UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 September 30, 2017

OR

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.)
9 West 57th Street, 49th Floor, Suite 4920 New York, New York		10019
(Address of Principal Executive Office)		(Zip Code)

(212) 588-6770

(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, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth 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
		Emerging growth company o

(Do not check if a smaller reporting company)

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

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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 November 8, 2017 was 179,318,643.

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements	1
Consolidated Statements of Assets and Liabilities as of September 30, 2017 (Unaudited) and December 31, 2016	1
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)	2
Consolidated Statements of Changes in Net Assets for the Nine Months Ended September 30, 2017 and 2016 (Unaudited)	4
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (Unaudited)	5
Consolidated Schedules of Investments as of September 30, 2017 (Unaudited) and December 31, 2016	6
Notes to Consolidated Financial Statements (Unaudited)	28
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	60
Item 3. Quantitative and Qualitative Disclosures About Market Risk	72
Item 4. Controls and Procedures	73
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	73
Item 1A. Risk Factors	73
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	76
Item 3. Defaults Upon Senior Securities	76
Item 4. Mine Safety Disclosures	76
Item 5. Other Information	76
Item 6. Exhibits	77
Signatures	78

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PART I - FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

 

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(dollars in thousands except share and per share data)

	September 30,				December 31,
	2017				2016
ASSETS	(Unaudited)
Investments, at fair value:
Control Investments, at fair value (amortized cost of $261,081 and $271,711, respectively)	$	241,382			$	254,638
Affiliate Investments, at fair value (amortized cost of $344,499 and $383,894, respectively)	313,545				354,238
Non-affiliate Investments, at fair value (amortized cost of $1,966,048 and $1,859,933, respectively)	1,903,257				1,785,207
Investments, at fair value (amortized cost of $2,571,628 and $2,515,538, respectively)	2,458,184				2,394,083
Cash and cash equivalents	90,341				189,270
Interest and dividends receivable	19,425				28,608
Receivable for unsettled trades	32,566				4,293
Prepaid expenses and other assets	883				52
Total assets	$	2,601,399			$	2,616,306
LIABILITIES
Debt (net of deferred financing costs of $7,785 and $5,013, respectively)	$	1,006,621			$	910,484
Stockholder distributions payable	9,537				13,516
Management fees payable	9,907				9,571
Incentive fee on income payable	3,834				3,137
Accounts payable and accrued expenses	10,991				8,454
Payable for unsettled trades	63,708				74,020
Interest and debt fees payable	9,705				9,606
Payable for common stock repurchases	55				57,651
Directors' fees payable	120				133
Total liabilities	1,114,478				1,086,572
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, 178,476,800 and 177,120,791 shares issued and outstanding, respectively	178				177
Additional paid in capital	1,741,586				1,729,865
Accumulated under distributed net investment income	22,467				48,944
Accumulated over distributed net realized gains	(164,839		)		(129,161		)
Net unrealized depreciation, net of deferred taxes	(115,855		)		(122,912		)
Total net assets attributable to Business Development Corporation of America	1,483,537				1,526,913
Net assets attributable to non-controlling interest	3,384				2,821
Total net assets	1,486,921				1,529,734
Total liabilities and net assets	$	2,601,399			$	2,616,306
Net asset value per share attributable to Business Development Corporation of America	$	8.31			$	8.62

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

1

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands except share and per share data)

(Unaudited)

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2017				2016				2017				2016
Investment income:
Interest from investments
Control investments		$	6,007			$	6,250			$	18,209			$	20,853
Affiliate investments		5,262				14,299				20,587				31,704
Non-affiliate investments		40,368				37,303				117,647				115,086
Total interest from investments		51,637				57,852				156,443				167,643
Interest from cash and cash equivalents		82				75				272				174
Total interest income		51,719				57,927				156,715				167,817
Other income		3,126				4,312				11,061				8,912
Total investment income		54,845				62,239				167,776				176,729
Operating expenses:
Management fees		9,907				9,544				29,136				28,549
Incentive fee on income		3,834				7,890				15,149				14,769
Interest and debt fees		11,448				9,168				32,108				27,944
Professional fees		1,249				1,745				4,073				4,978
Other general and administrative		1,334				627				4,679				5,188
Administrative services		203				203				608				656
Insurance		2				55				9				165
Directors' fees		265				302				675				575
Total expenses		28,242				29,534				86,437				82,824
Income tax expense, including excise tax		79				1,140				1,349				1,140
Net investment (income) loss attributable to non-controlling interests		(6		)		5				—				15
Net investment income		26,530				31,560				79,990				92,750
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from investments
Control investments		—				—				—				—
Affiliate investments		(2,809		)		—				(20,031		)		180
Non-affiliate investments		2,113				1,289				(15,647		)		3,513
Total net realized gain (loss) from investments		(696		)		1,289				(35,678		)		3,693
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
Control investments		2,178				(20,373		)		(3,017		)		(22,369		)
Affiliate investments		3,214				6,231				15,227				22,109
Non-affiliate investments		(13,680		)		(26,066		)		(4,590		)		(48,994		)
Total net change in unrealized appreciation (depreciation) on investments, net of deferred taxes		(8,288		)		(40,208		)		7,620				(49,254		)
Net change in unrealized (appreciation) depreciation attributable to non-controlling interests		(258		)		612				(563		)		1,296

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

2

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands except share and per share data)

(Unaudited)

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2017				2016				2017				2016
Net realized and unrealized loss on investments		(9,242		)		(38,307		)		(28,621		)		(44,265		)
Net increase (decrease) in net assets resulting from operations		$	17,288			$	(6,747	)		$	51,369			$	48,485
Per share information - basic and diluted
Net investment income		$	0.15			$	0.18			$	0.45			$	0.52
Net increase (decrease) in net assets resulting from operations		$	0.10			$	(0.04	)		$	0.29			$	0.27
Weighted average shares outstanding		179,311,957				180,277,765				179,140,235				179,345,395

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

3

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(dollars in thousands except share and per share data)

(Unaudited)

	For the Nine Months Ended September 30,
	2017				2016
Operations:
Net investment income	$	79,990			$	92,750
Net realized gain (loss) from investments	(35,678		)		3,693
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes	7,620				(49,254		)
Net change in unrealized (appreciation) depreciation attributable to non-controlling interests	(563		)		1,296
Net increase in net assets resulting from operations	51,369				48,485
Stockholder distributions:
Distributions	(106,467		)		(116,558		)
Net decrease in net assets from stockholder distributions	(106,467		)		(116,558		)
Capital share transactions:
Reinvestment of stockholder distributions	41,961				42,951
Repurchases of common stock	(30,239		)		(28,195		)
Net increase in net assets from capital share transactions	11,722				14,756
Total decrease in net assets, before non-controlling interest	(43,376		)		(53,317		)
Increase (decrease) in non-controlling interest	563				(1,283		)
Total decrease in net assets	(42,813		)		(54,600		)
Net assets at beginning of period	1,529,734				1,610,485
Net assets at end of period	$	1,486,921			$	1,555,885
Net asset value per common share attributable to Business Development Corporation of America	$	8.31			$	8.58
Common shares outstanding at end of period	178,476,800				180,904,847
Accumulated under (over) distributed net investment income	$	22,467			$	(15,436	)
Accumulated under (over) distributed net realized gains	$	(164,839	)		$	288

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

4

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)

	For the Nine Months Ended September 30,
	2017				2016
Operating activities:
Net increase in net assets resulting from operations	$	51,369			$	48,485
Adjustments to reconcile net increase in net assets from operations to net cash (used in) provided by operating activities:
Payment-in-kind interest income	(4,924		)		(10,883		)
Net accretion of discount on investments	(6,243		)		(5,158		)
Amortization of deferred financing costs	1,816				2,267
Amortization of discount on unsecured notes	236				237
Sales and repayments of investments	706,656				462,359
Purchases of investments	(787,257		)		(376,238		)
Net realized (gain) loss from investments	35,678				(3,693		)
Net unrealized (appreciation) depreciation on investments, gross of deferred taxes	(8,011		)		48,357
(Increase) decrease in operating assets:
Interest and dividends receivable	9,183				(6,290		)
Prepaid expenses and other assets	(831		)		2,930
Receivable for unsettled trades	(28,273		)		(15,072		)
Increase (decrease) in operating liabilities:
Payable for unsettled trades	(10,312		)		3,217
Management fees payable	336				(118		)
Incentive fee on income payable	697				7,890
Interest and debt fees payable	99				(1,425		)
Accounts payable and accrued expenses	2,537				875
Directors' fees payable	(13		)		189
Net cash (used in) provided by operating activities	(37,257		)		157,929
Financing activities:
Repurchases of common stock	(30,239		)		(28,195		)
Proceeds from debt	128,673				135,513
Payments on debt	(30,000		)		(122,570		)
Payments for common stock repurchases	(57,596		)		(924		)
Payments of financing costs	(4,588		)		(265		)
Proceeds from affiliate	—				7
Stockholder distributions	(68,485		)		(73,948		)
Increase (decrease) in non-controlling interest	563				(1,283		)
Net cash used in financing activities	(61,672		)		(91,665		)
Net increase (decrease) in cash and cash equivalents	(98,929		)		66,264
Cash and cash equivalents, beginning of period	189,270				150,412
Cash and cash equivalents, end of period	$	90,341			$	216,676
Supplemental information:
Interest paid during the period	$	29,607			$	26,704
Taxes, including excise tax, paid during the period	$	1,100			$	1,294
Distributions reinvested	$	41,961			$	42,951

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

5

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Senior Secured First Lien Debt - 115.6% (b)
Abaco Systems Holding Corp. (i)		Business Services		L+6.00% (7.30%), 12/7/2021		$	23,758			$	23,355			$	23,343			1.6	%
Ability Networks Inc. (j)		Health Care Providers & Services		L+5.00% (6.24%), 5/14/2021		13,607				13,540				13,607				0.9	%
Adams Publishing Group, LLC (f) (i)		Media		L+7.00% (8.33%), 11/3/2020		17,143				16,981				17,143				1.1	%
Aleris International, Inc. (x)		Metals & Mining		9.50%, 4/1/2021		2,882				3,057				3,064				0.2	%
Alvogen Pharma US, Inc. (j)		Health Care		L+5.00% (6.24%), 4/2/2022		14,214				14,100				14,219				1.0	%
AMI Entertainment Network, LLC (f) (j)		Hotels, Restaurants & Leisure		L+6.00% (7.31%), 7/21/2022		14,724				14,442				14,430				1.0	%
Amports, Inc. (m)		Transportation Infrastructure		L+5.00% (6.33%), 5/19/2020		14,876				14,827				14,876				1.0	%
Amteck, LLC (f) (i)		Commercial Services & Supplies		L+7.50% (8.84%), 7/2/2020		22,000				21,789				21,780				1.5	%
Answers Corporation (p)		Technology		L+5.00% (6.24%), 4/15/2021		3,014				2,948				2,924				0.2	%
AP Gaming I, LLC (i) (j)		Gaming/Lodging		L+5.50% (6.74%), 2/15/2024		29,426				29,356				29,426				2.0	%
APCO Holdings (i)		Diversified Consumer Services		L+6.00% (7.24%), 1/29/2022		8,555				8,364				8,383				0.6	%
Applied Merchant Systems West Coast, Inc. (m)		Diversified Financial Services		L+11.50% (12.80%), 10/26/2020		19,109				18,869				18,058				1.2	%
Applied Merchant Systems West Coast, Inc. (m)		Diversified Financial Services		L+11.50% (12.80%), 10/26/2020		6,500				6,419				6,143				0.4	%
Ascensus, Inc. (j)		Technology		L+4.00% (5.33%), 12/3/2022		19,687				18,885				19,687				1.3	%
Avatar Purchaser, Inc. (m)		Business Services		L+3.75% (5.08%), 11/9/2025		11,775				11,716				11,539				0.8	%
Avaya, Inc. Term Loan B-3 (t)		Communications Equipment		L+4.50% (5.82%), 1/26/2018		9,685				8,784				8,136				0.5	%
Avaya, Inc. Term Loan B-6 (t)		Communications Equipment		L+5.50% (6.81%), 3/31/2018		8,457				8,461				7,109				0.5	%
Avaya, Inc. Term Loan B-7 (t)		Communications Equipment		L+5.25% (6.56%), 5/29/2020		9,793				9,695				8,275				0.6	%
Basho Technologies, Inc. (d) (l) (t)		Software		17.00%, 3/9/2018		7,720				7,542				—				—	%
Basho Technologies, Inc. (d) (l) (t)		Software		17.00%, 11/15/2017		2,550				2,550				—				—	%
BCP Raptor, LLC (j)		Energy Equipment & Services		L+4.25% (5.52%), 6/24/2024		20,036				19,843				20,167				1.4	%
BCP Renaissance, LLC (j)		Energy Equipment & Services		L+4.00% (5.33%), 11/8/2024		8,472				8,430				8,559				0.6	%
BDS Solutions Group, LLC (i) (m)		Business Services		L+8.75% (10.09%), 6/1/2021		33,695				33,135				33,695				2.3	%
BDS Solutions Group, LLC (i) (m)		Business Services		L+8.75% (10.09%), 6/1/2021		2,944				2,893				2,944				0.2	%
Beaver-Visitec International Holdings, Inc.,		Health Care		L+5.00% (6.33%), 8/21/2023		6,596				6,596				6,596				0.4	%
Berner Food & Beverage LLC (f) (i)		Food Products		L+7.00% (8.33%), 3/16/2022		18,853				18,517				18,476				1.2	%
Blount International, Inc. (j)		Electronic Equipment, Instruments & Components		L+5.00% (6.24%), 4/12/2023		12,375				12,077				12,375				0.8	%

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

6

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Broder Bros, Co. (m)		Distributors		L+5.75% (7.05%), 6/3/2021		$	6,718			$	6,628			$	6,718			0.5	%
Broder Bros, Co. (m)		Distributors		L+12.25% (13.55%), 6/3/2021		6,979				6,885				6,979				0.5	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (l) (o) (t)		Food Products		L+12.50% (13.84%), 4/28/2019		17,055				16,406				3,411				0.3	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (l) (o) (t)		Food Products		L+12.50% (13.84%), 4/28/2019		39,415				33,647				7,883				0.5	%
Catapult Learning, LLC (i) (m)		Diversified Consumer Services		L+6.50% (7.81%), 7/16/2020		27,500				27,192				26,400				1.8	%
CCW, LLC (f) (i)		Hotels, Restaurants & Leisure		L+7.00% (8.25%), 3/21/2021		25,650				25,397				25,650				1.7	%
Central Security Group, Inc. (i) (j)		Commercial Services & Supplies		L+5.63% (6.86%), 10/6/2021		25,359				25,044				25,359				1.7	%
Chicken Soup for the Soul Publishing, LLC		Media		L+6.25% (7.50%), 1/8/2019		27,536				27,448				25,471				1.7	%
Clover Technologies Group, LLC (j)		Commercial Services & Supplies		L+4.50% (5.74%), 5/8/2020		13,584				13,526				12,225				0.8	%
Community Care Health Network, LLC (j)		Health Care		L+5.50% (6.74%), 10/19/2021		2,391				2,400				2,370				0.2	%
Contura Energy Inc. (j)		Energy Equipment & Services		L+5.00% (6.28%), 3/18/2024		7,511				7,441				7,389				0.5	%
ConvergeOne Holdings Corp. (j)		Technology		L+4.75% (6.09%), 6/20/2024		16,523				16,364				16,399				1.1	%
Covenant Surgical Partners, Inc. (x)		Health Care		8.75%, 8/1/2019		10,000				9,704				10,328				0.7	%
Covenant Surgical Partners, Inc. (x)		Health Care		8.75%, 8/1/2019		392				386				405				—	%
Cvent, Inc. (j)		Internet Software & Services		L+4.00% (5.24%), 11/29/2023		9,950				9,861				9,950				0.7	%
Danish CRJ LTD. (a) (p)		Aerospace & Defense		13.50%, 12/23/2028		20				—				20				—	%
DigiCert, Inc (j)		Internet Software & Services		L+5.00% (6.24%), 11/9/2024		10,772				10,718				10,718				0.7	%
Eagle Rx, LLC (i)		Health Care Providers & Services		L+4.00% (5.49%), 8/15/2019		14,409				14,381				14,409				1.0	%
ERG Holding Company (f) (i) (m)		Health Care Providers & Services		L+6.75% (8.09%), 4/4/2019		34,318				34,014				33,632				2.2	%
Everi Payments, Inc. (j)		Hotels, Restaurants & Leisure		L+4.50% (5.74%), 5/9/2024		10,681				10,665				10,772				0.7	%
Excelitas Technologies Corp. (j)		Electronic Equipment, Instruments & Components		L+5.00% (6.34%), 11/2/2020		13,642				13,604				13,642				0.9	%
Genesys Telecommunications Laboratories, Inc. (j)		Diversified Telecommunication Services		L+3.75% (5.08%), 12/1/2023		24,813				24,483				24,972				1.7	%
Greenwave Holdings, Inc. (l)		Internet Software & Services		13.00%, 7/8/2019		16,054				15,978				16,054				1.1	%
GTCR Valor Companies, Inc. (j)		Internet Software & Services		L+4.25% (5.58%), 6/16/2023		10,000				9,975				10,121				0.7	%
HC Group Holdings III, Inc. (j)		Health Care		L+5.00% (6.32%), 4/7/2022		14,819				14,591				14,798				1.0	%
Hexion Inc. (x)		Chemicals		10.38%, 2/1/2022		920				920				881				0.1	%
Icynene US Acquisition Corp. (f) (i) (m)		Building Products		L+6.25% (7.56%), 11/4/2020		20,292				20,082				19,480				1.3	%

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

7

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Ideal Tridon Holdings, Inc. (m)		Commercial Services & Supplies		L+6.50% (7.74%), 7/31/2023		$	23,977			$	23,511			$	23,497			1.6	%
Ideal Tridon Holdings, Inc. (f) (m)		Commercial Services & Supplies		L+6.50% (7.74%), 7/31/2022		787				734				771				0.1	%
ILC Dover LP (i) (l)		Aerospace & Defense		L+9.00% (10.24%), 3/20/2020		14,034				14,005				12,350				0.8	%
Indivior Finance S.A.R.L. (j)		Health Care		L+6.00% (7.32%), 12/19/2019		7,834				7,834				7,834				0.5	%
InMotion Entertainment Group, LLC (f) (i)		Specialty Retail		L+7.75% (9.05%), 10/1/2018		13,865				13,806				13,865				0.9	%
Internap Corporation (m)		Communications Equipment		L+7.00% (8.24%), 4/6/2022		8,228				8,116				8,290				0.6	%
IPC Corp. (j)		Diversified Telecommunication Services		L+4.50% (5.82%), 8/6/2021		7,121				7,006				6,801				0.5	%
Jackson Hewitt, Inc. (j)		Diversified Consumer Services		L+7.00% (8.31%), 7/30/2020		6,515				6,441				6,254				0.4	%
K2 Pure Solutions NoCal, L.P. (i)		Chemicals		L+6.00% (7.24%), 2/19/2021		6,500				6,441				6,500				0.4	%
Kahala Ireland OpCo Designated Activity Company (a) (l) (o)		Aerospace & Defense		L+8.00% (13.00%), 12/23/2028		141,549				141,549				141,549				9.5	%
Kissner Milling Co. Ltd. (x)		Chemicals		8.38%, 12/1/2022		21,199				21,544				21,614				1.5	%
LenderLive Services, LLC		Business Services		L+12.00% (13.23%), 8/11/2020		10,000				9,857				9,750				0.7	%
Lightsquared LP (l)		Diversified Telecommunications Services		L+8.75% (10.07%), 6/15/2020		11,034				10,275				10,323				0.7	%
Lionbridge Technologies, Inc. (i)		Business Services		L+5.50% (6.74%), 2/28/2024		13,799				13,735				13,734				0.9	%
MCS Acquisition Corp. (j)		Professional Services		L+4.75% (6.06%), 5/18/2024		12,569				12,509				12,506				0.8	%
Medical Depot Holdings, Inc. (i)		Health Care		L+5.50% (6.83%), 1/3/2023		19,898				18,315				18,457				1.2	%
Metal Services LLC (j)		Metals & Mining		L+7.50% (8.83%), 6/30/2019		10,834				10,740				10,834				0.7	%
Midwest Can Company, LLC (f) (i)		Energy Equipment & Services		L+6.75% (7.99%), 1/26/2022		5,079				5,003				5,000				0.3	%
MMM Holdings, LLC (d) (j) (l)		Health Care		L+8.75% (10.25%), 6/28/2019		7,028				7,028				6,888				0.5	%
Monitronics International, Inc. (j)		Diversified Consumer Services		L+5.50% (6.83%), 9/30/2022		2,970				2,957				2,944				0.2	%
Montreign Operating Company, LLC (m)		Hotels, Restaurants & Leisure		L+8.25% (9.49%), 1/24/2023		27,161				26,711				27,490				1.8	%
Mood Media Corporation (m)		Business Services		L+7.25% (8.58%), 6/28/2022		14,018				13,726				13,697				0.9	%
Motion Recruitment Partners, LLC (f) (i)		Professional Services		L+6.00% (7.24%), 2/13/2020		17,319				17,124				17,319				1.2	%
Motorsports Aftermarket Group, Inc.		Auto Components		L+4.00% (5.50%), 5/14/2021		26,079				24,928				11,475				0.8	%
MSO of Puerto Rico, LLC (d) (j) (l)		Health Care		L+8.75% (10.25%), 6/28/2019		5,110				5,109				5,007				0.3	%
Murray Energy Holdings Co. (j)		Energy Equipment & Services		L+7.25% (8.58%), 4/16/2020		14,683				14,067				13,429				0.9	%
National Technical Systems, Inc. (i)		Professional Services		L+6.25% (7.49%), 6/12/2021		16,469				16,369				15,646				1.1	%
New Star Metals Inc. (d) (l) (m)		Business Services		L+9.50% (11.00%), 12/22/2021		24,449				23,997				24,449				1.6	%

