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 March 31, 2018

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 May 9, 2018 was 179,048,333.

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2018

TABLE OF CONTENTS

 

	Page
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements	1
Consolidated Statements of Assets and Liabilities as of March 31, 2018 (Unaudited) and December 31, 2017	1
Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and 2017 (Unaudited)	2
Consolidated Statements of Changes in Net Assets for the Three Months Ended March 31, 2018 and 2017 (Unaudited)	4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 (Unaudited)	5
Consolidated Schedules of Investments as of March 31, 2018 (Unaudited) and December 31, 2017	7
Notes to Consolidated Financial Statements (Unaudited)	32
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	66
Item 3. Quantitative and Qualitative Disclosures About Market Risk	81
Item 4. Controls and Procedures	81
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	82
Item 1A. Risk Factors	82
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	83
Item 3. Defaults Upon Senior Securities	83
Item 4. Mine Safety Disclosures	83
Item 5. Other Information	83
Item 6. Exhibits	84
Signatures	85

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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)

	March 31,				December 31,
	2018				2017
ASSETS	(Unaudited)
Investments, at fair value:
Control Investments, at fair value (amortized cost of $356,539 and $374,888, respectively)	$	328,163			$	350,279
Affiliate Investments, at fair value (amortized cost of $248,859 and $296,884, respectively)	229,345				236,801
Non-affiliate Investments, at fair value (amortized cost of $2,086,102 and $1,926,856, respectively)	2,069,344				1,916,443
Investments, at fair value (amortized cost of $2,691,500 and $2,598,628, respectively)	2,626,852				2,503,523
Cash and cash equivalents	74,504				99,822
Interest and dividends receivable	21,398				21,542
Receivable for unsettled trades	4,130				21,409
Prepaid expenses and other assets	3,891				6,218
Total assets	$	2,730,775			$	2,652,514
LIABILITIES
Debt (net of deferred financing costs of $10,130 and $10,926, respectively)	$	1,164,050			$	1,030,223
Stockholder distributions payable	9,843				9,923
Management fees payable	9,955				9,932
Incentive fee on income payable	4,611				4,558
Accounts payable and accrued expenses	12,828				11,137
Payable for unsettled trades	41,984				80,547
Interest and debt fees payable	11,980				11,611
Payable for common stock repurchases	386				—
Directors' fees payable	74				67
Total liabilities	$	1,255,711			$	1,157,998
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, 178,245,519 and 179,733,998 shares issued and outstanding, respectively	178				180
Additional paid in capital	1,740,413				1,752,793
Accumulated under distributed net investment income	30,896				33,469
Accumulated over distributed net realized gains	(231,757		)		(197,348		)
Net unrealized depreciation, net of deferred taxes	(67,168		)		(97,399		)
Total net assets attributable to Business Development Corporation of America	1,472,562				1,491,695
Net assets attributable to non-controlling interest	2,502				2,821
Total net assets	1,475,064				1,494,516
Total liabilities and net assets	$	2,730,775			$	2,652,514
Net asset value per share attributable to Business Development Corporation of America	$	8.26			$	8.30

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 March 31,
		2018				2017
Investment income:
From control investments
Interest income		$	5,809			$	6,154
Dividend income		3,083				473
Total investment income from control investments		8,892				6,627
From affiliate investments
Interest income		5,219				6,309
Dividend income		1,352				2,992
Fee and other income		2				—
Total investment income from affiliate investments		6,573				9,301
From non-affiliate investments
Interest income		41,353				38,895
Dividend income		113				380
Fee and other income		1,445				1,399
Total investment income from non-affiliate investments		42,911				40,674
Interest from cash and cash equivalents		128				70
Total invesment income		58,504				56,672
Operating expenses:
Management fees		9,955				9,538
Incentive fee on income		4,611				6,367
Interest and debt fees		13,450				9,850
Professional fees		1,132				1,480
Other general and administrative		2,464				1,625
Administrative services		199				203
Insurance		1				6
Directors' fees		273				195
Total expenses		32,085				29,264
Income tax expense, including excise tax		270				635
Net investment gain (loss) attributable to non-controlling interests		(5		)		3
Net investment income		26,154				26,770
Realized and unrealized gain (loss):
Net realized gain (loss):
Control investments		394				—
Affiliate investments		(41,028		)		970
Non-affiliate investments		6,199				(11,741		)
Net realized gain on foreign currency transactions		26				—
Total net realized loss		(34,409		)		(10,771		)
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
Control investments		(4,309		)		(5,950		)
Affiliate investments		40,570				745
Non-affiliate investments		(6,345		)		8,781

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 March 31,
		2018				2017
Total net change in unrealized appreciation on investments, net of deferred taxes		29,916				3,576
Net change in unrealized appreciation (depreciation) attributable to non-controlling interests		315				(208		)
Net realized and unrealized loss		(4,178		)		(7,403		)
Net increase in net assets resulting from operations		$	21,976			$	19,367
Per share information - basic and diluted
Net investment income		$	0.15			$	0.15
Net increase in net assets resulting from operations		$	0.12			$	0.11
Weighted average shares outstanding		179,247,608				178,215,971

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 Three Months Ended March 31,
	2018				2017
Operations:
Net investment income	$	26,154			$	26,770
Net realized loss from investments	(34,435		)		(10,771		)
Net realized gain on foreign currency transactions	26				—
Net change in unrealized appreciation on investments, net of deferred taxes	29,916				3,576
Net change in unrealized appreciation (depreciation) attributable to non-controlling interests	315				(208		)
Net increase in net assets resulting from operations	21,976				19,367
Stockholder distributions:
Distributions	(28,727		)		(38,176		)
Net decrease in net assets from stockholder distributions	(28,727		)		(38,176		)
Capital share transactions:
Reinvestment of stockholder distributions	10,167				14,898
Repurchases of common stock	(22,549		)		(898		)
Net (decrease) increase in net assets from capital share transactions	(12,382		)		14,000
Total decrease in net assets, before non-controlling interest	(19,133		)		(4,809		)
(Decrease) increase in non-controlling interest	(319		)		211
Total decrease in net assets	(19,452		)		(4,598		)
Net assets at beginning of period	1,494,516				1,529,734
Net assets at end of period	$	1,475,064			$	1,525,136
Net asset value per common share attributable to Business Development Corporation of America	$	8.26			$	8.52
Common shares outstanding at end of period	178,245,519				178,750,498
Accumulated under distributed net investment income	$	30,896			$	37,538
Accumulated over distributed net realized gains	$	(231,757	)		$	(139,932	)

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 Three Months Ended March 31,
	2018				2017
Operating activities:
Net increase in net assets resulting from operations	$	21,976			$	19,367
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Payment-in-kind interest income	(1,410		)		(1,597		)
Net accretion of discount on investments	(2,147		)		(2,163		)
Amortization of deferred financing costs	796				527
Amortization of discount on unsecured notes	119				78
Sales and repayments of investments	160,643				202,845
Purchases of investments	(284,392		)		(171,177		)
Net realized loss from investments	34,435				10,771
Net realized gain on foreign currency transactions	(26		)		—
Net unrealized appreciation on investments, gross of deferred taxes	(30,458		)		(3,821		)
(Increase) decrease in operating assets:
Interest and dividends receivable	144				5,114
Receivable for unsettled trades	17,279				(27,658		)
Prepaid expenses and other assets	2,326				(1,447		)
Increase (decrease) in operating liabilities:
Management fees payable	23				(33		)
Incentive fee on income payable	53				3,230
Accounts payable and accrued expenses	1,691				1,670
Payable for unsettled trades	(38,563		)		(47,339		)
Interest and debt fees payable	369				(1,234		)
Directors' fees payable	7				(42		)
Net cash used in operating activities	(117,135		)		(12,909		)
Financing activities:
Repurchases of common stock	(22,162		)		(57,647		)
Proceeds from debt	132,912				31,874
Payments of financing costs	—				(4		)
Stockholder distributions	(18,640		)		(23,544		)
(Decrease) increase in non-controlling interest	(319		)		211
Net cash provided by (used in) financing activities	91,791				(49,110		)
Net decrease in cash and cash equivalents	(25,344		)		(62,019		)
Effect of foreign currency exchange rates	26				—
Cash and cash equivalents, beginning of period	99,822				189,270
Cash and cash equivalents, end of period	$	74,504			$	127,251

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

5

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2018				2017
Supplemental information:
Interest paid during the period	$	12,133			$	10,357
Taxes, including excise tax, paid during the period	$	16			$	18
Distributions reinvested	$	10,167			$	14,898

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)

March 31, 2018 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Senior Secured First Lien Debt - 128.9% (b)
Abaco Systems Holding Corp. (c) (i)		Business Services		L+6.00% (8.34%), 12/7/2021		$	23,638			$	23,284			$	23,094			1.6	%
ABC Financial Intermediate, LLC (j)		Media		L+4.25% (5.94%), 1/2/2025		7,739				7,702				7,797				0.5	%
Ability Networks Inc. (j)		Health Care Providers & Services		L+3.75% (5.54%), 12/13/2024		13,573				13,508				13,573				0.9	%
Adams Publishing Group, LLC (c) (i)		Media		L+7.00% (9.30%), 11/3/2020		15,357				15,235				15,357				1.0	%
Adams Publishing Group, LLC (c)		Media		L+7.00% (9.30%), 11/3/2020		4,432				4,432				4,432				0.3	%
Aleris International, Inc. (x)		Metals & Mining		9.50%, 4/1/2021		2,882				3,035				2,999				0.2	%
Alvogen Pharma US, Inc. (j)		Health Care		L+5.00% (6.88%), 4/2/2022		13,857				13,758				13,875				0.9	%
AMI Entertainment Network, LLC (c) (f) (i)		Hotels, Restaurants & Leisure		L+6.00% (7.69%), 7/21/2022		14,539				14,289				14,285				1.0	%
Amports, Inc. (c) (m)		Transportation Infrastructure		L+5.00% (6.88%), 5/19/2020		14,876				14,837				14,876				1.0	%
Amteck, LLC (c) (i)		Commercial Services & Supplies		L+6.50% (8.81%), 7/2/2020		20,545				20,384				20,545				1.4	%
Amteck, LLC (c)		Commercial Services & Supplies		L+6.50% (8.81%), 7/2/2020		5,000				5,000				5,000				0.3	%
Answers Corporation (c) (p)		Technology		L+5.00% (6.88%), 4/15/2021		2,999				2,942				2,909				0.2	%
AP Gaming I, LLC (i) (j)		Gaming/Lodging		L+4.25% (6.13%), 2/15/2024		33,507				33,443				33,884				2.3	%
AP NMT Acquisition B.V. (m)		Media		L+5.75% (8.06%),8/13/2021		6,620				6,639				6,616				0.4	%
APCO Holdings (c) (i)		Diversified Consumer Services		L+6.00% (7.88%), 1/29/2022		3,642				3,570				3,568				0.2	%
Applied Merchant Systems West Coast, Inc. (c) (m)		Diversified Financial Services		L+11.50% (13.20%), 10/26/2020		18,597				18,401				17,295				1.2	%
Applied Merchant Systems West Coast, Inc. (c) (m)		Diversified Financial Services		L+11.50% (13.20%), 10/26/2020		6,500				6,432				6,045				0.4	%
AqGen Ascensus Inc. (c) (j)		Technology		L+3.50% (5.80%), 12/3/2022		19,588				19,588				19,588				1.3	%
AqGen Ascensus Inc. (c) (f)		Technology		L+3.50% (5.80%), 12/3/2022		3,704				3,696				3,704				0.3	%
Avatar Purchaser, Inc. (c) (m)		Business Services		L+7.50% (10.00%), 11/17/2025		11,716				11,381				11,530				0.8	%
Avaya Holdings Corp. (j)		Communications Equipment		L+4.75% (6.54%), 12/15/2024		26,581				26,334				26,748				1.8	%
BCP Raptor, LLC (j)		Energy Equipment & Services		L+4.25% (6.04%), 6/24/2024		19,935				19,757				20,035				1.4	%
BCP Renaissance, LLC (j)		Energy Equipment & Services		L+4.00% (5.77%), 10/31/2024		8,472				8,432				8,507				0.6	%
BDS Solutions Group, LLC (c) (i) (m)		Business Services		L+8.75% (11.06%), 6/1/2021		32,399				31,934				32,399				2.2	%
BDS Solutions Group, LLC (c)		Business Services		L+8.75% (11.06%), 6/1/2021		2,831				2,789				2,831				0.2	%
Beaver-Visitec International Holdings, Inc. (c) (j)		Health Care		L+5.00% (7.30%), 8/21/2023		6,563				6,563				6,562				0.4	%
Black Mountain Sand, LLC (c) (f)		Energy Equipment & Services		L+9.00% (10.69%), 11/30/2021		13,050				12,871				12,869				0.9	%

