	$	2,311,281	100.0	%

Significant Unobservable Inputs

The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of March 31, 2016 (dollars in thousands). The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.



					Range
Asset Category	Fair Value		Primary Valuation Technique	Unobservable Inputs	Minimum		Maximum		Weighted Average^(a)
Senior Secured First Lien Debt ^(b)	$	910,704	Yield Analysis	Market Yield	5.25	%	24.50	%	10.27	%
Senior Secured Second Lien Debt ^(c)	263,654		Yield Analysis	Market Yield	8.50	%	24.00	%	11.34	%
Subordinated Debt ^(e)	90,293		Yield Analysis	Market Yield	10.75	%	22.00	%	14.49	%
Collateralized Securities	235,259		Discounted Cash Flow	Discount Rate	9.67	%	71.52	%	31.69	%
Equity/Other ^(d)	14,779		Market Multiple Analysis	EBITDA Multiple	0.4x		10.67x		3.6x
Equity/Other ^(d)	28,451		Discounted Cash Flow	Discount Rate	12.32	%	12.32	%	12.32	%

______________


^(a)	Weighted averages are calculated based on fair value of investments.


^(b)	The remaining $215.9 million of senior secured first lien debt were valued based on broker quotes, probability weighted scenario, or at their respective acquisition prices as the investments closed near year end.


^(c)	The remaining $35.4 million of senior secured second lien debt were valued based on broker quotes or at their respective acquisition prices as the investments closed near year end.


^(d)	The remaining $79.6 million of equity/other investments consisted of $79.2 million which were valued with consideration of their respective appraisal value, $0.0 million which were based on a Monte-Carlo simulation and $0.4 million which were valued based on Black-Scholes implementation of the Option Pricing Method.


^(e)	The remaining $1.8 million of subordinated debt were valued based on a Monte-Carlo simulation.

Increases or decreases in any of the above unobservable inputs in isolation would result in a lower or higher fair value measurement for such assets.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of December 31, 2015 (dollars in thousands). The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.



					Range
Asset Category	Fair Value		Primary Valuation Technique	Unobservable Inputs	Minimum		Maximum		Weighted Average^(a)
Senior Secured First Lien Debt ^(b)	$	880,433	Yield Analysis	Market Yield	6.00	%	24.00	%	10.55	%
Senior Secured Second Lien Debt ^(c)	247,878		Yield Analysis	Market Yield	8.50	%	30.00	%	11.51	%
Subordinated Debt ^(e)	90,437		Yield Analysis	Market Yield	12.25	%	21.00	%	14.51	%
Collateralized Securities	261,784		Discounted Cash Flow	Discount Rate	8.39	%	47.68	%	26.13	%
Equity/Other ^(d)	16,268		Market Multiple Analysis	EBITDA Multiple	0.3x		17.7x		3.5x
Equity/Other ^(d)	29,155		Discounted Cash Flow	Discount Rate	10.60	%	10.60	%	10.60	%

______________


^(a)	Weighted averages are calculated based on fair value of investments.


^(b)	The remaining $214.6 million of senior secured first lien debt were valued based on broker quotes or at their respective acquisition prices as the investments closed near year end.


^(c)	The remaining $92.7 million of senior secured second lien debt were valued based on broker quotes or at their respective acquisition prices as the investments closed near year end.


^(d)	The remaining $69.7 million of equity/other investments consisted of $69.6 million which were valued with consideration of their respective appraisal value, and $0.1 million which were based on a Monte-Carlo simulation.


^(e)	The remaining $1.8 million of subordinated debt were valued based on a Monte-Carlo simulation.

Increases or decreases in any of the above unobservable inputs in isolation would result in a lower or higher fair value measurement for such assets.

Note 4 — Related Party Transactions and Arrangements

The Sponsor, including its indirectly wholly-owned subsidiary, the Adviser, owns 0.16 million shares of the Company’s outstanding common stock as of March 31, 2016.

Realty Capital Securities, LLC (our "Former Dealer Manager") served as the dealer manager of our IPO until May 2015, when we terminated our offering. RCS Capital Corporation, the parent company of the Former Dealer Manager and certain of its affiliates that provided services to us, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was also under common control with our Sponsor.

In January 2016, AR Global became the successor business to AR Capital, LLC and became the parent of the Company's current Sponsor.

Management and Incentive Fee Compensation to the Adviser

The Adviser receives fees for the investment and management of the Company’s assets. The Adviser is entitled to an annual base management fee calculated at an annual rate of 1.5% of the Company’s average gross assets. The management fee is payable quarterly in arrears, and shall be calculated based on the average value of the Company’s gross assets at the end of

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

the two most recently completed calendar quarters. The management fee for any partial month or quarter will be appropriately prorated. In addition, any management fees waived by the Adviser are not subject to recoupment at a later date.

The incentive fee consists of two parts. The first part, which is referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears based on 20% of “pre-incentive fee net investment income” but only after the payment of a certain preferred return rate to investors, as defined in the Investment Advisory Agreement, for the immediately preceding quarter of 1.75% per quarter, or an annualized rate of 7.0%, subject to a "catch-up" feature. The second part of the incentive fee, which is referred to as the incentive fee on capital gains, is an incentive fee on capital gains earned on liquidated investments from the Company’s portfolio and is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement). This fee equals 20.0% of the Company’s incentive fee capital gains, which equals the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. Incentive fees waived by the Adviser are not subject to recoupment at a later date.

For the three months ended March 31, 2016 and March 31, 2015, the Company incurred $9.4 million and $8.2 million, respectively, of management fees, of which the Adviser did not waive any portion of such fees.

For the three months ended March 31, 2016 and March 31, 2015, the Company incurred $0.0 million and $5.2 million, respectively, of subordinated incentive fees on income, of which the Adviser waived $0.0 million and $3.5 million, respectively.

For the three months ended March 31, 2016 and March 31, 2015, the Company did not incur any capital gains incentive fees under the Investment Advisory Agreement.

For accounting purposes only, the Company is required under U.S. GAAP to also accrue a theoretical capital gains incentive fee based upon unrealized capital appreciation on investments held at the end of each period. The accrual of this theoretical capital gains incentive fee assumes all unrealized capital appreciation and depreciation is realized in order to reflect a capital gains incentive fee that would theoretically be payable to the Adviser. For the three months ended March 31, 2016 and March 31, 2015, the Company incurred $0.0 million and $0.7 million of theoretical capital gains incentive fees, respectively. The amounts actually paid to the Adviser will be consistent with the Advisers Act and formula reflected in the Investment Advisory Agreement which specifically excludes consideration of unrealized capital appreciation.

As a result of discussions with the SEC staff, the Company determined to no longer include TRS earnings in the computation of subordinated incentive fees, which was effective from January 1, 2014 through the termination of the TRS on June 27, 2014. The Adviser did not receive any additional fees as a result of the termination of the TRS, other than as a result of the increase in the Company’s assets and the fact that, effective June 27, 2014, realized gains and income received on loans formerly underlying the TRS beginning on the date on which the loans came on to the Company’s consolidated statement of assets and liabilities will be included in the incentive fee calculation under the Investment Advisory Agreement. Any gains or income realized as a result of the termination of the TRS, however, will not be considered in the calculation of the incentive fee due to Adviser under the Investment Advisory Agreement.

Expense Support Agreement

The Adviser and its affiliates may incur and pay costs and fees on behalf of the Company. The Company and its Adviser have entered into the Expense Support Agreement, whereby the Adviser may pay the Company up to 100% of all operating expenses (“Expense Support Payment”) for any period beginning November 4, 2011, the date our prior registration statement on Form N-2 was declared effective, and continuing until the Adviser and the Company mutually agree otherwise. The Expense Support Payment for any month shall be paid by the Adviser to the Company in any combination of cash or other immediately available funds and/or offsets against amounts due from the Company to the Adviser.

Operating expenses subject to this agreement include expenses as defined by U.S. GAAP, including, without limitation, advisory fees payable and interest on indebtedness for such period, if any.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

Pursuant to the Expense Support Agreement, the Company will reimburse the Adviser for Expense Support Payments within three years of the date that the Expense Support Payment obligation was incurred by the Adviser, subject to the conditions described below. The amount of any reimbursement during any calendar quarter will be limited to an amount that does not cause the Company's other operating expenses to exceed 1.5% of its net assets attributable to common shares after taking such reimbursement payment into account.

In addition, the Company will only make reimbursement payments if its “operating expense ratio” (as described in footnote 1 to the table below) is equal to or less than its operating expense ratio at the time the corresponding expense payment was incurred and if the annualized rate of the Company's regular cash distributions to stockholders is equal to or greater than the annualized rate of its regular cash distributions to stockholders at the time the corresponding expense payment was incurred.

Below is a table that provides information regarding Expense Support Payment obligations incurred by the Adviser pursuant to the Expense Support Agreement as well as other information relating to the Company's ability to reimburse the Adviser for such payments. The amounts presented in the first column below, except as noted, are subject to reimbursement to the Adviser pursuant to the terms of the Expense Support Agreement (dollars in thousands):



Quarter Ended	Amount of Expense Payment Obligation		Operating Expense Ratio as of the Date Expense Payment Obligation Incurred⁽¹⁾		Annualized Distribution Rate as of the Date Expense Payment Obligation Incurred ⁽²⁾		Eligible for Reimbursement Through
March 31, 2011	$	—	—	%	—	%	N/A ⁽³⁾
June 30, 2011	—		—		—		N/A ⁽³⁾
September 30, 2011	571		2.88		8.11		September 30, 2014 ⁽⁴⁾
December 31, 2011	131		1.97		7.90		December 31, 2014 ⁽⁴⁾
March 31, 2012	78		0.90		7.88		March 31, 2015 ⁽⁴⁾
June 30, 2012	189		0.30		7.75		June 30, 2015 ⁽⁴⁾

______________


⁽¹⁾	"Operating Expense Ratio" is expressed as a percentage of net assets and includes all expenses borne by the Company, except for organizational and offering expenses, base management and incentive fees owed to our Adviser and interest expense.


⁽²⁾	"Annualized Distribution Rate" equals the annualized rate of distributions paid to stockholders based on the amount of the regular cash distribution paid immediately prior to the date the Expense Support Payment obligation was incurred by our Adviser. "Annualized Distribution Rate" does not include special cash or stock distributions paid to stockholders.


⁽³⁾	"N/A"- Not Applicable


⁽⁴⁾	Expense Support Payment is no longer eligible for reimbursement as of March 31, 2016.

If an Expense Support Payment has not been reimbursed within three years of the date such Expense Support Payment was incurred, the Company’s obligation to pay such Expense Support Payment shall automatically terminate and be of no further effect.

The Company has recorded $0.2 million and $0.2 million as due to affiliate on the condensed consolidated statements of assets and liabilities as of March 31, 2016 and December 31, 2015, respectively, which reflects the netting of amounts due from the Adviser and affiliates and amounts due from the Company. On August 24, 2012, the Adviser made a payment to the Company in the amount of $0.8 million for $1.0 million of operating expenses pursuant to the Expense Support Agreement netted against $0.2 million due from the Company to the Adviser as reimbursement for payments made by the Adviser on behalf of the Company. As of March 31, 2016, the Adviser had assumed on a cumulative basis, $1.0 million of operating expenses pursuant to the Expense Support Agreement and none of the cumulative total is eligible for reimbursement.

Offering Costs

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

The Company incurs certain costs in connection with the registration of shares of its common stock. Offering costs principally relate to professional fees, printing costs, direct marketing expenses, due diligence costs, fees paid to regulators and other expenses, including the salaries and/or expenses of the Adviser and its affiliates engaged in registering and marketing the Company’s common stock. Such allocated expenses of the Adviser and its affiliates may include the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for the Company.

Pursuant to the Investment Advisory Agreement, the Company and the Adviser have agreed that the Company will not be liable for organization and offering expenses, including transfer agent fees, in excess of 1.5% of the aggregate gross proceeds from the Company’s on-going offering. As of March 31, 2016, offering costs incurred were not in excess of the 1.5% limit. As of December 31, 2015, offering costs incurred were not in excess of the 1.5% limit.