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

8

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
NexSteppe Inc. (f) (l) (t)		Chemicals		12.00%, 9/30/2018		$	751			$	750			$	751			0.1	%
NexSteppe Inc. (l) (t)		Chemicals		12.00%, 9/30/2018		11,637				10,453				5,004				0.3	%
Noosa Acquirer, Inc. (i) (m)		Food Products		L+5.25% (6.58%), 11/21/2020		25,000				24,803				25,000				1.7	%
NTM Acquisition Corp. (i)		Media		L+6.25% (7.52%), 6/7/2022		18,928				18,724				18,833				1.3	%
Optiv, Inc. (j)		Business Services		L+3.25% (4.56%), 2/1/2024		1,281				1,190				1,201				0.1	%
Orchid Underwriters Agency, LLC (f) (i)		Insurance Broker		L+5.00% (6.26%), 3/17/2022		19,900				19,723				19,900				1.3	%
ORG Chemical Holdings, LLC (i) (m)		Chemicals		L+5.75% (7.08%), 6/30/2022		27,892				27,363				27,357				1.8	%
ORG GC Holdings, LLC (i) m)		Business Services		L+6.25% (7.58%), 7/31/2022		25,680				25,307				25,294				1.7	%
Peabody Energy Corp. (j)		Metals & Mining		L+3.50% (4.74%), 3/31/2022		3,787				3,778				3,803				0.3	%
PeopLease Holdings, LLC (i)		Commercial Services & Supplies		L+9.00% (10.34%), 2/26/2021		20,000				19,862				15,000				1.0	%
PetVet Care Centers, LLC (i)		Business Services		L+6.00% (7.33%), 6/8/2023		19,503				19,338				19,435				1.3	%
PetVet Care Centers, LLC (f)		Business Services		L+6.00% (7.33%), 6/8/2023		2,975				2,975				2,964				0.2	%
PetVet Care Centers, LLC (f)		Business Services		L+6.00% (7.27%), 6/8/2023		461				461				461				—	%
PGX Holdings, Inc. (j)		Transportation Infrastructure		L+5.25% (6.49%), 9/29/2020		12,638				12,586				12,630				0.8	%
Premier Dental Services, Inc. (i) (j)		Health Care		L+5.25% (6.49%), 6/30/2023		28,774				28,497				28,917				1.9	%
Premier Global Services, Inc. (j)		Diversified Telecommunication Services		L+6.50% (7.78%), 12/8/2021		9,486				9,201				9,223				0.6	%
Pre-Paid Legal Services, Inc. (j)		Diversified Consumer Services		L+5.25% (6.50%), 7/1/2019		12,130				12,148				12,130				0.8	%
Pride Plating, Inc. (i)		Aerospace & Defense		L+5.50% (6.83%), 6/13/2019		8,494				8,465				8,325				0.6	%
PSKW, LLC (i)		Health Care Providers & Services		L+4.25% (5.58%), 11/25/2021		1,575				1,564				1,575				0.1	%
PSKW, LLC (m)		Health Care Providers & Services		L+8.29% (9.62%), 11/25/2021		17,750				17,504				17,750				1.2	%
PT Network, LLC (i)		Health Care		L+5.50% (9.75%), 11/30/2021		16,977				16,836				16,974				1.1	%
PT Network, LLC (f)		Health Care		L+5.50% (9.75%), 11/30/2021		1,555				1,555				1,555				0.1	%
PT Network, LLC (f)		Health Care		L+5.50% (9.75%), 11/30/2021		329				329				329				—	%
Pure Barre, LLC (f) (i) (m)		Hotels, Restaurants & Leisure		L+7.00% (8.24%), 6/11/2020		26,049				25,802				25,788				1.8	%
Pure Barre, LLC (f)		Hotels, Restaurants & Leisure		L+7.00% (8.24%), 6/11/2020		500				500				495				—	%
Resco Products, Inc. (i)		Metals & Mining		L+6.25% (7.49%), 3/7/2020		10,000				10,000				9,750				0.7	%
Sage Automotive Holdings, Inc. (j)		Auto Components		L+5.00% (6.24%), 11/8/2022		14,888				14,759				14,888				1.0	%
SHO Holding II Corporation (j)		Specialty Retail		L+5.00% (6.24%), 10/27/2022		9,795				9,723				9,746				0.7	%
Skillsoft Corp. (j)		Technology		L+4.75% (5.99%), 4/28/2021		12,829				12,107				12,111				0.8	%

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

9

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Squan Holding Corp. (p)		Diversified Telecommunication Services		L+4.50% (5.84%), 10/10/2019		$	17,168			$	14,491			$	13,563			0.9	%
SunGard Availability Services Capital, Inc. (j)		IT Services		L+5.00% (6.24%), 3/31/2019		6,860				6,838				6,722				0.5	%
Tax Defense Network, LLC (i) (l) (m) (t)		Diversified Consumer Services		L+13.00% (14.34%), 8/28/2019		28,772				26,532				7,637				0.5	%
Tillamook Country Smoker, LLC (f) (i)		Food Products		L+5.75% (7.07%), 5/19/2022		10,244				10,102				10,101				0.7	%
Tillamook Country Smoker, LLC (f) (i)		Food Products		L+5.75% (6.97%), 5/19/2022		202				202				199				—	%
Traverse Midstream Partners, LLC (j)		Energy Equipment & Services		L+4.00% (5.33%),11/9/2024		6,352				6,320				6,431				0.4	%
Trilogy International Partners, LLC (x)		Diversified Telecommunication Services		8.88%, 5/1/2022		14,875				14,806				15,470				1.0	%
Trojan Battery Company, LLC (j)		Auto Components		L+4.75% (6.08%), 6/12/2021		10,505				10,448				10,426				0.7	%
Turning Tech LLC (i)		Software		L+10.75% (12.09%), 6/30/2020		23,851				23,621				20,274				1.4	%
Twenty Eighty, Inc. (f) (l) (p)		Media		8.00%, 3/31/2020		6,182				4,283				4,637				0.3	%
Twenty Eighty, Inc. (f) (l) (p)		Media		L+8.00% (9.27%), 3/31/2020		2,889				2,364				2,831				0.2	%
Twenty Eighty, Inc. (f) (l) (p)		Media		9.00%, 3/31/2020		5,628				3,913				3,658				0.2	%
United Central Industrial Supply Company, LLC (i) (j)		Commercial Services & Supplies		L+7.25% (8.50%), 10/9/2018		8,526				8,498				7,674				0.5	%
VCVH Holding Corp. (i) (j)		Health Care		L+5.00% (6.34%), 6/1/2023		22,933				22,854				22,979				1.5	%
Veritas US Inc. (j)		Technology		L+4.50% (5.83%), 1/27/2023		15,056				15,101				15,188				1.0	%
VetCor Professional Practices LLC (f) (i)		Diversified Consumer Services		L+6.00% (7.33%), 4/20/2021		4,921				4,886				4,872				0.4	%
VetCor Professional Practices LLC (f) (i)		Diversified Consumer Services		L+6.00% (7.33%), 4/20/2021		1,164				1,164				1,152				—	%
VetCor Professional Practices LLC (f) (i)		Diversified Consumer Services		L+6.00% (7.33%), 4/20/2021		9,775				9,717				9,678				0.7	%
Von Drehle Corporation (i) (m)		Life Sciences Tools & Services		L+9.50% (10.83%), 3/6/2023		26,616				26,219				26,217				1.8	%
Xplornet Communications, Inc. (a) (j)		Diversified Telecommunication Services		L+4.75% (6.08%), 9/9/2021		12,307				12,226				12,423				0.8	%
Sub Total Senior Secured First Lien Debt										$	1,819,236			$	1,718,984			115.6	%
Senior Secured Second Lien Debt - 18.8% (b)
Anchor Glass Container Corporation (m)		Containers & Packaging		L+2.75% (3.98%), 12/7/2024		$	20,000			$	19,820			$	20,240			1.3	%
Answers Corporation (p)		Technology		L+5.00% (6.24%), 9/15/2021		4,687				4,058				4,382				0.3	%
Appriss Holdings, Inc. (m)		IT Services		L+9.25% (10.58%), 5/21/2021		13,985				13,864				13,705				0.9	%
Boston Market Corporation (m)		Hotels, Restaurants & Leisure		L+8.25% (9.49%), 12/16/2018		24,163				24,069				24,163				1.6	%
BrandMuscle Holdings Inc. (m)		Internet Software & Services		L+8.50% (9.80%), 6/1/2022		24,500				24,147				24,500				1.6	%

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

10

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Cayan Holdings (m)		IT Services		L+8.50% (9.83%), 3/24/2022		$	20,000			$	19,654			$	20,000			1.3	%
CDS U.S. Intermediate Holdings, Inc. (m)		Hotels, Restaurants & Leisure		L+8.25% (9.58%), 7/8/2023		7,927				7,803				7,927				0.5	%
CIG Financial, LLC (a) (m)		Consumer Finance		11.50%, 6/30/2019		13,000				12,954				12,090				0.8	%
CIG Financial, LLC (a) (f)		Consumer Finance		11.50%, 6/30/2019		1,000				1,000				930				0.1	%
CREDITCORP (x)		Consumer Finance		12.00%, 7/15/2018		13,250				13,233				11,312				0.8	%
Epic Health Services, Inc. (m)		Health Care Providers & Services		L+8.00% (9.24%), 3/17/2025		15,000				14,788				14,592				1.0	%
Hertz Corp. (x)		Automobiles		7.63%, 6/1/2022		14,194				14,194				14,617				1.0	%
J. C. Bromac Corporation (dba EagleRider, Inc.) (m)		Hotels, Restaurants & Leisure		L+8.75% (10.09%), 2/10/2021		19,867				19,628				19,768				1.3	%
J. C. Bromac Corporation (dba EagleRider, Inc.) (f)		Hotels, Restaurants & Leisure		L+8.75% (10.09%), 2/10/2021		4,473				4,473				4,450				0.3	%
NCP Finance Limited Partnership (j)		Consumer Finance		L+9.75% (11.00%), 10/1/2018		12,038				12,017				11,376				0.8	%
Recess Holdings, Inc. (m)		Hotels, Restaurants & Leisure		L+7.75% (9.08%), 9/29/2025		13,008				12,813				12,813				0.9	%
Rx30 HoldCo, Inc. (m)		Health Care Technology		L+9.00% (10.30%), 6/15/2022		11,500				11,345				11,500				0.8	%
Schulman Associates Institutional Review Board, Inc. (m)		Life Sciences Tools & Services		L+8.00% (9.30%), 6/3/2021		17,000				16,807				17,000				1.1	%
TierPoint, LLC (m)		Technology		L+7.25% (8.49%), 5/5/2025		5,334				5,283				5,281				0.4	%
U.S. Auto (m)		Diversified Consumer Services		L+11.75% (12.99%), 6/8/2020		30,000				29,717				29,100				2.0	%
Sub Total Senior Secured Second Lien Debt										$	281,667			$	279,746			18.8	%
Subordinated Debt - 4.8% (b)
Gold, Inc. (m)		Textiles, Apparel & Luxury Goods		10.00%, 6/30/2019		$	3,742			$	3,670			$	3,181			0.2	%
Park Ave RE Holdings, LLC (d) (l) (o)		Real Estate Management & Development		L+8.00% (13.00%), 12/29/2017		37,192				37,192				37,192				2.5	%
Steel City Media (l)		Media		16.00%, 3/29/2020		22,808				22,589				20,527				1.4	%
Xplornet Communications, Inc. (a) (j)		Diversified Telecommunication Services		9.63%, 6/1/2022		10,000				10,000				10,650				0.7	%
Sub Total Subordinated Debt										$	73,451			$	71,550			4.8	%
Collateralized Securities - 11.3% (b)
Collateralized Securities - Debt Investment
Fifth Street Senior Loan Fund I, LLC - 1A Class F (a) (p)		Diversified Investment Vehicles		L+7.50% (8.81%), 1/19/2027		$	10,728			$	9,221			$	8,613			0.6	%
Collateralized Securities - Equity Investment (n)
B&M CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		2.71%, 4/16/2026		$	40,250			$	16,419			$	14,043			0.9	%
CVP Cascade CLO, LTD. Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		0.00%, 1/16/2026		31,000				8,436				5,131				0.3	%

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

11

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		10.16%, 1/19/2027		$	31,575			$	20,347			$	16,989			1.1	%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		12.32%, 1/15/2027		35,057				17,075				11,421				0.8	%
MidOcean Credit CLO II, LLC Income Notes (a) (p) (v)		Diversified Investment Vehicles		4.37%, 1/29/2025		37,600				21,074				17,947				1.2	%
MidOcean Credit CLO III, LLC Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		5.11%, 7/21/2026		40,250				21,165				19,046				1.3	%
MidOcean Credit CLO IV, LLC Income Notes (a) (p) (v)		Diversified Investment Vehicles		9.06%, 4/15/2027		21,500				13,979				12,679				0.9	%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		21.69%, 7/25/2025		31,603				22,332				25,269				1.7	%
OFSI Fund VI, Ltd. Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		4.48%, 3/20/2025		38,000				15,376				12,563				0.8	%
Related Fee Agreements (a) (s)		Diversified Investment Vehicles								8,147				5,252				0.4	%
Silver Spring CLO, Ltd. Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		0.00%, 10/16/2026		31,500				15,995				10,672				0.7	%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		21.29%, 5/1/2026		36,000				13,419				9,075				0.6	%
Sub Total Collateralized Securities										$	202,985			$	168,700			11.3	%
Equity/Other - 14.7% (b)
Answers Corporation - Common Equity (e) (p)		Technology				909				$	11,361			$	13,797			0.9	%
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (e)		Software		Expire 3/9/2025		306,122				—				—				—	%
Basho Technologies, Inc. - Series G Senior Preferred Stock (e)		Software				2,000,000				2,000				—				—	%
California Resources Corp. - Preferred Equity (u)		Metals & Mining		9.00%		15,025,000				26,183				26,450				1.8	%
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o)		Food Products				6,023				—				—				—	%
Capstone Nutrition - Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o) (u)		Food Products				24,656				1,630				—				—	%
Danish CRJ LTD. - Common Equity (a) (e) (p) (r)		Aerospace & Defense				5,002				1				756				0.1	%
Evolution Research Group - Preferred Equity (e)		Health Care Providers & Services		8.00%		500,000				500				510				—	%
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (e)		Internet Software & Services		Expire 8/16/2025		172,414				—				—				—	%
Kahala Ireland OpCo Designated Activity Company - Common Equity (a) (e) (h) (o)		Aerospace & Defense				137				—				15,116				1.0	%
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (a) (e) (h) (o)		Aerospace & Defense				3,250,000				2,851				3,250				0.2	%

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

12

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Kahala US OpCo LLC - Class A Preferred Units (e) (k) (o)		Aerospace & Defense		13.00%		4,413,472				$	4,161			$	2,088			0.1	%
Mood Media Corporation - Warrants (e)		Business Services				121				26				44				—	%
New Star Metals Inc. - Warrants (e)		Business Services		Expire 12/22/2036		133,074				151				194				—	%
NexSteppe Inc. - Series C Preferred Stock Warrant (e)		Chemicals		Expire 3/9/2025		176,585				500				—				—	%
NMFC Senior Loan Program I, LLC (a) (p)		Diversified Investment Vehicles				50,000				50,000				50,264				3.4	%
Orchid Underwriters Agency, LLC - Preferred Shares (e) (u)		Insurance Broker				5,000				—				—				—	%
Orchid Underwriters Agency, LLC - Common Shares (e) (u)		Insurance Broker				5,000				113				601				—	%
Park Ave RE Holdings, LLC - Common Shares (e) (o) (w)		Real Estate Management & Development				1,000				—				7,248				0.5	%
Park Ave RE Holdings, LLC - Preferred Shares (e) (o) (w)		Real Estate Management & Development		8.00%		47,290				23,645				23,645				1.6	%
PennantPark Credit Opportunities Fund II, LP (a) (f) (g) (p)		Diversified Investment Vehicles				$	7,262			7,262				7,419				0.5	%
South Grand MM CLO I, LLC (a) (f) (p)		Diversified Investment Vehicles				$	29,524			29,095				28,106				1.9	%
Squan Holding Corp. - Class A Common Stock (e) (p)		Diversified Telecommunication Services				180,835				—				—				—	%
Squan Holding Corp. - Series A Preferred Stock (e) (p)		Diversified Telecommunication Services				8,962				—				—				—	%
Tax Defense Network, LLC - Common Equity (e)		Diversified Consumer Services				425				425				—				—	%
Tennenbaum Waterman Fund, L.P. (a)		Diversified Investment Vehicles				$	10,000			10,000				10,174				0.7	%
TCG BDC, Inc. - Common Stock (fka Carlyle GMS Finance, Inc.) (a)		Diversified Investment Vehicles				404,899				7,765				7,402				0.5	%
The SAVO Group, Ltd. - Warrants (e)		Internet Software & Services		Expire 3/23/2023		138,000				—				—				—	%
THL Credit Greenway Fund II LLC (a) (p)		Diversified Investment Vehicles				$	13,806			12,370				12,969				0.9	%
Twentyeighty, Inc. - Class A Common Equity (e)		Media				54,586				—				—				—	%
U.S. Auto - Series A Common Units (e) (u)		Diversified Consumer Services				10,000				10				—				—	%
U.S. Auto - Series A Preferred Units (e) (u)		Diversified Consumer Services				490				490				406				—	%
World Business Lenders, LLC - Preferred Stock (e)		Consumer Finance				3,750,000				3,750				3,759				0.3	%
Xplornet Communications, Inc. - Warrants (a) (e)		Diversified Telecommunication Services		Expire 10/25/2023		10,284				—				4,469				0.3	%

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

13

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Zimbra, Inc. - Warrants (Second Lien Debt) (e)		Software				535,000				$	—			$	163			—	%
Zimbra, Inc. - Warrants (Third Lien Bridge Note) (e)		Software		Expire 7/11/2023		1,000,000				—				374				—	%
Sub Total Equity/Other										$	194,289			$	219,204			14.7	%
TOTAL INVESTMENTS - 165.2% (b)										$	2,571,628			$	2,458,184			165.2	%

_____________

(a)

All of the Company's investments, except the investments noted by this footnote, are qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended (the "1940 Act"). Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets. Qualifying assets represent 77.9% 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 $1,486,921 as of September 30, 2017.

(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 and are valued using significant unobservable inputs (See Note 3 to the consolidated financial statements).

(d)	As of the date of election, the portfolio company elected to pay cash interest, noting the company has the option to elect a portion of the interest to be payment-in-kind (“PIK”).

(e)	Non-income producing at September 30, 2017.

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

14

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017

(Unaudited)

(f)The Company has various unfunded commitments to portfolio companies. The remaining amount of these unfunded commitments as of September 30, 2017 are comprised of the following:

Portfolio Company Name		Investment Type		Commitment Type		Original Commitment				Remaining Commitment
Adams Publishing Group, LLC		Senior Secured First Lien Debt		Delayed draw term loan		$	4,432			$	4,432
AMI Entertainment Network, LLC		Senior Secured First Lien Debt		Revolver term loan		1,234				1,234
Amteck, LLC		Senior Secured First Lien Debt		Revolver term loan		5,000				5,000
Berner Food & Beverage LLC		Senior Secured First Lien Debt		Delayed draw term loan		2,693				2,693
CCW, LLC		Senior Secured First Lien Debt		Revolver term loan		3,000				1,600
CIG Financial, LLC		Senior Secured Second Lien Debt		Delayed draw term loan		5,000				4,000
ERG Holding Company		Senior Secured First Lien Debt		Delayed draw term loan		263				263
ERG Holding Company		Senior Secured First Lien Debt		Revolver term loan		87				44
Icynene US Acquisition Corp.		Senior Secured First Lien Debt		Delayed draw term loan		5,000				5,000
Icynene US Acquisition Corp.		Senior Secured First Lien Debt		Revolver term loan		5,000				5,000
Ideal Tridon Holdings, Inc.		Senior Secured First Lien Debt		Revolver term loan		2,731				1,944
InMotion Entertainment Group, LLC		Senior Secured First Lien Debt		Delayed draw term loan		2,200				1,843
J. C. Bromac Corporation (dba EagleRider, Inc.)		Senior Secured Second Lien Debt		Delayed draw term loan		5,000				516
Midwest Can Company, LLC		Senior Secured First Lien Debt		Delayed draw term loan		828				828
Motion Recruitment Partners, LLC		Senior Secured First Lien Debt		Revolver term loan		2,000				2,000
NexSteppe Inc.		Senior Secured First Lien Debt		Delayed draw term loan		2,825				2,075
Orchid Underwriters Agency, LLC		Senior Secured First Lien Debt		Revolver term loan		2,200				2,200
PennantPark Credit Opportunities Fund II, LP		Equity/Other		Equity capital commitment		10,764				3,229
PetVet Care Centers, LLC		Senior Secured First Lien Debt		Delayed draw term loan		6,704				3,729
PetVet Care Centers, LLC		Senior Secured First Lien Debt		Revolver term loan		1,676				1,215
PT Network, LLC		Senior Secured First Lien Debt		Delayed draw term loan		6,579				5,024
PT Network, LLC		Senior Secured First Lien Debt		Revolver term loan		1,316				987
Pure Barre, LLC		Senior Secured First Lien Debt		Revolver term loan		2,500				2,000
South Grand MM CLO I, LLC		Equity/Other		Equity capital commitment		35,000				5,476
Tillamook Country Smoker, LLC		Senior Secured First Lien Debt		Revolver term loan		2,696				2,494
Twentyeighty, Inc.		Senior Secured First Lien Debt		Revolver term loan		443				443
VetCor Professional Practices LLC		Senior Secured First Lien Debt		Delayed draw term loan		2,573				1,408
Total						$	119,744			$	66,677

(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 Designated Activity Company.