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

7

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2018 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Black Mountain Sand, LLC (c)		Energy Equipment & Services		L+9.00% (10.81%), 11/30/2021		$	6,525			$	6,428			$	6,434			0.4	%
Blount International, Inc. (j)		Commercial Services & Supplies		L+4.25% (5.92%), 4/12/2023		12,500				12,471				12,656				0.9	%
California Resources Corp. (m)		Metals & Mining		L+4.75% (6.57%), 12/31/2022		12,259				12,023				12,424				0.8	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (c) (l) (o) (t)		Food Products		L+12.50% (13.88%), 9/25/2020		21,208				16,406				2,969				0.2	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (c) (l) (o) (t)		Food Products		L+12.50% (13.88%), 9/25/2020		49,012				33,647				6,862				0.5	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (c) (l) (o) (t)		Food Products		L+12.50% (13.88%) 4/28/2019		2,934				2,829				2,876				0.2	%
Catapult Learning, LLC (c) (i) (m)		Diversified Consumer Services		L+6.50% (8.27%), 7/16/2020		26,776				26,530				25,571				1.7	%
CCW, LLC (c) (f) (i)		Hotels, Restaurants & Leisure		L+7.00% (8.94%), 3/21/2021		27,750				27,466				27,750				1.9	%
Central Security Group, Inc. (c) (i) (j)		Commercial Services & Supplies		L+5.63% (7.50%), 10/6/2021		25,228				24,954				25,102				1.7	%
Chicken Soup for the Soul Publishing, LLC (c)		Media		L+6.25% (7.92%), 1/8/2019		27,386				27,333				24,236				1.6	%
Chloe Ox Parent, LLC (j)		Health Care Providers & Services		L+5.00% (7.30%), 12/23/2024		10,768				10,664				10,876				0.7	%
Clarion Events, Ltd (c) (j)		Business Services		L+5.00% (6.77%), 3/22/2025		5,817				5,701				5,701				0.4	%
Clover Technologies Group, LLC (j)		Commercial Services & Supplies		L+4.50% (6.38%), 5/8/2020		13,512				13,465				10,488				0.7	%
Community Care Health Network, LLC (c) (j)		Health Care		L+4.75% (6.74%), 2/16/2025		2,686				2,679				2,703				0.2	%
CONSOL Energy Inc. (j)		Metals & Mining		L+6.00% (7.99%), 11/28/2022		3,232				3,171				3,311				0.2	%
Contura Energy Inc. (j)		Energy Equipment & Services		L+5.00% (6.88%), 3/18/2024		7,472				7,408				7,449				0.5	%
ConvergeOne Holdings Corp. (c) (j)		Technology		L+4.75% (6.63%), 6/20/2024		16,434				16,287				16,434				1.1	%
Corfin Industries LLC (c) (f)		Industrials		L+6.50% (8.49%), 2/15/2024		8,615				8,446				8,443				0.6	%
Corfin Industries LLC (c) (f)		Industrials		L+6.50% (8.49%), 2/15/2024		48				48				47				0.1	%
Cvent, Inc. (j)		Internet Software & Services		L+3.75% (5.63%), 11/29/2024		16,436				16,337				16,518				1.1	%
DigiCert, Inc (j)		Internet Software & Services		L+4.75% (6.52%), 10/31/2024		10,800				10,749				10,915				0.7	%
Eagle Rx, LLC (c) (i)		Health Care Providers & Services		L+4.00% (5.91%) 8/15/2019		27,157				27,085				27,157				1.8	%
Elo Touch Solutions, Inc (c) (j)		Technology		L+6.00% (8.00%), 10/31/2023		3,542				3,508				3,542				0.2	%
ERG Holding Company (c) (i) (m)		Health Care Providers & Services		L+6.75% (9.07%), 4/4/2019		33,923				33,722				33,923				2.3	%
ERG Holding Company (c) (f)		Health Care Providers & Services		L+6.75% (9.07%), 4/4/2019		188				188				188				0.1	%
Everi Payments, Inc. (j)		Hotels, Restaurants & Leisure		L+3.50% (5.49%), 5/9/2024		10,628				10,613				10,694				0.7	%
Excelitas Technologies Corp. (j)		Electronic Equipment, Instruments & Components		L+3.50% (5.16%), 12/2/2024		9,975				9,951				10,058				0.7	%

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

8

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2018 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Frontier Communications (m)		Diversified Telecommunications Services		L+3.75% (5.63%), 6/15/2024		$	5,541			$	5,468			$	5,461			0.4	%
Genesys Telecommunications Laboratories, Inc. (j)		Diversified Telecommunication Services		L+3.50% (5.80%), 12/1/2023		24,689				24,387				24,828				1.7	%
Greenwave Holdings, Inc. (c) (d) (l)		Internet Software & Services		13.00%, 7/8/2019		10,278				10,245				9,765				0.7	%
GTCR Valor Companies, Inc. (j)		Internet Software & Services		L+3.25% (5.13%), 6/16/2023		9,950				9,928				10,027				0.7	%
HC Group Holdings III, Inc. (j)		Health Care		L+5.00% (6.88%), 4/7/2022		14,743				14,542				14,909				1.0	%
Hexion Inc. (x)		Chemicals		10.38%, 2/1/2022		920				920				890				0.1	%
Hexion Inc. (x)		Chemicals		6.63%, 4/15/2020		6,689				6,025				6,237				0.4	%
ICR Operations, LLC (c) (i)		Business Services		L+5.50% (7.79%), 3/26/2025		13,670				13,397				13,397				0.9	%
ICR Operations, LLC (c) (f)		Business Services		L+5.50% (7.79%),3/26/2024		165				162				162				0.1	%
Ideal Tridon Holdings, Inc. (c) (m)		Commercial Services & Supplies		L+5.50% (8.07%), 7/31/2023		23,857				23,433				23,430				1.6	%
Ideal Tridon Holdings, Inc. (c) (f)		Commercial Services & Supplies		L+5.50% (8.07%), 7/31/2022		546				513				537				0.1	%
Indivior Finance S.A.R.L. (i)		Health Care		L+4.50% (6.42%), 12/18/2022		6,965				6,932				6,974				0.5	%
InMotion Entertainment Group, LLC (c) (i)		Specialty Retail		L+7.25% (9.57%), 10/1/2021		13,153				13,112				13,153				0.9	%
InMotion Entertainment Group, LLC (c) (f) (i)		Specialty Retail		L+7.75% (10.07%), 10/1/2021		322				322				322				0.1	%
Intelsat S.A. (m)		Diversified Telecommunication Services		L+4.50% (6.46%), 1/2/2024		665				665				682				0.1	%
Intelsat S.A. (m)		Diversified Telecommunication Services		L+4.50% (6.46%), 1/2/2024		2,211				2,211				2,236				0.2	%
Internap Corporation (c) (j) (m)		Communications Equipment		L+5.75% (7.65%), 4/6/2022		20,158				20,040				20,220				1.4	%
IPC Corp. (j)		Diversified Telecommunication Services		L+4.50% (6.27%), 8/6/2021		3,784				3,730				3,703				0.3	%
Iridium Communications, Inc. (x)		Diversified Telecommunications Services		10.25%, 4/15/2023		3,536				3,536				3,633				0.2	%
Jackson Hewitt, Inc. (j)		Diversified Consumer Services		L+7.00% (8.77%), 7/30/2020		6,515				6,454				6,466				0.4	%
K2 Pure Solutions NoCal, L.P. (c) (i)		Chemicals		L+6.00% (7.88%), 2/19/2021		6,500				6,450				6,500				0.4	%
Kahala Ireland OpCo Designated Activity Company (a) (c) (l) (o)		Aerospace & Defense		L+8.00% (13.00%),12/23/2028		141,549				141,549				141,549				9.6	%
Kissner Milling Co. Ltd. (x)		Chemicals		8.38%, 12/1/2022		21,199				21,516				21,755				1.5	%
Lakeland Tours, LLC (f)		Diversified Consumer Services		L+4.00% (6.12%), 12/15/2024		5,634				5,620				5,690				0.4	%
LenderLive Services, LLC (c)		Business Services		L+12.00% (13.85%), 8/11/2020		10,000				9,881				10,000				0.7	%
Lightsquared LP (l)		Diversified Telecommunications Services		L+8.75% (10.78%), 12/7/2020		11,606				10,932				10,155				0.7	%

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

9

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2018 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Lionbridge Technologies, Inc. (c) (i)		Business Services		L+5.50% (7.38%), 2/28/2024		$	13,729			$	13,671			$	13,670			0.9	%
Loparex International Holding B.V. (c) (j)		Industrials		L+4.25% (6.59%), 4/11/2025		2,003				1,993				1,993				0.1	%
MCS Acquisition Corp. (c) (j)		Professional Services		L+4.75% (6.63%), 5/18/2024		14,261				14,206				14,261				1.0	%
Medallion Midland Acquisition, L.P. (j)		Energy Equipment & Services		L+3.25% (5.13%), 11/13/2024		4,439				4,428				4,428				0.3	%
Medical Depot Holdings, Inc. (c) (i)		Health Care		L+5.50% (7.80%), 1/3/2023		19,644				18,224				18,192				1.2	%
Michael Baker International, LLC (c) (j)		Business Services		L+4.50% (6.34%), 11/21/2022		5,607				5,555				5,610				0.4	%
Midwest Can Company, LLC (c) (f) (i)		Energy Equipment & Services		L+6.75% (8.63%), 1/26/2022		5,054				4,986				5,075				0.3	%
MMM Holdings, LLC (c) (f) (i)		Health Care		L+6.25% (8.37%), 3/15/2023		20,578				20,170				20,166				1.4	%
Monitronics International, Inc. (j)		Diversified Consumer Services		L+5.50% (7.80%), 9/30/2022		11,850				11,872				11,517				0.8	%
Montreign Operating Company, LLC (c) (m)		Hotels, Restaurants & Leisure		L+8.25% (10.13%), 1/24/2023		27,161				26,753				26,951				1.8	%
Mood Media Corporation (c) (m)		Business Services		L+7.25% (9.55%), 6/28/2022		13,806				13,549				13,520				0.9	%
Motion Recruitment Partners, LLC (c) (f) (i)		Professional Services		L+6.00% (7.89%), 2/13/2020		17,069				16,917				17,069				1.2	%
Murray Energy Holdings Co. (j)		Energy Equipment & Services		L+7.25% (9.55%), 4/16/2020		11,340				11,028				9,582				0.6	%
National Technical Systems, Inc. (c) (i)		Professional Services		L+6.25% (7.91%), 6/12/2021		16,469				16,383				15,481				1.0	%
Navitas Midstream Midland Basin, LLC (j)		Energy Equipment & Services		L+4.50% (6.40%), 12/13/2024		8,461				8,424				8,445				0.6	%
New Star Metals, Inc. (c) (m)		Business Services		L+9.50% (11.80%), 12/22/2021		24,328				23,921				24,357				1.7	%
NexSteppe Inc. (c) (l) (t)		Chemicals		12.00%, 9/30/2018		1,835				1,750				—				—	%
NexSteppe Inc. (c) (l) (t)		Chemicals		12.00%, 9/30/2018		12,362				10,453				—				—	%
Noosa Acquirer, Inc. (c) (i) (m)		Food Products		L+5.25% (7.14%), 11/21/2020		25,000				24,834				25,000				1.7	%
NTM Acquisition Corp. (c) (i)		Media		L+6.25% (8.55%), 6/7/2022		18,434				18,256				18,341				1.2	%
Office Depot, Inc. (j)		Specialty Retail		L+7.00% (8.71%), 11/8/2022		8,902				8,735				9,046				0.6	%
Optiv, Inc. (j)		Business Services		L+3.25% (5.13%), 2/1/2024		4,443				4,227				4,282				0.3	%
Orchid Underwriters Agency, LLC (c) (f) (i)		Insurance Broker		L+5.00% (7.30%), 3/17/2022		18,480				18,334				18,480				1.3	%
ORG Chemical Holdings, LLC (c) (i) (w)		Chemicals		L+5.75% (8.05%), 6/30/2022		27,752				27,281				27,275				1.8	%
ORG GC Holdings, LLC (c) (i) (w)		Business Services		L+6.00% (8.80%), 7/31/2022		25,485				25,154				25,024				1.7	%
Peabody Energy Corp. (j)		Metals & Mining		L+3.50% (5.38%), 3/31/2022		2,608				2,602				2,611				0.2	%
PeopLease Holdings, LLC (c) (i)		Commercial Services & Supplies		L+9.00% (11.31%), 2/26/2021		20,000				19,882				15,000				1.0	%
PGX Holdings, Inc. (c) (j)		Transportation Infrastructure		L+5.25% (7.13%), 9/29/2020		12,456				12,413				12,083				0.8	%

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)

March 31, 2018 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Premier Dental Services, Inc. (i) (j)		Health Care		L+4.50% (6.38%), 6/30/2023		$	32,935			$	32,693			$	33,182			2.2	%
Premier Global Services, Inc. (j)		Diversified Telecommunication Services		L+6.50% (8.29%), 12/8/2021		9,229				8,985				9,187				0.6	%
Pre-Paid Legal Services, Inc. (c) (j)		Diversified Consumer Services		L+5.25% (7.13%), 7/1/2019		11,010				11,023				11,010				0.7	%
Pride Plating, Inc. (c) (i)		Aerospace & Defense		L+5.50%, (7.80%), 6/13/2019		8,259				8,238				8,176				0.6	%
PSKW, LLC (c) (i)		Health Care Providers & Services		L+4.25% (6.55%), 11/25/2021		1,564				1,554				1,564				0.1	%
PSKW, LLC (c) (m)		Health Care Providers & Services		L+8.26% (10.56%), 11/25/2021		17,750				17,533				17,750				1.2	%
PSKW, LLC (c) (m)		Health Care Providers & Services		L+8.26% (10.56%), 11/25/2021		1,972				1,936				1,972				0.1	%
PT Network, LLC (c) (i)		Health Care		L+5.50% (7.21%), 11/30/2021		16,892				16,768				16,630				1.1	%
PT Network, LLC (c) (f)		Health Care		L+4.50% (9.25%), 11/30/2021		658				658				648				0.1	%
Pure Barre, LLC (c) (i) (m)		Hotels, Restaurants & Leisure		L+7.00% (8.88%), 6/11/2020		25,623				25,426				25,239				1.7	%
Pure Barre, LLC (c)		Hotels, Restaurants & Leisure		L+7.00% (8.88%), 6/11/2020		500				500				493				0.1	%
Quorum Health Corporation (j)		Health Care		L+6.75% (8.63%),4/29/2022		4,308				4,399				4,394				0.3	%
Resco Products, Inc. (c) (i)		Metals & Mining		L+6.25% (7.90%), 3/7/2020		10,000				10,000				9,750				0.7	%
Sage Automotive Holdings, Inc. (c) (j)		Auto Components		L+5.00% (6.88%), 11/8/2022		18,414				18,282				18,414				1.2	%
SHO Holding II Corporation (c) (j)		Specialty Retail		L+5.00% (6.79%), 10/27/2022		9,745				9,680				8,771				0.6	%
Skillsoft Corp. (j) (m)		Technology		L+4.75% (6.63%), 4/28/2021		17,134				16,409				16,515				1.1	%
Squan Holding Corp. (c)		Diversified Telecommunication Services		L+6.00% (8.31%), 10/10/2019		16,878				14,824				13,502				0.9	%
SSH Group Holdings, Inc. (c) (i)		Diversified Consumer Services		L+5.00% (7.45%), 10/2/2024		6,073				6,016				6,061				0.4	%
Steel City Media (c)		Media		L+4.75% (8.25%),3/29/2020		37,956				37,956				37,576				2.5	%
Stepstone Group LP (c) (i)		Financial Services		L+4.00% (5.90%), 3/27/2025		2,932				2,917				2,917				0.2	%
Subsea Global Solutions, LLC (c) (f) (i)		Business Services		L+7.00% (9.30%), 3/29/2023		8,475				8,306				8,306				0.6	%
SunGard Availability Services Capital, Inc. (j)		IT Services		L+10.00% (11.88%), 10/1/2022		3,430				3,421				3,374				0.2	%
Tax Defense Network, LLC (c) (l) (t)		Diversified Consumer Services		L+13.00% (15.31%), 8/28/2019		30,602				26,532				7,713				0.5	%
Thoughtworks, Inc. (c) (j)		Business Services		L+4.50% (6.38%), 10/12/2024		4,420				4,410				4,420				0.3	%
Tillamook Country Smoker, LLC (c) (i)		Food Products		L+5.75% (7.64%), 5/19/2022		10,244				10,117				10,116				0.7	%
Tillamook Country Smoker, LLC (c) (f)		Food Products		L+5.75% (7.49%), 5/19/2022		809				809				799				0.1	%
Traverse Midstream Partners, LLC (j)		Energy Equipment & Services		L+4.00% (5.85%), 9/27/2024		6,352				6,322				6,384				0.4	%