Other Affiliates

The Company has entered into agreements with affiliates of the Sponsor, whereby it has paid and/or may in the future pay certain fees or reimbursements to the Adviser, its affiliates and entities under common ownership with the Adviser in connection with items such as acquisition and financing activities, sales and maintenance of common stock under its IPO, asset and property management services and reimbursement of operating and offering related costs. The predecessor to AR Global is a party to a services agreement with RCS Advisory Services, LLC, a subsidiary of the parent company of the Former Dealer Manager (“RCS Advisory”), pursuant to which RCS Advisory and its affiliates provided the Company and certain other companies sponsored by AR Global with services (including, without limitation, transaction management, compliance, due diligence, event coordination and marketing services among others) on a time and expenses incurred basis or at a flat rate based on services performed. The predecessor to AR Global instructed RCS Advisory to stop providing such services in November 2015 and no services have since been provided by RCS Advisory. The Company was also party to a transfer agency agreement with American National Stock Transfer, LLC, a subsidiary of the parent company of the Former Dealer Manager (“ANST”), pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services), and supervisory services overseeing the transfer agency services performed by a third-party transfer agent. AR Global received written notice from ANST on February 10, 2016 that it would wind down operations by the end of the month and would withdraw as the transfer agent effective February 29, 2016. Subsequently, effective February 26, 2016, the Company entered into an agreement with DST Systems, Inc., its previous provider of sub-transfer agency services, to directly provide the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services).

The following table reflects the fees incurred and payable to our Former Dealer Manager and its affiliates as of and for the three months ended March 31, 2016 (dollars in thousands):



	Incurred for the Three Months Ended		Payable for the Three Months Ended
	March 31, 2016		March 31, 2016
Selling commissions and dealer manager fees ⁽¹⁾	$	—	$	—
Offering costs	—		204
Management and incentive fees, net	9,413		9,280
Investment banking advisory fees ⁽²⁾	—		—
Transfer agent fees	5		—
Professional fees	115		162
Other general and administrative	450		66
Total related party fees	$	9,983	$	9,712

The following table reflects the fees incurred and payable to our Former Dealer Manager and its affiliates as of and for the three months ended March 31, 2015 (dollars in thousands):

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)



	Incurred for the Three Months Ended		Payable for the Three Months Ended
	March 31, 2015		March 31, 2015
Selling commissions and dealer manager fees ⁽¹⁾	$	6,892	$	—
Offering costs	541		1,342
Management and incentive fees, net	9,943		8,598
Investment banking advisory fees ⁽²⁾	—		—
Transfer agent fees	346		961
Professional fees	168		307
Other general and administrative	36		59
Total related party fees	$	17,926	$	11,267

______________


⁽¹⁾	Selling commissions and dealer manager fees are not reflected in the Company's condensed consolidated financial statements


⁽²⁾	Investment banking advisory fees were paid to the Former Dealer Manager for strategic advisory services provided to the Company

Due (to)/from affiliate

The due from affiliate receivable primarily consists of the organization and offering expenses incurred in excess of 1.5% of gross proceeds as the Adviser has agreed to reimburse the Company for these costs per the Investment Advisory Agreement plus non offering costs due from the Adviser such as administrative and professional fees. These receivables are offset by non offering costs payable to the Adviser and offering costs payable.

The following table reflects the components of due (to)/from affiliate as of March 31, 2016 and December 31, 2015:



	March 31, 2016			December 31, 2015
Due from affiliate - organization & offering costs in excess of 1.5% of gross proceeds	$	—		$	—
Due (to)/from affiliate - non offering costs	17			7
Offering costs payable	(204		)	(204		)
Total due (to)/from affiliate	$	(187	)	$	(197	)

As of March 31, 2016, offering costs payable no longer includes offering costs that are payable to third parties. In prior periods, offering costs payable to third parties were included in due (to)/from affiliate as they were an offset to the organization and offering costs in excess of 1.5% of the aggregate gross proceeds from the Company’s on-going offering that were the responsibility of the Adviser. Total organization and offering costs do not exceed 1.5% of the aggregate gross proceeds at March 31, 2016 so offering costs payable to third parties is no longer applicable as an offsetting balance in due (to)/from affiliate.

Note 5 — Borrowings

Wells Fargo Credit Facility

On July 24, 2012, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, BDCA Funding I, LLC ("Funding I"), entered into a revolving credit facility with Wells Fargo and U.S. Bank as collateral agent, account bank and collateral custodian. The Wells Fargo Credit Facility, which was subsequently amended on April 26, 2013,

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

September 9, 2013, June 30, 2014, May 29, 2015, and November 4, 2015, provides for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis, with a term of 60 months.

The Company may contribute cash or loans to Funding I from time to time to retain a residual interest in any assets contributed through its ownership of Funding I or will receive fair market value for any loans sold to Funding I. Funding I may purchase additional loans from various sources. Funding I has appointed the Company as servicer to manage its portfolio of loans. Funding I's obligations under the Wells Fargo Credit Facility are secured by a first priority security interest in substantially all of the assets of Funding I, including its portfolio of loans. The obligations of Funding I under the Wells Fargo Credit Facility are non-recourse to the Company.

Borrowings under the Wells Fargo Credit Facility are subject to compliance with a borrowing base, pursuant to which the amount of funds advanced to Funding I varies depending upon the types of loans in Funding I's portfolio. As of March 31, 2016, the Company was in compliance with regards to the Wells Fargo Credit Facility covenants. The Wells Fargo Credit Facility may be prepaid in whole or in part, subject to customary breakage costs.

The Wells Fargo Credit Facility contains customary default provisions for facilities of this type pursuant to which Wells Fargo may terminate the rights, obligations, power and authority of the Company, in its capacity as servicer of the portfolio assets under the Wells Fargo Credit Facility, including, but not limited to, non-performance of Wells Fargo Credit Facility obligations, insolvency, defaults of certain financial covenants and other events with respect to the Company that may be adverse to Wells Fargo and the secured parties under the Wells Fargo Credit Facility.

In connection with the Wells Fargo Credit Facility, Funding I has made certain representations and warranties, is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities and is subject to certain customary events of default. Upon the occurrence and during the continuation of an event of default, Wells Fargo may declare the outstanding advances and all other obligations under the Wells Fargo Credit Facility immediately due and payable. During the continuation of an event of default, Funding I must pay interest at a default rate.

Deutsche Bank Credit Facility

On February 21, 2014, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, BDCA 2L Funding I, LLC ("2L Funding I"), entered into the Deutsche Bank Credit Facility with Deutsche Bank as lender and as administrative agent and U.S. Bank as collateral agent and collateral custodian.

Borrowings under the Deutsche Bank Credit Facility are subject to compliance with a borrowing base. The Deutsche Bank Credit Facility may be prepaid in whole or in part, subject to a prepayment fee. The Deutsche Bank Credit Facility contains customary default provisions including, but not limited to, non-payment of principal, interest or other obligations under the Deutsche Bank Credit Facility, insolvency, defaults of certain financial covenants and other events with respect to us that may be adverse to Deutsche Bank and the secured parties under the facility.

In connection with the Deutsche Bank Credit Facility, 2L Funding I has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. Upon the occurrence and during the continuation of an event of default, subject, in certain instances, to applicable cure periods, Deutsche Bank may declare the outstanding advances and all other obligations under the Deutsche Bank Credit Facility immediately due and payable. During the continuation of an event of default, 2L Funding I must pay interest at a default rate.

The obligations of the 2L Funding I under the Deutsche Bank Credit Facility are non-recourse to the Company.

Citi Credit Facility

On June 27, 2014, the Company, through a wholly-owned, special purpose financing subsidiary, BDCA-CB Funding, LLC ("CB Funding"), entered into the Citi Credit Facility as administrative agent and U.S. Bank as collateral agent, account bank and collateral custodian. The Citi Credit Facility provides for borrowings over a twenty four month period in an aggregate principal amount of up to $400.0 million on a committed basis, subject to the administrative agent’s right to approve the assets acquired by CB Funding and pledged as collateral under the Citi Credit Facility.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

UBS Credit Facility

On April 7, 2015, the Company, through a wholly-owned, special-purpose, bankruptcy-remote subsidiary, BDCA Helvetica Funding, Ltd. ("Helvetica Funding") entered into a debt financing facility with UBS AG, London Branch (“UBS”), pursuant to which $150.0 million will be made available to the Company to fund investments in new securities and for other general corporate purposes (the “UBS Credit Facility”). The UBS Credit Facility was subsequently amended on July 10, 2015 to increase the amount of debt available to the Company under the facility from $150.0 million to $210.0 million. Pricing under the transaction is based on three-month LIBOR plus a spread of 3.90% per annum for the relevant period.

Unsecured Notes

On August 26, 2015, the Company entered into a Purchase Agreement with the Initial Purchasers, relating to the Company’s sale of $100 million aggregate principal amount of its 6.00% fixed rate senior notes due 2020 to the Initial Purchasers in a private placement in reliance on Section 4(a)(2) of the Securities Act and for initial resale by the Initial Purchasers to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act (the "Unsecured Notes"). The Company relied upon these exemptions from registration based in part on representations made by the Initial Purchasers. The Purchase Agreement includes customary representations, warranties and covenants by the Company. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the Initial Purchasers against certain liabilities under the Securities Act. The Unsecured Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The net proceeds from the sale of the Unsecured Notes was approximately $97.9 million, after deducting initial purchasers’ discounts and commissions of approximately $1.58 million payable by the Company and estimated offering expenses of approximately $0.5 million payable by the Company. The Company intends to use the net proceeds to make investments in accordance with the Company’s investment objectives and for general corporate purposes.

The Unsecured Notes were issued pursuant to the Indenture, dated as of August 31, 2015, between the Company and the Trustee. The Unsecured Notes will mature on September 1, 2020, and may be redeemed in whole or in part at the Company’s option at any time, or from time to time, at the redemption prices set forth in the Indenture. The Unsecured Notes bear interest at a rate of 6.00% per year payable semi-annually on March 1 and September 1 of each year, commencing on March 1, 2016. The Unsecured Notes will be general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Unsecured Notes. The Unsecured Notes will rank equally in right of payment with all of the Company’s existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company’s subsidiaries, financing vehicles or similar facilities, including credit facilities held by the Company’s wholly owned, special purpose financing subsidiaries.

The Indenture contains certain covenants, including covenants requiring the Company to: (i) comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act as in effect immediately prior to the issuance of the Unsecured Notes, whether or not the Company is subject to such provisions; (ii) provide financial information to the holders of the Unsecured Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended; and (iii) maintain total unencumbered assets, as defined in the Indenture, of at least 175% of the aggregate principal amount of all of the Company and the Company’s consolidated subsidiaries’ outstanding unsecured debt determined on a consolidated basis in accordance with generally accepted accounting principles. These covenants are subject to important limitations and exceptions that are described in the Indenture.

The weighted average annualized interest cost for all borrowings for the three months ended March 31, 2016 and March 31, 2015 was 3.46% and 2.39%, respectively. The average daily debt outstanding for the three months ended March 31, 2016 and March 31, 2015 was $873.1 million and $609.6 million, respectively. The maximum debt outstanding for the three months ended March 31, 2016 and March 31, 2015 was $922.3 million and $608.7 million, respectively.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

The following table represents borrowings by credit facility, as of March 31, 2016 (dollars in thousands):



	Level	Maturity Date	Total Aggregate Borrowing Capacity		Total Principal Outstanding		Deferred Financing Costs			Principal less Deferred Financing Costs		Interest Rate		Interest Expense		Non-Usage Rate	Non-Usage Fees (per annum)
Wells Fargo Credit Facility	3	5/29/2020	$	400,000	$	283,086	$	(3,589	)	$	279,497	See Note 1		$	1,871	0.5% on the first $80 million and 2.0% on the remaining unfunded	$	269
Deutsche Bank Credit Facility	3	2/21/2017	60,000		60,000		(297		)	59,703		L+4.25%		328		See Note 2	245
Citi Credit Facility	3	6/27/2018	400,000		270,626		(1,651		)	268,975		L+1.70%		1,578		0.50%	164
UBS Credit Facility	3	4/7/2018	210,000		210,000		(569		)	209,431		L+3.90%		2,392		n/a	—
Subtotal			$	1,070,000	$	823,712	$	(6,106	)	$	817,606			$	6,169		$	678

Unsecured Notes	3	9/1/2020	$	100,000	$	98,605	$	(555	)	$	98,050	6.00	%	$	1,595	n/a	n/a
Totals			$	1,170,000	$	922,317	$	(6,661	)	$	915,656			$	7,764		$	678

_____________________

⁽¹⁾ Interest rate is priced at one months maturity LIBOR with no LIBOR floor, plus a spread ranging between 1.75% and 2.50% per annum, depending on the composition of the portfolio of loans owned.