(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 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 consolidated financial statements.

15

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017

(Unaudited)

(l)For the three months ended September 30, 2017, 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 September 30, 2017
Basho Technologies, Inc.		Senior Secured First Lien Debt		17.00	%		—	%		17.00	%		$	—
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.)		Senior Secured First Lien Debt		—	%		13.84	%		13.84	%		—
Greenwave Holdings, Inc.		Senior Secured First Lien Debt		10.00	%		3.00	%		13.00	%		123
ILC Dover LP		Senior Secured First Lien Debt		8.24	%		2.00	%		10.24	%		71
Kahala Ireland OpCo Designated Activity Company		Senior Secured First Lien Debt		—	%		13.00	%		13.00	%		18
Lightsquared LP		Senior Secured First Lien Debt		—	%		10.07	%		10.07	%		274
MMM Holdings, LLC		Senior Secured First Lien Debt		10.25	%		—	%		10.25	%		—
MSO of Puerto Rico, LLC		Senior Secured First Lien Debt		10.25	%		—	%		10.25	%		—
New Star Metals Inc.		Senior Secured First Lien Debt		11.00	%		—	%		11.00	%		—
NexSteppe Inc.		Senior Secured First Lien Debt		—	%		12.00	%		12.00	%		—
Park Ave RE Holdings, LLC		Subordinated Debt		13.00	%		—	%		13.00	%		—
Steel City Media		Subordinated Debt		4.00	%		12.00	%		16.00	%		602
Tax Defense Network, LLC		Senior Secured First Lien Debt		—	%		14.34	%		14.34	%		—
Twentyeighty, Inc.		Senior Secured First Lien Debt		4.77	%		4.50	%		9.27	%		43
Twentyeighty, Inc.		Senior Secured First Lien Debt		1.00	%		7.00	%		8.00	%		107
Twentyeighty, Inc.		Senior Secured First Lien Debt		0.25	%		8.75	%		9.00	%		122
Total													$	1,360

(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 provisions of the 1940 Act classify investments based on the level of control that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally presumed to be "non-controlled" when we own 25% or less of the portfolio company's voting securities and "controlled" when we own more than 25% of the portfolio company's voting securities.

(p)	The provisions of the 1940 Act classify investments further based on the level of ownership that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally deemed as "non-affiliated" when we own less than 5% of a portfolio company's voting securities and "affiliated" when we own 5% or more of a portfolio company's voting securities.

(q)	Unless otherwise indicated, all investments in the schedule of investments are non-affiliated, non-controlled 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 consist of one investment with a fair value of $0.5 million that is classified as a Non-affiliated Investment and five investments with a total fair value of $4.8 million that are classified as Affiliated Investments.

(t)	The investment is on non-accrual status as of September 30, 2017.

(u)	Investments are held in the taxable wholly-owned, consolidated subsidiary, 54th 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 or a portion thereof is pledged as collateral under the JPMC PB Account. Individual investments can be divided into parts which are pledged to separate credit facilities.

(y)

The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L") or Prime ("P") and which reset daily, monthly, quarterly or semiannually. For each, the Company has provided the spread over LIBOR or Prime and the current interest rate in effect at September 30, 2017. Certain investments are subject to a LIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable.

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

16

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

September 30, 2017

(Unaudited)

The following table shows the portfolio composition by industry grouping based on fair value at September 30, 2017:

	At September 30, 2017
	Investments at Fair Value				Percentage of Total Portfolio
Diversified Investment Vehicles	$	285,034			11.6	%
Aerospace & Defense	183,454				7.5
Business Services	182,744				7.4
Hotels, Restaurants & Leisure	173,746				7.1
Health Care	157,656				6.4
Diversified Consumer Services	108,956				4.4
Diversified Telecommunication Services	107,894				4.4
Commercial Services & Supplies	106,306				4.3
Health Care Providers & Services	96,075				3.9
Media	93,100				3.8
Technology	89,769				3.7
Internet Software & Services	71,343				2.9
Real Estate Management & Development	68,085				2.8
Food Products	65,070				2.6
Chemicals	62,107				2.5
Energy Equipment & Services	60,975				2.5
Metals & Mining	53,901				2.2
Professional Services	45,471				1.8
Life Sciences Tools & Services	43,217				1.8
IT Services	40,427				1.6
Consumer Finance	39,467				1.6
Auto Components	36,789				1.5
Communications Equipment	31,810				1.3
Gaming/Lodging	29,426				1.2
Transportation Infrastructure	27,506				1.1
Electronic Equipment, Instruments & Components	26,017				1.1
Diversified Financial Services	24,201				1.0
Specialty Retail	23,611				1.0
Software	20,811				0.8
Insurance	20,501				0.8
Containers & Packaging	20,240				0.8
Building Products	19,480				0.8
Automobiles	14,617				0.6
Distributors	13,697				0.6
Health Care Technology	11,500				0.5
Textiles, Apparel & Luxury Goods	3,181				0.1
Total	$	2,458,184			100.0	%

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

17

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (n) (x)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Senior Secured First Lien Debt - 106.6% (b)
Abaco Systems Holding Corp. (i)		Business Services		L+6.00% (7.00%), 12/7/2021		$	23,940			$	23,462			$	23,461			1.5	%
Ability Networks Inc. (j)		Health Care Providers & Services		L+5.00% (6.00%), 5/14/2021		13,712				13,631				13,712				0.9	%
Adams Publishing Group, LLC (i)		Media		P+4.25% (8.00%), 11/3/2020		15,178				14,904				15,178				1.0	%
Affinion Group, Inc. (j)		Business Services		L+5.25% (6.75%), 4/30/2018		9,974				9,827				9,910				0.6	%
Amports, Inc. (m)		Transportation Infrastructure		L+8.14% (9.14%), 5/19/2020		15,000				14,936				14,775				1.0	%
Amteck, LLC (f) (i)		Commercial Services & Supplies		L+8.50% (9.50%), 7/2/2020		23,438				23,063				22,852				1.5	%
Answers Corporation (i) (j) (t)		Internet Software & Services		P+6.25% (10.00%), 10/3/2021		34,475				33,589				17,065				1.1	%
AP Gaming I, LLC (i) (j)		Hotels, Restaurants & Leisure		L+8.25% (9.25%), 12/20/2020		30,353				30,148				30,150				2.0	%
APCO Holdings (i)		Diversified Consumer Services		L+6.00% (7.00%), 1/29/2022		8,868				8,632				8,646				0.6	%
Applied Merchant Systems West Coast, Inc. (m)		Diversified Financial Services		L+11.50% (12.50%), 10/26/2020		26,122				25,714				25,599				1.7	%
Ascensus, Inc. (j)		IT Services		L+4.50% (5.50%), 12/3/2022		17,831				16,915				17,786				1.2	%
Asurion LLC (j)		IT Services		L+3.75% (4.75%), 11/3/2023		249				248				253				—	%
Avaya, Inc. Term Loan B-3 (j)		Communications Equipment		L+4.50% (5.39%), 10/26/2017		9,685				8,784				8,384				0.5	%
Avaya, Inc. Term Loan B-6 (j)		Communications Equipment		L+5.50% (6.50%), 3/31/2018		8,457				8,461				7,353				0.5	%
Avaya, Inc. Term Loan B-7 (i) (j)		Communications Equipment		L+5.25% (6.25%), 5/29/2020		9,793				9,725				8,489				0.5	%
AxleTech International, LLC (i)		Machinery		L+6.50% (7.50%), 1/5/2021		19,600				19,467				18,914				1.2	%
Basho Technologies, Inc. (d) (l) (t)		Software		17.00%, 3/9/2018		10,595				10,294				3,814				0.2	%
Basho Technologies, Inc. (d) (t)		Software		17.00%, 3/31/2017		2,550				2,550				918				0.1	%
BDS Solutions Group, LLC (f) (i) (m)		Business Services		L+8.75% (9.59%), 6/1/2021		36,830				36,094				36,830				2.4	%
Blount International, Inc. (j)		Machinery		L+6.25% (7.25%), 4/12/2023		12,469				12,128				12,578				0.8	%
Broder Bros, Co. (m)		Distributors		L+5.75% (7.00%), 6/3/2021		7,275				7,158				7,275				0.5	%
Broder Bros, Co. (m)		Distributors		L+12.25% (13.50%), 6/3/2021		7,350				7,232				7,350				0.5	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (l) (o) (t)		Food Products		L+12.50% (13.50%), 4/28/2019		56,470				50,053				19,708				1.3	%
Catapult Learning, LLC (i) (m)		Diversified Consumer Services		L+7.99% (8.99%), 7/16/2020		27,500				27,109				26,537				1.7	%
CCW, LLC (f) (i)		Hotels, Restaurants & Leisure		L+7.00% (8.00%), 3/21/2021		24,625				24,268				24,379				1.6	%
Central Security Group, Inc. (i) (j)		Commercial Services & Supplies		L+5.63% (6.63%), 10/6/2020		25,554				25,200				25,458				1.7	%
CH Hold Corp. (f) (i)		Diversified Consumer Services		L+5.25% (6.25%), 11/20/2019		16,572				16,434				16,531				1.1	%
Chicken Soup for the Soul Publishing, LLC (i)		Media		L+6.25% (7.50%), 1/8/2019		28,543				28,331				27,116				1.8	%

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

18

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (n) (x)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Clover Technologies Group, LLC (j)		Commercial Services & Supplies		P+3.50% (7.25%), 5/8/2020		$	14,012			$	13,935			$	13,265			0.9	%
Contura Energy Inc.		Energy Equipment & Services		10.00%, 8/1/2021		10,000				10,534				10,650				0.7	%
ConvergeOne Holdings Corp. (j)		Diversified Consumer Services		L+5.38% (6.38%), 6/17/2020		16,601				16,470				16,518				1.1	%
Covenant Surgical Partners		Health Care		(8.75%), 8/1/2019		10,000				9,457				9,675				0.6	%
Cvent, Inc. (j)		Internet Software & Services		L+5.00% (6.00%), 11/29/2023		10,000				9,900				10,075				0.7	%
Danish CRJ LTD. (a) (p)		Aerospace & Defense		13.50%		20				7				20				—	%
DigiCert, Inc (j)		Internet Software & Services		L+5.00% (6.00%), 10/21/2021		10,890				10,627				10,836				0.7	%
Doskocil Manufacturing Company, Inc. (m)		Household Durables		L+8.40% (9.40%), 11/10/2020		15,000				14,797				15,000				1.0	%
Eagle Rx, LLC (i)		Health Care Providers & Services		L+6.00% (7.00%), 8/15/2019		14,533				14,495				14,533				1.0	%
ECI Acquisition Holdings, Inc. (i)		Internet Software & Services		L+6.25% (7.25%), 3/11/2019		12,775				12,738				12,584				0.8	%
Emergency Communications Network, LLC (m)		Internet Software & Services		L+10.08% (11.33%), 6/12/2021		19,750				19,530				19,552				1.3	%
ERG Holding Company (i) (m)		Health Care Providers & Services		L+6.75% (8.00%), 4/4/2019		34,650				34,194				34,130				2.2	%
Excelitas Technologies Corp. (j)		Electronic Equipment, Instruments & Components		L+5.00% (6.00%), 11/2/2020		13,761				13,714				13,451				0.9	%
Genesys Telecommunications Laboratories, Inc. (j)		Diversified Telecommunication Services		L+5.25% (6.25%), 12/1/2023		25,000				24,628				25,422				1.7	%
Greenwave Holdings, Inc. (l)		Internet Software & Services		13.00%, 7/8/2019		15,693				15,543				15,693				1.0	%
GTCR Valor Companies, Inc. (j)		Software		L+6.00% (7.00%), 6/16/2023		24,875				23,956				24,587				1.6	%
HC Group Holdings III, Inc. (j)		Health Care		L+5.00% (6.00%), 4/7/2022		14,932				14,665				14,298				0.9	%
Icynene US Acquisition Corp. (f) (i) (m)		Building Products		L+6.25% (7.25%), 11/4/2020		21,286				21,012				21,286				1.4	%
Icynene US Acquisition Corp. (f)		Building Products		L+6.25% (7.25%), 11/4/2019		1,000				1,000				1,000				0.1	%
ILC Dover LP (i) (l)		Aerospace & Defense		L+9.00% (10.00%), 3/20/2020		14,101				14,064				11,986				0.8	%
Indivior Finance S.A.R.L. (j)		Health Care		L+6.00% (7.00%), 12/19/2019		9,244				9,244				9,279				0.6	%
InMotion Entertainment Group, LLC (f) (i)		Specialty Retail		L+7.75% (9.00%), 10/1/2018		14,450				14,328				14,450				0.9	%
IPC Corp. (j)		Diversified Telecommunication Services		L+4.50% (5.50%), 8/6/2021		9,187				9,040				8,796				0.6	%
Jackson Hewitt, Inc. (j)		Diversified Consumer Services		L+7.00% (8.00%), 7/30/2020		6,860				6,810				6,577				0.4	%
K2 Pure Solutions NoCal, L.P. (i)		Chemicals		L+6.00% (7.00%), 8/19/2019		6,500				6,442				6,500				0.4	%
Kahala Ireland OpCo Designated Activity Company (a) (d) (l) (o)		Aerospace & Defense		L+8.00% (13.00%), 12/23/2028		149,409				149,409				149,409				9.8	%
Kahala US OpCo LLC (d) (l) (o)		Aerospace & Defense		L+8.00% (13.00%), 12/23/2028		2,690				2,690				2,690				0.2	%

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

19

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (n) (x)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Kissner HLD		Chemicals		8.38%, 12/1/2022		$	9,960			$	9,942			$	10,060			0.7	%
Land Holdings I, LLC (m)		Hotels, Restaurants & Leisure		12.00%, 6/26/2019		14,250				14,108				14,250				0.9	%
LenderLive Services, LLC		Business Services		L+12.00% (12.69%), 8/11/2020		10,000				9,819				9,800				0.6	%
Lightsquared LP (l)		Diversified Telecommunications Services		L+8.75% (9.75%), 6/15/2020		10,246				9,371				9,529				0.6	%
MCS AMS Sub-Holdings LLC (j)		Real Estate Management & Development		L+6.50% (7.50%), 10/15/2019		11,906				11,701				11,073				0.7	%
Medical Depot Holdings, Inc. (i)		Health Care		L+5.50% (6.50%), 1/3/2023		20,278				18,453				18,504				1.2	%
Metal Services LLC (j)		Metals & Mining		L+7.50% (8.50%), 6/30/2019		10,917				10,783				10,944				0.7	%
MMM Holdings, LLC (j) (l)		Health Care		L+8.25% (9.75%), 6/28/2019		7,153				7,072				6,938				0.5	%
Monitronics International, Inc. (j)		Diversified Consumer Services		L+5.50% (6.50%), 9/30/2022		2,993				2,978				3,018				0.2	%
Montreign Operating Company, LLC (m)		Hotels, Restaurants, & Leisure		L+8.25% (9.25%), 1/24/2023		25,000				24,500				25,187				1.6	%
Motion Recruitment Partners, LLC (f) (i)		Professional Services		L+6.00% (7.00%), 2/13/2020		18,000				17,733				18,000				1.2	%
Motorsports Aftermarket Group, Inc. (i) (j)		Auto Components		L+4.00% (5.00%), 5/14/2021		26,309				24,914				12,716				0.8	%
MSO of Puerto Rico, LLC (j) (l)		Health Care		L+8.25% (9.75%), 6/28/2019		5,200				5,142				5,044				0.3	%
Murray Energy Holdings Co.		Energy Equipment & Services		L+7.25% (8.25%), 4/16/2020		9,974				9,222				9,506				0.6	%
MWI Holdings, Inc. (j)		Machinery		L+5.50% (6.50%), 6/28/2020		9,950				9,862				9,950				0.6	%
National Technical Systems, Inc. (f) (i)		Professional Services		L+6.25% (7.25%), 6/12/2021		19,326				19,072				18,359				1.2	%
New Star Metals Inc. (l)		Business Services		L+9.50% (11.00%), 12/22/2021		32,707				32,020				32,023				2.1	%
NexSteppe Inc. (l)		Chemicals		15.00%, 3/30/2018		10,741				10,444				8,056				0.5	%
Noosa Acquirer, Inc. (i) (m)		Food Products		L+5.25% (6.25%), 11/21/2020		25,000				24,756				25,000				1.6	%
North Atlantic Trading Company, Inc. (i) (j)		Food Products		P+5.50% (9.25%), 1/13/2020		17,331				17,304				17,158				1.1	%
NTM Acquisition Corp. (i)		Media		L+6.25% (7.25%), 6/7/2022		12,431				12,260				12,245				0.8	%
Orchid Underwriters Agency, LLC (f) (m)		Insurance Broker		10.00%, 11/6/2019		13,955				13,806				13,955				0.9	%
Otter Box Holdings, Inc. (j)		Electronic Equipment, Instruments & Components		L+4.75% (5.75%), 6/3/2020		14,797				14,591				14,612				1.0	%
PeopLease Holdings, LLC (i)		Commercial Services & Supplies		L+9.00% (10.00%), 2/26/2021		20,000				19,832				20,000				1.3	%
PGX Holdings, Inc. (j)		Transportation Infrastructure		L+5.25% (6.25%), 9/29/2020		13,172				13,071				13,148				0.9	%
Plaskolite, LLC (j)		Chemicals		L+4.75% (5.75%), 11/3/2022		8,693				8,623				8,693				0.6	%
Premier Dental Services, Inc. (i) (j)		Health Care Providers & Services		L+6.50% (7.50%), 11/1/2018		22,488				22,440				22,319				1.5	%

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

20

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (n) (x)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Premier Global Services, Inc. (j)		Diversified Telecommunication Services		L+6.50% (7.50%), 12/8/2021		$	9,871			$	9,528			$	9,606			0.6	%
Pre-Paid Legal Services, Inc. (j)		Diversified Consumer Services		L+5.25% (6.50%), 7/1/2019		13,009				13,006				13,021				0.9	%
Pride Plating, Inc. (i)		Aerospace & Defense		L+5.50% (6.50%), 6/13/2019		7,188				7,153				6,864				0.4	%
PSKW, LLC (i)		Health Care Providers & Services		L+4.25% (5.25%), 11/25/2021		2,025				2,008				2,005				0.1	%
PSKW, LLC (m)		Health Care Providers & Services		L+8.39% (9.39%), 11/25/2021		17,750				17,460				17,217				1.1	%
PT Network, LLC (f) (i)		Health Care		L+6.50% (7.50%), 11/30/2021		17,105				16,858				16,934				1.1	%
Pure Barre, LLC (f) (i) (m)		Hotels, Restaurants & Leisure		L+7.00% (8.00%), 6/11/2020		27,823				27,444				27,545				1.8	%
Resco Products, Inc. (i)		Metals & Mining		P+4.75% (8.50%), 3/31/2017		10,000				10,000				9,200				0.6	%
RVNB Holdings, Inc. (dba All My Sons Moving & Storage) (f) (i)		Diversified Consumer Services		L+6.50% (7.50%), 2/25/2020		21,733				21,449				21,733				1.4	%
Sage Automotive Holdings, Inc. (j)		Auto Components		L+5.00% (6.00%), 10/8/2020		15,000				14,851				14,850				1.0	%
SHO Holding II Corporation (j)		Specialty Retail		L+5.00% (6.00%), 10/27/2022		11,880				11,779				11,821				0.8	%
Squan Holding Corp.		Diversified Telecommunication Services		L+4.00% (5.00%), 10/10/2019		10,455				6,903				6,895				0.5	%
STG-Fairway Acquisitions, Inc. (j)		Professional Services		L+5.25% (6.25%), 6/30/2022		13,359				13,199				13,042				0.9	%
Stratose Intermediate Holdings II, LLC (j)		Health Care Providers & Services		L+5.00% (6.00%), 1/26/2022		9,900				9,816				9,937				0.6	%
SunGard Availability Services Capital, Inc. (j)		IT Services		L+5.00% (6.00%), 3/31/2019		8,741				8,700				8,443				0.6	%
Tax Defense Network, LLC (f) (i) (m)		Diversified Consumer Services		L+10.50% (11.50%), 8/28/2019		26,650				26,354				18,388				1.2	%
Total Outdoor Holdings Corp.		Media		L+11.00% (12.00%), 8/28/2019		12,900				12,762				12,900				0.8	%
Trojan Battery Company, LLC (j)		Auto Components		P+3.75% (7.50%), 6/12/2021		10,586				10,517				10,507				0.7	%
Turning Tech LLC (f) (i)		Software		L+10.75% (11.59%), 6/30/2020		24,976				24,668				24,102				1.6	%
Twenty Eighty, Inc. (j) (m)		Media		P+5.00% (8.75%), 9/30/2019		21,926				20,989				7,975				0.5	%
United Central Industrial Supply Company, LLC (i) (j)		Commercial Services & Supplies		L+7.25% (8.50%), 10/9/2018		8,640				8,590				6,890				0.5	%
VCVH Holding Corp. (j)		Health Care		L+5.00% (6.00%), 6/1/2023		12,935				12,816				12,854				0.8	%
VetCor Professional Practices LLC (i)		Diversified Consumer Services		L+6.25% (7.25%), 4/20/2021		14,808				14,696				14,512				0.9	%
Xplornet Communications, Inc. (a) (j)		Diversified Telecommunication Services		L+6.00% (7.00%), 7/25/2020		9,975				9,882				10,050				0.7	%
Sub Total Senior Secured First Lien Debt										$	1,726,833			$	1,630,661			106.6	%
Senior Secured Second Lien Debt - 17.1% (b)
Anchor Glass Container Corporation		Containers & Packaging		L+7.75% (8.75%), 12/7/2024		$	20,000			$	19,801			$	20,325			1.3	%