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)

March 31, 2018 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Trilogy International Partners, LLC (x)		Diversified Telecommunication Services		8.88%, 5/1/2022		$	14,875			$	14,813			$	15,247			1.0	%
Trojan Battery Company, LLC (j)		Auto Components		L+4.75% (6.69%), 6/12/2021		10,451				10,402				10,451				0.7	%
Turning Tech LLC (c) (i)		Software		L+9.75% (12.06%), 6/30/2020		20,669				20,509				18,602				1.3	%
Twenty Eighty, Inc. (c) (f) (l) (p)		Media		8.00%, 3/31/2020		6,357				4,748				6,229				0.4	%
Twenty Eighty, Inc. (c) (f) (l) (p)		Media		L+8.00% (10.30%), 3/31/2020		2,887				2,448				2,887				0.2	%
Twenty Eighty, Inc. (c) (f) (l) (p)		Media		9.00%, 3/31/2020		5,880				4,424				5,762				0.4	%
United Central Industrial Supply Company, LLC (c) (i) (j)		Commercial Services & Supplies		L+7.25% (9.13%), 10/9/2018		8,481				8,467				8,072				0.5	%
USF S&H Holdco, LLC (c) (f) (i)		Hotels, Restaurants & Leisure		L+5.75% (7.93%), 3/19/2024		24,245				23,883				23,881				1.6	%
US Salt, LLC (c) (i) (m)		Food Products		L+4.75% (6.63%), 12/1/2023		5,189				5,139				5,135				0.3	%
US Salt, LLC (c) (f)		Food Products		L+4.75% (6.63%), 12/1/2023		1,254				1,254				1,241				0.1	%
VCVH Holding Corp. (c) (i) (j)		Health Care		L+5.00% (7.31%), 6/1/2023		26,034				25,901				26,224				1.8	%
Veritas US Inc. (j)		Technology		L+4.50% (6.80%), 1/27/2023		14,981				15,020				14,911				1.0	%
Veritas US Inc. (x)		Technology		10.50%, 2/1/2024		15,393				15,199				14,396				1.2	%
VetCor Professional Practices LLC (c) (f) (i)		Diversified Consumer Services		L+6.25% (8.56%), 4/20/2021		17,987				17,908				17,808				1.0	%
Von Drehle Corporation (c) (i) (m)		Life Sciences Tools & Services		L+7.50% (9.19%), 3/6/2023		26,045				25,679				25,751				1.7	%
Xplornet Communications, Inc. (a) (j)		Diversified Telecommunication Services		L+4.00% (6.30%), 9/9/2021		13,094				13,023				13,119				0.9	%
Sub Total Senior Secured First Lien Debt										$	1,982,847			$	1,900,969			128.9	%
Senior Secured Second Lien Debt - 16.1% (b)
Anchor Glass Container Corporation (c) (m)		Containers & Packaging		L+7.75% (9.49%), 12/7/2024		$	20,000			$	19,833			$	19,194			1.3	%
Answers Corporation (c) (p)		Technology		L+7.90% (9.00%), 9/15/2021		4,663				4,116				4,360				0.3	%
Astro AB Merger Sub, Inc. (m)		Diversified Financial Services		L+7.50% (9.27%), 4/30/2023		7,758				7,758				7,855				0.5	%
Boston Market Corporation (c) (m)		Hotels, Restaurants & Leisure		L+8.25% (10.24%), 12/16/2018		24,039				23,984				21,154				1.4	%
BrandMuscle Holdings Inc. (c) (m)		Internet Software & Services		L+8.50% (10.19%), 6/1/2022		24,500				24,185				24,500				1.7	%
Carlisle FoodService Products, Incorporated (c)		Food Products		L+7.75% (9.65%), 3/20/2026		10,719				10,506				10,505				0.7	%
CDS U.S. Intermediate Holdings, Inc. (m)		Hotels, Restaurants & Leisure		L+8.25% (10.55%), 7/8/2023		7,927				7,814				7,828				0.5	%
CIG Financial, LLC (a) (c) (m)		Consumer Finance		10.50%, 6/30/2019		9,000				8,978				8,370				0.6	%
CIG Financial, LLC (a) (c) (f)		Consumer Finance		10.50%, 6/30/2019		1,000				1,000				930				0.1	%
CP VI Bella Blocker Topco, LLC (m)		Health Care		L+6.75% (8.63%), 12/28/2025		2,009				1,999				2,001				0.1	%

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

12

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2018 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
CREDITCORP (x)		Consumer Finance		12.00%, 7/15/2018		$	13,250			$	13,243			$	12,356			0.8	%
Epic Health Services, Inc. (m)		Health Care Providers & Services		L+8.00% (9.88%), 3/17/2025		15,000				14,803				14,875				1.0	%
Genex Holdings, Inc.		Health Care		L+7.00% (9.05%), 3/6/2026		2,305				2,282				2,309				0.2	%
Hertz Corp. (x)		Automobiles		7.63%, 6/1/2022		14,194				14,194				14,394				1.0	%
PetVet Care Centers, LLC (c) (m)		Business Services		L+2.75% (4.65%), 2/13/2026		3,539				3,521				3,522				0.2	%
PI US Holdco III Limited (c) (m)		Consumer Finance		L+7.25% (9.11%), 12/20/2025		6,696				6,630				6,685				0.5	%
Recess Holdings, Inc. (c) (m)		Hotels, Restaurants & Leisure		L+7.75% (10.20%), 9/29/2025		13,008				12,823				12,813				0.9	%
Rx30 HoldCo, Inc. (c) (m)		Health Care Technology		L+9.00% (11.33%), 6/15/2022		11,500				11,361				11,500				0.8	%
Rx30 HoldCo, Inc. (c) (m)		Health Care Technology		L+9.00% (11.33%), 6/15/2022		1,229				1,206				1,229				0.1	%
TierPoint, LLC (c) (m)		Technology		L+3.75% (5.63%), 5/5/2025		5,334				5,287				5,281				0.4	%
Safe Fleet Holdings LLC (c) (m)		Industrials		L+6.75% (8.53%),2/1/2026		3,143				3,127				3,127				0.2	%
U.S. Auto (c) (m)		Diversified Consumer Services		L+10.50% (12.39%), 6/8/2020		30,000				29,769				29,850				2.0	%
US Salt, LLC (c) (m)		Food Products		L+8.75% (10.41%), 12/1/2024		12,872				12,688				12,686				0.8	%
Sub Total Senior Secured Second Lien Debt										$	241,107			$	237,324			16.1	%
Subordinated Debt - 8.8% (b)
Ardent Legacy Acquisitions, Inc.		Health Care		L+8.50% (10.16%), 3/1/2023		$	21,222			$	20,904			$	21,302			1.5	%
BMC Software Finance, Inc. (x)		Software		8.13%, 7/15/2021		19,461				19,451				19,385				1.3	%
Frontier Communications (x)		Diversified Telecommunication Services		8.13%, 10/1/2018		5,500				5,494				5,565				0.4	%
Frontier Communications (x)		Diversified Telecommunication Services		8.50%, 4/15/2020		10,000				9,226				10,150				0.7	%
Gold, Inc. (c) (m)		Textiles, Apparel & Luxury Goods		10.00%, 6/30/2019		3,742				3,700				3,443				0.2	%
Park Ave RE Holdings, LLC (c) (d) (l) (o)		Real Estate Management & Development		L+8.00%, (13.00%), 12/31/2021		37,192				37,192				37,192				2.5	%
Steel City Media (c) (l) (t)		Media		16.00%, 3/29/2020		24,717				24,536				21,010				1.4	%
Xplornet Communications, Inc. (a) (l) (x)		Diversified Telecommunication Services		9.63%, 6/1/2022		10,534				10,534				11,061				0.8	%
Sub Total Subordinated Debt										$	131,037			$	129,108			8.8	%
Collateralized Securities - 10.9% (b)
Collateralized Securities - Debt Investment
NewStar Exeter Fund CLO - Debt (a) (c) (p)		Diversified Investment Vehicles		9.86%, 1/19/2027		$	10,728			$	9,302			$	8,445			0.6	%

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

13

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2018 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
WhiteHorse VIII, Ltd. CLO - Debt (a) (c) (p) (v)		Diversified Investment Vehicles		6.32%, 5/1/2026		$	8,000			$	7,639			$	7,626			0.5	%
Collateralized Securities - Equity Investment (n)
B&M CLO 2014-1, LTD. Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		6.03%, 4/16/2026		$	40,250			$	12,936			$	12,320			0.8	%
CVP Cascade CLO, LTD. Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		12.18%, 1/16/2026		31,000				1,784				2,423				0.2	%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		2.79%, 1/15/2027		35,057				12,079				12,198				0.8	%
MidOcean Credit CLO II, LLC Income Notes (a) (c) (p) (v)		Diversified Investment Vehicles		11.24%, 1/29/2030		37,600				20,876				21,820				1.5	%
MidOcean Credit CLO III, LLC Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		2.27%, 7/21/2026		40,250				16,326				16,839				1.1	%
MidOcean Credit CLO IV, LLC Income Notes (a) (c) (p) (v)		Diversified Investment Vehicles		8.92%, 4/15/2027		21,500				13,066				13,090				0.9	%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		23.70%, 4/25/2031		31,603				21,380				25,436				1.7	%
NewStar Exeter Fund CLO - Equity (a) (c) (p) (v)		Diversified Investment Vehicles		1.07%, 1/19/2027		31,575				11,621				11,071				0.7	%
OFSI Fund VI, Ltd. Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		5.19%, 3/20/2025		38,000				12,229				9,770				0.7	%
Related Fee Agreements (a) (c) (s)		Diversified Investment Vehicles				13,841				5,908				3,499				0.2	%
Silver Spring CLO, Ltd. Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		3.91%, 10/16/2026		31,500				8,570				8,502				0.6	%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		5.61%, 5/1/2026		36,000				11,558				8,895				0.6	%
Sub Total Collateralized Securities										$	165,274			$	161,934			10.9	%
Equity/Other - 13.4% (b)
Answers Corporation - Common Equity (c) (e) (p)		Technology				909				$	11,361			$	10,965			0.7	%
Avaya Holdings Corp. (e) (x)		Communications Equipment				611				5,309				7,489				0.5	%
California Resources Development JV, LLC - Preferred Equity (c) (o) (u)		Metals & Mining		9.00%		26,717,000				24,049				24,952				1.7	%
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) (c) (e) (o)		Food Products				6,023				1,630				—				—	%
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) (c) (e) (o) (u)		Food Products				24,656				—				—				—	%
Danish CRJ LTD. - Common Equity (a) (c) (e) (p) (r)		Aerospace & Defense				10,000				1				460				—	%
Evolution Research Group - Preferred Equity (c) (e)		Health Care Providers & Services		8.00%		500,000				500				909				0.1	%
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (c) (e)		Internet Software & Services		Expire 8/16/2025		172,414				—				—				—	%
Kahala Ireland OpCo Designated Activity Company - Common Equity (a) (c) (e) (h) (o)		Aerospace & Defense				137				—				8,849				0.6	%

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)

March 31, 2018 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (a) (c) (e) (h) (o)		Aerospace & Defense				3,250,000				2,851				3,250				0.2	%
Kahala US OpCo LLC - Class A Preferred Units (c) (e) (k) (o)		Aerospace & Defense		13.00%		4,413,472				$	10			$	—			—	%
Mood Media Corporation - Warrants (c) (e)		Business Services				121,021				27				48				—	%
New Star Metals Inc. - Warrants (c) (e)		Business Services		Expire 12/22/2036		100,216				151				279				—	%
NexSteppe Inc. - Series C Preferred Stock Warrant (c) (e)		Chemicals				237,240				737				—				—	%
NMFC Senior Loan Program I, LLC (a) (o)		Diversified Investment Vehicles				50,000				50,000				51,126				3.5	%
Orchid Underwriters Agency, LLC - Preferred Shares (c) (e) (u)		Insurance Broker				5,000				113				773				0.1	%
Orchid Underwriters Agency, LLC - Common Shares (c) (e) (u)		Insurance Broker				5,000				—				76				—	%
Park Ave RE Holdings, LLC - Common Shares (c) (e) (o) (w)		Real Estate Management & Development				1,000				102				14,297				1.0	%
Park Ave RE Holdings, LLC - Preferred Shares (c) (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				$	9,952			9,952				10,167				0.7	%
South Grand MM CLO I, LLC (a) (f) (o)		Diversified Investment Vehicles				$	9,724			9,689				10,596				0.7	%
Squan Holding Corp. - Class A Common Stock (c) (e) (p)		Diversified Telecommunication Services				180,835				—				—				—	%
Squan Holding Corp. - Series A Preferred Stock (c) (e) (p)		Diversified Telecommunication Services				8,962				—				47				—	%
Tax Defense Network, LLC - Common Equity (c) (e)		Diversified Consumer Services				106,346				425				—				—	%
Tennenbaum Waterman Fund, L.P. (a)		Diversified Investment Vehicles				$	10,000			10,000				10,430				0.7	%
TCG BDC, Inc. - Common Stock (fka Carlyle GMS Finance, Inc.) (a) (x)		Diversified Investment Vehicles				404,899				5,841				5,293				0.4	%
The SAVO Group, Ltd. - Warrants (c) (e)		IT Services		Expire 3/29/2023		138,000				—				—				—	%
THL Credit Greenway Fund II LLC (a) (p)		Diversified Investment Vehicles				$	12,141			10,526				9,396				0.6	%
Twentyeighty, Inc. - Class A Common Equity (c) (e)		Media				54,586				—				—				—	%
TZ Holdings, Inc. - Warrants (fka Zimbra, Inc.) (c) (e)		Software				136,000				—				—				—	%
TZ Holdings, Inc. - Preferred Shares (fka Zimbra, Inc.) (c) (e)		Software		Expire 10/25/2023		1,000,000				10				179				—	%
U.S. Auto - Series A Common Units (c) (e) (u)		Diversified Consumer Services				10,000				10				—				—	%
U.S. Auto - Series A Preferred Units (c) (e) (u)		Diversified Consumer Services				490				490				532				—	%
U.S Auto - Series C Preferred Equity Units (c) (e) (u)		Diversified Consumer Services				56				56				—				—	%

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)

March 31, 2018 (Unaudited)
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
World Business Lenders, LLC - Preferred Stock (c) (e)		Consumer Finance				922,669				3,750				3,759				0.3	%
Sub Total Equity/Other										$	171,235			$	197,517			13.4	%
TOTAL INVESTMENTS - 178.1% (b)										$	2,691,500			$	2,626,852			178.1	%

_____________

(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 74.5% 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 $1,475,064 as of March 31, 2018.