⁽²⁾ The undrawn rate is 0.75%. The Facility is subject to minimum utilization of 82.5% of the loan amount measured quarterly. If the utilized portion of the loan amount is less than the foregoing, such thresholds shall bear interest at LIBOR + 4.25%

The following table represents borrowings by credit facility, as of March 31, 2015 (dollars in thousands):



	Level	Maturity Date	Total Aggregate Borrowing Capacity		Total Principal Outstanding		Interest Rate	Interest Expense		Non-Usage Rate	Non-Usage Fees (per annum)
Wells Fargo Credit Facility	3	5/29/2020	$	300,000	$	278,100	See Note 1	$	1,700	0.5% on the first $80 million and 2.0% on the remaining unfunded	$	26
Deutsche Bank Credit Facility	3	2/21/2017	60,000		—		L+4.25%	700		See Note 2	—
Citi Credit Facility	3	6/27/2016	400,000		270,600		L+1.70%	1,300		0.50%	200
Totals			$	760,000	$	548,700		$	3,700		$	226

_________________

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

The following table represents borrowings by credit facility, as of December 31, 2015 (dollars in thousands):



	Level	Maturity Date	Total Aggregate Borrowing Capacity		Total Principal Outstanding		Deferred Financing Costs			Principal Less Deferred Financing Costs
Wells Fargo Credit Facility	3	5/29/2017	$	400,000	$	263,086	$	(4,020	)	$	259,066
Deutsche Bank Credit Facility	3	2/21/2017	60,000		—		(380		)	(380		)
Citi Credit Facility	3	6/27/2018	400,000		270,626		(1,984		)	268,642
UBS Credit Facility	3	4/7/2018	210,000		210,000		(560		)	209,440
Subtotal			$	1,070,000	$	743,712	$	(6,944	)	$	736,768

Unsecured Notes	3	8/26/2020	$	100,000	$	98,526	$	(586	)	$	97,940
Totals			$	1,170,000	$	842,238	$	(7,530	)	$	834,708

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair value of short-term financial instruments such as cash and cash equivalents, due to affiliates and accounts payable approximate their carrying value on the accompanying statements of assets and liabilities due to their short-term nature. The fair values of the Company’s remaining financial instruments that are not reported at fair value on the accompanying consolidated statements of assets and liabilities are reported below (amounts in thousands):



	Level	Carrying Amount at March 31, 2016		Fair Value at March 31, 2016
Wells Fargo Credit Facility	3	$	283,087	$	283,087
Deutsche Bank Credit Facility	3	60,000		60,000
Citi Credit Facility	3	270,625		270,625
UBS Credit Facility	3	210,000		210,000
Unsecured Notes	3	98,605		98,605
		$	922,317	$	922,317



	Level	Carrying Amount at December 31, 2015		Fair Value at December 31, 2015
Wells Fargo Credit Facility	3	$	263,087	$	263,087
Deutsche Bank Credit Facility	3	—		—
Citi Credit Facility	3	270,625		270,625
UBS Credit Facility	3	210,000		210,000
Unsecured Notes	3	98,526		98,526
		$	842,238	$	842,238

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

Note 6 — Commitments and Contingencies

Commitments

In the ordinary course of business, the Company may enter into future funding commitments. As of March 31, 2016, the Company had unfunded commitments on delayed draw term loans of $50.5 million, unfunded commitments on revolver term loans of $23.6 million and unfunded equity commitments of $11.7 million. As of December 31, 2015, the Company had unfunded commitments on delayed draw term loans of $48.7 million, unfunded commitments on revolver term loans of $18.9 million and unfunded equity commitments of $11.8 million. The unfunded commitments are disclosed in the Company's Consolidated Schedule of Investments. The Company maintains sufficient cash on hand and available borrowings to fund such unfunded commitments.

Litigation and Regulatory Matters

In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. The Company has no knowledge of material legal or regulatory proceedings pending or known to be contemplated against the Company at this time.

Indemnifications

In the ordinary course of its business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote.

Guarantees

The Company has provided a guarantee to its controlled portfolio company, Park Ave RE Holdings, LLC, in connection with a secured loan whereby the Company will be responsible for certain liabilities of the portfolio company upon the occurrence of certain events (such as a bankruptcy or the incurrence of additional indebtedness in violation of the terms of the loan).

Note 7 — Economic Dependency

Under various agreements, the Company has engaged or will engage the Adviser and its affiliates to provide certain services that are essential to the Company, including asset management services, asset acquisition and disposition decisions, the sale of shares of the Company’s common stock available for issuance, as well as other administrative responsibilities for the Company including accounting services and investor relations.

As a result of these relationships, the Company is dependent upon the Adviser and its affiliates. In the event that these companies were unable to provide the Company with the respective services, the Company would be required to find alternative providers of these services.

Note 8 — Common Stock

On August 25, 2011, the Company had raised sufficient funds to break escrow on its IPO. On July 1, 2014, the Company's registration statement on Form N-2 (File No. 333-193241) for its Follow-on was declared effective by the SEC. Simultaneously with the effectiveness of the registration statement of the Follow-on, the Company's IPO terminated. Through March 31, 2016, the Company sold 177.9 million shares of common stock for gross proceeds of $1.9 billion, including shares purchased by the Sponsor and shares issued under the DRIP. Following the time the Company's updated registration statement was declared effective on June 30, 2015, the Company issued shares for subscription agreements that had been accepted through that date. The Company is no longer issuing new shares except for DRIP shares. As of March 31, 2016, the Company had repurchased 5.7 million shares of common stock for payments of $54.8 million.

The following table reflects the common stock activity for the three months ended March 31, 2016 (dollars in thousands except share amounts):

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)



	Shares		Value
Shares Sold	—		$	—
Shares Issued through DRIP	1,737,478		15,621
Share Repurchases	(2,956,721	)	(27,230		)
	(1,219,243	)	$	(11,609	)

The following table reflects the common stock activity for the three months ended March 31, 2015 (dollars in thousands except share amounts):



	Shares		Value
Shares Sold	6,925,977		$	76,740
Shares Issued through DRIP	1,663,383		16,767
Share Repurchases	(432,002	)	(4,522		)
	8,157,358		$	88,985

Note 9 — Share Repurchase Program

The Company intends to conduct semi-annual tender offers pursuant to its share repurchase program ("SRP"). The Company’s board of directors will consider the following factors, among others, in making its determination regarding whether to cause the Company to offer to repurchase shares and under what terms:



	•	the effect of such repurchases on the Company's qualification as a RIC (including the consequences of any necessary asset sales);



	•	the liquidity of the Company's assets (including fees and costs associated with disposing of assets);



	•	the Company's investment plans and working capital requirements;



	•	the relative economies of scale with respect to the Company's size;



	•	the Company's history in repurchasing shares or portions thereof; and



	•	the condition of the securities markets.

On March 8, 2016, the Company's board of directors amended the Company's SRP. The Company will conduct tender offers on a semi-annual basis, instead of on a quarterly basis as was done previously. The Company will continue to limit the number of shares to be repurchased in any calendar year to 10% of the weighted average number of shares outstanding in the prior calendar year, or 5.0% at each semi-annual tender offer. In addition, in the event of a stockholder’s death or disability, any repurchases of shares made in connection with a stockholder’s death or disability may be included within the overall limitation imposed on tender offers during the relevant redemption period, which provides that the Company may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock the Company is able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)



Quarterly Offer Date	Repurchase Date	Shares Tendered	Shares Repurchased	Repurchase Price Per Share		Aggregate Consideration for Repurchased Shares (in thousands)
September 12, 2012	October 8, 2012	—	—	$	9.71	$	—
December 13, 2012	January 15, 2013	46,975	10,732	$	9.90	$	106.22
March 27, 2013	April 25, 2013	29,625	29,625	$	10.18	$	301.58
July 15, 2013	August 13, 2013	30,365	30,365	$	10.18	$	308.97
October 22, 2013	November 21, 2013	55,255	55,255	$	10.36	$	572.44
February 4, 2014	March 6, 2014	68,969	68,969	$	10.36	$	714.52
June 6, 2014	July 11, 2014	117,425	117,425	$	10.36	$	1,216.38
August 7, 2014	September 10, 2014	111,854	111,854	$	10.36	$	1,158.80
December 19, 2014	January 23, 2015	313,101	313,101	$	10.36	$	3,243.73
March 16, 2015	April 15, 2015	162,688	162,688	$	10.36	$	1,685.45
June 26, 2015	July 31, 2015	533,527	533,527	$	9.72	$	5,185.88
September 18, 2015	October 20, 2015	728,874	728,874	$	9.53	$	6,946.17
December 23, 2015	January 25, 2016	7,375,871	3,053,869	$	9.22	$	28,156.67

Share amounts in the table above represent amounts filed in the Tender Offer.

As of March 31, 2016, the Company had repurchased 5.7 million shares of common stock for payments of $54.8 million. As of December 31, 2015, the Company had repurchased 2.7 million shares of common stock for payments of $27.6 million.

Note 10 — Net Increase in Net Assets

Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company had no potentially dilutive securities as of March 31, 2016 and December 31, 2015.

The following information sets forth the computation of the weighted average basic and diluted net increase (decrease) in net assets per share from operations for the three months ended March 31, 2016 and March 31, 2015 (dollars in thousands except share and per share amounts):



	For the Three Months Ended March 31,		For the Three Months Ended March 31,
	2016		2015
Basic and diluted
Net increase in net assets from operations	$	20,284	$	31,123
Weighted average common shares outstanding	179,076,365		161,823,970
Net increase in net assets resulting from operations per share - basic and diluted	$	0.11	$	0.19

The table below shows changes in our offering price and distribution rates since the commencement of our public offering.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)



Announcement Date	New Public Offering Price		Effective Date	Daily Distribution Amount per share	Annualized Distribution Rate
November 14, 2011	$	10.26	November 16, 2011	0.002221920	7.90	%
May 1, 2012	$	10.44	June 1, 2012	0.002215850	7.75	%
August 14, 2012	$	10.50	September 4, 2012	0.002246575	7.81	%
September 24, 2012	$	10.60	October 16, 2012	0.002246575	7.74	%
October 15, 2012	$	10.70	November 1, 2012	0.002273973	7.76	%
February 5, 2013	$	10.80	February 18, 2013	0.002293151	7.75	%
February 25, 2013	$	10.90	March 1, 2013	0.002314384	7.75	%
April 3, 2013	$	11.00	April 16, 2013	0.002335616	7.75	%
August 15, 2013	$	11.10	August 16, 2013	0.002356849	7.75	%
October 29, 2013	$	11.20	November 1, 2013	0.002378082	7.75	%
May 28, 2015	$	11.15	April 16, 2015	0.002378082	7.78	%

Note 11 — Distributions

From time to time, the Company may also pay interim distributions at the discretion of its board of directors. The Company may fund its cash distributions to stockholders from any sources of funds available to it, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets and non-capital gains proceeds from the sale of assets. The Company’s distributions may exceed its earnings, especially during the period before the Company has substantially invested the proceeds from its IPO and Follow-on. As a result, a portion of the distributions the Company will make may represent a return of capital for tax purposes. As of March 31, 2016, the Company had accrued $13.1 million in stockholder distributions that were unpaid. As of December 31, 2015, the Company had accrued $13.2 million in stockholder distributions that were unpaid.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

The following table reflects the cash distributions per share that we have paid on our common stock since January 2015 (dollars in thousands except per share amounts):



Record Date	Payment Date	Per share		Distributions Paid in Cash		Distributions Paid Through the DRIP		Total Distributions Paid
2015:
January 31, 2015	February 4, 2015	$	0.07	$	5,948	$	5,797	$	11,745
February 28, 2015	March 2, 2015	0.07		5,520		5,236		10,756
March 31, 2015	April 1, 2015	0.07		6,265		5,898		12,163
April 30, 2015	May 1, 2015	0.07		6,242		5,849		12,091
May 29, 2015	June 1, 2015	0.07		6,680		5,905		12,585
June 30, 2015	July 1, 2015	0.07		6,485		5,735		12,220
July 31, 2015	August 3, 2015	0.07		6,976		6,126		13,102
August 31, 2015	September 1, 2015	0.07		7,053		6,049		13,102
September 30, 2015	October 1, 2015	0.07		6,870		5,835		12,705
October 31, 2015	November 2, 2015	0.07		7,140		6,030		13,170
November 30, 2015	December 1, 2015	0.07		6,932		5,835		12,767
December 31, 2015	January 4, 2016	0.07		7,224		5,989		13,213
				$	79,335	$	70,284	$	149,619
2016:
January 31, 2016	February 3, 2016	$	0.07	$	8,921	$	4,298	$	13,219
February 28, 2016	March 1, 2016	0.07		7,014		5,335		12,349
March 31, 2016	April 1, 2016	0.07		7,363		5,718		13,081
April 30, 2016	May 2, 2016	0.07		12,700		1		12,701
				$	35,998	$	15,352	$	51,350
				$	115,333	$	85,636	$	200,969

The following table reflects the stock distributions per share that the Company declared on its common stock to date:

Date Declared

Record Date

Payment Date

Per Share

Distribution Percentage

Shares Issued

March 29, 2012

May 1, 2012

May 2, 2012

0.05

0.49

25,709

The Company has not established any limit on the extent to which it may use borrowings, if any, or proceeds from its IPO and Follow-on to fund distributions (which may reduce the amount of capital it ultimately invests in assets). There can be no assurance that the Company will be able to sustain distributions at any particular level.