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

21

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (n) (x)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Appriss Holdings, Inc. (m)		IT Services		L+9.25% (10.25%), 5/21/2021		$	13,985			$	13,839			$	13,775			0.9	%
Asurion LLC (j)		IT Services		L+7.50% (8.50%), 3/3/2021		10,000				9,320				10,156				0.7	%
Boston Market Corporation (m)		Hotels, Restaurants & Leisure		L+8.25% (9.25%), 12/16/2018		24,351				24,196				24,107				1.6	%
BrandMuscle Holdings Inc. (m)		Internet Software & Services		L+8.50% (9.50%), 6/1/2022		24,500				24,091				24,500				1.6	%
Cayan Holdings (m)		IT Services		L+8.50% (9.50%), 3/24/2022		20,000				19,579				19,600				1.3	%
CDS U.S. Intermediate Holdings, Inc. (m)		Hotels, Restaurants & Leisure		L+8.25% (9.25%), 7/8/2023		4,800				4,680				4,668				0.3	%
CIG Financial, LLC (a) (f) (m)		Consumer Finance		10.50%, 6/30/2019		13,000				12,935				12,415				0.8	%
CREDITCORP		Consumer Finance		12.00%, 7/15/2018		13,250				13,217				10,401				0.7	%
Epic Health Services, Inc. (m)		Health Care Providers & Services		L+9.25% (10.25%), 8/17/2021		15,933				15,703				15,933				1.0	%
J. C. Bromac Corporation (dba EagleRider, Inc.) (f) (m)		Hotels, Restaurants & Leisure		L+8.75% (9.59%), 2/10/2021		6,950				6,887				6,776				0.4	%
Linc Energy Finance USA, Inc. (t)		Oil, Gas & Consumable Fuels		12.50%, 10/31/2017		9,000				8,914				—				—	%
NCP Finance Limited Partnership (j)		Consumer Finance		L+9.75% (11.00%), 10/1/2018		12,145				12,109				11,386				0.7	%
Rx30 HoldCo, Inc. (m)		Health Care Technology		L+9.00% (10.00%), 6/15/2022		11,500				11,320				11,500				0.8	%
Schulman Associates Institutional Review Board, Inc. (m)		Life Sciences Tools & Services		L+8.00% (9.00%), 6/3/2021		17,000				16,768				16,745				1.1	%
Stratose Intermediate Holdings II, LLC (m)		Health Care Providers & Services		L+9.50% (10.50%), 7/26/2022		30,000				29,593				30,000				2.0	%
U.S. Auto (m)		Diversified Consumer Services		L+11.75% (12.75%), 6/8/2020		30,000				29,561				29,700				1.9	%
Sub Total Senior Secured Second Lien Debt										$	272,513			$	261,987			17.1	%
Subordinated Debt - 5.3% (b)
Gold, Inc. (m)		Textiles, Apparel & Luxury Goods		10.00%, 6/30/2019		$	7,003			$	6,924			$	5,953			0.4	%
Park Ave RE Holdings, LLC (d) (l) (o)		Real Estate Management & Development		L+8.00% (13.00%), 12/29/2017		37,192				37,192				37,192				2.4	%
Steel City Media (l)		Media		16.00%, 3/29/2020		21,418				21,146				20,561				1.4	%
Xplornet Communications, Inc. (a) (l)		Diversified Telecommunication Services		13.00%, 10/25/2020		14,591				14,591				15,102				1.0	%
Zimbra, Inc. (t)		Software		12.00%, 7/10/2018		1,203				1,203				1,732				0.1	%
Sub Total Subordinated Debt										$	81,056			$	80,540			5.3	%
Collateralized Securities - 16.3% (b)
Collateralized Securities - Debt Investment
Fifth Street Senior Loan Fund I, LLC - 1A Class F (a) (p)		Diversified Investment Vehicles		L+7.50% (8.38%), 1/19/2027		$	10,728			$	9,100			$	8,455			0.5	%
Collateralized Securities - Equity Investment
B&M CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		7.71%, 4/16/2026		$	40,250			$	20,331			$	16,772			1.1	%

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

22

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (n) (x)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
CVP Cascade CLO, LTD. Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		0.04%, 1/16/2026		$	31,000			$	10,552			$	8,868			0.6	%
CVP Cascade CLO-2, LTD. Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		4.80%, 7/18/2026		35,250				13,667				11,593				0.8	%
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		13.83%, 1/19/2027		31,575				22,079				20,579				1.3	%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		4.65%, 1/15/2027		35,057				19,941				16,101				1.1	%
MidOcean Credit CLO II, LLC (a) (p) (v)		Diversified Investment Vehicles		7.44%, 1/29/2025		37,600				23,092				22,419				1.5	%
MidOcean Credit CLO III, LLC (a) (p) (v)		Diversified Investment Vehicles		11.89%, 7/21/2026		40,250				23,998				23,341				1.5	%
MidOcean Credit CLO IV, LLC (a) (p) (v)		Diversified Investment Vehicles		13.77%, 4/15/2027		21,500				15,160				15,505				1.0	%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		23.61%, 7/25/2025		31,603				23,795				24,491				1.6	%
Ocean Trails CLO V, LTD. (a) (p) (v)		Diversified Investment Vehicles		14.78%, 10/13/2026		40,518				28,222				29,144				1.9	%
OFSI Fund VI, Ltd. Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		13.59%, 3/20/2025		38,000				19,012				17,354				1.1	%
Related Fee Agreements (a) (s)		Diversified Investment Vehicles				—				11,345				10,390				0.7	%
Silver Spring CLO, Ltd. (a) (p) (v)		Diversified Investment Vehicles		0.26%, 10/16/2026		31,500				18,676				12,007				0.8	%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (p) (v)		Diversified Investment Vehicles		6.99%, 5/1/2026		36,000				15,806				12,563				0.8	%
Sub Total Collateralized Securities										$	274,776			$	249,582			16.3	%
Equity/Other - 11.2% (b)
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (e)		Software		Expire 3/9/2025		306,122				$	—			$	—			—	%
Basho Technologies, Inc. - Series G Senior Preferred Stock (e)		Software				2,040,816				2,000				—				—	%
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o)		Food Products				6,023				1,630				—				—	%
Capstone Nutrition - Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o) (u)		Food Products				24,656				—				—				—	%
Carlyle GMS Finance, Inc. (a) (f)		Diversified Investment Vehicles				$	6,587			6,587				6,273				0.4	%
Danish CRJ LTD. (a) (e) (p) (r)		Aerospace & Defense				10,000				1				407				—	%
Evolution Research Group - Preferred Equity (e)		Health Care Providers & Services		8.00%		200				500				610				—	%
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (e)		Internet Software & Services		Expire 8/16/2025		172,414				—				19				—	%

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

23

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (n) (x)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Kahala Ireland OpCo Designated Activity Company - Common Equity (a) (e) (h) (o)		Aerospace & Defense				137				$	—			$	8,180			0.5	%
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (a) (e) (h) (o)		Aerospace & Defense				3,250,000				2,900				3,250				0.2	%
Kahala US OpCo LLC - Class A Preferred Units (e) (k) (o)		Aerospace & Defense		13.00%		4,413,472				4,193				4,000				0.3	%
New Star Metals Inc. (l)		Business Services		Expire 12/22/2036		133,074				201				201				—	%
NexSteppe Inc. - Series C Preferred Stock Warrant (e)		Chemicals		Expire 3/9/2025		185,704				500				43				—	%
NMFC Senior Loan Program I, LLC (a) (p)		Diversified Investment Vehicles				$	50,000			50,000				47,057				3.1	%
Orchid Underwriters Agency, LLC - Preferred Shares (e) (u)		Insurance Broker				5,000				500				659				—	%
Orchid Underwriters Agency, LLC - Common Shares (e) (u)		Insurance Broker				5,000				—				304				—	%
Park Ave RE Holdings, LLC - Common Shares (e) (o) (w)		Real Estate Management & Development				1,000				—				6,564				0.4	%
Park Ave RE Holdings, LLC - Preferred Shares (o) (w)		Real Estate Management & Development		8.00%		47,290				23,645				23,645				1.6	%
PennantPark Credit Opportunities Fund II, LP (a) (f) (g) (p)		Diversified Investment Vehicles				$	9,943			9,943				9,788				0.7	%
South Grand MM CLO I, LLC (a) (f) (p)		Diversified Investment Vehicles				$	29,095			29,095				28,382				1.9	%
Squan Holding Corp. - Class A Common Stock (e) (p)		Diversified Telecommunication Services				180,835				—				—				—	%
Squan Holding Corp. - Series A Preferred Stock (e) (p)		Diversified Telecommunication Services				8,962				—				—				—	%
Tax Defense Network, LLC (e)		Diversified Consumer Services				396				425				—				—	%
Tennenbaum Waterman Fund, L.P. (a)		Diversified Investment Vehicles				$	10,000			10,000				10,169				0.7	%
The SAVO Group, Ltd. - Warrants (e)		Internet Software & Services		Expire 3/23/2023		138,000				—				—				—	%
THL Credit Greenway Fund II LLC (a) (p)		Diversified Investment Vehicles				$	13,990			13,990				12,850				0.9	%
U.S. Auto - Series A Common Units (e) (u)		Diversified Consumer Services				10,000				10				27				—	%
U.S. Auto - Series A Preferred Units (e) (u)		Diversified Consumer Services				490				490				572				—	%
World Business Lenders, LLC (e)		Consumer Finance				922,669				3,750				4,441				0.3	%
Xplornet Communications, Inc. - Warrants (a) (e)		Diversified Telecommunication Services		Expire 10/25/2023		10,284				—				3,647				0.2	%
Zimbra, Inc. - Warrants (Third Lien Bridge Note) (e)		Software		Expire 7/11/2023		1,000,000				—				225				—	%

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

24

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (n) (x)		Principal / Number of Shares				Amortized Cost				Fair Value (c)				% of Net Assets (b)
Sub Total Equity/Other										$	160,360			$	171,313			11.2	%
TOTAL INVESTMENTS - 156.5% (b)										$	2,515,538			$	2,394,083			156.5	%

_____________

(a)

All of the Company's investments, except the investments noted by this footnote, are qualifying assets under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets. Qualifying assets represent 77.9% 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 $1,529,734 as of December 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 and are valued using significant unobservable inputs (See Note 3 to the consolidated financial statements).

(d)	As of the date of election, the portfolio company elected to pay cash interest, noting the company has the option to elect a portion of the interest to be payment-in-kind (“PIK”).

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

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

Portfolio Company Name		Investment Type		Commitment Type		Original Commitment				Remaining Commitment
Amteck, LLC		Senior Secured First Lien Debt		Revolver term loan		$	5,000			$	5,000
BDS Solutions Group, LLC		Senior Secured First Lien Debt		Revolver term loan		3,000				3,000
Carlyle GMS Finance, Inc.		Equity/Other		Equity capital commitment		10,000				3,413
CCW, LLC		Senior Secured First Lien Debt		Revolver term loan		3,000				3,000
CH Hold Corp.		Senior Secured First Lien Debt		Delayed draw term loan		2,175				706
CIG Financial, LLC		Senior Secured Second Lien Debt		Delayed draw term loan		5,000				5,000
Icynene US Acquisition Corp.		Senior Secured First Lien Debt		Delayed draw term loan		5,000				5,000
Icynene US Acquisition Corp.		Senior Secured First Lien Debt		Revolver term loan		5,000				4,000
InMotion Entertainment Group, LLC		Senior Secured First Lien Debt		Delayed draw term loan		2,200				1,843
J. C. Bromac Corporation (dba EagleRider, Inc.)		Senior Secured Second Lien Debt		Delayed draw term loan		5,000				5,000
Motion Recruitment Partners, LLC		Senior Secured First Lien Debt		Revolver term loan		2,000				2,000
National Technical Systems, Inc.		Senior Secured First Lien Debt		Delayed draw term loan		5,000				5,000
Orchid Underwriters Agency, LLC		Senior Secured First Lien Debt		Delayed draw term loan		5,600				5,600
PennantPark Credit Opportunities Fund II, LP		Equity/Other		Equity capital commitment		10,800				538
Pure Barre, LLC		Senior Secured First Lien Debt		Revolver term loan		6,579				6,579
PT Network, LLC		Senior Secured First Lien Debt		Delayed draw term loan		1,316				1,316
PT Network, LLC		Senior Secured First Lien Debt		Revolver term loan		2,500				2,500
RVNB Holdings, Inc. (dba All My Sons Moving & Storage)		Senior Secured First Lien Debt		Revolver term loan		852				852
South Grand MM CLO I, LLC		Equity/Other		Equity capital commitment		35,000				5,476
Tax Defense Network, LLC		Senior Secured First Lien Debt		Delayed draw term loan		5,000				1,000
Turning Tech LLC		Senior Secured First Lien Debt		Revolver term loan		6,000				3,000
Total						$	126,022			$	69,823

(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 Designated Activity Company.

(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.

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

25

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016

(k)	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.

(l)For the year ended December 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 year ended December 31, 2016
Basho Technologies, Inc.		Senior Secured First Lien Debt		17.00	%		—	%		17.00	%		$	283
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.)		Senior Secured First Lien Debt		—	%		13.50	%		13.50	%		807
CPX Interactive Holdings, LP		Senior Secured Second Lien Debt		11.00	%		2.00	%		13.00	%		315
Greenwave Holdings, Inc.		Senior Secured First Lien Debt		10.00	%		3.00	%		13.00	%		510
ILC Dover LP		Senior Secured First Lien Debt		8.00	%		2.00	%		10.00	%		132
Kahala Ireland OpCo Designated Activity Company		Senior Secured First Lien Debt		—	%		13.00	%		13.00	%		5,827
Kahala US OpCo LLC		Senior Secured First Lien Debt		13.00	%		—	%		13.00	%		87
Lightsquared LP		Senior Secured First Lien Debt		—	%		9.75	%		9.75	%		—
MMM Holdings, LLC		Senior Secured First Lien Debt		9.75	%		—	%		9.75	%		—
MSO of Puerto Rico, LLC		Senior Secured First Lien Debt		9.75	%		—	%		9.75	%		—
New Star Metals Inc.		Senior Secured First Lien Debt		9.00	%		2.00	%		11.00	%		—
NexSteppe Inc.		Senior Secured First Lien Debt		10.00	%		5.00	%		15.00	%		509
Park Ave RE Holdings, LLC		Subordinated Debt		13.00	%		—	%		13.00	%		—
Steel City Media		Subordinated Debt		12.00	%		4.00	%		16.00	%		840
Taqua, LLC		Senior Secured First Lien Debt		10.50	%		3.00	%		13.50	%		202
The Tennis Channel Holdings, Inc.		Senior Secured First Lien Debt		6.88	%		2.00	%		8.88	%		85
Visionary Integration Professionals, LLC		Subordinated Debt		—	%		15.00	%		15.00	%		1,088
Xplornet Communications, Inc.		Subordinated Debt		—	%		13.00	%		13.00	%		1,727
Total													$	12,412

(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 provisions of the 1940 Act classify investments based on the level of control that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally presumed to be "non-controlled" when we own 25% or less of the portfolio company's voting securities and "controlled" when we own more than 25% of the portfolio company's voting securities.

(p)	The provisions of the 1940 Act classify investments further based on the level of ownership that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally deemed as "non-affiliated" when we own less than 5% of a portfolio company's voting securities and "affiliated" when we own 5% or more of a portfolio company's voting securities.

(q)	Unless otherwise indicated, all investments in the schedule of investments are non-affiliated, non-controlled 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 consist of one investment with a fair value of $0.7 million that is classified as a Non-affiliated Investment and six investments with a total fair value of $9.6 million that are classified as Affiliated Investments.

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

(u)	Investments are held in the taxable wholly-owned, consolidated subsidiary, 54th 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 majority of the investments bear interest at a rate that may be determined by reference to LIBOR or Prime and which reset daily, monthly, quarterly or semiannually. For each, the Company has provided the spread over LIBOR or Prime and the current interest rate in effect at December 31, 2016. Certain investments are subject to a LIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable.

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

26

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016

The following table shows the portfolio composition by industry grouping based on fair value at December 31, 2016:

	At December 31, 2016
	Investments at Fair Value				Percentage of Total Portfolio
Diversified Investment Vehicles	$	364,101			15.2	%
Aerospace & Defense	186,806				7.8
Diversified Consumer Services	175,780				7.3
Health Care Providers & Services	160,396				6.7
Hotels, Restaurants & Leisure	157,062				6.6
Business Services	112,225				4.7
Internet Software & Services	110,324				4.6
Media	95,975				4.0
Health Care	93,526				3.9
Diversified Telecommunication Services	89,047				3.7
Commercial Services & Supplies	88,465				3.7
Real Estate Management & Development	78,474				3.3
IT Services	70,013				2.9
Food Products	61,866				2.6
Software	55,378				2.3
Professional Services	49,401				2.1
Machinery	41,442				1.7
Consumer Finance	38,643				1.6
Auto Components	38,073				1.6
Chemicals	33,352				1.4
Electronic Equipment, Instruments & Components	28,063				1.2
Transportation Infrastructure	27,923				1.2
Specialty Retail	26,271				1.1
Diversified Financial Services	25,599				1.1
Communications Equipment	24,226				1.0
Building Products	22,286				0.9
Containers & Packaging	20,325				0.9
Energy Equipment & Services	20,156				0.8
Metals & Mining	20,144				0.8
Life Sciences Tools & Services	16,745				0.7
Household Durables	15,000				0.6
Insurance	14,918				0.6
Distributors	14,625				0.6
Health Care Technology	11,500				0.5
Textiles, Apparel & Luxury Goods	5,953				0.3
Oil, Gas & Consumable Fuels	—				—
Total	$	2,394,083			100.0	%

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

27

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Note 1 — Organization and Basis of Presentation

Business Development Corporation of America (the “Company”) is an externally managed, non-diversified closed-end management investment company incorporated in Maryland in May 2010 that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (“the 1940 Act”). In addition, the Company has elected to be treated for tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company’s investment activities are managed by BDCA Adviser, LLC (the “Adviser”), a subsidiary of Benefit Street Partners L.L.C. (“BSP”) and supervised by the Company’s board of directors, a majority of whom are independent of the Adviser and its affiliates. As a BDC, the Company is required to comply with certain regulatory requirements.

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 up to $1 billion. The Company also purchases interests in loans through secondary market transactions. 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” or "CLOs"). Structurally, CLOs 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. In most cases, companies to whom we provide customized financing solutions will be privately held at the time the Company invests in them.

While the structure of the Company’s investments is likely to vary, we may invest in senior secured debt, senior unsecured debt, subordinated secured debt, subordinated unsecured debt, mezzanine debt, convertible debt, convertible preferred equity, preferred equity, common equity, warrants, CLOs and other instruments, many of which generate current yields. If the Adviser deems appropriate, the Company may invest in more liquid senior secured and second lien debt securities, some of which may be traded. The Company will make such investments to the extent allowed by the 1940 Act and consistent with its continued qualification as a RIC for federal income tax purposes.