(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. Such investments 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 March 31, 2018.

(f)	The Company has various unfunded commitments to portfolio companies. The remaining amount of these unfunded commitments as of March 31, 2018 are comprised of the following:

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)

March 31, 2018 (Unaudited)
Portfolio Company Name		Investment Type		Commitment Type		Original Commitment				Remaining Commitment
AMI Entertainment Network, LLC		Senior Secured First Lien Debt		Revolver term loan		$	1,234			$	1,234
AqGen Ascensus Inc.		Senior Secured First Lien Debt		Delayed draw term loan		5,000				1,283
Black Mountain Sand, LLC		Senior Secured First Lien Debt		Delayed draw term loan		13,050				6,525
CCW, LLC		Senior Secured First Lien Debt		Revolver term loan		3,000				3,000
CIG Financial, LLC		Senior Secured Second Lien Debt		Delayed draw term loan		5,000				4,000
Corfin Industries LLC		Senior Secured First Lien Debt		Revolver term loan		956				908
ERG Holding Company		Senior Secured First Lien Debt		Delayed draw term loan		263				75
ERG Holding Company		Senior Secured First Lien Debt		Revolver term loan		87				87
ICR Operations, LLC		Senior Secured First Lien Debt		Revolver term loan		2,753				2,588
Ideal Tridon Holdings, Inc.		Senior Secured First Lien Debt		Revolver term loan		2,731				2,185
InMotion Entertainment Group, LLC		Senior Secured First Lien Debt		Delayed draw term loan		2,200				1,843
Lakeland Tours, LLC		Senior Secured First Lien Debt		Delayed draw term loan		464				464
Midwest Can Company, LLC		Senior Secured First Lien Debt		Delayed draw term loan		828				828
MMM Holdings, LLC		Senior Secured First Lien Debt		Delayed draw term loan		3,522				3,522
MMM Holdings, LLC		Senior Secured First Lien Debt		Revolver term loan		1,761				1,761
Motion Recruitment Partners, LLC		Senior Secured First Lien Debt		Revolver term loan		2,000				2,000
Orchid Underwriters Agency, LLC		Senior Secured First Lien Debt		Revolver term loan		2,200				2,200
PennantPark Credit Opportunities Fund II, LP		Equity capital commitment		Equity capital commitment		10,763				538
PT Network, LLC		Senior Secured First Lien Debt		Delayed draw term loan		6,579				6,579
PT Network, LLC		Senior Secured First Lien Debt		Revolver term loan		1,316				658
South Grand MM CLO I, LLC		Equity capital commitment		Equity capital commitment		35,000				5,476
Subsea Global Solutions, LLC		Senior Secured First Lien Debt		Revolver term loan		963				963
Tillamook Country Smoker, LLC		Senior Secured First Lien Debt		Revolver term loan		2,696				1,887
Twenty Eighty, Inc.		Senior Secured First Lien Debt		Revolver term loan		443				443
US Salt, LLC		Senior Secured First Lien Debt		Delayed draw term loan		1,297				43
USF S&H Holdco, LLC		Senior Secured First Lien Debt		Revolver term loan		1,616				1,616
Vetcor Professional Practices LLC		Senior Secured First Lien Debt		Delayed draw term loan		3,656				2,852
Total						$	111,378			$	55,558

(g)	The investment is subject to a three year lock-up restriction on withdrawals. The lock-up expires on March 31, 2019.

(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.

(l)For the three months ended March 31, 2018, the following investments paid or have the option to pay all or a portion of interest and dividends via payment-in-kind (“PIK”):

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)

March 31, 2018 (Unaudited)
Portfolio Company		Investment Type		Cash			PIK			All-in Rate			PIK Earned for the three months ended March 31, 2018
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.)		Senior Secured First Lien Debt		—	%		14.27	%		14.27	%		$	—
Greenwave Holdings, Inc.		Senior Secured First Lien Debt		10.00	%		3.00	%		13.00	%		87
Kahala Ireland OpCo Designated Activity Company		Senior Secured First Lien Debt		—	%		13.00	%		13.00	%		—
Lightsquared LP		Senior Secured First Lien Debt		10.78	%		—	%		10.78	%		290
MMM Holdings, Inc.		Senior Secured First Lien Debt		8.37	%		—	%		8.37	%		—
New Star Metals, Inc.		Senior Secured First Lien Debt		11.80	%		—	%		11.80	%		—
NextSteppe 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		—	%		16.00	%		16.00	%		829
Tax Defense Network, LLC		Senior Secured First Lien Debt		10.81	%		4.50	%		15.31	%		12
Twenty Eighty, Inc.		Senior Secured First Lien Debt		4.00	%		4.00	%		8.00	%		65
Twenty Eighty, Inc.		Senior Secured First Lien Debt		8.00	%		—	%		8.00	%		127
Twenty Eighty, Inc.		Senior Secured First Lien Debt		0.25	%		8.75	%		9.00	%		—
Xplornet Communications, Inc.		Senior Secured First Lien Debt		6.30	%		—	%		6.30	%		—
Xplornet Communications, Inc.		Subordinated Debt		—	%		9.63	%		9.63	%		—
Total													$	1,410

(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. The Company classifies this investment as "controlled".

(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. The Company classifies this investment as "affiliated".

(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 five investments with a total fair value of $3.5 million that are classified as Affiliated Investments.

(t)	The investment is on non-accrual status as of March 31, 2018.

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

(v)

The Collateralized Securities - subordinated notes are treated as equity investments and 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 March 31, 2018. 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.

18

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

March 31, 2018

(Unaudited)

 

The following table shows the portfolio composition by industry grouping based on fair value at March 31, 2018:

	At March 31, 2018
	Investments at Fair Value				Percentage of Total Portfolio
Diversified Investment Vehicles	$	258,942			9.9	%
Business Services	202,152				7.7
Health Care	190,071				7.2
Hotels, Restaurants & Leisure	171,088				6.5
Aerospace & Defense	162,284				6.2
Media	150,243				5.7
Diversified Telecommunication Services	128,576				4.9
Diversified Consumer Services	125,786				4.8
Health Care Providers & Services	122,787				4.7
Commercial Services & Supplies	120,830				4.6
Technology	112,605				4.3
Energy Equipment & Services	89,208				3.4
Food Products	78,189				3.0
Real Estate Management & Development	75,134				2.9
Internet Software & Services	71,725				2.7
Chemicals	62,657				2.4
Metals & Mining	56,047				2.1
Communications Equipment	54,457				2.1
Professional Services	46,811				1.8
Software	38,166				1.5
Gaming/Lodging	33,884				1.3
Consumer Finance	32,100				1.2
Specialty Retail	31,292				1.2
Diversified Financial Services	31,195				1.2
Auto Components	28,865				1.1
Transportation Infrastructure	26,959				1.0
Life Sciences Tools & Services	25,751				1.0
Containers & Packaging	19,194				0.7
Insurance Broker	18,480				0.7
Automobiles	14,394				0.5
Industrials	13,610				0.5
Health Care Technology	12,729				0.5
Electronic Equipment, Instruments & Components	10,058				0.4
Textiles, Apparel & Luxury Goods	3,443				0.1
IT Services	3,374				0.1
Financial Services	2,917				0.1
Insurance	849				—
Total	$	2,626,852			100.0	%

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, 2017
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Senior Secured First Lien Debt - 118.8% (b)
Abaco Systems Holding Corp. (c) (i)		Business Services		L+6.00% (7.35%), 12/7/2021		$	23,698			$	23,320			$	23,129			1.6	%
ABC Financial Intermediate, LLC (c) (j)		Media		L+4.25% (5.94%), 1/2/2025		7,739				7,700				7,700				0.5	%
Ability Networks Inc. (c) (j)		Health Care Providers & Services		L+5.00% (6.35%), 12/13/2024		13,607				13,539				13,607				0.9	%
Adams Publishing Group, LLC (c) (i)		Media		L+7.00% (8.69%), 11/3/2020		16,250				16,109				16,250				1.1	%
Adams Publishing Group, LLC (c)		Media		L+7.00% (8.69%), 11/3/2020		4,432				4,432				4,432				0.3	%
Aleris International, Inc. (x)		Metals & Mining		9.50%, 4/1/2021		2,882				3,046				3,044				0.2	%
Alvogen Pharma US, Inc. (j)		Health Care		L+5.00% (6.57%), 4/2/2022		14,061				13,955				13,932				0.9	%
AMI Entertainment Network, LLC (c) (f) (i)		Hotels, Restaurants & Leisure		L+6.00% (7.69%), 7/21/2022		14,632				14,365				14,368				1.0	%
Amports, Inc. (c) (m)		Transportation Infrastructure		L+5.00% (6.69%), 5/19/2020		14,876				14,832				14,876				1.0	%
Amteck, LLC (c) (f) (i)		Commercial Services & Supplies		L+7.50% (9.20%), 7/2/2020		21,688				21,499				21,579				1.4	%
Answers Corporation (c) (p)		Technology		L+5.00% (6.57%), 4/15/2021		3,007				2,945				2,916				0.2	%
AP Gaming I, LLC (i) (j)		Gaming/Lodging		L+5.50% (7.07%), 2/15/2024		33,592				33,524				33,823				2.3	%
APCO Holdings (c) (i)		Diversified Consumer Services		L+6.00% (7.57%), 1/29/2022		3,666				3,590				3,593				0.2	%
Applied Merchant Systems West Coast, Inc. (c) (m)		Diversified Financial Services		L+11.50% (12.84%), 10/26/2020		18,853				18,635				17,816				1.2	%
Applied Merchant Systems West Coast, Inc. (c) (m)		Diversified Financial Services		L+11.50% (12.84%), 10/26/2020		6,500				6,425				6,143				0.4	%
AqGen Ascensus Inc. (j)		Technology		L+3.50% (5.06%), 12/3/2022		19,637				19,637				19,694				1.3	%
AqGen Ascensus Inc. (f)		Technology		L+3.50% (5.06%), 12/3/2022		3,333				3,325				3,348				0.2	%
Avatar Purchaser, Inc. (c) (m)		Business Services		L+7.50% (8.99%), 11/17/2025		11,716				11,370				11,520				0.8	%
Avaya Holdings Corp. (j)		Communications Equipment		L+4.75% (6.23%), 12/15/2024		26,108				25,848				25,662				1.7	%
Basho Technologies, Inc. (c) (d) (l) (t)		Software		17.00%, 5/31/2018		6,645				6,485				—				—	%
Basho Technologies, Inc. (c) (d) (l) (t)		Software		17.00%, 5/31/2018		2,550				2,550				—				—	%
BCP Raptor, LLC (j)		Energy Equipment & Services		L+4.25% (5.73%), 6/24/2024		19,986				19,800				20,048				1.3	%
BCP Renaissance, LLC (j)		Energy Equipment & Services		L+4.00% (5.38%), 10/31/2024		8,472				8,431				8,569				0.6	%
BDS Solutions Group, LLC (c) (i) (m)		Business Services		L+8.75% (10.45%), 6/1/2021		33,042				32,531				33,042				2.2	%
BDS Solutions Group, LLC (c)		Business Services		L+8.75% (10.45%), 6/1/2021		2,888				2,841				2,888				0.2	%
Beaver-Visitec International Holdings, Inc. (c) (j)		Health Care		L+5.00% (6.69%), 8/21/2023		6,580				6,580				6,580				0.4	%
Berner Food & Beverage LLC (c) (f) (i)		Food Products		L+7.00% (8.69%), 3/16/2022		18,853				18,536				18,476				1.2	%
Black Mountain Sand, LLC (c) (f)		Energy Equipment & Services		L+9.00% (10.50%), 11/30/2021		13,050				12,859				12,854				0.9	%