Note 12 — Income Tax Information and Distributions to Stockholders

The Company has elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). Generally, a RIC is exempt from federal income taxes if it meets, certain quarterly asset diversification requirements, annual income tests, and distributes to stockholders its ‘‘Investment Company Taxable Income,’’ as defined in the Code, each taxable year. Distributions declared prior to the filing of the previous year's tax return and paid up to one year after the current tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its RIC status each year. The Company may also be subject to federal excise taxes of 4%.

A RIC is limited in its ability to deduct expenses in excess of its “investment company taxable income” (which is, generally, ordinary income plus net realized short-term capital gains in excess of net realized long-term capital losses). If our

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

expenses in a given taxable year exceed gross taxable income (e.g., as the result of large amounts of equity-based compensation), we would incur a net operating loss for that year. However, a RIC is not permitted to carry forward net operating losses to subsequent taxable years and such net operating losses do not pass through to the RIC’s stockholders. In addition, deductible expenses can be used only to offset investment company taxable income, not net capital gain. A RIC may not use any net capital losses (that is, realized capital losses in excess of realized capital gains) to offset the RIC’s investment company taxable income, but may carry forward such net capital losses, and use them to offset capital gains indefinitely. Due to these limits on the deductibility of expenses and net capital losses, we may for tax purposes have aggregate taxable income for several taxable years that we are required to distribute and that is taxable to our stockholders even if such taxable income is greater than the aggregate net income we actually earned during those taxable years. Such required distributions may be made from our cash assets or by liquidation of investments, if necessary. We may realize gains or losses from such liquidations. In the event we realize net capital gains from such transactions, you may receive a larger capital gain distribution than you would have received in the absence of such transactions.

The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes, nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company's 2013 and 2014 federal tax years remain subject to examination by the Internal Revenue Service.

As of March 31, 2016, the Company had a deferred asset of $1.1 million and a deferred liability of $(3.9) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $1.1 million. As of December 31, 2015, the Company had a deferred asset of $2.1 million and a deferred liability of $(3.0) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.1 million.

The deferred tax asset valuation allowance has been determined pursuant to the provisions of FASB ASC Topic 740, Income Taxes, including the Company's estimation of future taxable income, if necessary, and is adequate to reduce the total deferred tax asset to an amount that will more likely than not be realized.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

Note 13 — Financial Highlights

The following is a schedule of financial highlights for the three months ended March 31, 2016 and March 31, 2015:



	For the Three Months Ended March 31,			For the Three Months Ended March 31,
	2016			2015
Per share data:
Net asset value, beginning of period	$	8.97		$	9.74

Results of operations ⁽¹⁾ Net investment income	0.19			0.21
Net realized and unrealized depreciation on investments, net of deferred taxes	(0.08		)	(0.02		)
Net increase in net assets resulting from operations	0.11			0.19

Stockholder distributions ⁽²⁾ Distributions from net investment income	(0.19		)	(0.21		)
Return of capital	(0.03		)	—
Net decrease in net assets resulting from stockholder distributions	(0.22		)	(0.21		)

Capital share transactions Issuance of common stock ⁽³⁾	—			0.04
Repurchases of common stock	—			(0.03		)
Offering costs	—			(0.01		)
Net increase in net assets resulting from capital share transactions	—			—
Net asset value, end of period	$	8.86		$	9.72
Shares outstanding at end of period	177,922,785			165,691,398
Total return ⁽⁵⁾	1.25		%	2.02		%
Ratio/Supplemental data:
Net assets, end of period (in thousands)	$	1,580,516		$	1,613,073
Ratio of net investment income to average net assets ^(4)(7)(8)	8.45		%	8.64		%
Ratio of total expenses to average net assets ^(4)(7)(8)	5.89		%	4.21		%
Portfolio turnover rate ⁽⁶⁾	5.61		%	10.58		%

______________


⁽¹⁾	The per share data was derived by using the weighted average shares outstanding during the period. Net investment income per share excluding the expense waiver and reimbursement equals $0.19 for the three months ended March 31, 2015.


⁽²⁾	The per share data for distributions reflects the actual amount of distributions declared per share during the period.


⁽³⁾	The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of shares of common stock mainly from the Company's dividend reinvestment program.


⁽⁴⁾	For the three months ended March 31, 2015, excluding the expense waiver and reimbursement, the ratio of net investment income and total expenses to average net assets is 7.73% and 5.12%, respectively.

⁽⁵⁾

Total return is calculated assuming a purchase of shares of common stock at the current net asset value on the first day and a sale at the current net asset value on the last day of the periods reported. Distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the DRIP. The total return based on net asset value for the three months ended March 31, 2015, includes the effect of the expense waiver and reimbursement which equaled 0.22%.


⁽⁶⁾	Portfolio turnover rate is calculated using the lesser of year-to-date purchases or sales over the average of the invested assets at fair value. Not annualized.


⁽⁷⁾	Ratios are annualized, except for incentive fees.


⁽⁸⁾	Offering cost are not included as an expense in the calculation of this ratio.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)

Note 14 – Schedules of Investments and Advances to Affiliates

The following table presents the Schedule of Investments and Advances to Affiliates as of March 31, 2016:



Portfolio Company ⁽¹⁾	Type of Asset	Amount of dividends and interest included in income			Beginning Fair Value at December 31, 2015		Gross additions		Gross reductions			Realized Gain/(Loss)		Change in Unrealized Gain (Loss)			Fair Value at March 31, 2016
Control Investments
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.)	Senior Secured First Lien Debt	$	—		$	29,731	$	4,215	$	—		$	—	$	(2,853	)	$	31,093
Kahala US OpCo LLC	Senior Secured First Lien Debt	87			2,604		86		—			—		—			2,690
Kahala Ireland OpCo Limited ⁽³⁾	Senior Secured First Lien Debt	5,659			170,281		5,657		—			—		—			175,938
Kahala Ireland OpCo Limited - Common Equity ⁽³⁾	Equity/Other	—			29,428		—		—			—		5,672			35,100
Kahala Ireland OpCo Limited - Profit Participating Note ⁽³⁾	Equity/Other	—			3,250		—		25			—		(25		)	3,250
Kahala US OpCo LLC	Equity/Other	1			4,136		—		(199		)	—		2,363			6,300
Park Ave RE Holdings, LLC ⁽²⁾	Subordinated Debt	1,160			35,192		—		—			—		—			35,192
Park Ave RE Holdings, LLC ⁽²⁾ - Common Shares	Equity/Other	—			8,115		—		(369		)	—		2,239			9,985
Park Ave RE Holdings, LLC ⁽²⁾ - Preferred Shares	Equity/Other	364			23,645		—		—			—		—			23,645
Total Control Investments		$	7,271		$	306,382	$	9,958	$	(543	)	$	—	$	7,396		$	323,193

Affiliate Investments
B&M CLO 2014-1, LTD. Subordinated Notes	Collateralized Securities	$	508		$	19,169	$	—	$	(1,508	)	$	—	$	(988	)	$	16,673
CVP Cascade CLO, LTD. Subordinated Notes	Collateralized Securities	896			11,114		—		(854		)	—		(1,395		)	8,865
CVP Cascade CLO-2, LTD. Subordinated Notes	Collateralized Securities	(85		)	12,216		—		(1,938		)	—		590			10,868
Danish CRJ LTD.	Senior Secured First Lien Debt	—			20		—		(1		)	—		1			20
Danish CRJ LTD.	Equity/Other	—			1,034		—		—			—		(123		)	911
Fifth Street Senior Loan Fund LLC 2015-1A Class F	Collateralized Securities	259			8,523		40		—			—		(256		)	8,307
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes	Collateralized Securities	828			23,566		—		(1,181		)	—		(751		)	21,634
Figueroa CLO 2014-1, LTD. Subordinated Notes	Collateralized Securities	303			16,112		—		(1,325		)	—		(856		)	13,931
MidOcean Credit CLO II, LLC	Collateralized Securities	797			23,603		—		(1,169		)	—		(213		)	22,221
MidOcean Credit CLO III, LLC	Collateralized Securities	1,040			23,748		—		(1,494		)	—		485			22,739
MidOcean Credit CLO IV, LLC	Collateralized Securities	763			14,212		—		(709		)	—		599			14,102
NMFC Senior Loan Program I, LLC	Equity/Other	768			45,994		—		—			—		(1,009		)	44,985
NewStar Arlington Senior Loan Program LLC Subordinated Notes	Collateralized Securities	1,058			24,461		—		(990		)	—		(261		)	23,210
Ocean Trails CLO V, LTD.	Collateralized Securities	969			25,957		—		(1,050		)	—		(191		)	24,716
OFSI Fund VI, Ltd. Subordinated Notes	Collateralized Securities	175			20,205		—		(1,834		)	—		(521		)	17,850
PennantPark Credit Opportunities Fund II, LP	Equity/Other	183			9,082		—		(1,615		)	180		1,106			8,753
Related Fee Agreements	Collateralized Securities	402			11,679		—		(513		)	—		(496		)	10,670

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)



Portfolio Company ⁽¹⁾	Type of Asset	Amount of dividends and interest included in income			Beginning Fair Value at December 31, 2015		Gross additions		Gross reductions			Realized Gain/(Loss)		Change in Unrealized Gain (Loss)			Fair Value at March 31, 2016
South Grand MM CLO I, LLC	Equity/Other	—			29,155		—		—			—		(703		)	28,452
Silver Spring CLO, Ltd.	Collateralized Securities	(449		)	12,269		—		(2,132		)	—		(3,648		)	6,489
THL Credit Greenway Fund II LLC	Equity/Other	336			16,910		—		(1,102		)	—		443			16,251
WhiteHorse VIII, Ltd. CLO Subordinated Notes	Collateralized Securities	(118		)	13,955		—		(1,914		)	—		1			12,042
Total Affiliate Investments		$	8,633		$	362,984	$	40	$	(21,329	)	$	180	$	(8,186	)	$	333,689
Total Control & Affiliate Investments		$	15,904		$	669,366	$	9,998	$	(21,872	)	$	180	$	(790	)	$	656,882

______________________________________________________


⁽¹⁾	The principal amount and ownership detail are shown in the Condensed Consolidated Schedules of Investments.


⁽²⁾	This investment is deemed significant under the SEC Rule 4-08(g). As of March 31, 2016, Park Ave RE Holdings LLC had total assets and liabilities of approximately $105.7 million and $80.4 million, respectively. Total revenue and net income for the three months ended March 31, 2016 were approximately $2.5 million and $0.4 million, respectively.


⁽³⁾	This investment is deemed significant under the SEC Rules 3-09 and 4-08(g). As of March 31, 2016, Kahala Ireland OpCo Limited had total assets and liabilities of approximately $483.2 million and $488.9 million, respectively. Total revenue and net loss for the three months ended March 31, 2016 were approximately $23.1 million and $2.8 million, respectively.

In addition, the Company has determined that it must include audited financial statements of Kahala Ireland OpCo Limited because it is a controlled investment and is required to do so under Rule 3-09. The audited financial statements were attached to the Company's Annual Report on Form 10-K as Exhibit 99.1.