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, and subsequently amended the offering to issue up to an additional 101.1 million shares of its common stock (the “Offering”). The Company closed the Offering to new investments on April 30, 2015. In order to allow for associated processing time needed, the transfer agent for the Company accepted subscriptions in good order dated on or before April 30, 2015 and received no later than June 30, 2015. As of September 30, 2017, the Company had issued 194.5 million shares of common stock for gross proceeds of $2.1 billion including the shares purchased by affiliates and shares issued under the Company's distribution reinvestment plan (“DRIP”). As of September 30, 2017, the Company had repurchased a cumulative 16.0 million shares of common stock through its share repurchase program for payments of $143.6 million.

The Company intends to co-invest, subject to the conditions included in the exemptive order the Company received from the Securities and Exchange Commission ("SEC"), with certain of our affiliates. The Company believes that such co-investments may afford it additional investment opportunities and an ability to achieve greater diversification.

As a BDC, the Company is generally required to invest at least 70% of our total assets primarily in securities of private and certain U.S. public companies (other than certain financial institutions), cash, cash equivalents and U.S. government securities and other high quality debt investments that mature in one year or less.

The Company is permitted to borrow money from time to time within the levels permitted by the 1940 Act (which generally allows it to incur leverage for up to one half of its total assets). The Company has used, and expects to continue to use, its credit facilities and other borrowings, along with proceeds from the rotation of its portfolio and proceeds from private securities offerings to finance its investment objectives.

28

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

    

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The consolidated financial statements reflect all adjustments, both normal and recurring which, in the opinion of management, are necessary of the fair presentation of the Company’s results of operations and financial condition for the periods presented. The Company is an investment company and follows accounting and reporting guidance in Accounting Standards Codification ("ASC") Topic 946 - Financial Services - Investment Companies ("ASC 946").

The Company consolidates the following subsidiaries for accounting purposes: BDCA Funding I, LLC (“Funding I”), BDCA 2L Funding I, LLC (“2L Funding I”), BDCA-CB Funding, LLC (“CB Funding”), BDCA Helvetica Funding, Ltd. (“Helvetica Funding”), 54th Street Equity Holdings, Inc. 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 consolidated 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 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, 2017.

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 946, the Company will generally not consolidate its investment in a company other than a substantially 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 substantially wholly-owned subsidiaries in its consolidated financial statements.

Valuation of Portfolio Investments

Portfolio investments are reported on the 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.

29

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

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.

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, with assistance from one or more independent valuation firms engaged by our board of directors or as noted below, with respect to investments in an investment fund;

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

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

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 946, as of the Company's measurement date.

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% of the voting securities of a company shall be presumed to control such company. Any person who does not so own more than 25% of the voting securities of any company shall be presumed not to control such company”. Consistent with the 1940 Act, “Affiliated Investments” are defined as those investments in companies in which the Company owns between 5% or more 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 consolidated financial statements may have been reclassified to disclose the Company's Control Investments and Affiliate Investments as defined above. In addition, prior period consolidated financial statements may have been reclassified to present investment industry classifications in a consistent manner with the current year.

30

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

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 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 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. For the period ended September 30, 2017 and December 31, 2016, the Company did not incur any offering costs.

Deferred Financing Costs

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

Distributions

The Company’s board of directors has authorized, and has declared, cash distributions payable on a monthly basis to stockholders of record on each day since it commenced operations. From November 2013 until July 2017, the distribution rate has been $0.002378082 per day, which is equivalent to $0.868 per annum, per share of common stock, except for 2016 where the daily distribution rate was $0.002371585 per day to accurately reflect 2016 being a leap year. In July 2017, the board of directors reduced the distribution rate with respect to the Company's cash distributions to $0.001780822 per day, which is equivalent to $0.65 annually, per share of common stock.

The amount of each such distribution is subject to the discretion of the board of directors and applicable legal restrictions related to the payment of distributions. The Company calculates 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 fifth 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 advances 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. See Note 12 - Income Tax Information and Distributions to Stockholders for additional information.

31

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

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. Discount and premium 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 discount and amortization of premium 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 Paragraph 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.

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. 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 may be 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 interest which may include 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. 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 Code. Generally, a RIC is not subject to federal income taxes in respect of each taxable year if it distributes dividends for federal income tax purposes to stockholders of an amount generally equal to at least 90% of ‘‘investment company taxable income,’’ as defined in the Code, and determined without regard to any deduction for dividends paid. Distributions declared prior to the filing of the previous year's tax return and paid up to twelve months after the previous tax year can be carried back to the prior tax year in determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain

32

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

its ability to be subject to be taxed as a RIC each year. The Company may be subject to federal excise tax imposed at a rate of 4% on certain undistributed amounts. See Note 12 - Income Tax Information and Distributions to Stockholders for additional information.

New Accounting Pronouncements

In December 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2016-19, Technical Corrections and Improvements. As part of this guidance, ASU 2016-19 amends FASB ASC 820 to clarify the difference between a valuation approach and a valuation technique. The amendment also requires an entity to disclose when there has been a change in either or both a valuation approach and/or a valuation technique. ASU 2016-19 is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. The Company has evaluated the impact of ASU 2016-19 on its consolidated financial statements and disclosures and determined that the adoption of ASU 2016-19 has not had a material impact on its consolidated financial statements.

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows, which will amend FASB ASC 230. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is evaluating the impact of ASU 2016-18 on its consolidated financial statements and disclosures.

In October 2016, the SEC adopted new rules and amended rules (together, “final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. The application of this guidance did not have a material impact on the Company's consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230)”, which seeks to reduce diversity in how certain cash payments are presented in the Statement of Cash Flows. Under ASU 2016-15, an entity will need to conform to the presentation as prescribed for eight specific cash flow issues. ASU 2016-15 will be effective for annual and interim reporting periods after December 15, 2017. The application of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606 "Identifying Performance Obligations and Licensing"),” which amends the criteria for revenue recognition where an entity enters into contracts with customers to transfer goods or services or where there is a transfer of non-financial assets. Under ASU 2016-10, an entity should recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2016-10 will be effective for annual and interim reporting periods beginning after December 15, 2017. The Company does not believe that the adoption of ASU 2016-10 will have a material impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued 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 does not believe that the adoption of ASU 2016-01 will have a material impact on the Company's consolidated financial statements.

33

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

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 consolidated financial statements.

Note 3 — Fair Value of Financial Instruments

The Company’s fair value measurements are classified into a fair value hierarchy in accordance with ASC Topic 820, Fair Value Measurement, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine 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.

All of the Company’s investment portfolio at September 30, 2017 was comprised of debt and equity instruments for which Level 1 inputs, such as quoted prices, were not available. Therefore, at September 30, 2017, 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 September 30, 2017 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 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.

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

34

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

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 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, as of the Company's measurement date.

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 cash flows from the assets, and distribute the cash flows to the liability structure based on priority of payments. The 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 consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations on the consolidated financial statements.

    

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

The following table presents fair value measurements of investments, by major class, as of September 30, 2017, according to the fair value hierarchy:

	Fair Value Measurements
	Level 1				Level 2				Level 3				Measured at Net Asset Value (1)				Total
Senior Secured First Lien Debt	$	—			$	208,009			$	1,510,975			$	—			$	1,718,984
Senior Secured Second Lien Debt	—				25,929				253,817				—				279,746
Subordinated Debt	—				10,650				60,900				—				71,550
Collateralized Securities	—				—				168,700				—				168,700
Equity/Other	—				7,402				102,870				108,932				219,204
Total	$	—			$	251,990			$	2,097,262			$	108,932			$	2,458,184

______________

⁽¹⁾ In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient election 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 consolidated statements of assets and liabilities.

35

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

The following table presents fair value measurements of investments, by major class, as of December 31, 2016, according to the fair value hierarchy:

	Fair Value Measurements
	Level 1				Level 2				Level 3				Measured at Net Asset Value (1)				Total
Senior Secured First Lien Debt	$	—			$	714,562			$	916,099			$	—			$	1,630,661
Senior Secured Second Lien Debt	—				56,936				205,051				—				261,987
Subordinated Debt	—				—				80,540				—				80,540
Collateralized Securities	—				—				249,582				—				249,582
Equity/Other	—				—				56,794				114,519				171,313
Total	$	—			$	771,498			$	1,508,066			$	114,519			$	2,394,083

______________

⁽¹⁾ In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient election 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 consolidated statements of assets and liabilities.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2017:

	Senior Secured First Lien Debt				Senior Secured Second Lien Debt				Subordinated Debt				Collateralized Securities				Equity/Other				Total
Balance as of December 31, 2016	$	916,099			$	205,051			$	80,540			$	249,582			$	56,794			$	1,508,066
Net change in unrealized appreciation (depreciation) on investments	(32,773		)		(790		)		(2,035		)		(9,092		)		9,023				(35,667		)
Purchases and other adjustments to cost	463,431				58,850				2,295				121				37,570				562,267
Sales and redemptions	(293,002		)		(46,259		)		(21,095		)		(70,030		)		(521		)		(430,907		)
Net realized gains (losses)	1,539				586				1,195				(1,881		)		4				1,443
Transfers in	455,681				36,379				—				—				—				492,060
Transfers out	—				—				—				—				—				—
Balance as of September 30, 2017	$	1,510,975			$	253,817			$	60,900			$	168,700			$	102,870			$	2,097,262
Net change in unrealized appreciation (depreciation) 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       appreciation (depreciation):	$	(32,737	)		$	(383	)		$	(995	)		$	(10,228	)		$	9,023			$	(35,320	)

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

36

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

For the nine months ended September 30, 2017, there were no transfers out of Level 1 to Level 2 and Level 3 to Level 2. For the nine months ended September 30, 2017, thirty-eight investments in companies were transferred out of Level 2 to Level 3.

    

Transfers during the period were due to changes in management's assessment of liquidity in the underlying positions.

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

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, 2016:

	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 change in unrealized appreciation (depreciation) on investments	(39,045		)		4,506				1,120				48,557				(19,214		)		(4,076		)
Purchases and other adjustments to cost	255,985				27,416				5,813				162				201				289,577
Sales and redemptions	(241,206		)		(118,913		)		(7,403		)		(60,921		)		(4,069		)		(432,512		)
Net realized gains (losses)	(9,461		)		1,538				(11,262		)		—				(6,081		)		(25,266		)
Transfers in	4,252				—				—				—				—				4,252
Transfers out	(149,466		)		(50,059		)		—				—				(29,155		)		(228,680		)
Balance as of December 31, 2016	$	916,099			$	205,051			$	80,540			$	249,582			$	56,794			$	1,508,066
Net change in unrealized appreciation (depreciation) 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 appreciation (depreciation):	$	(41,722	)		$	1,653			$	(603	)		$	48,557			$	(21,841	)		$	(13,956	)

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

For the year ended December 31, 2016, there were no transfers out of Level 1 to Level 2. For the year ended December 31, 2016, an investment in one company was transferred out of Level 2 to Level 3. For the year ended December 31, 2016, investments in seventeen companies were transferred from Level 3 to Level 2 as the number of observable market quotes increased.

 

37

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

The composition of the Company’s investments as of September 30, 2017, at amortized cost and fair value, were as follows:

	Investments at Amortized Cost				Investments at Fair Value				Fair Value Percentage of Total Portfolio
Senior Secured First Lien Debt	$	1,819,236			$	1,718,984			69.9	%
Senior Secured Second Lien Debt	281,667				279,746				11.4
Subordinated Debt	73,451				71,550				2.9
Collateralized Securities	202,985				168,700				6.9
Equity/Other	194,289				219,204				8.9
Total	$	2,571,628			$	2,458,184			100.0	%

The composition of the Company’s investments as of December 31, 2016, at amortized cost and fair value, were as follows:

	Investments at Amortized Cost				Investments at Fair Value				Fair Value Percentage of Total Portfolio
Senior Secured First Lien Debt	$	1,726,833			$	1,630,661			68.1	%
Senior Secured Second Lien Debt	272,513				261,987				10.9
Subordinated Debt	81,056				80,540				3.4
Collateralized Securities	274,776				249,582				10.4
Equity/Other	160,360				171,313				7.2
Total	$	2,515,538			$	2,394,083			100.0	%

38

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Significant Unobservable Inputs

The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of September 30, 2017. 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)		$	1,149,148			Yield Analysis		Market Yield		5.25	%		25.00	%		8.94	%
Senior Secured First Lien Debt (b) (c)		$	141,549			Waterfall Analysis		Discount Rate		14.00	%		16.00	%		N/A
Senior Secured Second Lien Debt (d)		$	241,005			Yield Analysis		Market Yield		9.25	%		17.19	%		11.97	%
Subordinated Debt (c) (e)		$	37,192			Waterfall Analysis		Discount Rate		8.40	%		9.40	%		N/A
Subordinated Debt (c) (e)		$	3,181			Yield Analysis		Market Yield		12.70	%		14.90	%		N/A
Collateralized Securities		$	168,700			Discounted Cash Flow		Discount Rate		12.00	%		39.00	%		19.81	%
Equity/Other (f)		$	51,347			Waterfall Analysis		Discount Rate		8.90%			15.00%			11.33%
Equity/Other (f)		$	27,580			Discounted Cash Flow		Discount Rate		2.00%			12.85%			12.45%
Equity/Other (f)		$	1,201			Waterfall Analysis		EBITDA Multiple		6.63x			10.00x			8.14x
Equity/Other (f)		$	207			Option Pricing Method		Volatility		40.00%			60.00%			55.76%

______________

    

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

(b)	The remaining $220.4 million of senior secured first lien debt consisted of $107.8 million which were valued using a Scenario-Based analysis technique factoring in various unobservable inputs, $101.8 million which were valued based on their respective acquisition prices as the investments closed near period end, and $10.8 million which were valued using their respective mark.

(c)	Weighted average not applicable as this asset category contains one investment.

(d)	The remaining $12.8 million of senior secured second lien debt were valued based on their respective acquisition prices as the investments closed near year end.

(e)	The remaining $20.5 million of subordinated debt were valued using a Scenario-Based analysis technique factoring in various unobservable inputs.

(f)	The remaining $22.5 million of equity/other investments were valued using the Current Value Method, factoring in various unobservable inputs.

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.

39

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

    

The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of December 31, 2016. 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)		$	823,974			Yield Analysis		Market Yield		6.00	%		27.00	%		10.88	%
Senior Secured First Lien Debt (c)		$	19,708			Joint Venture/Merger Strategy		EBITDA Multiple		6.75x			7.50x			N/A
Senior Secured Second Lien Debt		$	205,051			Yield Analysis		Market Yield		10.60	%		13.60	%		11.91	%
Subordinated Debt (d)		$	78,808			Yield Analysis		Market Yield		12.25	%		17.25	%		14.11	%
Collateralized Securities		$	249,582			Discounted Cash Flow		Discount Rate		7.54	%		45.06	%		19.84	%
Equity/Other (e)		$	10,279			Market Multiple Analysis		EBITDA Multiple		2.40x			11.20x			7.00x

______________

    

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

(b)	Refer to note (c) below for one senior secured first lien debt investment valued using an alternative technique. The remaining $72.4 million of senior secured first lien debt were valued at their respective acquisition prices as the investments closed near year end.

(c)	Weighted average not applicable as this asset category contains one investment.

(d)	The remaining $1.7 million of subordinated debt were valued based on a Monte-Carlo simulation.

(e)	The remaining $46.5 million of equity/other investments consisted of $46.0 million which were valued with consideration of their respective appraisal value, $0.3 million which were based on a Monte-Carlo simulation, and $0.2 million which were valued at their respective acquisition prices as the investment closed near year end.

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.

As of September 30, 2017, the Company had five portfolio companies, which represented eleven portfolio investments, on non-accrual status with a total principal amount of $135.8 million, amortized cost of $124.8 million, and fair value of $48.2 million, which represented 4.9%, 4.9% and 2.0% of the investment portfolio total principal, amortized cost and fair value, respectively. As of December 31, 2016, the Company had six portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $136.2 million, amortized cost of $127.6 million, and fair value of $51.2 million which represented 5.0%, 5.1% and 2.1% of the investment portfolio total principal, amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - in the consolidated financial statements included in this report for additional details regarding the Company’s non-accrual policy.

Note 4 — Related Party Transactions and Arrangements

Investment Advisory Agreement

Pursuant to the Investment Advisory Agreement and for the investment advisory and management services provided thereunder, the Company pays the Adviser a base management fee and an incentive fee.

40

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Base Management Fee

The base management fee is calculated at an annual rate of 1.5% of the Company’s average gross assets. The base management fee is payable quarterly in arrears. Average gross assets is calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters. All or any part of the base management fee not taken as to any quarter shall be deferred without interest and may be taken in such other quarter as the Adviser will determine. The base management fee for any partial month or quarter is appropriately pro-rated.

Incentive Fees

The incentive fee consists of two parts. The first part is referred to as the incentive fee on income and it is calculated and payable quarterly in arrears based on the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter. “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees, other than fees for providing managerial assistance, such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount debt instruments with payment-in-kind interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. The payment of the incentive fee on income shall be subject to payment of a preferred return to investors each quarter, expressed as a quarterly rate of return on the value of our net assets at the end of the most recently completed calendar quarter, of 1.75% (7.00% annualized), subject to a “catch up” feature (as described below). The calculation of the incentive fee on income for each quarter is as follows:

•	No incentive fee on income shall be payable to the Adviser in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the preferred return rate of 1.75% or 7.00% annualized (the “Preferred Return”) on net assets;

•

100% of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds the preferred return but is less than or equal to 2.1875% in any calendar quarter (8.75% annualized) shall be payable to the Adviser. This portion of the Company’s incentive fee on income is referred to as the “catch up” and is intended to provide the Adviser with an incentive fee of 20% on all of the Company’s Pre-Incentive Fee Net Investment Income when the Company’s Pre-Incentive Fee Net Investment Income reaches 2.1875% (8.75% annualized) in any calendar quarter; and

•	For any quarter in which our Pre-Incentive Fee Net Investment Income exceeds 2.1875% (8.75% annualized), the incentive fee on income shall equal 20% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, as the Preferred Return and catch-up will have been achieved.

The second part of the incentive fee, referred to as the “incentive fee on capital gains during operations,” shall be an incentive fee on capital gains earned on liquidated investments from the portfolio during operations prior to the Company’s liquidation and shall be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, if earlier). This fee shall equal 20.0% of the Company’s incentive fee capital gains, which shall equal 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.

The Transaction

On July 19, 2016, American Realty Capital II Advisors, LLC, the former parent of the Adviser, entered into a membership interest purchase agreement with a subsidiary of BSP, pursuant to which such subsidiary acquired all of the outstanding limited liability company interests of the Adviser (the “Transaction”). In connection with the Transaction, the Company amended the Investment Advisory Agreement, effective as of November 1, 2016, to allow the Adviser to serve as investment adviser to the Company following the closing of the Transaction.

41

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Administration Agreement

In connection with the closing of the Transaction, the Company terminated the previous administration agreement and entered into a new administration agreement with BSP on November 1, 2016. In connection with the New Administration Agreement, BSP provides the Company with office facilities and administrative services.

Co-Investment Relief

The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC. The SEC staff has granted the Company exemptive relief that allows it to enter into certain negotiated co-investment transactions alongside with other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with its investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, the Company is permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of its eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to the Company and our stockholders and do not involve overreaching in respect of the Company or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objective and strategies.

Transactions with Affiliates

    

In connection with the closing of the Transaction, an affiliate of BSP purchased $10.0 million of the Company’s common stock based on its net asset value per share in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"). On November 7, 2016, the Company issued approximately 1.2 million shares of its common stock to such BSP affiliate.

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 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.

Due (to)/from affiliate

As of September 30, 2017 and December 31, 2016, there were no amounts due (to)/from affiliate.

Other Affiliated Parties

The Adviser is the investment adviser of BDCA. The Adviser is an affiliate of BSP, an SEC registered investment adviser. The Adviser and BSP are under common control. The Adviser is affiliated and under common control with Providence Equity Capital Markets L.L.C. (“PECM”), an SEC registered investment adviser on the BSP platform. The Adviser is affiliated and under common control with Providence Equity Partners L.L.C. (“PEP”), an SEC registered investment adviser. PEP is a global private equity investment adviser and maintains an information barrier between itself and the Adviser, BSP and PECM. The Adviser is affiliated and under common control with Merganser Capital Management, LLC (“Merganser”), an SEC registered investment adviser. BSP, the Adviser, PECM, Merganser and PEP’s respective Form ADV’s are publicly available for review on the SEC Investment Adviser Public Disclosure website.

42

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Note 5 — Borrowings

Wells Fargo Credit Facility

On July 24, 2012, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, 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”). The Wells Fargo Credit Facility, which was subsequently amended on April 26, 2013, September 9, 2013, June 30, 2014, May 29, 2015, November 4, 2015, and May 18, 2017 provides for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis. The Wells Fargo Credit Facility has a maturity date of May 18, 2022.

The Wells Fargo Credit Facility is priced at the one-month maturity London Interbank Offered Rate (“LIBOR”), with no LIBOR floor, plus a spread ranging between 1.65% and 2.50% per annum, depending on the composition of the portfolio of loans owned by Funding I for the relevant period. Interest is payable quarterly in arrears. Funding I is subject to a non-usage fee to the extent the aggregate principal amount available under the Wells Fargo Credit Facility has not been borrowed. The non-usage fee per annum is 0.50% for the first 25% of the unused balance and 2.0% for the portion of the unused balance that exceeds 25%.