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

20

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Blount International, Inc. (j)		Commercial Services & Supplies		L+4.25% (5.61%), 4/12/2023		$	12,500			$	12,470			$	12,637			0.9	%
California Resources, Corp. (m)		Metals & Mining		L+10.38% (11.88%), 12/31/2022		12,259				12,014				12,198				0.8	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (c) (l) (o) (t)		Food Products		L+12.50% (13.88%), 4/28/2019		20,482				16,406				4,096				0.3	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (c) (l) (o) (t)		Food Products		L+12.50% (13.88%), 4/28/2019		47,336				33,647				9,467				0.6	%
Catapult Learning, LLC (c) (i) (m)		Diversified Consumer Services		L+6.50% (7.88%), 7/16/2020		27,138				26,861				25,917				1.7	%
CCW, LLC (c) (f) (i)		Hotels, Restaurants & Leisure		L+7.00% (8.63%), 3/21/2021		26,525				26,292				26,525				1.8	%
Central Security Group, Inc. (c) (i) (j)		Commercial Services & Supplies		L+5.63% (7.19%), 10/6/2021		25,293				24,999				25,294				1.7	%
Chicken Soup for the Soul Publishing, LLC (c)		Media		L+6.25% (7.61%), 1/8/2019		27,536				27,465				24,369				1.6	%
Chloe Ox Parent, LLC (j)		Health Care Providers & Services		L+5.00% (6.64%), 12/23/2024		10,768				10,660				10,768				0.7	%
Clover Technologies Group, LLC (j)		Commercial Services & Supplies		L+4.50% (6.07%), 5/8/2020		13,548				13,495				10,070				0.7	%
Community Care Health Network, LLC (c) (j)		Health Care		L+5.50% (7.07%), 10/19/2021		2,376				2,384				2,377				0.2	%
CONSOL Energy, Inc. (j)		Metals & Mining		L+6.00% (7.47%), 11/28/2022		3,240				3,176				3,275				0.2	%
Contura Energy Inc. (j)		Energy Equipment & Services		L+5.00% (6.63%), 3/18/2024		7,491				7,425				7,379				0.5	%
ConvergeOne Holdings Corp. (j)		Technology		L+4.75% (6.44%), 6/20/2024		16,475				16,323				16,489				1.1	%
Cvent, Inc. (c) (j)		Internet Software & Services		L+3.75% (5.32%), 11/29/2024		16,436				16,333				16,436				1.1	%
DigiCert, Inc (j)		Internet Software & Services		L+4.75% (6.13%), 10/31/2024		10,800				10,747				10,930				0.7	%
Eagle Rx, LLC (c) (i)		Health Care Providers & Services		L+4.25% (5.61%), 8/15/2019		27,279				27,192				27,279				1.8	%
Elo Touch Solutions, Inc (j)		Technology		L+6.00% (7.44%), 10/31/2023		3,781				3,744				3,772				0.3	%
ERG Holding Company (c) (i) (m)		Health Care Providers & Services		L+6.75% (8.45%), 4/4/2019		34,099				33,846				33,587				2.3	%
ERG Holding Company (c) (f)		Health Care Providers & Services		L+6.75% (8.45%), 4/4/2019		136				136				134				0.1	%
Everi Payments, Inc. (j)		Hotels, Restaurants & Leisure		L+3.50% (4.98%), 5/9/2024		10,654				10,639				10,748				0.7	%
Excelitas Technologies Corp. (j)		Electronic Equipment, Instruments & Components		L+3.50% (5.16%), 12/2/2024		10,000				9,975				10,066				0.7	%
Genesys Telecommunications Laboratories, Inc. (j)		Diversified Telecommunication Services		L+3.75% (5.44%), 12/1/2023		24,751				24,435				24,874				1.7	%
Greenwave Holdings, Inc. (c) (d) (l)		Internet Software & Services		13.00%, 7/8/2019		12,184				12,136				12,184				0.8	%
GTCR Valor Companies, Inc. (j)		Internet Software & Services		L+4.25% (5.94%), 6/16/2023		9,975				9,952				10,079				0.7	%
HC Group Holdings III, Inc. (j)		Health Care		L+5.00% (6.57%), 4/7/2022		14,781				14,567				14,911				1.0	%
Hexion Inc. (x)		Chemicals		10.38%, 2/1/2022		920				920				853				0.1	%
Ideal Tridon Holdings, Inc. (c) (m)		Commercial Services & Supplies		L+6.50% (7.74%), 7/31/2023		23,917				23,472				23,465				1.6	%

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

21

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Ideal Tridon Holdings, Inc. (c) (f)		Commercial Services & Supplies		L+6.50% (7.74%), 7/31/2022		$	546			$	511			$	536			—	%
Indivior Finance S.A.R.L. (i)		Health Care		L+4.50% (6.11%), 12/18/2022		6,983				6,948				7,001				0.5	%
InMotion Entertainment Group, LLC (c) (i)		Specialty Retail		L+7.25% (8.95%), 10/1/2021		13,343				13,299				13,343				0.9	%
InMotion Entertainment Group, LLC (c) (f) (i)		Specialty Retail		L+7.75% (9.45%), 10/1/2021		327				327				327				—	%
Intelsat S.A (m)		Diversified Telecommunication Services		L+4.50% (6.19%), 1/2/2024		665				665				672				—	%
Intelsat S.A (m)		Diversified Telecommunication Services		L+4.50% (6.63%), 1/2/2024		2,211				2,211				2,231				0.1	%
Internap Corporation (m)		Communications Equipment		L+7.00% (8.41%), 4/6/2022		8,208				8,102				8,280				0.6	%
IPC Corp. (j)		Diversified Telecommunication Services		L+4.50% (5.89%), 8/6/2021		7,103				6,995				6,943				0.5	%
Jackson Hewitt, Inc. (j)		Diversified Consumer Services		L+7.00% (8.38%), 7/30/2020		6,515				6,448				6,409				0.4	%
K2 Pure Solutions NoCal, L.P. (c) (i)		Chemicals		L+6.00% (7.57%), 2/19/2021		6,500				6,445				6,500				0.4	%
Kahala Ireland OpCo Designated Activity Company (a) (c) (l) (o)		Aerospace & Defense		L+8.00% (13.00%), 12/23/2028		141,549				141,549				141,549				9.5	%
Kissner Milling Co. Ltd. (c) (x)		Chemicals		8.38%, 12/1/2022		21,199				21,530				21,430				1.4	%
Lakeland Tours, LLC (f)		Diversified Consumer Services		L+4.00% (5.59%), 12/15/2024		5,634				5,620				5,683				0.4	%
LenderLive Services, LLC (c)		Business Services		L+12.00% (13.50%), 8/11/2020		10,000				9,869				9,650				0.7	%
Lightsquared LP (l)		Diversified Telecommunications Services		L+8.75% (10.27%), 6/15/2020		11,315				10,598				10,481				0.7	%
Lionbridge Technologies, Inc. (c) (i)		Business Services		L+5.50% (7.07%), 2/28/2024		13,764				13,703				13,702				0.9	%
MCS Acquisition Corp. (c) (j)		Professional Services		L+4.75% (6.25%), 5/18/2024		14,297				14,239				14,297				1.0	%
Medallion Midland Acquisition, L.P. (j)		Energy Equipment & Services		L+3.25% (4.82%), 11/13/2024		4,450				4,439				4,456				0.3	%
Medical Depot Holdings, Inc. (c) (i)		Health Care		L+5.50% (7.19%), 1/3/2023		19,771				18,270				18,407				1.2	%
Metal Services LLC (j)		Metals & Mining		L+7.50% (9.19%), 6/30/2019		10,806				10,726				10,846				0.7	%
Michael Baker International, LLC (j)		Business Services		L+4.50% (5.94%), 11/21/2022		5,607				5,552				5,593				0.4	%
Midwest Can Company, LLC (c) (f) (i)		Energy Equipment & Services		L+6.75% (8.32%), 1/26/2022		5,067				4,994				5,008				0.3	%
MMM Holdings, LLC (c) (d) (j) (l)		Health Care		L+8.75% (10.32%), 6/28/2019		7,028				7,029				6,818				0.5	%
Monitronics International, Inc. (j)		Diversified Consumer Services		L+5.50% (7.19%), 9/30/2022		2,963				2,950				2,933				0.2	%
Montreign Operating Company, LLC (c) (m)		Hotels, Restaurants & Leisure		L+8.25% (9.82%), 1/24/2023		27,161				26,732				27,473				1.8	%
Mood Media Corporation (c) (m)		Business Services		L+7.25% (8.94%), 6/28/2022		13,912				13,638				13,608				0.9	%
Motion Recruitment Partners, LLC (c) (f) (i)		Professional Services		L+6.00% (7.57%), 2/13/2020		17,194				17,021				17,194				1.2	%

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

22

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
MSO of Puerto Rico, LLC (c) (d) (j) (l)		Health Care		L+8.75% (10.32%), 6/28/2019		$	5,110			$	5,110			$	4,956			0.3	%
Murray Energy Holdings Co. (j)		Energy Equipment & Services		L+7.25% (8.94%), 4/16/2020		13,408				12,929				11,778				0.8	%
National Technical Systems, Inc. (c) (i)		Professional Services		L+6.25% (7.61%), 6/12/2021		16,469				16,376				15,481				1.0	%
Navitas Midstream Midland Basin, LLC (j)		Energy Equipment & Services		L+4.50% (5.98%), 12/13/2024		7,969				7,929				7,969				0.5	%
New Star Metals Inc. (c) (d) (l) (m)		Business Services		L+9.50% (11.00%), 12/22/2021		24,388				23,959				24,413				1.6	%
NexSteppe Inc. (c) (f) (l) (t)		Chemicals		12.00%, 9/30/2018		1,533				1,500				—				—	%
NexSteppe Inc. (c) (l) (t)		Chemicals		12.00%, 9/30/2018		11,998				10,453				—				—	%
Noosa Acquirer, Inc. (c) (i) (m)		Food Products		L+5.25% (6.94%), 11/21/2020		25,000				24,819				25,000				1.7	%
NTM Acquisition Corp. (c) (i)		Media		L+6.25% (7.94%), 6/7/2022		18,681				18,490				18,587				1.2	%
Office Depot, Inc. (j)		Specialty Retail		L+7.00% (8.41%), 11/8/2022		9,130				8,949				9,153				0.6	%
Optiv, Inc. (j)		Business Services		L+3.25% (4.63%), 2/1/2024		4,455				4,229				4,160				0.3	%
Orchid Underwriters Agency, LLC (c) (f) (i)		Insurance Broker		L+5.00% (6.31%), 3/17/2022		18,480				18,325				18,480				1.2	%
ORG Chemical Holdings, LLC (c) (i) (m)		Chemicals		L+5.75% (7.44%), 6/30/2022		27,822				27,322				27,338				1.8	%
ORG GC Holdings, LLC (c) (i) m)		Business Services		L+6.75% (8.08%), 7/31/2022		25,550				25,199				25,266				1.7	%
Peabody Energy Corp. (j)		Metals & Mining		L+3.50% (5.07%), 3/31/2022		2,608				2,602				2,641				0.2	%
PeopLease Holdings, LLC (c) (i)		Commercial Services & Supplies		L+9.00% (10.70%), 2/26/2021		20,000				19,872				15,000				1.0	%
PetVet Care Centers, LLC (c) (i)		Business Services		L+6.00% (7.69%), 6/8/2023		19,454				19,296				19,386				1.3	%
PetVet Care Centers, LLC (c) (f)		Business Services		L+6.00% (7.35%), 6/8/2023		4,425				4,425				4,409				0.3	%
PetVet Care Centers, LLC (c) (f)		Business Services		L+6.00% (9.50%), 6/8/2023		1,676				1,676				1,676				0.1	%
PGX Holdings, Inc. (c) (j)		Transportation Infrastructure		L+5.25% (6.82%), 9/29/2020		12,547				12,500				12,547				0.8	%
Premier Dental Services, Inc. (i) (j)		Health Care		L+5.25% (6.82%), 6/30/2023		33,018				32,764				33,162				2.2	%
Premier Global Services, Inc. (j)		Diversified Telecommunication Services		L+6.50% (7.83%), 12/8/2021		9,357				9,093				9,182				0.6	%
Pre-Paid Legal Services, Inc. (c) (j)		Diversified Consumer Services		L+5.25% (6.82%), 7/1/2019		12,010				12,026				12,010				0.8	%
Pride Plating, Inc. (c) (i)		Aerospace & Defense		L+5.50% (7.19%), 6/13/2019		8,376				8,351				8,293				0.6	%
PSKW, LLC (c) (i)		Health Care Providers & Services		L+4.25% (5.94%), 11/25/2021		1,569				1,559				1,569				0.1	%
PSKW, LLC (c) (m)		Health Care Providers & Services		L+8.26% (9.95%), 11/25/2021		17,750				17,518				17,750				1.2	%
PSKW, LLC (c) (m)		Health Care Providers & Services		L+8.26% (9.95%), 11/25/2021		1,972				1,934				1,972				0.1	%
PT Network, LLC (c) (f) (i)		Health Care		L+5.50% (6.86%), 11/30/2021		16,935				16,802				16,931				1.1	%
Pure Barre, LLC (c) (i) (m)		Hotels, Restaurants & Leisure		L+7.00% (8.57%), 6/11/2020		25,698				25,478				25,441				1.7	%

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, 2017
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Pure Barre, LLC (c) (f)		Hotels, Restaurants & Leisure		L+7.00% (8.57%), 6/11/2020		$	500			$	500			$	495			—	%
Resco Products, Inc. (c) (i)		Metals & Mining		L+6.25% (7.82%), 3/7/2020		10,000				10,000				9,750				0.7	%
Sage Automotive Holdings, Inc. (j)		Auto Components		L+5.00% (6.57%), 11/8/2022		18,461				18,321				18,576				1.2	%
SHO Holding II Corporation (c) (j)		Specialty Retail		L+5.00% (6.42%), 10/27/2022		9,770				9,702				9,379				0.6	%
Skillsoft Corp. (j)		Technology		L+4.75% (6.32%), 4/28/2021		12,829				12,158				12,325				0.8	%
Squan Holding Corp. (c) (p)		Diversified Telecommunication Services		L+4.50% (6.20%), 10/10/2019		17,052				14,680				13,642				0.9	%
SSH Group Holdings, Inc. (c) (i)		Diversified Consumer Services		L+5.00% (6.69%), 10/2/2024		6,088				6,029				6,027				0.4	%
SunGard Availability Services Capital, Inc. (c) (j)		IT Services		L+10.00% (11.56%), 3/31/2019		6,860				6,842				6,688				0.5	%
Tax Defense Network, LLC (c) (l) (t)		Diversified Consumer Services		L+13.00% (14.70%), 8/28/2019		29,670				26,532				7,477				0.5	%
Thoughtworks, Inc. (j)		Business Services		L+4.50% (6.07%), 10/12/2024		4,420				4,409				4,420				0.3	%
Tillamook Country Smoker, LLC (c) (f) (i)		Food Products		L+5.75% (7.19%), 5/19/2022		10,244				10,110				10,111				0.7	%
Traverse Midstream Partners, LLC (j)		Energy Equipment & Services		L+4.00% (5.85%), 9/27/2024		6,352				6,321				6,435				0.4	%
Trilogy International Partners, LLC (x)		Diversified Telecommunication Services		8.88%, 5/1/2022		14,875				14,810				15,247				1.0	%
Trojan Battery Company, LLC (c) (j)		Auto Components		L+4.75% (6.32%), 6/12/2021		10,478				10,425				10,399				0.7	%
Turning Tech LLC (c) (i)		Software		L+10.75% (12.45%), 6/30/2020		23,476				23,271				20,542				1.4	%
Twenty Eighty, Inc. (c) (f) (l) (p)		Media		8.00%, 3/31/2020		6,291				4,535				4,719				0.3	%
Twenty Eighty, Inc. (c) (f) (l) (p)		Media		L+8.00% (9.42%), 3/31/2020		2,911				2,426				2,853				0.2	%
Twenty Eighty, Inc. (c) (f) (l) (p)		Media		9.00%, 3/31/2020		5,753				4,164				3,739				0.3	%
United Central Industrial Supply Company, LLC (c) (i) (j)		Commercial Services & Supplies		L+7.25% (8.82%), 10/9/2018		8,504				8,483				7,943				0.5	%
US Salt, LLC (c) (f) (i) (m)		Food Products		L+4.75% (6.11%), 12/1/2023		5,189				5,137				5,137				0.3	%
VCVH Holding Corp. (c) (i) (j)		Health Care		L+5.00% (6.70%), 6/1/2023		22,875				22,801				23,081				1.5	%
Veritas US Inc. (j)		Technology		L+4.50% (6.19%), 1/27/2023		15,018				15,061				15,044				1.0	%
VetCor Professional Practices LLC (c) (f) (i)		Diversified Consumer Services		L+6.00% (7.69%), 4/20/2021		4,909				4,877				4,859				0.3	%
VetCor Professional Practices LLC (c)		Diversified Consumer Services		L+6.00% (7.69%), 4/20/2021		2,569				2,569				2,543				0.2	%
VetCor Professional Practices LLC (c) (i)		Diversified Consumer Services		L+6.00% (7.69%), 4/20/2021		9,750				9,696				9,653				0.7	%
Von Drehle Corporation (c) (i) (m)		Life Sciences Tools & Services		L+7.50% (9.19%), 3/6/2023		26,549				26,167				26,220				1.8	%
Xplornet Communications, Inc. (a) (j)		Diversified Telecommunication Services		L+4.75% (6.44%), 9/9/2021		13,127				13,051				13,242				0.9	%
Sub Total Senior Secured First Lien Debt										$	1,865,392			$	1,776,534			118.8	%