The following table presents the Schedule of Investments and Advances to Affiliates as of December 31, 2015:



Portfolio Company ⁽¹⁾	Type of Asset	Amount of dividends and interest included in income			Beginning Fair Value at December 31, 2014		Gross additions		Gross reductions			Realized Gain/(Loss)			Change in Unrealized Gain (Loss)			Fair Value at December 31, 2015
Control Investments
Integrity Nutraceuticals Inc.	Senior Secured First Lien Debt	$	2,012		$	29,150	$	7,636	$	(932	)	$	14		$	(6,137	)	$	29,731
HIG Integrity Nutraceuticals	Equity/Other	—			—		—		—			—			—			—
Integrity Nutraceuticals	Equity/Other	—			—		—		—			—			—			—
Kahala US OpCo LLC	Senior Secured First Lien Debt	354			7,131		2,114		(6,641		)	—			—			2,604
Kahala Ireland OpCo Limited	Senior Secured First Lien Debt	13,500			47,843		122,438		—			—			—			170,281
Kahala Ireland OpCo Limited - Common Equity	Equity/Other	—			5,275		—		—			—			24,153			29,428
Kahala Ireland OpCo Limited - Profit Participating Note	Equity/Other	—			1,625		1,625		(148		)	—			148			3,250
Kahala US OpCo LLC	Equity/Other	—			7,500		—		(1,770		)	(65		)	(1,529		)	4,136
Park Ave RE Holdings, LLC ⁽²⁾	Subordinated Debt	2,585			6,107		29,085		—			—			—			35,192
Park Ave RE Holdings, LLC ⁽²⁾ - Common Shares	Equity/Other	—			5,551		595		(1,237		)	—			3,206			8,115
Park Ave RE Holdings, LLC ⁽²⁾ - Preferred Shares	Equity/Other	885			7,809		15,836		—			—			—			23,645
Total Control Investments		$	19,336		$	117,991	$	179,329	$	(10,728	)	$	(51	)	$	19,841		$	306,382

Affiliate Investments
B&M CLO 2014-1, LTD. Subordinated Notes	Collateralized Securities	$	1,558		$	31,280	$	—	$	(7,919	)	$	—		$	(4,192	)	$	19,169
CVP Cascade CLO, LTD. Subordinated Notes	Collateralized Securities	(1,980		)	22,553		—		(8,396		)	—			(3,043		)	11,114
CVP Cascade CLO-2, LTD. Subordinated Notes	Collateralized Securities	(1,397		)	26,479		—		(8,925		)	—			(5,338		)	12,216

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts, percentages and as otherwise indicated)

(Unaudited)



Danish CRJ LTD.	Senior Secured First Lien Debt	26			181		—		(161		)	—			—			20
Danish CRJ LTD.	Equity/Other	—			260		—		—			—			774			1,034
Fifth Street Senior Loan Fund LLC 2015-1A Class F	Equity/Other	877			—		8,938		—			—			(415		)	8,523
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes	Collateralized Securities	4,005			—		27,486		(747		)	—			(3,173		)	23,566
Figueroa CLO 2014-1, LTD. Subordinated Notes	Collateralized Securities	859			27,128		—		(3,405		)	—			(7,611		)	16,112
MidOcean Credit CLO II, LLC	Collateralized Securities	2,577			33,712		—		(5,305		)	—			(4,804		)	23,603
MCF CLO V Warehouse LLC	Equity/Other	2,501			—		23,486		(23,239		)	(247		)	—			—
MidOcean Credit CLO III, LLC	Collateralized Securities	3,684			36,120		—		(6,290		)	—			(6,082		)	23,748
MidOcean Credit CLO IV, LLC - Warehouse	Collateralized Securities	—			18,500		—		(18,700		)	200			—			—
MidOcean Credit CLO IV, LLC	Collateralized Securities	3,549			—		18,500		(851		)	—			(3,437		)	14,212
NMFC Senior Loan Program I, LLC	Equity/Other	6,808			49,371		—		—			—			(3,377		)	45,994
NewStar Arlington Senior Loan Program LLC Subordinated Notes	Collateralized Securities	6,435			30,474		—		(2,314		)	—			(3,699		)	24,461
Ocean Trails CLO V, LTD.	Collateralized Securities	3,927			34,607		—		(4,352		)	—			(4,298		)	25,957
OFSI Fund VI, Ltd. Subordinated Notes	Collateralized Securities	1,318			32,707		—		(8,384		)	—			(4,118		)	20,205
PennantPark Credit Opportunities Fund II, LP	Equity/Other	834			10,764		1,615		(3,229		)	301			(369		)	9,082
Related Fee Agreements	Collateralized Securities	—			15,081		1,220		(3,514		)	—			(1,108		)	11,679
South Grand MM CLO I, LLC	Collateralized Securities	2,690			27,744		2,880		(1,100		)	22			(391		)	29,155
Silver Spring CLO, Ltd.	Collateralized Securities	(955		)	27,398		—		(7,416		)	—			(7,713		)	12,269
THL Credit Greenway Fund II LLC	Equity/Other	1,482			18,877		230		(2,412		)	—			215			16,910
WhiteHorse VIII, Ltd. CLO Subordinated Notes	Collateralized Securities	817			27,570		—		(7,017		)	—			(6,598		)	13,955
Total Affiliate Investments		$	39,615		$	470,806	$	84,355	$	(123,676	)	$	276		$	(68,777	)	$	362,984
Total Control & Affiliate Investments		$	58,951		$	588,797	$	263,684	$	(134,404	)	$	225		$	(48,936	)	$	669,366

______________________________________________________


⁽¹⁾	The principal amount and ownership detail are shown in the Condensed Consolidated Schedules of Investments.


⁽²⁾	This investment is deemed significant under the SEC Rule 4-08(g). As of December 31, 2015, Park Ave RE Holdings LLC had total assets and liabilities of approximately $104.7 million and $79.5 million, respectively. Total revenue and net income for the year ended December 31, 2015 were approximately $5.8 million and $0.7 million, respectively.

Note 15 – Subsequent Events

The Company has evaluated subsequent events through the filing of this Form 10-Q and determined that there have been no events that have occurred that would require adjustments to the Company’s disclosures in the condensed consolidated financial statements except for the following:

DRIP Sales

From April 1, 2016 to May 2, 2016, the Company made distributions of $25.8 million. These distributions consisted of $20.1 million in cash and $0.6 million shares of common stock issued pursuant to the DRIP. Total gross proceeds from the issuance of shares pursuant to the DRIP were $5.7 million.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements of Business Development Corporation of America and the notes thereto, and other financial information included elsewhere in this Quarterly Report on Form 10-Q. We are externally managed by our adviser, BDCA Adviser, LLC (the "Adviser").

The forward-looking statements contained in this Quarterly Report on Form 10-Q may include statements as to:


•	our future operating results;


•	our business prospects and the prospects of our portfolio companies;


•	the impact of the investments that we expect to make;


•	the ability of our portfolio companies to achieve their objectives;


•	our expected financings and investments;


•	the adequacy of our cash resources and working capital;


•	the timing of cash flows, if any, from the operations of our portfolio companies;


•	our repurchase of shares;


•	actual and potential conflicts of interest with our Adviser and its affiliates;


•	the dependence of our future success on the general economy and its effect on the industries in which we invest;


•	the ability to qualify and maintain our qualification as a regulated investment company (“RIC”) and a business development company (“BDC”);


•	the timing, form and amount of any dividend distributions;


•	the impact of fluctuations in interest rates on our business;


•	the valuation of any investments in portfolio companies, particularly those having no liquid trading market; and


•	our ability to recover unrealized losses.

In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015. Other factors that could cause actual results to differ materially include:


•	changes in the economy;


•	risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; and


•	future changes in laws or regulations and conditions in our operating areas.

You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Overview

We are a specialty finance company incorporated in Maryland in May 2010. We are an externally managed, non-diversified closed-end investment company that has elected to be treated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act") and is applying the guidance of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946, "Financial Services - Investment Companies" ("ASC 946").

Our investment objective is to generate both current income and to a lesser extent long-term capital appreciation through debt and equity investments. We invest primarily in first and second lien senior secured loans and mezzanine debt issued by middle market companies. We define middle market companies as those with annual revenues between $10 million

and $1 billion. We may also purchase interests in loans through secondary market transactions in the "over-the-counter" market for institutional loans. First and second lien secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in bankruptcy priority and are generally secured by liens on the operating assets of a borrower which may include inventory, receivables, plant, property and equipment. Mezzanine debt is subordinated to senior loans and is generally unsecured. We may invest in the equity and junior debt tranches of collateralized loan obligation investment vehicles ("Collateralized Securities"). Structurally, Collateralized Securities are entities that are formed to manage a portfolio of senior secured loans made to companies whose debt is rated below investment grade or, in limited circumstances, unrated. The senior secured loans within these Collateralized Securities meet specified credit and diversity criteria and are subject to concentration limitations in order to create a diverse investment portfolio. We expect that each investment will generally range between approximately 0.5% to 3.0% of our total assets. In most cases, companies to whom we provide customized financing solutions will be privately held at the time we invest in them.

Significant Accounting Estimates and Critical Accounting Policies

Our condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management’s most difficult, subjective, or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the condensed consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. In preparing the condensed consolidated financial statements, management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. As our expected operating plans occur we will describe additional critical accounting policies in the notes to our condensed consolidated financial statements in addition to those discussed below.

Set forth below is a summary of the significant accounting estimates and critical accounting policies that management believes are important to the preparation of our condensed consolidated financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result, these estimates are subject to a degree of uncertainty. These significant accounting estimates include:

Valuation of Portfolio Investments

Portfolio investments are reported on the condensed consolidated statements of assets and liabilities at fair value. On a quarterly basis the Adviser performs an analysis of each investment to assist the Board in its determination of fair value as follows:

Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that the Adviser may take into account in fair value pricing the Company's investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

For an investment in an investment fund that does not have a readily determinable fair value, the Adviser measures the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of Financial Accounting Standards Board, ("FASB"), Accounting Standards Codification, ("ASC"), Topic 946, Financial Services-Investment Companies, as of the Company's measurement date. The value of our TRS was primarily based on the increase or decrease in the value of the loans underlying the TRS, as determined by Citi based upon indicative pricing by an independent third-party pricing service.

Prior to its termination in June 2014, the value of our TRS was primarily based on the increase or decrease in the value of the loans underlying the TRS, as determined by Citi based upon indicative pricing by an independent third-party pricing service.

For investments in Collateralized Securities, the Adviser models both the assets and liabilities of each Collateralized Securities' capital structure. The model uses a waterfall engine to store the collateral data, generate collateral cash flows from the assets, and distribute the cash flows to the liability structure based on the priority of payments. The waterfall cash flows are discounted using rates that incorporate risk factors such as default risk, recovery risk, prepayment risk, reinvestment risk, and interest rate risk, among others. In addition, the Adviser considers broker quotations and/or quotations provided by pricing services as an input to determining fair value when available.

With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:


•	Each portfolio company or investment will be valued by the Adviser, potentially with assistance from one or more independent valuation firms engaged by our board of directors;


•	The independent valuation firm(s), if involved, will conduct independent appraisals and make an independent assessment of the value of each investment; and


•	Our board of directors determines the fair value of each investment, in good faith, based on the input of our Adviser, independent valuation firm (to the extent applicable) and the audit committee of our board of directors.

Investment Advisory and Administration Agreements

Pursuant to the Investment Advisory Agreement we have with the Adviser, we pay the Adviser a fee for its services consisting of two components - a management fee and an incentive fee. The management fee is calculated at an annual rate of 1.5% of our average gross assets and is payable quarterly in arrears.

The incentive fee consists of two parts. The first part, referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the immediately preceding quarter. The payment of the subordinated incentive fee on income is subject to payment of a preferred return to investors each quarter, expressed as a quarterly rate of return on adjusted capital at the beginning of the most recently completed calendar quarter, of 1.75% (7.00% annualized), subject to a “catch up” feature.

The second part of the incentive fee, referred to as the incentive fee on capital gains, is an incentive fee on capital gains earned on liquidated investments from the portfolio and is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement). This fee equals 20.0% of our incentive fee capital gains, which equals our realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed

net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. Realized gains received from loans underlying the total return swap we had with Citi were not included for purposes of evaluating the incentive fee on capital gains.