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. 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, 2L Funding I, entered into the credit facility with Deutsche Bank (the “Deutsche Bank Credit Facility”) as lender and as administrative agent and U.S. Bank as collateral agent and collateral custodian. The Deutsche Bank Credit Facility was amended on February 19, 2016, and it was terminated in accordance with its terms on June 3, 2016.

The Deutsche Bank Credit Facility provided for borrowings in an aggregate principal amount of up to $60.0 million with a term of 36 months. The Deutsche Bank Credit Facility was priced at LIBOR plus 4.25%, with no LIBOR floor. Prior to its termination, the Deutsche Bank Credit Facility was subject to a minimum utilization of 82.5% of the loan amount thereafter, measured quarterly. If the utilized portion of the loan amount was less than the foregoing thresholds, such shortfalls bore interest at LIBOR plus 4.25%. The Deutsche Bank Credit Facility provided for monthly interest payments for each drawn loan. 2L Funding I paid a structuring fee and incurred certain other customary costs and expenses in connection with obtaining the Deutsche Bank Credit Facility.

    

43

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Citi Credit Facility

On June 27, 2014, the Company, through a wholly-owned, special purpose financing subsidiary, CB Funding, entered into a credit facility (the “Citi Credit Facility”) with Citibank, N.A. ("Citi") as administrative agent and U.S. Bank as collateral agent, account bank and collateral custodian. The Citi Credit Facility, which was subsequently amended on October 14, 2015, provides for borrowings 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. The Citi Credit Facility was amended on September 14, 2017 to extend the investment period to November 30, 2017. The Citi Credit Facility has a maturity date of June 27, 2018.

The Citi Credit Facility is priced at three month LIBOR, with no LIBOR floor, plus a spread of 1.70% per annum for the first twenty-four months and 2.00% per annum thereafter. Interest is payable quarterly in arrears. CB Funding is subject to a non-usage fee to the extent the aggregate principal amount available under the Citi Credit Facility has not been borrowed. Any amounts borrowed under the Citi Credit Facility along with any accrued and unpaid interest thereunder will mature, and will be due and payable, in three years.

    

UBS Credit Facility

On April 7, 2015, the Company, through a wholly-owned, special-purpose, bankruptcy-remote subsidiary, Helvetica Funding, entered into a debt financing facility with UBS AG, London Branch (“UBS”), pursuant to which $150.0 million has been 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. On June 6, 2016, the UBS credit facility was again amended to increase the amount of debt available from $210.0 million to $232.5 million. In addition, the amended facility increased the applicable spread over a three-month LIBOR from 3.90% to 4.05% per annum for the relevant period and increased the permissible percentage of second lien loans from 60% to 70%. Pricing under the transaction is based on three-month LIBOR plus a spread of 4.05% per annum for the relevant period. The UBS Credit Facility has a maturity date of April 7, 2018.

Unsecured Notes

On August 26, 2015, the Company entered into a Purchase Agreement with the initial purchasers, relating to the Company’s sale of $100.0 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 $1.6 million payable by the Company and estimated offering expenses of approximately $0.5 million payable by the Company. The Company used 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

44

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

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 U.S. GAAP. These covenants are subject to important limitations and exceptions that are described in the Indenture.

JP Morgan Securities LLC Prime Brokerage Account

On January 20, 2017, the Company entered into a prime brokerage account agreement with JP Morgan Securities LLC (the “JPMC PB Account”). The JPMC PB Account provides a full suite of services around the custody of bonds and equities and also access to leverage, which is dependent on the price, credit quality and diversity of the pool of assets held within the account. The borrowing availability is recalculated daily based on changes to the assets, with margin calls issued in the morning as appropriate. The cost to borrow is 1 week LIBOR + 90 bps and there is no mandatory usage or period wherein the debt needs to be repaid.

As of September 30, 2017, the Company had borrowings of $25.7 million and additional borrowing capacity of $6.5 million under the JPMC PB Account.

The weighted average annualized interest cost for all borrowings for the nine months ended September 30, 2017 and September 30, 2016 was 3.91% and 3.49%, respectively. The average daily debt outstanding for the nine months ended September 30, 2017 and September 30, 2016 was $968.3 million and $883.6 million, respectively. The maximum debt outstanding for the nine months ended September 30, 2017 and September 30, 2016 was $1.1 billion and $945.0 million, respectively.

The following table represents borrowings as of September 30, 2017:

	Level		Maturity Date		Total Aggregate Borrowing Capacity				Total Principal Outstanding				Less Deferred Financing Costs				Amount per Balance Sheet
Wells Fargo Credit Facility	3		5/18/2022		$	400,000			$	371,152			$	(6,662	)		$	364,490
Citi Credit Facility	3		6/27/2018		400,000				286,003				(544		)		285,459
UBS Credit Facility	3		4/7/2018		232,500				232,500				(213		)		232,287
Unsecured Notes	3		9/1/2020		100,000				99,078				(366		)		98,712
JPMC PB Account	n/a		n/a		32,183				25,673				—				25,673
Totals					$	1,164,683			$	1,014,406			$	(7,785	)		$	1,006,621

45

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

The following table represents borrowings as of December 31, 2016:

	Level		Maturity Date		Total Aggregate Borrowing Capacity				Total Principal Outstanding				Less Deferred Financing Costs				Amount per Balance Sheet
Wells Fargo Credit Facility	3		5/29/2020		$	400,000			$	298,152			$	(2,939	)		$	295,213
Citi Credit Facility	3		6/27/2018		400,000				286,003				(1,097		)		284,906
UBS Credit Facility	3		4/7/2018		232,500				232,500				(517		)		231,983
Unsecured Notes	3		9/1/2020		100,000				98,842				(460		)		98,382
Totals					$	1,132,500			$	915,497			$	(5,013	)		$	910,484

The following table represents interest and debt fees for the three and nine months ended September 30, 2017:

	Three months ended September 30, 2017																Nine months ended September 30, 2017
	Interest Rate		Non-Usage Rate		Interest Expense				Deferred Financing Costs (3)				Other Fees (4)				Interest Rate		Non-Usage Rate		Interest Expense				Deferred Financing Costs (3)				Other Fees (4)
Wells Fargo Credit Facility	(1)		(2)		$	3,212			$	363			$	90			(1)		(2)		$	8,440			$	861			$	593
Citi Credit Facility	L+1.70%		0.50%		2,339				186				137				L+1.70%		0.50%		6,634				552				401
UBS Credit Facility	L+4.05%		n/a		3,177				104				24				L+4.05%		n/a		9,162				309				80
Unsecured Notes	6.00%		n/a		1,580				32				—				6.00%		n/a		4,736				94				7
JPMC PB Account	L+0.90%		n/a		204				—				—				L+0.90%		n/a		239				—				—
Totals					$	10,512			$	685			$	251							$	29,211			$	1,816			$	1,081

_________________

⁽¹⁾ Interest rate is priced at one month's LIBOR with no LIBOR floor, plus a spread ranging between 1.65% and 2.50% per annum, depending on the composition of the portfolio of loans owned.

⁽²⁾ The non-usage fee per annum is 0.50% for the first 25% of the unused balance and 2.0% for the unused balance that exceeds 25%.

⁽³⁾ Amortization of deferred financing costs.

⁽⁴⁾ Includes non-usage fees, custody fees and trustee fees.

46

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

The following table represents interest and debt fees for the three and nine months ended September 30, 2016:

	Three months ended September 30, 2016																Nine months ended September 30, 2016
	Interest Rate		Non-Usage Rate		Interest Expense				Deferred Financing Costs (5)				Other Fees (6)				Interest Rate		Non-Usage Rate		Interest Expense				Deferred Financing Costs (5)				Other Fees (6)
Wells Fargo Credit Facility	(1)		(2)		$	2,038			$	217			$	340			(1)		(2)		$	5,909			$	864			$	926
Deutsche Bank Credit Facility	L+4.25%		(3) (4)		—				—				—				L+4.25%		(3)		679				412				295
Citi Credit Facility	L+1.70%		0.50%		1,813				186				125				L+1.70%		0.50%		5,027				703				447
UBS Credit Facility	L+4.05%		n/a		2,781				99				24				L+4.05%		n/a		7,652				194				38
Unsecured Notes	6.00%		n/a		1,513				32				n/a				6.00%		n/a		4,704				94				n/a
Totals					$	8,145			$	534			$	489							$	23,971			$	2,267			$	1,706

_________________

⁽¹⁾ Interest rate is priced at one month's 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 non-usage fee per annum for the first nine months is 0.50%; thereafter, 0.50% for the first 20% of the unused balance and 2.0% for the unused balance that exceeds 20%.

⁽³⁾ The undrawn rate is 0.75% per annum based on average undrawn amount. 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 bears interest at LIBOR + 4.25%.

⁽⁴⁾ On June 3, 2016, the Deutsche Bank Credit Facility was repaid and terminated.

⁽⁵⁾ Amortization of deferred financing costs.

⁽⁶⁾ Includes non-usage fees and custody fees.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate fair 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 consolidated statements of assets and liabilities due to their short-term nature. The fair value of the Company's Unsecured Notes is derived from market indications provided by Bloomberg Finance L.P. at September 30, 2017 and December 31, 2016, respectively.

    

At September 30, 2017, the carrying amount of our borrowings approximated their fair value. The fair values of our debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of our borrowings are estimated based upon market interest rates for our own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any. As of September 30, 2017 and December 31, 2016, our borrowings would be deemed to be Level 3, as defined in Note 3.

47

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

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 September 30, 2017				Fair Value at September 30, 2017
Wells Fargo Credit Facility	3		$	371,152			$	371,152
Citi Credit Facility	3		286,003				286,003
UBS Credit Facility	3		232,500				232,500
Unsecured Notes	3		99,078				100,854
JPMC PB Account	n/a		25,673				25,673
			$	1,014,406			$	1,016,182

	Level		Carrying Amount at December 31, 2016				Fair Value at December 31, 2016
Wells Fargo Credit Facility	3		$	298,152			$	298,152
Citi Credit Facility	3		286,003				286,003
UBS Credit Facility	3		232,500				232,500
Unsecured Notes	3		98,842				98,125
			$	915,497			$	914,780

Note 6 — Commitments and Contingencies

Commitments

In the ordinary course of business, the Company may enter into future funding commitments. As of September 30, 2017, the Company had unfunded commitments on delayed draw term loans of $31.8 million, unfunded commitments on revolver term loans of $26.2 million and unfunded equity capital commitments of $8.7 million. As of December 31, 2016, the Company had unfunded commitments on delayed draw term loans of $35.7 million, unfunded commitments on revolver term loans of $24.7 million and unfunded equity capital commitments of $9.4 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).

48

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

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 September 30, 2017, the Company sold 194.5 million shares of common stock for gross proceeds of $2.1 billion, including shares purchased by an affiliate of BSP 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 September 30, 2017, the Company had repurchased 16.0 million shares of common stock through its share repurchase program for payments of $143.6 million.

The following table reflects the common stock activity for the nine months ended September 30, 2017 (dollars in thousands except share amounts):

		Shares			Value
Shares Sold		—			$	—
Shares Issued through DRIP		4,906,334			41,961
Share Repurchases		(3,550,326	)		(30,239		)
		1,356,008			$	11,722

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

		Shares			Value
Shares Sold		1,165,501			$	10,000
Shares Issued through DRIP		6,591,972			58,424
Share Repurchases		(9,778,710	)		(85,844		)
		(2,021,237	)		$	(17,420	)

49

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

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 considers the following factors 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;

•the condition of the securities markets.

    

On March 8, 2016, the Company's board of directors amended the Company's SRP. The Company intends to conduct tender offers on a semi-annual basis, instead of on a quarterly basis as was done previously. The Company intends to 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. The Company's three most recent tender offers were oversubscribed.

 

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
July 26, 2016		December 31, 2016		17,004,354			6,715,864			$	8.58			$	57,622.10
June 8, 2017		July 6, 2017		11,747,753			3,433,482			$	8.52			$	28,576.26

    

Share amounts in the table above represent amounts filed in the tender offer.

Through September 30, 2017, the Company had repurchased an aggregate of 16.0 million shares of common stock for payments of $143.6 million. As of December 31, 2016, the Company had repurchased 12.5 million shares of common stock for payments of $113.4 million. Amounts include additional shares tendered for death and disability as permitted.

50

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Note 10 — Net Increase (Decrease) 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 September 30, 2017 and December 31, 2016.

The following information sets forth the computation of the weighted average basic and diluted net increase (decrease) in net assets per share resulting from operations for the three and nine months ended September 30, 2017 and September 30, 2016:

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2017				2016				2017				2016
Basic and diluted
Net increase (decrease) in net assets resulting from operations	$	17,288			$	(6,747	)		$	51,369			$	48,485
Weighted average common shares outstanding	179,311,957				180,277,765				179,140,235				179,345,395
Net increase (decrease) in net assets resulting from operations per share	$	0.10			$	(0.04	)		$	0.29			$	0.27

    

Note 11 — Distributions

The Company’s board of directors has authorized, and has declared, cash distributions payable on a monthly basis to stockholders of record on each day since it commenced operations. From November 2013 until July 2017, the distribution rate has been $0.002378082 per day, which is equivalent to $0.868 per annum, per share of common stock, except for 2016 where the daily distribution rate was $0.002371585 per day to accurately reflect 2016 being a leap year. In July 2017, the board of directors reduced the distribution rate with respect to the Company's cash distributions to $0.001780822 per day, which is equivalent to $0.65 annually, per share of common stock.

The amount of each such distribution is subject to the discretion of the board of directors and applicable legal restrictions related to the payment of distributions. The Company calculates 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 fifth 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 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 September 30, 2017, the Company had accrued $9.5 million in stockholder distributions that were unpaid. As of December 31, 2016, the Company had accrued $13.5 million in stockholder distributions that were unpaid.

    

51

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

The table below reflects the cash distributions per share that we have paid on our common stock since January 2016.

Record Date		Payment Date		Per share				Distributions Paid in Cash				Distributions Paid Through the DRIP				Total Distributions Paid
2016:
January 31, 2016		February 3, 2016		$	0.07			$	8,922			$	4,298			$	13,220
February 28, 2016		March 1, 2016		0.07				7,014				5,333				12,347
March 31, 2016		April 1, 2016		0.07				7,363				5,718				13,081
April 30, 2016		May 2, 2016		0.07				12,708				(2		)		12,706
May 31, 2016		June 2, 2016		0.07				7,582				5,539				13,121
June 30, 2016		July 1, 2016		0.07				7,438				5,304				12,742
July 31, 2016		August 1, 2016		0.07				7,789				5,421				13,210
August 31, 2016		September 1, 2016		0.07				7,908				5,351				13,259
September 30, 2016		October 3, 2016		0.07				7,745				5,127				12,872
October 31, 2016		November 1, 2016		0.07				8,067				5,273				13,340
November 30, 2016		December 1, 2016		0.07				7,947				5,073				13,020
December 31, 2016		January 3, 2017		0.07				8,311				5,205				13,516
								$	98,794			$	57,640			$	156,434
2017:
January 31, 2017		February 3, 2017		$	0.07			$	7,983			$	5,081			$	13,064
February 28, 2017		March 1, 2017		0.07				7,250				4,612				11,862
March 31, 2017		April 3, 2017		0.07				8,135				5,060				13,195
April 30, 2017		May 1, 2017		0.07				7,942				4,881				12,823
May 31, 2017		June 1, 2017		0.07				8,270				4,995				13,265
June 30, 2017		July 3, 2017		0.07				8,064				4,813				12,877
July 31, 2017		August 3, 2017		0.06				6,307				3,692				9,999
August 31, 2017		September 1, 2017		0.06				6,223				3,622				9,845
September 30, 2017		October 2, 2017		0.05				6,060				3,477				9,537
								$	66,234			$	40,233			$	106,467

    

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 Code. Generally, a RIC will not be subject to federal income taxes if it meets, certain quarterly asset diversification requirements, annual income composition tests, and distributes dividends for U.S. federal income tax purposes to stockholders each year of an amount generally at least equal to 90% of its “investment company taxable income” as defined in the Code and determined without regard to any deduction for dividends paid. Distributions declared prior to the filing of the previous year’s tax return and paid up to twelve months after the previous tax year can be carried back to the prior year in determining distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its ability to be subject to be taxed as a RIC each year.

Accordingly, no provision for federal income tax has been recorded in the consolidated financial statements.

52

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year and incur a 4% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned.

The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes (“ASC Topic 740”), nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company's 2016, 2015 and 2014 federal tax returns remain subject to examination by the Internal Revenue Service. Interest and penalties related to taxes are classified as other general and administrative on the consolidated statements of operations, if any.

As of September 30, 2017, the Company had a gross deferred tax asset of $2.5 million and a deferred tax liability of $(3.2) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.5 million. As of December 31, 2016, the Company had a gross deferred tax asset of $2.3 million and a deferred tax liability of $(2.6) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.2 million. 

The deferred tax asset valuation allowance has been determined pursuant to the provisions of ASC Topic 740, 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.     

53

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Note 13 — Financial Highlights

The following is a schedule of financial highlights for the nine months ended September 30, 2017 and September 30, 2016:

	For the Nine Months Ended September 30,				For the Nine Months Ended September 30,
	2017				2016
Per share data:
Net asset value, beginning of period	$	8.62			$	8.97
Results of operations (1)        Net investment income	0.45				0.52
Net realized and unrealized gain (loss) on investments, net of deferred taxes	(0.16		)		(0.25		)
Net increase in net assets resulting from operations	0.29				0.27
Stockholder distributions (2)        Distributions	(0.60		)		(0.65		)
Net decrease in net assets resulting from stockholder distributions	(0.60		)		(0.65		)
Capital share transactions        Issuance of common stock (3)	—				(0.01		)
Repurchases of common stock	—				—
Net increase (decrease) in net assets resulting from capital share transactions	—				(0.01		)
Net asset value, end of period	$	8.31			$	8.58
Shares outstanding at end of period	178,476,800				180,904,847
Total return (4)	3.36		%		3.03		%
Ratio/Supplemental data:
Net assets, end of period (in thousands)	$	1,486,921			$	1,555,885
Ratio of net investment income to average net assets (6)(7)	7.43		%		8.14		%
Ratio of total expenses to average net assets (6)(7)	7.32		%		6.67		%
Portfolio turnover rate (5)	29.13		%		16.70		%

______________

(1)	Per share data was derived by using the weighted average shares outstanding during the period.

(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 DRIP.

(4)	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.

(5)	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.

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

(7)	There were no offering costs incurred during the period.