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, 2017
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Senior Secured Second Lien Debt - 16.0% (b)
Anchor Glass Container Corporation (c) (m)		Containers & Packaging		L+7.75% (9.18%), 12/7/2024		$	20,000			$	19,826			$	20,060			1.3	%
Answers Corporation (c) (p)		Technology		L+7.90% (9.00%), 9/15/2021		4,675				4,088				4,371				0.3	%
Astro AB Merger Sub, Inc. (m)		Diversified Financial Services		L+7.50% (8.88%), 4/30/2023		7,758				7,758				7,777				0.5	%
Boston Market Corporation (c) (m)		Hotels, Restaurants & Leisure		L+8.25% (9.73%), 12/16/2018		24,101				24,026				23,860				1.6	%
BrandMuscle Holdings Inc. (c) (m)		Internet Software & Services		L+8.50% (9.84%), 6/1/2022		24,500				24,166				24,500				1.6	%
Cayan Holdings (c) (m)		IT Services		L+8.50% (10.18%), 3/24/2022		20,000				19,673				20,000				1.3	%
CDS U.S. Intermediate Holdings, Inc. (c) (m)		Hotels, Restaurants & Leisure		L+8.25% (9.94%), 7/8/2023		7,927				7,809				7,828				0.5	%
CIG Financial, LLC (a) (c) (m)		Consumer Finance		10.50%, 6/30/2019		9,000				8,973				8,550				0.6	%
CIG Financial, LLC (a) (c) (f)		Consumer Finance		10.50%, 6/30/2019		1,000				1,000				950				0.1	%
CREDITCORP (x)		Consumer Finance		12.00%, 7/15/2018		13,250				13,238				11,925				0.8	%
Epic Health Services, Inc. (c) (m)		Health Care Providers & Services		L+8.00% (9.57%), 3/17/2025		15,000				14,796				14,531				1.0	%
Hertz Corp. (x)		Automobiles		7.63%, 6/1/2022		14,194				14,194				14,930				1.0	%
PI US Holdco III Limited (c) (m)		Consumer Finance		L+7.25% (8.92%), 12/20/2025		6,696				6,629				6,629				0.4	%
Recess Holdings, Inc. (c) (m)		Hotels, Restaurants & Leisure		L+3.75% (5.25%), 9/29/2025		13,008				12,816				12,813				0.9	%
Rx30 HoldCo, Inc. (c) (m)		Health Care Technology		L+9.00% (10.35%), 6/15/2022		11,500				11,353				11,500				0.8	%
Rx30 HoldCo, Inc. (c) (m)		Health Care Technology		L+9.00% (10.50%), 6/15/2022		1,229				1,204				1,229				0.1	%
TierPoint, LLC (c) (m)		Technology		L+7.25% (8.82%), 5/5/2025		5,334				5,285				5,281				0.4	%
U.S. Auto (c) (m)		Diversified Consumer Services		L+11.75% (13.12%), 6/8/2020		30,000				29,743				29,100				2.0	%
US Salt, LLC (c) (m)		Food Products		L+8.75% (10.18%), 12/1/2024		12,872				12,681				12,679				0.8	%
Sub Total Senior Secured Second Lien Debt										$	239,258			$	238,513			16.0	%
Subordinated Debt - 6.3% (b)
BMC Software Finance, Inc. (x)		Software		8.13%, 7/15/2021		$	8,461			$	8,422			$	8,482			0.6	%
Gold, Inc. (c) (m)		Textiles, Apparel & Luxury Goods		10.00%, 6/30/2019		3,742				3,670				3,312				0.2	%
Frontier Communications (x)		Diversified Telecommunication Services		8.13%, 10/1/2018		5,500				5,494				5,479				0.4	%
Frontier Communications (x)		Diversified Telecommunication Services		8.50%, 4/15/2020		10,000				9,143				8,300				0.5	%
Park Ave RE Holdings, LLC (c) (d) (l) (o)		Real Estate Management & Development		L+8.00% (13.00%), 12/31/2021		37,192				37,192				37,192				2.5	%
Steel City Media (c) (l)		Media		16.00%, 3/29/2020		23,661				23,461				20,585				1.4	%
Xplornet Communications, Inc. (a) (l) (x)		Diversified Telecommunication Services		10.63%, 6/1/2022		10,534				10,534				10,989				0.7	%
Sub Total Subordinated Debt										$	97,916			$	94,339			6.3	%

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

25

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Collateralized Securities - 10.7% (b)
Collateralized Securities - Debt Investment
NewStar Exeter Fund CLO - Debt (a) (c) (p)		Diversified Investment Vehicles		L+7.50% (8.86%), 1/19/2027		$	10,728			$	9,262			$	8,660			0.6	%
Collateralized Securities - Equity Investment (n)
B&M CLO 2014-1, LTD. Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		0.00%, 4/16/2026		$	40,250			$	15,385			$	12,804			0.8	%
CVP Cascade CLO, LTD. Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		0.00%, 1/16/2026		31,000				7,618				4,121				0.3	%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		0.00%, 1/15/2027		35,057				16,421				12,508				0.8	%
MidOcean Credit CLO II, LLC Income Notes (a) (c) (p) (v)		Diversified Investment Vehicles		15.75%, 1/29/2025		37,600				20,876				20,651				1.4	%
MidOcean Credit CLO III, LLC Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		1.31%, 7/21/2026		40,250				20,323				17,508				1.2	%
MidOcean Credit CLO IV, LLC Income Notes (a) (c) (p) (v)		Diversified Investment Vehicles		1.44%, 4/15/2027		21,500				13,289				12,212				0.8	%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		12.62%, 7/25/2025		31,603				21,849				25,439				1.7	%
NewStar Exeter Fund CLO - Equity (a) (c) (p) (v)		Diversified Investment Vehicles		3.45%, 1/19/2027		31,575				19,471				13,089				0.9	%
OFSI Fund VI, Ltd. Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		0.00%, 3/20/2025		38,000				14,006				10,162				0.7	%
Related Fee Agreements (a) (c) (s)		Diversified Investment Vehicles								6,959				3,917				0.2	%
Silver Spring CLO, Ltd. Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		0.00%, 10/16/2026		31,500				15,123				10,363				0.7	%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (c) (p) (v)		Diversified Investment Vehicles		10.03%, 5/1/2026		36,000				12,947				8,761				0.6	%
Sub Total Collateralized Securities										$	193,529			$	160,195			10.7	%
Equity/Other - 15.7% (b)
Answers Corporation - Common Equity (c) (e) (p)		Technology				909				$	11,361			$	14,231			1.0	%
Avaya Holdings Corp. (e) (x)		Communications Equipment				611				9,696				10,716				0.7	%
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (c) (e)		Software		Expire 3/9/2025		306,122				—				—				—	%
Basho Technologies, Inc. - Series G Senior Preferred Stock (c) (e)		Software				2,040,816				2,000				—				—	%
California Resources Development JV, LLC - Preferred Equity (c) (u)		Metals & Mining		9.00%		26,717,000				26,183				26,984				1.8	%
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) (c) (e) (o)		Food Products				6,023				1,630				—				—	%
Capstone Nutrition - Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (c) (e) (o) (u)		Food Products				24,656				—				—				—	%
Danish CRJ LTD. - Common Equity (a) (c) (e) (p) (r)		Aerospace & Defense				10,000				1				605				—	%
Evolution Research Group - Preferred Equity (c) (e)		Health Care Providers & Services		8.00%		500,000				500				535				—	%

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, 2017
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (c) (e)		Internet Software & Services		Expire 8/16/2025		172,414				$	—			$	—			—	%
Kahala Ireland OpCo Designated Activity Company - Common Equity (a) (c) (e) (h) (o)		Aerospace & Defense				137				—				11,709				0.8	%
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (a) (c) (e) (h) (o)		Aerospace & Defense				3,250,000				2,851				3,250				0.2	%
Kahala US OpCo LLC - Class A Preferred Units (c) (e) (k) (o)		Aerospace & Defense		13.00%		4,413,472				—				—				—	%
Mood Media Corporation - Warrants (c) (e)		Business Services				121,021				27				47				—	%
New Star Metals Inc. - Warrants (c) (e)		Business Services		Expire 12/22/2036		100,216				151				272				—	%
NexSteppe Inc. - Series C Preferred Stock Warrant (c) (e)		Chemicals				237,240				737				—				—	%
NMFC Senior Loan Program I, LLC (a) (p)		Diversified Investment Vehicles				50,000				50,000				50,805				3.4	%
Orchid Underwriters Agency, LLC - Preferred Shares (c) (e) (u)		Insurance Broker				5,000				113				616				—	%
Orchid Underwriters Agency, LLC - Common Shares (c) (e) (u)		Insurance Broker				5,000				—				—				—	%
Park Ave RE Holdings, LLC - Common Shares (c) (e) (o) (w)		Real Estate Management & Development				1,000				—				12,678				0.8	%
Park Ave RE Holdings, LLC - Preferred Shares (c) (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				9,952				9,952				10,136				0.7	%
South Grand MM CLO I, LLC (a) (f) (p)		Diversified Investment Vehicles				29,524				29,095				28,904				2.0	%
Squan Holding Corp. - Class A Common Stock (c) (e) (p)		Diversified Telecommunication Services				180,835				—				—				—	%
Squan Holding Corp. - Series A Preferred Stock (c) (e) (p)		Diversified Telecommunication Services				8,962				—				60				—	%
Tax Defense Network, LLC - Common Equity (c) (e)		Diversified Consumer Services				106,346				425				—				—	%
Tennenbaum Waterman Fund, L.P. (a)		Diversified Investment Vehicles				10,000				10,000				10,427				0.7	%
TCG BDC, Inc. - Common Stock (fka Carlyle GMS Finance, Inc.) (a) (x)		Diversified Investment Vehicles				404,899				7,765				7,843				0.5	%
The SAVO Group, Ltd. - Warrants (c) (e)		Internet Software & Services		Expire 3/23/2023		138,000				—				—				—	%
THL Credit Greenway Fund II LLC (a) (p)		Diversified Investment Vehicles				12,141				12,141				11,373				0.9	%
Twentyeighty, Inc. - Class A Common Equity (c) (e)		Media				54,586				—				—				—	%
TZ Holdings, Inc. - Warrants (fka Zimbra, Inc.) (c) (e)		Software				—				—				—				—	%
TZ Holdings, Inc. - Preferred Shares (fka Zimbra, Inc.) (c) (e)		Software				1,000,000				10				179				—	%
U.S. Auto - Series A Common Units (c) (e) (u)		Diversified Consumer Services				10,000				10				—				—	%
U.S. Auto - Series A Preferred Units (c) (e) (u)		Diversified Consumer Services				490				490				513				—	%

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

27

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017
Portfolio Company (q)		Industry		Investment Coupon Rate / Maturity (y)		Principal / Number of Shares				Amortized Cost				Fair Value				% of Net Assets (b)
World Business Lenders, LLC - Preferred Stock (c) (e)		Consumer Finance				922,669				$	3,750			$	3,759			0.3	%
Xplornet Communications, Inc. - Warrants (a) (c) (e)		Diversified Telecommunication Services		Expire 10/25/2023		10,284				—				4,655				0.3	%
Sub Total Equity/Other										$	202,533			$	233,942			15.7	%
TOTAL INVESTMENTS - 167.5% (b)										$	2,598,628			$	2,503,523			167.5	%

_____________

(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 73.8% 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 $1,494,516 as of December 31, 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. Such investments 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, 2017.

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

28

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

(f)The Company has various unfunded commitments to portfolio companies. The remaining amount of these unfunded commitments as of December 31, 2017 are comprised of the following:

Portfolio Company Name		Investment Type		Commitment Type		Original Commitment				Remaining Commitment
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
AqGen Ascensus, Inc.		Senior Secured First Lien Debt		Delayed draw term loan		5,000				1,667
Berner Food & Beverage LLC		Senior Secured First Lien Debt		Delayed draw term loan		2,693				2,693
Black Mountain Sand LLC		Senior Secured First Lien Debt		Delayed draw term loan		13,050				13,050
CCW, LLC		Senior Secured First Lien Debt		Revolver term loan		3,000				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				136
ERG Holding Company		Senior Secured First Lien Debt		Revolver term loan		87				78
Ideal Tridon Holdings, Inc.		Senior Secured First Lien Debt		Revolver term loan		2,731				2,185
InMotion Entertainment Group, LLC		Senior Secured First Lien Debt		Delayed draw term loan		2,200				1,843
Lakeland Tours, LLC		Senior Secured First Lien Debt		Delayed draw term loan		464				464
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				250
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				538
PetVet Care Centers, LLC		Senior Secured First Lien Debt		Delayed draw term loan		6,704				2,272
PT Network, LLC		Senior Secured First Lien Debt		Delayed draw term loan		6,579				6,579
PT Network, LLC		Senior Secured First Lien Debt		Revolver term loan		1,316				1,316
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				2,696
Twentyeighty, Inc.		Senior Secured First Lien Debt		Revolver term loan		442				442
US Salt, LLC		Senior Secured First Lien Debt		Delayed draw term loan		1,297				1,297
VetCor Professional Practices LLC		Senior Secured First Lien Debt		Delayed draw term loan		3,656				3,656
Total						$	119,529			$	64,500

(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.