We have entered into the Amended and Restated Administration Servicing Agreement and the Amended and Restated Accounting Servicing Agreement with US Bancorp Fund Services, LLC (the “Administrator”). The Administrator provides services, such as accounting, financial reporting and compliance support, necessary to operate. On August 13, 2012, we entered into a custody agreement with U.S. Bank National Association (“U.S. Bank”). Under the custody agreement, U.S. Bank holds all of our portfolio securities and cash for certain of our subsidiaries, and transfers such securities or cash pursuant to our instructions. The custody agreement is terminable by either party, without penalty, on not less than ninety days prior notice to the other party. Realty Capital Securities, LLC (the "Former Dealer Manager") served as the dealer manager of our IPO until May 2015, when we terminated our offering. RCS Capital Corporation, the parent company of the Former Dealer Manager and certain of its affiliates that provided services to us, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was also under common control with our Sponsor.

On February 9, 2016, we and ARC Advisory Services, LLC (“ARC Advisory”), a wholly-owned subsidiary of our Adviser, entered into an agreement pursuant to which ARC Advisory provides us with administrative services necessary for our operation (the “ARC Administration Agreement”). Pursuant to the ARC Administration Agreement, ARC Advisory provides us with, among other things, office facilities, equipment, clerical, bookkeeping and record keeping services. In addition, ARC Advisory assists us in determining and publishing our net asset value and the filing of our tax returns. We will reimburse ARC Advisory for the costs and expenses incurred by ARC Advisory in performing its obligations pursuant to the ARC Administration Agreement.

Income Taxes

We have elected to be treated for federal income tax purposes, and intend to qualify thereafter, as a RIC under Subchapter M of the Code. Generally, a RIC is exempt from federal income taxes if it distributes at least 90% of its ‘‘investment company taxable income,’’ as defined in the Code, each year. Distributions declared prior to the filing of the previous year's tax return and paid up to one year after the current tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. We intend to distribute sufficient distributions to maintain our RIC status each year. We may also be subject to federal excise taxes of 4%.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

See Note 2 to the condensed consolidated financial statements for a description of other accounting policies and recently issued accounting pronouncements.

Portfolio and Investment Activity

During the three months ended March 31, 2016, we made $144.3 million of investments in new and existing portfolio companies and had $130.0 million in aggregate amount of exits and repayments, resulting in net investments of $14.3 million for the period. The portfolio composition by loan market at fair value consisted of 81.4% Middle Market ⁽¹⁾, 4.0% Large Corporate ⁽²⁾, and 14.6% Other ⁽³⁾ investments. In addition, the total portfolio of debt investments at fair value consisted of 91.0% bearing variable interest rates and 9.0% bearing fixed interest rates.

______________

⁽¹⁾Middle market represents companies whose annual revenues are between $10 million and $1 billion.

⁽²⁾Large corporate represents companies whose annual revenues are in excess of $1 billion.

⁽³⁾Other represents collateralized securities and equity investments.

Our portfolio composition, based on fair value at March 31, 2016 was as follows:



	March 31, 2016
	Percentage of Total Portfolio		Weighted Average Current Yield for Total Portfolio ⁽¹⁾
Senior Secured First Lien Debt	62.7	%	8.8	%
Senior Secured Second Lien Debt	14.3		10.5
Subordinated Debt	4.0		13.6
Collateralized Securities ⁽²⁾	10.1		12.3
Equity/Other	8.9		N/A
Total	100.0	%	9.7	%

______________

⁽¹⁾Excludes the effect of the amortization or accretion of loan premiums or discounts.

⁽²⁾Weighted average current yield for Collateralized Securities is based on the estimation of effective yield to expected maturity for each security as calculated in accordance with ASC Topic 325-40-35, Beneficial Interests in Securitized Financial Assets (see Note 2 - Summary of Significant Accounting Policies).

During the year ended December 31, 2015, we made $1.2 billion of investments in new portfolio companies and had $0.7 billion in aggregate amount of exits and repayments, resulting in net investments of $0.5 billion for the period. The portfolio composition by loan market consisted of 80.4% Middle Market ⁽¹⁾, 3.7% Large Corporate ⁽²⁾, and 15.9% Other ⁽³⁾ investments. In addition, the total portfolio of debt investments consisted of 91.2% bearing variable interest rates and 8.8% bearing fixed interest rates.

______________

⁽¹⁾Middle market represents companies whose annual revenues are between $10 million and $1 billion.

⁽²⁾Large corporate represents companies whose annual revenues are in excess of $1 billion.

⁽³⁾Other represents collateralized securities and equity investments.

Our portfolio composition, based on fair value at December 31, 2015 was as follows:



	December 31, 2015
	Percentage of Total Portfolio		Weighted Average Current Yield for Total Portfolio ⁽¹⁾
Senior Secured First Lien Debt	60.8	%	8.8	%
Senior Secured Second Lien Debt	15.1		10.4
Subordinated Debt	4.0		13.6
Collateralized Securities ⁽²⁾	11.3		11.3
Equity/Other	8.8		N/A
Total	100.0	%	9.6	%

______________

⁽¹⁾Excludes the effect of the amortization or accretion of loan premiums or discounts.

Portfolio Asset Quality

Our Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Adviser grades the credit risk of all debt investments on a scale of 1 to 5 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio debt investment relative to the inherent risk at the time the original debt investment was made (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company's business, the collateral coverage of the investment and other relevant factors.



Loan Rating		Summary Description
1		Debt investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since the time of investment are favorable.

2		Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. All investments are initially rated a “2”.

3		Performing debt investment requiring closer monitoring. Trends and risk factors show some deterioration.

4		Underperforming debt investment. Some loss of interest or dividend expected, but still expecting a positive return on investment. Trends and risk factors are negative.

5		Underperforming debt investment with expected loss of interest and some principal.

The weighted average risk ratings of our investments based on fair value was 2.21 and 2.19 as of March 31, 2016 and December 31, 2015, respectively. As of March 31, 2016, we had three portfolio companies, which represented three portfolio investments, on non-accrual status. These investments had a total principal of $56.3 million and a total fair value of $33.0 million, which represented 2.2% and 1.4%, respectively, of our portfolio as of March 31, 2016. We are currently evaluating potential value recovery alternatives for these investments. As of December 31, 2015, we had three portfolio company, which represented three portfolio investments, on non-accrual status. These investments had a total principal of $51.9 million and a total fair value of $33.0 million, which represented 2.0% and 1.4%, respectively, of our portfolio as of December 31, 2015.

RESULTS OF OPERATIONS

Operating results for the three months ended March 31, 2016, and March 31, 2015 was as follows (dollars in thousands):



	For the Three Months Ended March 31,		For the Three Months Ended March 31,
	2016		2015
Total investment income	$	56,918	$	49,881
Total expenses net of expense waivers	23,380		16,344
Net investment income loss (gain) attributable to noncontrolling interests	7		(12		)
Net investment income	$	33,531	$	33,549

Investment Income

For the three months ended March 31, 2016, total investment income was $56.9 million and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.3 billion and a weighted average current yield of 9.7%. For the three months ended March 31, 2015, total investment income was $49.9 million and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.0 billion and a weighted average current yield of 10.0%.

Operating Expenses

The composition of our operating expenses for the three months ended March 31, 2016 and March 31, 2015 was as follows (dollars in thousands):



	For the Three Months Ended March 31,		For the Three Months Ended March 31,
	2016		2015
Management fees	$	9,413	$	8,235
Subordinated income incentive fees	—		5,242
Interest and credit facility financing expenses	9,336		4,291
Professional fees	1,570		1,224
Other general and administrative	2,630		613
Administrative services	250		203
Insurance	55		52
Directors fees	126		18
Operating expenses before expense waivers	23,380		19,878
Waiver of management and incentive fees	—		(3,534		)
Total operating expenses net of expense waivers	$	23,380	$	16,344

Interest and credit facility expenses for the three months ended March 31, 2016 were comprised of amortization of deferred financing costs and non-usage fees related to the Wells Fargo Credit Facility, Deutsche Bank Credit Facility, Citi Credit Facility, UBS Credit Facility and Unsecured Notes, along with $1.9 million of interest expense on the balance drawn on the Wells Fargo Credit Facility, $0.3 million of interest expense on the balance drawn on the Deutsche Bank Credit Facility, $1.6 million of interest expense on the balance drawn on the Citi Credit Facility, $2.4 million of interest expense on the balance drawn on the UBS Credit Facility, and $1.6 million of interest expense on the balance drawn on the Unsecured Notes. The interest expense on the balance drawn on the Wells Fargo Credit Facility was based on an average daily debt outstanding of $266.2 million at a weighted average annualized cost of 2.78% for the three months ended March 31, 2016. The interest expense on the balance drawn on the Deutsche Bank Credit Facility was based on an average daily debt outstanding of $27.7 million at a weighted average annualized cost of 4.68% for the three months ended March 31, 2016. The interest expense on the balance drawn on the Citi Credit Facility was based on an average daily debt outstanding of $270.6 million at a weighted average annualized cost of 2.28% for the three months ended March 31, 2016. The interest expense on the balance drawn on the UBS Credit Facility was based on an average daily debt outstanding of $210.0 million at a weighted average annualized cost of 4.51% for the three months ended March 31, 2016. The interest expense on the balance drawn on the Unsecured Notes was based on an average daily debt outstanding of $98.6 million at a weighted average annualized cost of 6.00% for the three months ended March 31, 2016. For the three months ended March 31, 2016, we incurred $9.4 million of management fees, of which the Adviser did not waive any such fees. For the three months ended March 31, 2016, we did not incur any incentive fees.

Interest and credit facility expenses for the three months ended March 31, 2015 were comprised of amortization of deferred financing costs and non-usage fees related to the Wells Fargo Credit Facility, Deutsche Bank Credit Facility and Citi Credit Facility, along with $1.7 million of interest expense on the balance drawn on the Wells Fargo Credit Facility, $0.7 million of interest expense on the balance drawn on the Deutsche Bank Credit Facility, and $1.3 million of interest expense on the balance drawn on the Citi Credit Facility. The interest expense on the balance drawn on the Wells Fargo Credit Facility was based on an average daily debt outstanding of $279.0 million at a weighted average annualized cost of 2.47% for the three months ended March 31, 2015. The interest expense on the balance drawn on the Deutsche Bank Credit Facility was based on an average daily debt outstanding of $60.0 million at a weighted average annualized cost of 4.42% for the three months ended March 31, 2015. The interest expense on the balance drawn on the Citi Credit Facility was based on an average daily debt outstanding of $270.6 million at a weighted average annualized cost of 1.87% for the three months ended March 31, 2015. For the three months ended March 31, 2015, we incurred $8.2 million of management fees, of which the Adviser did not waive any such fees. For the three months ended March 31, 2015, we incurred $5.2 million of incentive fees, of which the Adviser waived $3.5 million.

We have entered into the Expense Support Agreement with our Adviser, whereby the Adviser may pay up to 100% of all of our operating expenses (“Expense Support Payment”) for any period beginning November 4, 2011, the date our prior registration statement on Form N-2 was declared effective and continuing until we and the Adviser mutually agree otherwise.

The Expense Support Payments for any month shall be paid to us by the Adviser in any combination of cash or other immediately available funds, and/or offsets against amounts due from us to the Adviser. For the three months ended March 31, 2016 and 2015, no Expense Support Payments were made by our Adviser.

Net Realized Gain and Net Change in Unrealized Appreciation (Depreciation) on Investments (dollars in thousands):



	For the Three Months Ended March 31,			For the Three Months Ended March 31,
	2016			2015
Net realized gain (loss) from investments
Control investments	$	—		$	(65	)
Affiliate investments	180			200
Non-control/non-affiliate investments	1,017			184
Total net realized gain from investments	1,197			319
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
Control investments	6,501			1,682
Affiliate investments	(8,186		)	(4,965		)
Non-control/non-affiliate investments	(12,759		)	704
Total net change in unrealized depreciation on investments, net of deferred taxes	(14,444		)	(2,579		)
Net change in unrealized depreciation attributable to non-controlling interests	—			(166		)
Net realized and unrealized loss on investments	$	(13,247	)	$	(2,426	)

Net realized gain/(loss) and change in unrealized appreciation (depreciation) on investments, net of deferred taxes, resulted in a net loss of $(13.2) million for the three months ended March 31, 2016 compared to a net loss of $(2.4) million for the same period in 2015. We look at net realized gains and change in unrealized appreciation (depreciation) together, as movement in unrealized appreciation or depreciation can be the result of realizations.

The net loss for the three months ended March 31, 2016 was primarily driven by the unrealized depreciation on our Collateralized Securities and our Fund Investments. The net loss for the three months ended March 31, 2015 was primarily driven by the unrealized depreciation of $(4.4) million on a portfolio company investment that was not meeting performance expectations and was partially offset by net unrealized appreciation across the remainder of the portfolio. In total, we sold or repaid $130.0 million and $206.6 million, respectively, of assets during the three months ended March 31, 2016 and March 31, 2015.