54

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Note 14 – Schedules of Investments and Advances to Affiliates

The following table presents the Schedule of Investments and Advances to Affiliates as of September 30, 2017:

Portfolio Company (1)		Type of Asset		Amount of dividends and interest included in income				Beginning Fair Value at December 31, 2016				Gross additions*				Gross reductions**				Realized Gain/(Loss)				Change in Unrealized Gain (Loss) (6)				Fair Value at September 30, 2017
Control Investments
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (4)		Senior Secured First Lien Debt		$	—			$	19,708			$	—			$	—			$	—			$	(8,414	)		$	11,294
Kahala Ireland OpCo Designated Activity Company (3)		Senior Secured First Lien Debt		14,542				149,409				140				(8,000		)		—				—				141,549
Kahala Ireland OpCo Designated Activity Company - Common Equity (3)		Equity/Other		—				8,180				—				—				—				6,936				15,116
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (3)		Equity/Other		—				3,250				—				(48		)		—				48				3,250
Kahala US OpCo LLC (3)		Senior Secured First Lien Debt		120				2,690				—				(2,690		)		—				—				—
Kahala US OpCo LLC - Class A Preferred Units (3)		Equity/Other		—				4,000				—				(32		)		—				(1,880		)		2,088
Park Ave RE Holdings, LLC (2)		Subordinated Debt		3,667				37,192				—				—				—				—				37,192
Park Ave RE Holdings, LLC (2) - Common Shares		Equity/Other		—				6,564				—				—				—				684				7,248
Park Ave RE Holdings, LLC (2) - Preferred Shares		Equity/Other		946				23,645				—				—				—				—				23,645
Total Control Investments				$	19,275			$	254,638			$	140			$	(10,770	)		$	—			$	(2,626	)		$	241,382
Affiliate Investments
Answers Corporation		Senior Secured First Lien Debt		$	98			$	—			$	2,963			$	(15	)		$	—			$	(24	)		2,924
Answers Corporation		Senior Secured First Lien Debt		(1		)		—				17,064				(15,365		)		(18,223		)		16,524				—
Answers Corporation		Senior Secured First Lien Debt		1				—				2,954				(2,954		)		—				—				—
Answers Corporation		Senior Secured Second Lien Debt		271				—				4,079				(24		)		3				324				4,382
Answers Corporation		Equity/Other		—				—				11,361				—				—				2,436				13,797
B&M CLO 2014-1, LTD. Subordinated Notes		Collateralized Securities		369				16,772				—				(3,912		)		—				1,183				14,043
CVP Cascade CLO, LTD. Subordinated Notes		Collateralized Securities		3				8,868				—				(2,116		)		—				(1,621		)		5,131
CVP Cascade CLO-2, LTD. Subordinated Notes (7)		Collateralized Securities		191				11,593				—				(10,837		)		(2,829		)		2,073				—
Danish CRJ LTD.		Senior Secured First Lien Debt		—				20				—				(7		)		—				7				20
Danish CRJ LTD.		Equity/Other		—				407				—								—				349				756
Fifth Street Senior Loan Fund LLC 2015-1A Class F		Collateralized Securities		824				8,455				121				—				—				37				8,613
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes		Collateralized Securities		1,747				20,579				—				(1,732		)		—				(1,858		)		16,989
Figueroa CLO 2014-1, LTD. Subordinated Notes		Collateralized Securities		(103		)		16,101				—				(2,866		)		—				(1,814		)		11,421
MidOcean Credit CLO II, LLC Income Notes		Collateralized Securities		1,108				22,419				—				(2,018		)		—				(2,454		)		17,947

55

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Portfolio Company (1)		Type of Asset		Amount of dividends and interest included in income				Beginning Fair Value at December 31, 2016				Gross additions*				Gross reductions**				Realized Gain/(Loss)				Change in Unrealized Gain (Loss) (6)				Fair Value at September 30, 2017
MidOcean Credit CLO III, LLC Subordinated Notes		Collateralized Securities		773				23,341				—				(2,833		)		—				(1,462		)		19,046
MidOcean Credit CLO IV, LLC Income Notes		Collateralized Securities		869				15,505				—				(1,181		)		—				(1,645		)		12,679
NMFC Senior Loan Program I, LLC		Equity/Other		5,169				47,057				—				—				—				3,207				50,264
NewStar Arlington Senior Loan Program LLC Subordinated Notes		Collateralized Securities		3,735				24,491				—				(1,462		)		—				2,240				25,269
Ocean Trails CLO V, LTD. (7)		Collateralized Securities		48				29,144				—				(29,128		)		906				(922		)		—
OFSI Fund VI, Ltd. Subordinated Notes		Collateralized Securities		762				17,354				—				(3,637		)		—				(1,154		)		12,563
PennantPark Credit Opportunities Fund II, LP		Equity/Other		501				9,788				—				(2,691		)		10				312				7,419
Related Fee Agreements (5)		Collateralized Securities		709				9,647				—				(3,052		)		42				(1,866		)		4,771
South Grand MM CLO I, LLC		Equity/Other		1,791				28,382				—				—				—				(276		)		28,106
Silver Spring CLO, Ltd. Subordinated Notes		Collateralized Securities		94				12,007				—				(2,681		)		—				1,346				10,672
Squan Holding Corp.		Senior Secured First Lien Debt		1,342				6,895				7,783				(256		)		60				(919		)		13,563
Twentyeighty, Inc. - First Lien Debt (TLA 3/20)		Senior Secured First Lien Debt		268				—				2,364				—				—				467				2,831
Twentyeighty, Inc. - First Lien Debt (TLB 3/20)		Senior Secured First Lien Debt		659				—				4,283				—				—				354				4,637
Twentyeighty, Inc. - First Lien Debt (TLC 3/20)		Senior Secured First Lien Debt		625				—				3,913				—				—				(255		)		3,658
Twentyeighty, Inc. - Class A Common Equity		Equity/Other		—				—				—				—				—				—				—
THL Credit Greenway Fund II LLC		Equity/Other		879				12,850				—				(1,620		)		—				1,739				12,969
WhiteHorse VIII, Ltd. CLO Subordinated Notes		Collateralized Securities		160				12,563				—				(2,387		)		—				(1,101		)		9,075
Total Affiliate Investments				$	22,892			$	354,238			$	56,885			$	(92,774	)		$	(20,031	)		$	15,227			$	313,545
Total Control & Affiliate Investments				$	42,167			$	608,876			$	57,025			$	(103,544	)		$	(20,031	)		$	12,601			$	554,927

______________________________________________________

*     Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

**     Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

(1)	The principal amount and ownership detail are shown in the consolidated schedules of investments.

(2)	This investment was not deemed significant under Regulation S-X as of September 30, 2017.

(3)	This investment was not deemed significant under Regulation S-X as of September 30, 2017.

(4)	This investment was not deemed significant under Regulation S-X as of September 30, 2017.

(5)	Not all Related Fee Agreements shown on the consolidated schedules of investments are Affiliated Investments.

(6)	Gross of deferred taxes.

(7)	Investment no longer held as of September 30, 2017.

    

56

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

Dividends and interest for the nine months ended September 30, 2017 attributable to Controlled and Affiliated investments no longer held as of September 30, 2017 was $0 and $0.2 million, respectively.

    

Realized gain (loss) for the nine months ended September 30, 2017 attributable to Controlled Affiliated investments no longer held as of September 30, 2017 was $0 and $(1.9) million, respectively.

    

Change in unrealized gain (loss) for the nine months ended September 30, 2017 attributable to Controlled and Affiliated investments no longer held as of September 30, 2017 was $0 and $1.2 million, respectively.

The following table presents the Schedule of Investments and Advances to Affiliates as of December 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) (6)				Fair Value at December 31, 2016
Control Investments
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (4)		Senior Secured First Lien Debt		$	713			$	29,731			$	8,933			$	—			$	—			$	(18,956	)		$	19,708
Capstone Nutrition Common Stock (fka Integrity Nutraceuticals, Inc.) (4)		Equity/Other		—				—				—				—				—				—				—
Capstone Nutrition Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (4)		Equity/Other		—				—				—				—				—				—				—
Kahala Ireland OpCo Designated Activity Company (3)		Senior Secured First Lien Debt		21,354				170,281				5,828				(26,700		)		—				—				149,409
Kahala Ireland OpCo Designated Activity Company - Common Equity (3)		Equity/Other		—				29,428				—				—				—				(21,248		)		8,180
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (3)		Equity/Other		—				3,250				—				(166		)		—				166				3,250
Kahala US OpCo LLC		Senior Secured First Lien Debt		354				2,604				86				—				—				—				2,690
Kahala US OpCo LLC - Class A Preferred Units		Equity/Other		1				4,136				—				(250		)		—				114				4,000
Park Ave RE Holdings, LLC (2)		Subordinated Debt		4,750				35,192				2,000				—				—				—				37,192
Park Ave RE Holdings, LLC (2) - Common Shares		Equity/Other		—				8,115				—				(587		)		—				(964		)		6,564
Park Ave RE Holdings, LLC (2) - Preferred Shares		Equity/Other		2,010				23,645				—				—				—				—				23,645
Total Control Investments				$	29,182			$	306,382			$	16,847			$	(27,703	)		$	—			$	(40,888	)		$	254,638
Affiliate Investments
B&M CLO 2014-1, LTD. Subordinated Notes		Collateralized Securities		$	1,938			$	19,169			$	—			$	(5,485	)		$	—			$	3,088			$	16,772
CVP Cascade CLO, LTD. Subordinated Notes		Collateralized Securities		981				11,114				—				(4,642		)		—				2,396				8,868
CVP Cascade CLO-2, LTD. Subordinated Notes		Collateralized Securities		860				12,216				—				(5,349		)		—				4,726				11,593
Danish CRJ LTD.		Senior Secured First Lien Debt		—				20				—				(13		)		—				13				20
Danish CRJ LTD.		Equity/Other		—				1,034				—				—				—				(627		)		407
Fifth Street Senior Loan Fund LLC 2015-1A Class F		Collateralized Securities		1,054				8,523				162				—				—				(230		)		8,455
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes		Collateralized Securities		2,919				23,566				—				(4,660		)		—				1,673				20,579
Figueroa CLO 2014-1, LTD. Subordinated Notes		Collateralized Securities		1,199				16,112				—				(4,518		)		—				4,507				16,101
MidOcean Credit CLO II, LLC		Collateralized Securities		2,463				23,603				—				(4,627		)		—				3,443				22,419

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(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) (6)				Fair Value at December 31, 2016
MidOcean Credit CLO III, LLC		Collateralized Securities		3,516				23,748				—				(5,133		)		—				4,726				23,341
MidOcean Credit CLO IV, LLC		Collateralized Securities		2,456				14,212				—				(2,488		)		—				3,781				15,505
NMFC Senior Loan Program I, LLC		Equity/Other		7,466				45,994				—				—				—				1,063				47,057
NewStar Arlington Senior Loan Program LLC Subordinated Notes		Collateralized Securities		5,109				24,461				—				(3,405		)		—				3,435				24,491
Ocean Trails CLO V, LTD.		Collateralized Securities		4,158				25,957				—				(3,266		)		—				6,453				29,144
OFSI Fund VI, Ltd. Subordinated Notes		Collateralized Securities		2,577				20,205				—				(5,497		)		—				2,646				17,354
PennantPark Credit Opportunities Fund II, LP		Equity/Other		650				9,082				2,691				(1,615		)		180				(550		)		9,788
Related Fee Agreements (5)		Collateralized Securities		1,434				11,679				—				(2,182		)		—				150				9,647
South Grand MM CLO I, LLC		Equity/Other		2,234				29,155				—				—				—				(773		)		28,382
Silver Spring CLO, Ltd.		Collateralized Securities		(229		)		12,269				—				(3,609		)		—				3,347				12,007
Squan Holding Corp.		Senior Secured First Lien Debt		—				—				20,421				(3,022		)		(11,017		)		513				6,895
Squan Holding Corp.		Senior Secured First Lien Debt		—				—				1,035				(1,045		)		—				10				—
Squan Holding Corp. - Class A Common Stock		Equity/Other		—				—				—				—				(12		)		12				—
Squan Holding Corp. - Series A Preferred Stock		Equity/Other		—				—				—				—				(1,139		)		1,139				—
THL Credit Greenway Fund II LLC		Equity/Other		1,135				16,910				—				(2,912		)		—				(1,148		)		12,850
WhiteHorse VIII, Ltd. CLO Subordinated Notes		Collateralized Securities		1,659				13,955				—				(5,781		)		—				4,389				12,563
Total Affiliate Investments				$	43,579			$	362,984			$	24,309			$	(69,249	)		$	(11,988	)		$	48,182			$	354,238
Total Control & Affiliate Investments				$	72,761			$	669,366			$	41,156			$	(96,952	)		$	(11,988	)		$	7,294			$	608,876

______________________________________________________

*     Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

**     Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

(1)	The principal amount and ownership detail are shown in the consolidated schedules of investments.

(2)

This investment was not deemed significant under Regulation S-X as of December 31, 2016. However, financial information is provided for comparative purposes. As of December 31, 2016, Park Ave RE Holdings LLC had total assets and liabilities of $136.3 million and $110.2 million, respectively. Total revenue and net income for the year ended December 31, 2016 were approximately $13.4 million and $1.9 million, respectively.

(3)

This investment was not deemed significant under Regulation S-X as of December 31, 2016. However, financial information is provided for comparative purposes. As of December 31, 2016, Kahala Ireland OpCo Designated Activity Company had total assets and liabilities of $463.1 million and $463.8 million, respectively. Total revenue and net income for the year ended December 31, 2016 were approximately $93.4 million and $2.2 million, respectively.

(4)	This investment is deemed significant under Regulation S-X as of December 31, 2016. As of December 31, 2016, Capstone Nutrition had total assets and liabilities of $86.0 million and $101.5 million, respectively. Total revenue and net (loss) for the year ended December 31, 2016 were approximately $129.3 million and $(51.6) million, respectively.

(5)	Not all Related Fee Agreements shown on the consolidated schedules of investments are Affiliated Investments.

(6)	Gross of deferred taxes.

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended September 30, 2017

(Unaudited)

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 consolidated financial statements except for the following:

DRIP Sales

From October 1, 2017 through the filing of this Form 10-Q, the Company issued 0.8 million shares of common stock including shares issued pursuant to the DRIP. Total gross proceeds from these issuances including proceeds from shares issued pursuant to the DRIP were $7.1 million.

Dividend Declaration

On November 1, 2017, the Company announced that its board of directors declared monthly cash dividends payable in each of December 2017 and January, February and March 2018. These monthly dividends reflect an annualized distribution rate of $0.65 per share.

    

    

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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 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 contractual arrangements and relationships with third parties;

•	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 qualifications as a regulated investment company (“RIC”) and a business development company (“BDC”);

•	the timing, form and amount of any 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;

•	the impact of changes to generally accepted accounting principles, and the impact to BDCA; and

•	the impact of changes to tax legislation and, generally, our tax position.

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. 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 an externally managed, non-diversified closed-end management investment company incorporated in Maryland in May 2010 that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (“the 1940 Act”). In addition, we have elected to be treated for tax purposes as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Our investment activities are managed by the Adviser, a subsidiary of Benefit Street Partners L.L.C. (“BSP”) and supervised by our board of directors, a majority of whom are independent of the Adviser and its affiliates. As a BDC, we are required to comply with certain regulatory requirements.

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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 senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S. middle-market companies. We define middle market companies as those with annual revenues of less than $1 billion, although we may invest in larger or smaller companies. We may also purchase interests in loans or corporate bonds through secondary market transactions. We expect that each investment generally will range between approximately 0.5% and 3.0% of our total assets. As of September 30, 2017, 81.3% of our portfolio was invested in senior secured loans.

Senior secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in priority of payments 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 also invest in the equity and junior debt tranches of collateralized loan obligation investment vehicles (“Collateralized Securities” or "CLO's").

Financial and Operating Highlights

(Dollars in millions, except per share amounts)
At September 30, 2017:
	Investment Portfolio	$	2,458.2
	Net Assets attributable to Business Development Corporation of America	1,483.5
	Debt (net of deferred financing costs)	1,006.6
	Net Asset Value per share	8.31
Portfolio Activity for the Nine Months Ended September 30, 2017:
	Cost of investments purchased during period, including PIK	792.2
	Sales, repayments and other exits during the period	706.7
	Number of portfolio companies at end of period	151
Operating results for the Nine Months Ended September 30, 2017:
	Net investment income per share	0.45
	Distributions declared per share	(0.60		)
	Net increase in net assets resulting from operations per share	0.29
	Net investment income	80.0
	Net realized and unrealized loss on investments	(28.6		)
	Net increase in net assets resulting from operations	51.4

Portfolio and Investment Activity

During the nine months ended September 30, 2017, we made $787.3 million of investments in new and existing portfolio companies and had $706.7 million in aggregate amount of exits and repayments, resulting in net investments of $80.6 million for the period. The portfolio composition by loan market consisted of 77.1% Middle Market ⁽¹⁾, 7.1% Large

Corporate ⁽²⁾, and 15.8% Other ⁽³⁾ investments. In addition, the total portfolio of debt investments at fair value consisted of 92.5% bearing variable interest rates and 7.5% bearing fixed interest rates.

______________

⁽¹⁾ Middle market represents companies with annual revenues of less than $1 billion.

⁽²⁾ Large corporate represents companies with annual revenues exceeding $1 billion.

⁽³⁾ Other represents collateralized securities and equity investments.

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Our portfolio composition, based on fair value at September 30, 2017 was as follows:

	September 30, 2017
	Percentage of Total Portfolio			Weighted Average Current Yield for Total Portfolio (1)
Senior Secured First Lien Debt	69.9	%		8.6	%
Senior Secured Second Lien Debt	11.4			10.2
Subordinated Debt	2.9			13.9
Collateralized Securities (2)	6.9			7.8
Equity/Other	8.9			N/A
Total	100.0	%		8.9	%

______________

⁽¹⁾ Includes 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, 2016, we made $678.5 million of investments in new and existing portfolio companies and had $587.9 million in aggregate amount of exits and repayments, resulting in net investments of $90.6 million for the period. The portfolio composition by loan market consisted of 75.2% Middle Market ⁽¹⁾, 7.2% Large Corporate ⁽²⁾, and 17.6% Other ⁽³⁾ investments. In addition, the total portfolio of debt investments at fair value consisted of 92.2% bearing variable interest rates and 7.8% bearing fixed interest rates.

______________

⁽¹⁾ Middle market represents companies with annual revenues of less than $1 billion.

⁽²⁾ Large corporate represents companies with annual revenues exceeding $1 billion.

⁽³⁾ Other represents collateralized securities and equity investments.

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

	December 31, 2016
	Percentage of Total Portfolio			Weighted Average Current Yield for Total Portfolio (1)
Senior Secured First Lien Debt	68.1	%		9.1	%
Senior Secured Second Lien Debt	10.9			10.7
Subordinated Debt	3.4			13.5
Collateralized Securities (2)	10.4			11.5
Equity/Other	7.2			N/A
Total	100.0	%		9.7	%

______________

⁽¹⁾ Includes 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).

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.

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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 2.35 and 2.18 as of September 30, 2017 and December 31, 2016, respectively. As of September 30, 2017, the Company had five portfolio companies, which represented eleven portfolio investments, on non-accrual status with a total principal amount of $135.8 million, amortized cost of $124.8 million, and fair value of $48.2 million, which represented 4.9%, 4.9% and 2.0% of the investment portfolio total principal, amortized cost and fair value, respectively. As of December 31, 2016, the Company had six portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $136.2 million, amortized cost of $127.6 million, and fair value of $51.2 million which represented 5.0%, 5.1% and 2.1% of the investment portfolio total principal, amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - in our consolidated financial statements included in this report for additional details regarding the Company’s non-accrual policy.

 

RESULTS OF OPERATIONS

Operating results for the three and nine months ended September 30, 2017 and September 30, 2016 was as follows (dollars in thousands):

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2017				2016				2017				2016
Total investment income	$	54,845			$	62,239			$	167,776			$	176,729
Total expenses	28,242				29,534				86,437				82,824
Income tax expense, including excise tax	79				1,140				1,349				1,140
Net investment (income) loss attributable to non-controlling interests	(6		)		5				—				15
Net investment income	$	26,530			$	31,560			$	79,990			$	92,750

 Investment Income

For the three and nine months ended September 30, 2017, total investment income was $54.8 million and $167.8 million, respectively, and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.4 billion and a weighted average current yield of 8.9%. Included within total investment income was $0.8 million and $5.9 million, respectively, of fee income for the three and nine months ended September 30, 2017. Fee income consists primarily of prepayment and amendment fees. For the three and nine months ended September 30, 2016, total investment income was $62.2 million and $176.7 million, respectively, 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 10.2%. Included within total investment income was $1.3 million and $4.9 million, respectively, of fee income for the three and nine months ended September 30, 2016. Fee income consists primarily of prepayment and amendment fees.

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Operating Expenses

The composition of our operating expenses for the three and nine months ended September 30, 2017 and September 30, 2016 was as follows (dollars in thousands):

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2017				2016				2017				2016
Management fees	$	9,907			$	9,544			$	29,136			$	28,549
Incentive fee on income	3,834				7,890				15,149				14,769
Interest and debt fees	11,448				9,168				32,108				27,944
Professional fees	1,249				1,745				4,073				4,978
Other general and administrative	1,334				627				4,679				5,188
Administrative services	203				203				608				656
Insurance	2				55				9				165
Directors' fees	265				302				675				575
Total operating expenses	$	28,242			$	29,534			$	86,437			$	82,824

For the three and nine months ended September 30, 2017, we incurred $9.9 million and $29.1 million, respectively, of management fees, of which the Adviser did not waive any such fees. For the three and nine months ended September 30, 2017, we incurred $3.8 million and $15.1 million, respectively, of incentive fees on income, of which the Adviser did not waive any such fees. For the three and nine months ended September 30, 2016, we incurred $9.5 million and $28.5 million, respectively, of management fees, of which the Adviser did not waive any such fees. For the three and nine months ended September 30, 2016, we incurred $7.9 million and $14.8 million, respectively, of incentive fees on income, of which the Adviser did not waive any such fees.

For the three and nine months ended September 30, 2017, we incurred interest and debt fees of $11.4 million and $32.1 million, respectively. For the three and nine months ended September 30, 2016, we incurred interest and debt fees of $9.2 million and $27.9 million, respectively. Interest and debt fees are comprised of interest expense, non-usage fees, trustee fees, amortization of deferred financing costs and amortization of discount if applicable related to the Wells Fargo Credit Facility, Citi Credit Facility, UBS Credit Facility, Unsecured Notes and the JPMC PB Account. The increase in interest and debt fees for the three and nine months ended September 30, 2017 as compared to the same periods in 2016 is a result of an increase in the average debt outstanding.

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

Net realized gain and net change in unrealized appreciation (depreciation) on investments, net of deferred taxes for the three and nine months ended September 30, 2017 and September 30, 2016 were as follows (dollars in thousands):

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2017				2016				2017				2016
Net realized gain (loss) from investments
Control investments	$	—			$	—			$	—			$	—
Affiliate investments	(2,809		)		—				(20,031		)		180
Non-affiliate investments	2,113				1,289				(15,647		)		3,513
Total net realized gain (loss) from investments	(696		)		1,289				(35,678		)		3,693
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
Control investments	2,178				(20,373		)		(3,017		)		(22,369		)
Affiliate investments	3,214				6,231				15,227				22,109
Non-affiliate investments	(13,680		)		(26,066		)		(4,590		)		(48,994		)
Total net change in unrealized appreciation (depreciation) on investments, net of deferred taxes	(8,288		)		(40,208		)		7,620				(49,254		)
Net change in unrealized (appreciation) depreciation attributable to non-controlling interests	(258		)		612				(563		)		1,296
Net realized and unrealized loss on investments	$	(9,242	)		$	(38,307	)		$	(28,621	)		$	(44,265	)

Net realized and unrealized loss on investments, net of deferred taxes, resulted in a net loss of $9.2 million and $28.6 million, respectively, for the three and nine months ended September 30, 2017 compared to a net loss of $38.3 million and $44.3 million, respectively, for the same periods in 2016. We look at net realized gains (losses) and change in unrealized appreciation (depreciation) together, as movement in unrealized appreciation or depreciation can be the result of realizations.