29

---

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

(l)For the year ended December 31, 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 Year ended December 31, 2017
Basho Technologies, Inc.		Senior Secured First Lien Debt		17.00	%		—	%		17.00	%		$	—
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.)		Senior Secured First Lien Debt		—	%		13.88	%		13.88	%		—
Greenwave Holdings, Inc.		Senior Secured First Lien Debt		10.00	%		3.00	%		13.00	%		476
ILC Dover LP		Senior Secured First Lien Debt		8.24	%		2.00	%		10.24	%		214
Kahala Ireland OpCo Designated Activity Company		Senior Secured First Lien Debt		—	%		13.00	%		13.00	%		141
Lightsquared LP		Senior Secured First Lien Debt		—	%		10.27	%		10.27	%		1,069
MMM Holdings, LLC		Senior Secured First Lien Debt		10.32	%		—	%		10.32	%		—
MSO of Puerto Rico, LLC		Senior Secured First Lien Debt		10.32	%		—	%		10.32	%		—
New Star Metals Inc.		Senior Secured First Lien Debt		11.00	%		—	%		11.00	%		—
NexSteppe Inc.		Senior Secured First Lien Debt		—	%		12.00	%		12.00	%		135
Park Ave RE Holdings, LLC		Subordinated Debt		13.00	%		—	%		13.00	%		—
Steel City Media		Subordinated Debt		—	%		16.00	%		16.00	%		2,243
Tax Defense Network, LLC		Senior Secured First Lien Debt		—	%		14.70	%		14.70	%		266
Twentyeighty, Inc.		Senior Secured First Lien Debt		4.92	%		4.50	%		9.42	%		108
Twentyeighty, Inc.		Senior Secured First Lien Debt		1.00	%		7.00	%		8.00	%		390
Twentyeighty, Inc.		Senior Secured First Lien Debt		0.25	%		8.75	%		9.00	%		441
Xplornet Communications, Inc.		Subordinated Debt		—	%		13.00	%		13.00	%		946
Xplornet Communications, Inc.		Subordinated Debt		—	%		10.63	%		10.63	%		534
Total													$	6,963

(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. The Company classifies this investment as "controlled".

(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. The Company classifies this investment as "affiliated".

(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 four investments with a total fair value of $3.9 million that are classified as Affiliated Investments.

(t)	The investment is on non-accrual status as of December 31, 2017.

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

(v)

The Collateralized Securities - subordinated notes are treated as equity investments and 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 December 31, 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.

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BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

The following table shows the portfolio composition by industry grouping based on fair value at December 31, 2017:

	At December 31, 2017
	Investments at Fair Value				Percentage of Total Portfolio
Diversified Investment Vehicles	$	279,683			11.2	%
Business Services	197,181				7.9
Aerospace & Defense	165,406				6.6
Hotels, Restaurants & Leisure	149,551				6.0
Health Care	148,156				5.9
Diversified Telecommunication Services	125,997				5.0
Health Care Providers & Services	121,732				4.9
Diversified Consumer Services	116,717				4.7
Commercial Services & Supplies	116,524				4.6
Technology	97,471				3.9
Media	95,534				3.8
Food Products	84,966				3.4
Energy Equipment & Services	84,496				3.4
Internet Software & Services	74,129				3.0
Real Estate Management & Development	73,515				2.9
Metals & Mining	68,738				2.6
Chemicals	56,121				2.2
Professional Services	46,972				1.9
Communications Equipment	44,658				1.8
Software	36,903				1.5
Gaming/Lodging	33,823				1.3
Specialty Retail	32,202				1.3
Consumer Finance	31,813				1.3
Diversified Financial Services	31,736				1.3
Auto Components	28,975				1.2
Transportation Infrastructure	27,423				1.1
IT Services	26,688				1.1
Life Sciences Tools & Services	26,220				1.0
Containers & Packaging	20,060				0.8
Insurance	19,096				0.8
Automobiles	14,930				0.6
Health Care Technology	12,729				0.5
Electronic Equipment, Instruments & Components	10,066				0.4
Textiles, Apparel & Luxury Goods	3,312				0.1
Total	$	2,503,523			100.0	%

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

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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 March 31, 2018

(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.

During the three months ended March 31, 2018, the Company invested approximately $284.4 million to portfolio companies to contribute to the support of their business objectives of which some were contractually obligated. See also Note 6 - Commitments and Contingencies. As of March 31, 2018, the Company held investments in loans it made to investee companies with aggregate principal amounts of $2,427.1 million. The details of such investments have been disclosed on the consolidated schedule of investments as well as in Note 3 - Fair Value of Financial Instruments. In addition to providing loans to investee companies, from time to time the Company may assist investee companies in securing financing from other sources by introducing such investee companies to sponsors or other lending institutions.

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. As of March 31, 2018, the Company had issued 197.0 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 March 31, 2018, the Company had repurchased a cumulative 18.8 million shares of common stock through its share repurchase program for payments of $166.2 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.

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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 March 31, 2018

(Unaudited)

The Company is permitted to borrow money from time to time within the levels permitted by the 1940 Act (which generally currently 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.

    

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-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, 2018.

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.

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 March 31, 2018

(Unaudited)

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.

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.

The Company’s investments in funds that offer periodic liquidity have redemption frequencies which range from monthly to quarterly and redemption notice periods which range from 30 to 90 days. Investments in private equity typically do not offer liquidity and instead, capital is returned through periodic distributions.

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.

    

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 March 31, 2018

(Unaudited)

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. Typically, 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 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.

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 March 31, 2018 and December 31, 2017, 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

35

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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 March 31, 2018

(Unaudited)

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.

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 325-40-35, Beneficial Interests in Securitized Financial Assets ("ASC 325-40-35"). 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. In accordance with ASC 325-40, investments in CLOs are periodically assessed for other-than-temporary impairment ("OTTI"). When the Company determines that a CLO has OTTI, the amortized cost basis of the CLO is written down as of the date of the determination based on events and information evaluated and that write-down is recognized as a realized loss.

Fee Income

Fee income, such as structuring fees, origination, closing, amendment fees, commitment, termination and other upfront fees are generally non-recurring and are recognized as revenue when earned, either upon receipt or amortized into income. Upon the re-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.

36

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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 March 31, 2018

(Unaudited)

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 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 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 is effective for annual and interim reporting periods after December 15, 2017. The Company has evaluated the impact of ASU 2016-15 on its consolidated financial statements and disclosures and determined that the adoption of ASU 2016-15 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 adopted this guidance and the application did not have a material impact on the Company's consolidated financial statements.

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 was August 1, 2017. The application of this guidance did not 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. The Company has evaluated the impact of ASU 2016-10 on its consolidated financial statements and disclosures and determined that the adoption of ASU 2016-10 has not had a material impact on its 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

37

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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 March 31, 2018

(Unaudited)

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 has evaluated the impact of ASU 2016-01 on its consolidated financial statements and disclosures and determined that the adoption of ASU 2016-01 has not had a material impact on its consolidated financial statements.

    

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

For investments for which Level 1 inputs, such as quoted prices, were not available at March 31, 2018, the investments were valued at fair value as determined in good faith using the valuation policy approved by the board of directors using Level 2 and Level 3 inputs. The Company evaluates the source of inputs, including any markets in which the Company's investments are trading, in determining fair value. Due to the inherent uncertainty in the valuation process, the estimate of fair value of the Company’s investment portfolio at March 31, 2018 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.

38

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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 March 31, 2018

(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.

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.

The following table presents fair value measurements of investments, by major class, as of March 31, 2018, 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	$	—			$	554,140			$	1,346,829			—				$	1,900,969
Senior Secured Second Lien Debt	—				61,618				175,706				—				237,324
Subordinated Debt	—				67,463				61,645				—				129,108
Collateralized Securities	—				—				161,934				—				161,934
Equity/Other	7,489				5,293				93,020				91,715				197,517
Total	$	7,489			$	688,514			$	1,839,134			$	91,715			$	2,626,852

______________

⁽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

39

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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 March 31, 2018

(Unaudited)

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 presents fair value measurements of investments, by major class, as of December 31, 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	$	—			$	522,031			$	1,254,503			—				$	1,776,534
Senior Secured Second Lien Debt	—				34,632				203,881				—				238,513
Subordinated Debt	—				33,250				61,089				—				94,339
Collateralized Securities	—				—				160,195				—				160,195
Equity/Other	10,716				7,843				103,738				111,645				233,942
Total	$	10,716			$	597,756			$	1,783,406			$	111,645			$	2,503,523

______________

⁽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 three months ended March 31, 2018:

	Senior Secured First Lien Debt				Senior Secured Second Lien Debt				Subordinated Debt				Collateralized Securities				Equity/Other				Total
Balance as of December 31, 2017	$	1,254,503			$	203,881			$	61,089			$	160,195			$	103,738			$	1,783,406
Net change in unrealized appreciation (depreciation) on investments	6,338				(3,364		)		(549		)		29,996				(6,750		)		25,671
Purchases and other adjustments to cost	168,863				17,296				1,152				7,679				55				195,045
Sales and redemptions	(78,336		)		(20,074		)		—				(5,936		)		(5,802		)		(110,148		)
Net realized gains (losses)	(8,450		)		326				(47		)		(30,000		)		1,779				(36,392		)
Transfers in	3,911				—				—				—				—				3,911
Transfers out	—				(22,359		)		—				—				—				(22,359		)
Balance as of March 31, 2018	$	1,346,829			$	175,706			$	61,645			$	161,934			$	93,020			$	1,839,134
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:	$	(3,057	)		$	(3,038	)		$	(549	)		$	29,995			$	(4,094	)		$	19,257

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

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 March 31, 2018

(Unaudited)

For the three months ended March 31, 2018, there were no transfers out of Level 1 to Level 2. For the three months ended March 31, 2018, eight investments were transferred out of Level 2 to Level 3. For the three months ended March 31, 2018, eight investments were transferred out of Level 3 to Level 2. 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, 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	(23,259		)		(558		)		(2,718		)		(8,140		)		13,805				(20,870		)
Purchases and other adjustments to cost	427,865				79,561				3,167				161				38,817				549,571
Sales and redemptions	(342,176		)		(117,696		)		(21,453		)		(79,376		)		(3,980		)		(564,681		)
Net realized gains (losses)	(11,753		)		1,144				1,553				(2,032		)		(1,698		)		(12,786		)
Transfers in	287,727				36,379				—				—				—				324,106
Transfers out	—				—				—				—				—				—
Balance as of December 31, 2017	$	1,254,503			$	203,881			$	61,089			$	160,195			$	103,738			$	1,783,406
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:	$	(36,523	)		$	(841	)		$	(1,678	)		$	(9,353	)		$	13,573			$	(34,822	)

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

For the year ended December 31, 2017, there were no transfers out of Level 1 to Level 2 and Level 3 to Level 2. For the year ended December 31, 2017, twenty-five investments 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.

The composition of the Company’s investments as of March 31, 2018, 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	$	1,982,847			$	1,900,969			72.4	%
Senior Secured Second Lien Debt	241,107				237,324				9.0
Subordinated Debt	131,037				129,108				4.9
Collateralized Securities	165,274				161,934				6.2
Equity/Other	171,235				197,517				7.5
Total	$	2,691,500			$	2,626,852			100.0	%

41

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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 March 31, 2018

(Unaudited)

The composition of the Company’s investments as of December 31, 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	$	1,865,392			$	1,776,534			71.0	%
Senior Secured Second Lien Debt	239,258				238,513				9.5
Subordinated Debt	97,916				94,339				3.8
Collateralized Securities	193,529				160,195				6.4
Equity/Other	202,533				233,942				9.3
Total	$	2,598,628			$	2,503,523			100.0	%

Significant Unobservable Inputs

The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of March 31, 2018. 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)		$	1,025,569			Yield Analysis		Market Yield		5.50	%		25.00	%		9.74	%
Senior Secured First Lien Debt (b) (c)		$	141,549			Waterfall Analysis		Discount Rate		15.00	%		17.00	%		N/A
Senior Secured Second Lien Debt (d)		$	162,073			Yield Analysis		Market Yield		9.25	%		19.11	%		13.25	%
Subordinated Debt (c) (e)		$	37,192			Waterfall Analysis		Discount Rate		8.35	%		8.55	%		N/A
Subordinated Debt (c) (e)		$	3,443			Yield Analysis		Market Yield		12.50	%		14.60	%		N/A
Collateralized Securities		$	161,934			Discounted Cash Flow		Discount Rate		5.60	%		30.50	%		18.46	%
Equity/Other (f)		$	50,041			Waterfall Analysis		Discount Rate		8.50%			17.50%			10.68%
Equity/Other (f)		$	25,413			Discounted Cash Flow		Discount Rate		5.49%			11.69%			11.58%
Equity/Other (f)		$	1,708			Waterfall Analysis		EBITDA Multiple		1.40x			10.00x			6.66x
Equity/Other (f)		$	48			Option Pricing Method		Volatility		30.00%			50.00%			40.00%

______________

    

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

(b)	The remaining $179.7 million of senior secured first lien debt consisted of $114.9 million which were valued using a Scenario-Based analysis technique factoring in various unobservable inputs and $64.8 million which were valued based on 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 $13.6 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 $21.0 million of subordinated debt were valued using a Scenario-Based analysis technique factoring in various unobservable inputs.

42

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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 March 31, 2018

(Unaudited)

(f)	The remaining $15.6 million of equity/other investments were valued using the Current Method, factoring in various unobservable inputs and $0.2 million which were valued based on their respective acquisition prices as the investments closed near year end.

There were no significant changes in valuation approach or technique as of March 31, 2018.

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.