Changes in Net Assets from Operations

For the three months ended March 31, 2016, we recorded a net increase in net assets resulting from operations of $20.3 million versus a net increase in net assets resulting from operations of $31.1 million for the three months ended March 31, 2015. The decrease is primarily attributable to net unrealized depreciation on investments of $(14.4) million during the three months ended March 31, 2016 which was driven by the overall market decline in broadly syndicated loan prices and unrealized depreciation across the portfolio of Collateralized Securities due to decreased liquidity in the market for this asset class and a decline in the market values of the collateral loans in the underlying securities. Based on the weighted average shares of common stock outstanding for the periods ended March 31, 2016 and 2015, respectively, our per share net increase in net assets resulting from operations was $0.11 for the three months ended March 31, 2016, versus a net increase in net assets resulting from operations of $0.19 for the three months ended March 31, 2015.

Cash Flows

For the three months ended March 31, 2016, net cash provided by operating activities was $16.5 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and sales of portfolio

investments, among other factors. The increase in cash flows used in operating activities for the three months ended March 31, 2016 was primarily due to 130.0 million in sales and repayments of investments. offset by cash used in operating activities for purchases of $144.3 million. This offset was far less than the prior period offset of $71.7 million.

Net cash provided by financing activities of $29.7 million during the three months ended March 31, 2016 primarily related to net proceeds from the Wells Fargo Credit Facility and the Deutsche Bank Credit Facility of $80.0 million. These inflows were partially offset by payments of stockholder distributions of $23.2 million and repurchases of common stock of $27.2 million.

For the three months ended March 31, 2015, net cash used in operating activities was $16.3 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and sales of portfolio investments, among other factors. The increase in cash flows used in operating activities for the three months ended March 31, 2015 was primarily due to $278.3 million for purchases of investments partially offset by cash provided by operating activities of $206.6 million for sales and repayments of investments, $11.8 million from a decrease in unsettled trades payable, and $31.1 million from a net increase in net assets from operations. The purchase and sales activity is driven by the increase in investment activity resulting from the continuous equity capital raising and growing capital base.

Net cash provided by financing activities of $37.9 million during the three months ended March 31, 2015 primarily related to net proceeds from the issuance of common stock of $68.8 million. These inflows were partially offset by principal repayments on debt of $10.0 million and payments of stockholder distributions of $17.3 million. Consistent with the increase in investment activity, the proceeds from the issuance of common stock are the result of our increasing equity raise capabilities.

Recent Developments

From April 1, 2016 to May 2, 2016, we made distributions of $25.8 million. These distributions consisted of $20.1 million in cash and $0.6 million shares of common stock issued pursuant to the DRIP. Total gross proceeds from the issuance from shares issued pursuant to the DRIP were $5.7 million.

Liquidity and Capital Resources

We generate cash flows from fees, interest and dividends earned from our investments, as well as proceeds from sales of our investments and, previously, from the net proceeds of our continuous public offering. The Registration Statement offering for sale up to $1.5 billion of shares of our common stock (150.0 million shares at an initial offering price of $10.00 per share) (the "Offering"), was declared effective on January 27, 2011. On July 1, 2014, our registration statement on Form N-2 (File No. 333-193241) for our follow-on offering (the "Follow-on") was declared effective by the SEC. Simultaneously with the effectiveness of the Follow-on, our IPO terminated. Under the Follow-on, we can offer up to 101,100,000 shares of its common stock. As of March 31, 2016, we had issued 177.9 million shares of our common stock for gross proceeds of $1.9 billion including shares issued to the Sponsor and shares issued under our distribution reinvestment plan ("DRIP").

Our principal demands for funds in both the short-term and long-term are for portfolio investments, for the payment of operating expenses, distributions to our investors, repurchases under our share repurchase program, and for the payment of principal and interest on our outstanding indebtedness. We may also from time to time enter into other agreements with third parties whereby third parties will contribute to specific investment opportunities. Items other than investment acquisitions are expected to be met from a combination of the proceeds from the sale of common stock, cash flows from operations, and, during our IPO and Follow-on, reimbursements from the Adviser. We closed the Offering to new investments on April 30, 2015. In order to allow for associated processing time needed, our transfer agent accepted subscriptions in good order dated on or before April 30, 2015 and received no later than June 30, 2015.

We have entered into the Expense Support Agreement with our Adviser, whereby the Adviser may pay the Expense Support Payment for any period beginning on the effective date of the Registration Statement, until we and the Adviser mutually agree otherwise. The purpose of the Expense Support Agreement was to reduce our offering and operating expenses to ensure that we were able to bear a reasonable level of expense in relation to our investment income. The Expense Support Payment for any month shall be paid to us by the Adviser in cash and/or offset against amounts due from us to the Adviser. Operating expenses subject to this agreement include expenses as defined by U.S. GAAP, including, without limitation, advisory fees payable and interest on indebtedness for such period, if any. As of March 31, 2016, the Adviser had made cumulative payments to us for $1.0 million of expenses pursuant to the Expense Support Agreement and none of the cumulative total is eligible for reimbursement. During the three months ended March 31, 2016, the Adviser made no payments to us for expenses pursuant to the Expense Support Agreement. See Note 4 - Related Party Transactions and Arrangements - Expense Support Agreement - in our condensed consolidated financial statements included in this report for additional information on this arrangement, including Expense Payments made by our Adviser pursuant to the terms of this agreement and the ability of the Adviser to be reimbursed for Expense Payments made to us.

Other potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from private offerings, proceeds from the sale of investments and undistributed funds from operations. However, our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. Our ability to raise proceeds in our public offering will be dependent on a number of factors as well, including general market conditions for BDCs and market perceptions about us.

We intend to conduct semi-annual tender offers pursuant to our share repurchase program. Our board of directors will consider the following factors, among others, in making its determination regarding whether to cause us to offer to repurchase shares and under what terms:


•	the effect of such repurchases on our qualification as a RIC (including the consequences of any necessary asset sales);


•	the liquidity of our assets (including fees and costs associated with disposing of assets);


•	our investment plans and working capital requirements;


•	the relative economies of scale with respect to our size;


•	our history in repurchasing shares or portions thereof; and


•	the condition of the securities markets.

On March 8, 2016, our board of directors amended our share repurchase program. We will begin to make tender offers on a semi-annual basis, instead of on a quarterly basis as was done previously. We will continue to limit the number of shares to be repurchased in any calendar year to 10% of the weighted average number of shares outstanding in the prior calendar year, or 5.0% at each semi-annual tender offer. In addition, in the event of a stockholder’s death or disability, any repurchases of shares made in connection with a stockholder’s death or disability may be included within the overall limitation imposed on tender offers during the relevant redemption period, which provides that we may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock we are able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period.

Distributions

Our board of directors has authorized, and we have declared, cash distributions payable on a monthly basis to stockholders of record on each day since we commenced operations. Since November 2013, the distribution rate has been $0.002378082 per day, which is equivalent to $0.868 per annum, per share of common stock (or an annualized rate for distributions declared of 7.78% based on our last public offering price of $11.15 per share). In March 2016, our board of directors ratified the existing distribution amount equivalent to $0.868 per annum, and, for calendar year 2016, affirmed a change to the daily distribution amount to $0.002371585 per day per share of common stock, effective January 1, 2016, to accurately reflect that 2016 is a leap year.

The amount of each such distribution will be subject to the discretion of our board of directors and applicable legal restrictions related to the payment of distributions. We will calculate each stockholder’s specific distribution amount for the month using record and declaration dates and accrue distributions on the date we accept a subscription for shares of our common stock. The distributions are payable by the 5th day following each month end to stockholders of record at the close of business each day during the prior month.

From time to time, we may also pay interim distributions at the discretion of our board of directors. Our distributions may exceed our earnings, especially during the period before we have substantially invested the proceeds from our IPO. As a result, a portion of the distributions we make may represent a return of capital for tax purposes.

The table below shows the components of the distributions we have declared and/or paid during the three months ended March 31, 2016 and March 31, 2015. As of March 31, 2016, we had $13.1 million of distributions accrued and unpaid.



	For the Three Months Ended March 31,		For the Three Months Ended March 31,
	2016		2015
Distributions declared	$	38,649	$	34,663
Distributions paid	$	38,781	$	34,086
Portion of distributions paid in cash	$	23,160	$	17,319
Portion of distributions paid in DRIP shares	$	15,621	$	16,767

We may fund our cash distributions to stockholders from any sources of funds available to us including expense payments from our Adviser that are subject to reimbursement to it as well as offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets and non-capital gains proceeds from the sale of assets. We have not established limits on the amount of funds we may use from available sources to make distributions. Prior to June 30, 2012, a substantial portion of our distributions resulted from Expense Support Payments made by our Adviser that are subject to reimbursement by us within three years from the date such payment obligations were incurred. The purpose of this arrangement could be to avoid such distributions being characterized as returns of capital for GAAP or tax purposes. Despite this, we may still have distributions which could be characterized as a return of capital for tax purposes. You should understand that any such distributions were not based on our investment performance and can only be sustained if we achieve positive investment performance in future periods and/or our Adviser continues to make such reimbursements. You should also understand that our future reimbursements of such Expense Support Payments will reduce the distributions that you would otherwise receive. There can be no assurance that we will achieve the performance necessary to sustain our distributions or that we will be able to pay distributions at all. The Adviser has no obligation to make Expense Support Payments in future periods. No Expense Support Payments were made by our Adviser during the three months ended March 31, 2016 or the three months ended March 31, 2015.

The following table sets forth the distributions made during the three months ended March 31, 2016 and 2015 (dollars in thousands):



	For the Three Months Ended March 31,		For the Three Months Ended March 31,
	2016		2015
Monthly distributions	$	38,649	$	34,663
Total distributions	$	38,649	$	34,663

Election as a RIC

We have elected to be treated as a RIC under Subchapter M of the Code commencing with our taxable year ended December, 31 2011, and intend to maintain our qualification as a RIC thereafter. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any income that we distribute to our stockholders from our tax earnings and profits. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gain over realized net long-term capital loss, or the annual distribution requirement. Even if we qualify as a RIC, we generally will be subject to corporate-level U.S. federal income tax on our undistributed taxable income and could be subject to U.S federal excise, state, local and foreign taxes. We may be subject to a 4% U.S. Federal excise tax.

Inflation

The impact of inflation on our portfolio depends on the type of securities we hold. When inflation occurs, the value of our equity securities may fall in the short term. However in the long term, a company’s revenue and earnings and, therefore, the value of the equity investment, should at least increase at the same pace as inflation. The effect of inflation on debt securities is more immediate and direct as inflation may decrease the value of fixed rate debt securities. However, not all debt securities are affected equally, the longer the term of the debt security, the more volatile the value of the investment. The process through which we will value the investments in our portfolio on a quarterly basis, market quotations and our multi-step valuation process as described in our significant accounting policies, will take the effect of inflation into account.

Related-Party Transactions and Agreements

We have entered into agreements with affiliates of our Adviser, whereby we pay certain fees or reimbursements to our Adviser or its affiliates in connection with asset and service fees, reimbursement of operating costs and offering related costs. See Note 4 - Related Party Transactions and Arrangements - for a discussion of the various related-party transactions,

agreements and fees.

Contractual Obligations

The following table shows our payment obligations for repayment of debt and other contractual obligations at March 31, 2016 (dollars in thousands):



			Payment Due by Period
	Total		Less than 1 year		1 - 3 years		3- 5 years		More than 5 years
Wells Fargo Credit Facility ⁽¹⁾	$	283,087	$	—	$	—	$	283,087	$	—
Deutsche Bank Credit Facility ⁽²⁾	60,000		60,000		—		—		—
Citi Credit Facility ⁽³⁾	270,625		—		270,625		—		—
UBS Credit Facility ⁽⁴⁾	210,000		—		210,000		—		—
Unsecured Notes ⁽⁵⁾	98,605		—		—		98,605		—
Total contractual obligations	$	922,317	$	60,000	$	480,625	$	381,692	$	—

______________


⁽¹⁾	As of March 31, 2016, we had $116.9 million of unused borrowing capacity under the Wells Fargo Credit Facility, subject to borrowing base limits.


⁽²⁾	As of March 31, 2016, we had no unused borrowing capacity under the Deutsche Bank Credit Facility, subject to borrowing base limits.