The net realized and unrealized loss for the three and nine months ended September 30, 2017 was primarily driven by realized losses on Senior Secured Investment restructurings and sales of Collateralized Securities and unrealized losses in Senior Secured Investments. The net realized and unrealized loss for the three and nine months ended September 30, 2016 was primarily driven by the unrealized depreciation on our Senior Secured First Lien Debt and Common Equity investments.

        

Changes in Net Assets from Operations

For the three and nine months ended September 30, 2017, we recorded a net increase in net assets resulting from operations of $17.3 million and $51.4 million, respectively, versus a net (decrease) increase in net assets resulting from operations of $(6.7) million and $48.5 million, respectively, for the three and nine months ended September 30, 2016. Based on the weighted average shares of common stock outstanding for the three and nine months ended September 30, 2017, our per share net increase in net assets resulting from operations was $0.10 and $0.29, respectively, versus a net increase (decrease) in net assets resulting from operations of $(0.04) and $0.27, respectively, for the three and nine months ended September 30, 2016.

Cash Flows

For the nine months ended September 30, 2017, net cash used in operating activities was $37.3 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. The increase in cash flows used in operating activities was primarily a result of purchases of investments of $787.3 million as well as an increase in receivable for unsettled trades of $28.3 million, partially offset by sales and repayments of investments of $706.7 million.

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Net cash used in financing activities of $61.7 million during the nine months ended September 30, 2017 primarily related to repurchases of common stock of $87.8 million and payments of stockholder distributions of $68.5 million, partially offset by net proceeds from the Wells Fargo Credit Facility, Citi Credit Facility and the JPMC PB Account of $98.7 million.

For the nine months ended September 30, 2016, net cash provided by operating activities was $157.9 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. The increase in cash flows provided by operating activities for the nine months ended September 30, 2016 was primarily due to $462.4 million in sales and repayments of investments, a net increase in unrealized depreciation of $48.4 million, a net increase in net assets of $48.5 million and an increase in unsettled purchases of $3.2 million, offset by cash used in operating activities for purchases of $376.2 million, an increase in unsettled sale proceeds of $15.1 million and payment-in-kind ("PIK") interest of $10.9 million.

Net cash used in financing activities of $91.7 million during the nine months ended September 30, 2016 primarily related to payments of stockholder distributions of $73.9 million and repurchases of common stock of $29.1 million partially offset by net proceeds from the Wells Fargo Credit Facility, Citi Credit Facility and the UBS Credit Facility of $12.9 million.

    

Recent Developments

Distribution Reinvestment Plan ("DRIP") Sales

From October 1, 2017 through the filing of this Form 10-Q, we issued 0.8 million shares of common stock including shares issued pursuant to the DRIP. Total gross proceeds from these issuances including proceeds from shares issued pursuant to the DRIP were $7.1 million.

Dividend Declaration

On November 1, 2017, the Company announced that its board of directors declared monthly cash dividends payable in each of December 2017 and January, February and March 2018. These monthly dividends reflect an annualized distribution rate of $0.65 per share.

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 Offering. As of September 30, 2017, we had issued 194.5 million shares of our common stock for gross proceeds of $2.1 billion, including shares issued to the BSP affiliate and shares issued pursuant to the 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. 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.

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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 intend to conduct tender offers on a semi-annual basis, instead of on a quarterly basis as was done previously. We intend to 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 has declared, cash distributions payable on a monthly basis to stockholders of record on each day since it commenced operations. From November 2013 until July 2017, the distribution rate has been $0.002378082 per day, which is equivalent to $0.868 per annum, per share of common stock, except for 2016 where the daily distribution rate was $0.002371585 per day to accurately reflect 2016 being a leap year. In July 2017, the board of directors reduced the distribution rate with respect to our cash distributions to $0.001780822 per day, which is equivalent to $0.65 annually, per share of common stock.

The amount of each such distribution is subject to the discretion of our board of directors and applicable legal restrictions related to the payment of distributions. We 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 fifth 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 nine months ended September 30, 2017 and 2016 (dollars in thousands).

	For the Nine Months Ended September 30,
	2017				2016
Distributions declared	$	106,467			$	116,558
Distributions paid	$	110,446			$	116,899
Portion of distributions paid in cash	$	68,485			$	73,948
Portion of distributions paid in DRIP shares	$	41,961			$	42,951

As of September 30, 2017, we had $9.5 million of distributions accrued and unpaid. As of December 31, 2016, we had $13.5 million of distributions accrued and unpaid.

    

We may fund our cash distributions to stockholders from any sources of funds available to us, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets and non-capital

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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. We may have distributions which could be characterized as a return of capital for tax purposes. During the nine months ended September 30, 2017 and 2016, no portion of our distributions were characterized as return of capital for tax purposes. The specific tax characteristics of our distributions made in respect of our anticipated fiscal year ending December 31, 2017 will be reported to stockholders shortly after the end of the calendar year 2017 as well as in our periodic reports with the SEC. Stockholders should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is our ordinary income or gains. Moreover, 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. 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 following table sets forth the distributions made during the nine months ended September 30, 2017 and 2016 (dollars in thousands):

	For the Nine Months Ended September 30,
	2017				2016
Monthly distributions	$	106,467			$	116,558
Total distributions	$	106,467			$	116,558

Taxation as a RIC

We have elected to be treated as a RIC under Subchapter M of the Code commencing with our tax year ended December, 31 2011, and intend to maintain our qualification as a RIC thereafter. As a RIC, we generally will not be subject to corporate-level U.S. federal income taxes on any income that we distribute as dividends for U.S. federal income tax purposes to our stockholders. 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 tax year, an amount equal to 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 and determined without regard to any deduction for dividends paid, 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 state, local and foreign taxes.

Additionally, in order to avoid the imposition of a U.S. federal excise tax, we are required to distribute, in respect of each calendar year, dividends to our stockholders of an amount at least equal to the sum of 98% of our calendar year net ordinary income (taking into account certain deferrals and elections); 98.2% of our capital gain net income (adjusted for certain ordinary losses) for the one year period ending on October 31 of such calendar year; and any net ordinary income and capital gain net income for preceding calendar years that were not distributed during such calendar years and on which we previously did not incur any U.S. federal income tax. If we fail to qualify as a RIC for any reason and become subject to corporate tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. Such a failure would have a material adverse effect on us and our stockholders. In addition, we could be required to recognize unrealized gains, incur substantial taxes and interest and make substantial distributions in order to re-qualify as a RIC. We cannot assure stockholders that they will receive any distributions.

Related Party Transactions and Agreements

The Transaction

On July 19, 2016, American Realty Capital II Advisors, LLC, the former parent of the Adviser, entered into a membership interest purchase agreement with a subsidiary of BSP, pursuant to which such subsidiary acquired all of the outstanding limited liability company interests of the Adviser (the “Transaction”). In connection with the Transaction, we amended the Investment Advisory Agreement, effective as of November 1, 2016, to allow the Adviser to serve as investment adviser to us following the closing of the Transaction.

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Investment Advisory Agreement

    

We entered into an Investment Advisory Agreement on November 1, 2016 under which the Adviser, subject to the overall supervision of our board of directors manages the day-to-day operations of, and provides investment advisory services to us. The Adviser and its affiliates also provide investment advisory services to other funds that have investment mandates that are similar, in whole and in part, with ours. The Adviser and its affiliates serve as investment adviser or sub-adviser to private funds and registered open-end funds, and serves as an investment adviser to a public real estate investment trust. The Adviser’s policies are designed to manage and mitigate the conflicts of interest associated with the allocation of investment opportunities. In addition, any affiliated fund currently formed or formed in the future and managed by the Adviser or its affiliates may have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. However, in certain instances due to regulatory, tax, investment, or other restrictions, certain investment opportunities may not be appropriate for either us or other funds managed by the Adviser or its affiliates.

Administration Agreement

In connection with the closing of the Transaction, we terminated our previous administration agreement and entered into a new administration agreement with BSP on November 1, 2016. In connection with the New Administration Agreement, BSP will provide us with office facilities and administrative services.

Co-Investment Relief

The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC permitting the BDC to do so. The SEC staff has granted us exemptive relief that allows it to enter into certain negotiated co-investment transactions alongside other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.

Transactions with Affiliates

In connection with the closing of the Transaction, an affiliate of BSP purchased $10.0 million of our common stock based on our net asset value per share as of September 30, 2016 in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended. On November 7, 2016, we issued approximately 1.2 million shares of our common stock to such BSP affiliate.

Contractual Obligations

The following table shows our payment obligations for repayment of debt and other contractual obligations at September 30, 2017 (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)	$	371,152			$	—			$	—			$	371,152			$	—
Citi Credit Facility (2)	286,003				286,003				—				—				—
UBS Credit Facility (3)	232,500				232,500				—				—				—
Unsecured Notes (4)	99,078				—				99,078				—				—
JPMC PB Account (5)	25,673				—				—				—				25,673
Total contractual obligations	$	1,014,406			$	518,503			$	99,078			$	371,152			$	25,673

______________

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(1)	As of September 30, 2017, we had $28.8 million of unused borrowing capacity under the Wells Fargo Credit Facility, subject to borrowing base limits.

(2)	As of September 30, 2017, we had $114.0 million of unused borrowing capacity under the Citi Credit Facility, subject to borrowing base limits.

(3)	As of September 30, 2017, we had no unused borrowing capacity under the UBS Credit Facility, subject to borrowing base limits.

(4)	As of September 30, 2017, we had no unused borrowing capacity under the Unsecured Notes.

(5)	As of September 30, 2017, we had $6.5 million of unused borrowing capacity under the JPMC PB Account.

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 September 30, 2017, we had unfunded commitments on delayed draw term loans of $31.8 million, unfunded commitments on revolver term loans of $26.2 million and unfunded equity capital commitments of $8.7 million. As of December 31, 2016, we had unfunded commitments on delayed draw term loans of $35.7 million, unfunded commitments on revolver term loans of $24.7 million and unfunded equity capital commitments of $9.4 million. The unfunded commitments are disclosed in our consolidated schedule of investments. We believe we maintain sufficient cash on hand and available borrowing capacity to fund such unfunded commitments.

Significant Accounting Estimates and Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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.

While our significant accounting policies are more fully described in Note 2 of Notes to Consolidated Financial Statements appearing elsewhere in this report, we believe the following accounting policies require the most significant judgment in the preparation of our consolidated financial statements.

Valuation of Portfolio Investments

Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. On a quarterly basis we perform 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. We may also obtain quotes with respect to certain of our investments from pricing services or brokers or dealers in order to value assets. When doing so, we determine whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, we use the quote obtained.

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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 we may take into account in fair value pricing our 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, we measure 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 946, as of our measurement date.

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 our quarterly valuation process the Adviser may be assisted by one or more independent valuation firms engaged by us. 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).

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

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

Because there is not a readily available market value for most of the investments in its portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by our 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 our investments may fluctuate from period to period. Additionally, the fair value of our 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 we 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 we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.

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. Discount and premium 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 discount and amortization of premium on investments.

We have a number of investments in Collateralized Securities. Interest income from investments in the “equity” class of these Collateralized Securities (in our 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 Paragraph 325-40-35, Beneficial

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Interests in Securitized Financial Assets. We monitor the expected cash inflows from our equity investments in Collateralized Securities, including the expected principal repayments. The effective yield is determined and updated quarterly.

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. 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

We hold debt and equity investments in its portfolio that contain 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. 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. 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.

 

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

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 September 30, 2017, our debt included variable-rate debt, bearing a weighted average interest rate of LIBOR plus 3.56% and fixed rate debt, bearing an interest rate of 6.00% with a total carrying value of $1,014.4 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.

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Change in Interest Rates		Estimated Percentage Change in Interest Income net of Interest Expense
(-) 25 Basis Points		(1.54	)%
Base Interest Rate		—	%
(+) 100 Basis Points		6.16	%
(+) 200 Basis Points		12.32	%

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) under 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) under the Exchange Act) during the quarter ended September 30, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of September 30, 2017, we are not 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, 2016, 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. Other than as set forth below, 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, 2016.

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CLOs typically will have no significant assets other than their underlying loans; payments on CLO investments are and will be payable solely from the cash flows from such loans.

CLOs typically will have no significant assets other than their underlying loans. Accordingly, payments on Collateralized Securities are and will be payable solely from the cash flows from such underlying loans, net of all management fees and other expenses. Payments to us as a holder of Collateralized Securities are subject to payments received on the underlying loans. This means that relatively small numbers of defaults of underlying loans may adversely impact our returns.

Collateralized Securities are exposed to leveraged credit risk.

We may be in a subordinated position with respect to realized losses on the loans in CLOs. The leveraged nature of CLOs, in particular, magnifies the adverse impact of loan defaults. Collateralized Securities represent a leveraged investment with respect to the underlying loans. Therefore, changes in the market value of Collateralized Securities could be greater than the change in the market value of the underlying loans, which are subject to credit, liquidity and interest rate risk.

There is the potential for interruption and deferral of cash flow from CLO investments.

If certain minimum collateral value ratios and/or interest coverage ratios are not met by a CLO, primarily due to loan defaults, then cash flow that otherwise would have been available to pay distributions to us on our CLO investments may instead be used to redeem any senior notes or to purchase additional loans, until the ratios again exceed the minimum required levels or any senior notes are repaid in full. This could result in an elimination, reduction or deferral in the distribution and/or principal paid to the holders of such Collateralized Securities, which would adversely impact our returns.

The inability of a CLO collateral manager to reinvest the proceeds of the prepayment of loans may adversely affect us.

There can be no assurance that for any CLO investment, in the event that any of the loans of a CLO underlying such investment are prepaid, the CLO collateral manager will be able to reinvest such proceeds in new loans with equivalent investment returns. If the CLO collateral manager cannot reinvest in new loans with equivalent investment returns, the interest proceeds available to pay interest on the rated liabilities and investments may be adversely affected.

Collateralized Securities are subject to prepayments and calls, increasing re-investment risk.

Collateralized Securities and/or the underlying loans may be prepaid more quickly than expected, which could have an adverse impact on the Company’s value. Prepayment rates are influenced by changes in interest rates and a variety of economic, geographic and other factors beyond the Company’s control, and consequently cannot be predicted with certainty. In addition, for a CLO collateral manager there is often a strong incentive to refinance well performing portfolios once the senior tranches amortize. The yield to maturity of the investments will depend on the amount and timing of payments of principal on the loans and the price paid for the securities. Such yield may be adversely affected by a higher or lower than anticipated rate of prepayments of the debt.

Furthermore, Collateralized Securities generally do not contain optional call provisions, other than a call at the option of the holders of the equity tranches for the senior notes and the junior secured notes to be paid in full after the expiration of an initial period in the deal (referred to as the ‘‘non-call period’’).

The exercise of the call option is by the relevant percentage (usually a majority) of the holders of the equity tranches and, therefore, where the Company does not hold the relevant percentage it will not be able to control the timing of the exercise of the call option. The equity tranches also generally have a call at any time based on certain tax event triggers. In any event, the call can only be exercised by the holders of equity tranches if they can demonstrate (in accordance with the detailed provisions in the transaction) that the senior notes and junior secured notes will be paid in full if the call is exercised.

Early prepayments and/or the exercise of a call option other than at the Company’s request may also give rise to increased re-investment risk with respect to certain investments, as the Company may realize excess cash earlier than expected. If the Company is unable to reinvest such cash in a new investment with an expected rate of return at least equal to that of the investment repaid, this may reduce the Company’s net income and, consequently, could have an adverse impact on its ability to pay dividends.

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Loans of CLOs may be sold and replaced, resulting in a loss to us.

The loans underlying Collateralized Securities may be sold and replacement collateral purchased within the parameters set out in the relevant CLO indenture between the CLO and the CLO trustee and those parameters may typically only be amended, modified or waived by the agreement of a majority of the holders of the senior notes and/or the junior secured notes and/or the equity tranche once the CLO has been established. If these transactions result in a net loss, the magnitude of the loss from the perspective of the equity tranche would be increased by the leveraged nature of the investment.

Our investments in CLOs may be subject to special anti-deferral provisions that could result in us incurring tax or recognizing income prior to receiving cash distributions related to such income.

We may in the future purchase residual or subordinated interests in CLOs or certain other non-U.S. equity investments that are treated for U.S. federal income tax purposes as shares in a ‘‘passive foreign investment company’’ (a ‘‘PFIC’’). If we acquire shares in a PFIC (including equity tranche investments in CLOs that are PFICs), we may be subject to U.S. federal income tax on a portion of any ‘‘excess distribution’’ or gain from the disposition of such shares even if such income is distributed as a taxable distribution by us to our stockholders. Certain elections may be available to mitigate or eliminate such tax on excess distributions, but such elections (if available) will generally require us to recognize our share of the PFICs income for each year regardless of whether we receive any distributions from such PFICs. We must nonetheless receive distributions from the entity qualifying as a PFIC in the same tax year with respect to such income to maintain our status as a RIC.

If we hold more than 10% of the shares in a foreign corporation that is treated as a controlled foreign corporation (‘‘CFC’’) (including equity tranche investments in a CLO treated as CFC), we may be treated as receiving a deemed distribution (taxable as ordinary income) each year from such foreign corporation in an amount equal to our pro rata share of the corporation’s income for the tax year (including both ordinary earnings and capital gains). If we are required to include such deemed distributions from a CFC in our income, we will be required to distribute such income to maintain our RIC status regardless of whether or not the CFC makes an actual distribution during such year.

If we are required to include amounts in income prior to receiving distributions representing such income, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax.

Proposed regulations may impact our ability to qualify as a RIC if we do not receive timely distributions from certain of our CLO and other non-U.S. equity investments.

As discussed above, we may be required to include in our income our proportionate share of the income of certain CLO and other non-U.S. investments to the extent that such CLOs or foreign entities are PFICs for which we have made a qualifying electing fund (‘‘QEF’’) election or are CFCs. To qualify as a RIC, we must, among other thing, derive in each taxable year at least 90% of our gross income from certain sources specified in the Code (the ‘‘90% Income Test’’). Although the Code generally provides that the income inclusions from a QEF or a CFC will be ‘‘good income’’ for purposes of this 90% Income Test to the extent that the QEF or the CFC distribute such income to us in the same taxable year to which the income is included in our income, the Code does not specifically provide whether these income inclusions would be ‘‘good income’’ for this 90% Income Test if we do not receive distributions from the QEF or CFC during such taxable year. Recently, the IRS and U.S. Treasury Department issued proposed regulations that provide that the income inclusions from a QEF or a CFC would be good income for purposes of the 90% Income Test unless we receive a cash distribution from such entity in the same tax year attributable to the included income inclusions. The proposed regulations, if adopted, would apply to tax years beginning on or after 90 days after the regulations are published as final. If such regulations are finalized, we may be restricted in our ability to make QEF elections with respect to CLOs and other non-U.S. equity investments treated as PFICs as well as many need to limit and/or manage our holdings in issuers that could be treated as PFICs or CFCs in order to mitigate the risk that we do not qualify as a RIC.

The Collateralized Securities in which we invest may be subject to U.S. withholding tax if they fail to comply with certain reporting requirements.

The ‘‘Foreign Account Tax Compliance Act,’’ or FATCA, imposes a withholding tax of 30% on payments of U.S. source interest and distributions, and gross proceeds from the disposition of an instrument that produces U.S. source interest or distributions paid after December 31, 2018, to certain non-U.S. entities, including certain non U.S. financial institutions and investment funds, unless such non-U.S. entity complies with certain reporting requirements regarding its U.S. account holders and its U.S. owners. Most CLO vehicles in which we invest will be treated as non-U.S. financial entities for this purpose, and

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therefore will be required to comply with these reporting requirements to avoid the 30% withholding. If a CLO vehicle in which we invest fails to properly comply with these reporting requirements, it could reduce the amounts available to distribute to equity and junior debt holders in such CLO vehicle, which could materially and adversely affect our operating results and cash flows.

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.

As discussed above, we intend to conduct tender offers pursuant to our share repurchase program on a semi-annual basis. 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. Our three most recent tender offers were oversubscribed.

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

    

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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ITEM 6. EXHIBITS

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the nine months ended September 30, 2017 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit No.	Description
11	Computation of Per Share Earnings (included in the notes to the unaudited 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).

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SIGNATURES

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/ Richard J. Byrne Richard J. Byrne		Chief Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer)		November 9, 2017
/s/ Corinne D. Pankovcin Corinne D. Pankovcin		Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)		November 9, 2017

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