⁽³⁾	As of March 31, 2016, we had $129.4 million of unused borrowing capacity under the Citi Credit Facility, subject to borrowing base limits.


⁽⁴⁾	As of March 31, 2016, we had no unused borrowing capacity under the UBS Credit Facility, subject to borrowing base limits.


⁽⁵⁾	As of March 31, 2016, we had no unused borrowing capacity under the Unsecured Notes.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Commitments

In the ordinary course of business, the Company may enter into future funding commitments. As of March 31, 2016, the Company had unfunded commitments on delayed draw term loans of $50.5 million, unfunded commitments on revolver term loans of $23.6 million and unfunded equity commitments of $11.7 million. As of December 31, 2015, the Company had unfunded commitments on delayed draw term loans of $48.7 million, unfunded commitments on revolver term loans of $18.9 million and unfunded equity commitments of $11.8 million. The unfunded commitments are disclosed in the Company's Condensed Consolidated Schedule of Investments. The Company maintains sufficient cash on hand and available borrowings to fund such unfunded commitments.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to interest rate fluctuations. Many factors including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control contribute to interest rate risk. To meet our short and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes in earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars and treasury lock agreements, subject to the requirements of the 1940 Act, in order to mitigate our interest rate risk with respect to various debt instruments. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates. During the periods covered by this report, we did not engage in interest rate hedging activities. We would not hold or issue these derivative contracts for trading or speculative purposes. We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.

As of March 31, 2016, our debt included variable-rate debt, bearing a weighted average interest rate of LIBOR plus 2.57% and fixed rate debt, bearing an interest rate of 6.00% with a total carrying value of $922.3 million. The following table quantifies the potential changes in interest income net of interest expense should interest rates increase by 100 or 200 basis points or decrease by 25 basis points assuming that our current statement of assets and liabilities was to remain constant and no actions were taken to alter our existing interest rate sensitivity.



Change in Interest Rates	Estimated Percentage Change in Interest Income net of Interest Expense
(-) 25 Basis Points	0.75	%
Base Interest Rate	—	%
(+) 100 Basis Points	0.17	%
(+) 200 Basis Points	2.58	%

Because we may borrow money to make investments, our net investment income may be dependent on the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of increasing interest rates, our cost of funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were (a) designed to ensure that the information we are required to disclose in our reports under the Exchange Act is recorded, processed and reported in an accurate manner and on a timely basis and the information that we are required to disclose in our Exchange Act reports is accumulated and communicated to management to permit timely decisions with respect to required disclosure and (b) operating in an effective manner.

Change in Internal Control Over Financial Reporting

No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended March 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

As of March 31, 2016, neither we nor our Adviser are defendants in any material pending legal proceeding, and no such material proceedings are known to be contemplated. However, from time to time, we may be party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under the contracts with our portfolio companies. Third parties may also seek to impose liability on us in connection with the activities of our portfolio companies.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I., “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2015.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the three months ended March 31, 2016 (and are numbered in accordance with Item 601 of Regulation S-K).



Exhibit No.	Description

3.1	Second Articles of Amendment and Restatement of the Registrant (previously filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed on August 13, 2013 and herein incorporated by reference).

3.2	Bylaws (previously filed as Exhibit (b) to the Company’s Pre-Effective Amendment No. 1 to its Registration Statement on Form N-2/A (File No. 333-166636) (the "Prior Registration Statement") filed on November 24, 2010 and herein incorporated by reference).

10.1	Second Amended and Restated Investment Advisory and Management Services Agreement dated June 5, 2013 by and between the Company and the Adviser (previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed on August 13, 2013 and herein incorporated by reference).

10.2	Administration Agreement, dated as of February 9, 2016, between the Company and ARC Advisory Services, LLC (previously filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2015 filed on March 9, 2016 and herein incorporated by reference).

10.3	Amended and Restated Fund Administration Servicing Agreement by and between the Company and U.S. Bancorp Fund Services, LLC (previously filed as Exhibit 10.1 to the Company’s Current Report filed on April 17, 2015 and herein incorporated by reference).

10.4	Amended and Restated Fund Accounting Servicing Agreement by and between the Company and U.S. Bancorp Fund Services, LLC (previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on April 17, 2015 and herein incorporated by reference).

10.5	Distribution Reinvestment Plan (previously filed as Exhibit E to the Company's Pre-Effective Amendment No. 1 to its Prior Registration Statement filed on November 24, 2010 and herein incorporated by reference).

10.6	Custody Agreement dated August 13, 2012 by and between the Company and U.S. Bank National Association (previously filed as Exhibit 10.11 to the Company's Current Report on Form 8-K filed on August 17, 2012 and herein incorporated by reference).

10.7	Expense Support Agreement dated November 9, 2011 by and between the Company and Adviser (previously filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed on November 14, 2011 and herein incorporated by reference).

10.8	Loan and Servicing Agreement, together with Exhibits thereto, among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC, Wells Fargo Bank, National Association, Lenders and Lenders Agents from time to time party hereto and U.S. Bank National Association, each dated as of July 24, 2012 (previously filed as Exhibit 10.15 to the Company's Current Report on Form 8-K filed on August 7, 2012 and herein incorporated by reference).

10.9	Purchase and Sale Agreement by and between the Company and BDCA Funding I, LLC, dated as of July 24, 2012 (previously filed as Exhibit 10.16 to the Company's Current Report on Form 8-K filed on August 7, 2012 and herein incorporated by reference).

10.10	Collection Account Agreement by and among U.S. Bank National Association, Wells Fargo Securities, LLC, BDCA Funding I, LLC and the Company, dated as of July 24, 2012 (previously filed as Exhibit 10.17 to the Company's Current Report on Form 8-K filed on August 7, 2012 and herein incorporated by reference).

10.11	Amendment No. 1 to Loan and Servicing Agreement, among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, dated as of January 14, 2013 (previously filed as Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed on May 15, 2013 and herein incorporated by reference).

10.12	Amendment No. 2 to Loan and Servicing Agreement, among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, dated as of April 26, 2013 (previously filed as Exhibit 10.17 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed on May 15, 2013 and herein incorporated by reference).



Exhibit No.	Description
10.13	Amendment No. 1 to Purchase and Sale Agreement, entered into by and between BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association and U.S. Bank National Association, dated as of April 26, 2013 (previously filed as Exhibit 10.18 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed on May 15, 2013 and herein incorporated by reference).

10.14	Amendment No. 3 to Loan and Servicing Agreement, among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, dated as of September 9, 2013 (previously filed as Exhibit 10.20 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 filed on November 13, 2013 and herein incorporated by reference).

10.15	Confirmation Letter Agreement by and between 405 TRS I, LLC and Citibank, N.A., amended and restated as of October 15, 2013 (previously filed as Exhibit 10.21 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 filed on November 13, 2013 and herein incorporated by reference).

10.16	Loan Financing and Servicing Agreement dated February 21, 2014 between BDCA 2L Funding I, LLC, as Borrower; Business Development Corporation of America, as Equityholder and as Servicer; the Lenders From Time to Time Parties Hereto; Deutsche Bank AG, New York Branch, as Administrative Agent, the Other Agents Party Hereto; and U.S. Bank National Association as Collateral Agent and as Collateral Custodian (previously filed as Exhibit 10.22 to the Company's Annual Report on form 10-K for the year ended December 31, 2013 filed on March 19, 2014 and herein incorporated by reference).

10.17	Sale and Contribution Agreement dated February 21, 2014 between Business Development Corporation of America, as Seller and BDCA 2L Funding I, LLC, as Purchaser (previously filed as Exhibit 10.23 to the Company's Annual Report on Form 10-K filed on March 19, 2014 and herein incorporated by reference).

10.18	Securities Account Control Agreement dated February 21, 2014 between BDCA 2L Funding I, LLC, as Pledgor, U.S. Bank National Association, as Secured Party; and U.S. Bank National Association, as Securities Intermediary (previously filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K filed on March 19, 2014 and herein incorporated by reference).

10.19	Confirmation Letter Agreement by and between 405 TRS I, LLC and Citibank, N.A., amended and restated as of May 6, 2014 (previously filed as Exhibit 10.25 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 filed on May 15, 2014 and herein incorporated by reference).

10.20	Credit and Security Agreement, dated as of June 27, 2014, by and between BDCA-CB Funding LLC, the financial institutions and other lenders from time to time party thereto, Citibank, N.A., as administrative agent, U.S. Bank National Association, as collateral agent and custodian, and Business Development Corporation of America, as collateral manager (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).

10.21	Account Control Agreement, dated as of June 27, 2014, by and between BDCA-CB Funding, LLC, as pledger, U.S. Bank National Association as collateral agent and securities intermediary(previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).

10.22	Collateral Administration Agreement, dated as of June 27, 2014, between BDCA-CB Funding, LLC, as borrower, Business Development Corporation of America, as collateral manager, Citibank, N.A., as administrative agent, and U.S. Bank National Association, as collateral administrator (previously filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).

10.23	Sale and Contribution Agreement, dated as of June 27, 2014, between Business Development Corporation of America, as seller, and BDCA-CB Funding, LLC, as purchaser (previously filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).

10.24	Agreement and Plan of Merger, dated as of June 27, 2014, by and among BDCA-CB Funding LLC, 405 Loan Funding LLC and Citibank, N.A. (previously filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).

10.25	Termination Acknowledgment (TRS), dated as of June 27, 2014, by and between BDCA-CB Funding LLC and Citibank, N.A., as counterparty, secured party and bank (previously filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).

10.26	Amendment No. 4 to Loan and Servicing Agreement, dated as of June 30, 2014 (as amended), by and among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, and U.S. Bank National Association (previously filed as Exhibit 10.29 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed on August 14, 2014 and herein incorporated by reference).



Exhibit No.	Description
10.27	Master Loan Purchase Agreement, dated as of April 7, 2015 between BDCA Helvetica Funding, Ltd. and Business Development Corporation of America (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).

10.28	Indenture, dated as of April 7, 2015, by and between BDCA Helvetica Funding, Ltd. and U.S. Bank National Association as trustee (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).

10.29	Subscription Agreement, dated as of April 7, 2015, between BDCA Helvetica Funding, Ltd., Business Development Corporation of America (previously filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).

10.30	Rule 144A Global Class A Notes and Regulation S Global Class A Notes (included in Exhibit A to Exhibit 10.2 to the Company’s Current Report on Form 8-K previously filed on April 7, 2015 and herein incorporated by reference).

10.31	TBMA/ISMA 2000 Global Master Repurchase Agreement (2000 version), by and between UBS AG, London Branch and Business Development Corporation of America, together with the related Annex and Confirmation thereto, each dated as of March 31, 2015 (previously filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).

10.32	Collateral Management Agreement, dated as of April 7, 2015, between BDCA Helvetica Funding, Ltd. and Business Development Corporation of America (previously filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).

10.33	Collateral Administration Agreement, dated as of April 7, 2015, between BDCA Helvetica Funding, Ltd., Business Development Corporation of America and U.S. Bank National Association as administrator (previously filed as Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).

10.34	Account Control Agreement dated as of April 7, 2015 between BDCA Helvetica Funding, Ltd. and U.S. Bank National Association as trustee and custodian (previously filed as Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).

10.35	Equity Contribution Agreement, dated as of April 7, 2015, between BDCA Helvetica Funding, Ltd., Business Development Corporation of America and U.S. Bank National Association as trustee (previously filed as Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).

10.36	Liquidation Agent Appointment Letter, dated as of April 7, 2015, between BDCA Helvetica Funding, Ltd., Business Development Corporation of America and UBS AG, London Branch (previously filed as Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).

10.37	Form of Indemnification Agreement (previously filed as exhibit 10.40 to the Company's Annual Report on Form 10-K for the year ended December 31, 2015 filed on May 4, 2015 and herein incorporated by reference).

11	Computation of Per Share Earnings (included in the notes to the unaudited condensed consolidated financial statements contained in this report).

31.1	Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2	Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32	Written statement of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 12th day of May 2016.




		BUSINESS DEVELOPMENT CORPORATION OF AMERICA
		By: /s/ Peter M. Budko Name: Peter M. Budko Title: Chief Executive Officer and Chairman of the Board of Directors

* * * * *

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:




Signature	Title	Date

/s/ Peter M. Budko Peter M. Budko	Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)	May 12, 2016
/s/ Corinne D. Pankovcin Corinne D. Pankovcin	Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)	May 12, 2016