    

The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of December 31, 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)		$	967,773			Yield Analysis		Market Yield		5.00	%		26.75	%		9.21	%
Senior Secured First Lien Debt (b) (c)		$	141,549			Waterfall Analysis		Discount Rate		15.00	%		17.00	%		N/A
Senior Secured Second Lien Debt (d)		$	184,572			Yield Analysis		Market Yield		9.25	%		15.05	%		11.91	%
Subordinated Debt (c) (e)		$	37,192			Waterfall Analysis		Discount Rate		8.20	%		9.20	%		N/A
Subordinated Debt (c) (e)		$	3,312			Yield Analysis		Market Yield		12.50	%		14.60	%		N/A
Collateralized Securities		$	160,195			Discounted Cash Flow		Discount Rate		12.35	%		37.50	%		20.37	%
Equity/Other (f)		$	51,282			Waterfall Analysis		Discount Rate		8.45%			16.00%			10.65%
Equity/Other (f)		$	27,589			Discounted Cash Flow		Discount Rate		5.63%			12.19%			12.05%
Equity/Other (f)		$	1,462			Waterfall Analysis		EBITDA Multiple		4.00x			10.50x			9.31x
Equity/Other (f)		$	47			Option Pricing Method		Volatility		30.00%			50.00%			40.00%

______________

    

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

(b)	The remaining $145.2 million of senior secured first lien debt consisted of $113.5 million which were valued using a Scenario-Based analysis technique factoring in various unobservable inputs and $31.7 million which were valued based on 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 $19.3 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 $20.6 million of subordinated debt were valued using a Scenario-Based analysis technique factoring in various unobservable inputs.

(f)	The remaining $23.2 million of equity/other investments were valued using the Current Method, factoring in various unobservable inputs and $0.2 million which were valued based on their respective acquisition prices as the investments closed near year end.

There were no significant changes in valuation approach or technique as of December 31, 2017.

43

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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 March 31, 2018

(Unaudited)

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 March 31, 2018, the Company had four portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $142.7 million, amortized cost of $116.2 million, and fair value of $41.4 million which represented 4.5%, 4.3% and 1.6% of the investment portfolio's total principal, amortized cost and fair value, respectively. As of December 31, 2017, the Company had four portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $120.2 million, amortized cost of $97.6 million, and fair value of $21.0 million which represented 4.0%, 3.8% and 0.8% of the investment portfolio's total principal, amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - 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.

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 may be deferred without interest and may be taken in such other quarter as the Adviser will determine within three years. The base management fee for any partial month or quarter is appropriately pro-rated.

As of March 31, 2018 and December 31, 2017, $10.0 million and $9.9 million was payable to the Adviser for base management fees, respectively.

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

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 March 31, 2018

(Unaudited)

•	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.

As of March 31, 2018 and December 31, 2017, $4.6 million and $4.6 million was payable to the Adviser for the incentive fee on income, respectively.

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.

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. As of March 31, 2018 and December 31, 2017, $0.1 million and $0.6 million was payable to BSP under the New Administration Agreement, respectively.

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

45

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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 March 31, 2018

(Unaudited)

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.

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.

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.

46

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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 March 31, 2018

(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 November 28, 2017 to extend the investment period to May 31, 2019. The Citi Credit Facility has a maturity date of May 28, 2020.

The Citi Credit Facility is priced at three month LIBOR, with no LIBOR floor, plus a spread of 1.60% per annum through and including the last day of the investment period 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. The non-usage fee per annum is 0.50%. 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.

2020 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 “2020 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 2020 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 2020 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 2020 Notes were issued pursuant to the Indenture, dated as of August 31, 2015, between the Company and the Trustee. The 2020 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 2020 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 2020 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 2020 Notes. The 2020 Notes will rank equally in right of payment with all of the Company’s existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company’s subsidiaries, financing vehicles or similar facilities, including credit facilities held by the Company’s wholly owned, special purpose financing subsidiaries. 

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 March 31, 2018

(Unaudited)

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 2020 Notes, whether or not the Company is subject to such provisions; (ii) provide financial information to the holders of the 2020 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.

2022 Notes

    

On December 14, 2017, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with Sandler O’Neill & Partners, L.P (the “Initial Purchaser”) relating to the Company's sale of $150.0 million aggregate principal amount of its 4.75% fixed rate notes due 2022 (the “2022 Notes”) to the Initial Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and for initial resale by the Initial Purchaser to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act and to institutional accredited investors under Rule 501(a)(1), (2), (3) or (7) under the Securities Act. The Company relied upon these exemptions from registration based in part on representations made by the Initial Purchaser. The Purchase Agreement also includes customary representations, warranties and covenants by the Company. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the Initial Purchaser against certain liabilities under the Securities Act. The 2022 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. The net proceeds from the sale of the 2022 Notes was approximately $147.0 million, after deducting an offering price discount of approximately $0.8 million, as well as Initial Purchaser’s discounts and commissions of approximately $1.7 million and estimated offering expenses of approximately $0.6 million, each payable by the Company. The Company used the net proceeds to repay outstanding indebtedness, to make investments in portfolio companies in accordance with its investment objectives and for general corporate purposes.

The 2022 Notes were issued pursuant to an Indenture dated as of December 19, 2017 (the “Indenture”), between the Company and U.S. Bank National Association, trustee (the “Trustee”), and a Supplemental Indenture, dated as of December 19, 2017 (the “Supplemental Indenture”), between the Company and the Trustee. The 2022 Notes will mature on December 30, 2022, unless repurchased or redeemed in accordance with their terms prior to such date. The Notes bear interest at a rate of 4.75% per year payable semi-annually on June 30 and December 30 of each year, commencing on June 30, 2018. The 2022 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 2022 Notes. The 2022 Notes will rank equally in right of payment with all of the Company's existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company's secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company's subsidiaries, financing vehicles or similar facilities, including credit facilities entered into 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 the 1940 Act, whether or not it is subject to those requirements, and (ii) provide financial information to the holders of the 2022 Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. These covenants are subject to important limitations and exceptions that are described in the Indenture.

In addition, if a change of control repurchase event, as defined in the Indenture, occurs prior to maturity, holders of the 2022 Notes will have the right, at their option, to require the Company to repurchase for cash some or all of the 2022 Notes at a repurchase price equal to 100% of the principal amount of the 2022 Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

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

48

---

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 March 31, 2018

(Unaudited)

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 March 31, 2018, the Company had borrowings of $71.2 million and additional borrowing capacity of $0.9 million under the JPMC PB Account.

The weighted average annualized interest cost for all borrowings for the three months ended March 31, 2018, and March 31, 2017 was 4.36% and 3.79%, respectively. The average daily debt outstanding for the three months ended March 31, 2018, and March 31, 2017 was $1,090.0 million and $926.7 million, respectively. The maximum debt outstanding for the three months ended March 31, 2018, and March 31, 2017 was $1,175.9 million and $945.6 million, respectively.

The following table represents borrowings as of March 31, 2018:

		Maturity Date		Total Aggregate Borrowing Capacity				Total Principal Outstanding				Less Deferred Financing Costs				Amount per Balance Sheet
Wells Fargo Credit Facility		5/18/2022		$	400,000			$	266,052			$	(5,944	)		$	260,108
Citi Credit Facility		5/28/2020		400,000				356,003				(1,708		)		354,295
UBS Credit Facility		4/7/2018		232,500				232,500				(7		)		232,493
2022 Notes		12/30/2022		150,000				149,216				(2,167		)		147,049
2020 Notes		9/1/2020		100,000				99,236				(304		)		98,932
JPMC PB Account		n/a		72,089				71,173				—				71,173
Totals				$	1,354,589			$	1,174,180			$	(10,130	)		$	1,164,050

The following table represents borrowings as of December 31, 2017:

		Maturity Date		Total Aggregate Borrowing Capacity				Total Principal Outstanding				Less Deferred Financing Costs				Amount per Balance Sheet
Wells Fargo Credit Facility		5/18/2022		$	400,000			$	188,051			$	(6,299	)		$	181,752
Citi Credit Facility		5/28/2020		400,000				336,003				(1,902		)		334,101
UBS Credit Facility		4/7/2018		232,500				232,500				(110		)		232,390
2022 Notes		12/30/2022		150,000				149,175				(2,280		)		146,895
2020 Notes		9/1/2020		100,000				99,158				(335		)		98,823
JPMC PB Account		n/a		49,994				36,262				—				36,262
Totals				$	1,332,494			$	1,041,149			$	(10,926	)		$	1,030,223

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 March 31, 2018

(Unaudited)

The following table represents interest and debt fees for the three months ended March 31, 2018:

	Three months ended March 31, 2018
	Interest Rate		Non-Usage Rate		Interest Expense				Deferred Financing Costs (3)				Other Fees (4)
Wells Fargo Credit Facility	(1)		(2)		$	2,161			$	355			$	498
Citi Credit Facility	L+1.60%		0.50%		2,798				195				96
UBS Credit Facility	L+4.05%		n/a		3,372				103				25
2022 Notes	4.75%		n/a		1,822				112				4
2020 Notes	6.00%		n/a		1,578				31				—
JPMC PB Account	L+0.90%		n/a		300				—				—
Totals					$	12,031			$	796			$	623

_________________

⁽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.

The following table represents interest and debt fees for the three months ended March 31, 2017:

	Three months ended March 31, 2017
	Interest Rate		Non-Usage Rate		Interest Expense				Deferred Financing Costs (3)				Other Fees (4)
Wells Fargo Credit Facility	(1)		(2)		$	2,368			$	212			$	238
Citi Credit Facility	L+1.70%		0.50%		2,032				182				140
UBS Credit Facility	L+4.05%		n/a		2,931				102				23
2020 Notes	6.00%		n/a		1,578				31				7
JPMC PB Account	L+0.90%		n/a		6				—				—
Totals					$	8,915			$	527			$	408

______________

⁽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⁾ Amortization of deferred financing costs.

⁽⁴⁾ Includes non-usage fees, custody fees and trustee 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 2020 Notes and 2022 Notes are derived from market indications provided by Bloomberg Finance L.P. at March 31, 2018 and December 31, 2017, respectively.

50

---

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 March 31, 2018

(Unaudited)

At March 31, 2018, the carrying amount of our secured 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 March 31, 2018 and December 31, 2017, our borrowings would be deemed to be Level 3, as defined in Note 3.

The fair values of the Company’s remaining financial instruments that are not reported at fair value on the accompanying consolidated statements of assets and liabilities are reported below (amounts in thousands):

	Level		Carrying Amount at March 31, 2018				Fair Value at March 31, 2018
Wells Fargo Credit Facility	3		$	266,052			$	266,052
Citi Credit Facility	3		356,003				356,003
UBS Credit Facility	3		232,500				232,500
2022 Notes	3		149,216				150,899
2020 Notes	3		99,236				103,524
JPMC PB Account	3		71,173				71,173
			$	1,174,180			$	1,180,151

	Level		Carrying Amount at December 31, 2017				Fair Value at December 31, 2017
Wells Fargo Credit Facility	3		$	188,051			$	188,051
Citi Credit Facility	3		336,003				336,003
UBS Credit Facility	3		232,500				232,500
2022 Notes	3		149,175				148,811
2020 Notes	3		99,158				103,276
JPMC PB Account	3		36,262				36,262
			$	1,041,149			$	1,044,903

Note 6 — Commitments and Contingencies

Commitments

In the ordinary course of business, the Company may enter into future funding commitments. As of March 31, 2018, the Company had unfunded commitments on delayed draw term loans of $28.1 million, unfunded commitments on revolver term loans of $21.5 million and unfunded equity capital commitments of $6.0 million. As of December 31, 2017, the Company had unfunded commitments on delayed draw term loans of $38.7 million, unfunded commitments on revolver term loans of $19.8 million and unfunded equity capital commitments of $6.0 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.

 

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 March 31, 2018

(Unaudited)

Indemnifications

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

Guarantees

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

Note 7 — Economic Dependency

 

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

  

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

Note 8 — Common Stock

On August 25, 2011, the Company had raised sufficient funds to break escrow on its IPO. On July 1, 2014, the Company's registration statement on Form N-2 (File No.333-193241) for its Follow-on was declared effective by the SEC. Simultaneously with the effectiveness of the registration statement of the Follow-on, the Company's IPO terminated. Through March 31, 2018, the Company sold 197.0 million shares of common stock for gross proceeds of $2.1 billion, including the shares purchased by an affiliate of BSP and shares issued under the Company's DRIP. Following the time the Company's updated registration statement was declared effective on June 30, 2015, the Company issued shares for subscription agreements that had been accepted through that date. The Company is no longer issuing new shares except for DRIP shares. As of March 31, 2018, the Company had repurchased 18.8 million shares of common stock through its share repurchase program for payments of $166.2 million.

The following table reflects the common stock activity for the three months ended March 31, 2018 (dollars in thousands except share amounts):

		Shares			Value
Shares Sold		—			$	—
Shares Issued through DRIP		1,223,362			10,167
Share Repurchases		(2,711,841	)		(22,549		)
		(1,488,479	)		$	(12,382	)

The following table reflects the common stock activity for the year ended December 31, 2017 (dollars in thousands except share amounts):

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 March 31, 2018

(Unaudited)

		Shares			Value
Shares Sold		—			$	—
Shares Issued through DRIP		6,162,092			52,455
Share Repurchases		(3,548,885	)		(30,212		)
		2,613,207			$	22,243

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 four most recent tender offers were oversubscribed.

 

53

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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 March 31, 2018

(Unaudited)

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
December 19, 2017		January 19, 2018		21,521,235			2,547,524			$	8.31			$	21,350.21

    

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

Through March 31, 2018, the Company had repurchased an aggregate of 18.8 million shares of common stock for payments of $166.2 million. As of December 31, 2017, the Company had repurchased 16.0 million shares of common stock for payments of $143.6 million. Amounts include additional shares tendered for death and disability as permitted.

Note 10 — Earnings Per Share

Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company had no potentially dilutive securities as of March 31, 2018 and December 31, 2017.

The following information sets forth the computation of the weighted average basic and diluted net increase in net assets per share resulting from operations for the three months ended March 31, 2018 and March 31, 2017.

	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2018				2017
Basic and diluted
Net increase in net assets resulting from operations	$	21,976			$	19,367
Weighted average common shares outstanding	179,247,608				178,215,971
Net increase in net assets resulting from operations per share	$	0.12			$	0.11

    

54

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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 March 31, 2018

(Unaudited)

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 March 31, 2018, the Company had accrued $9.8 million in stockholder distributions that were unpaid. As of December 31, 2017, the Company had accrued $9.9 million in stockholder distributions that were unpaid.

    

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 March 31, 2018

(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
October 31, 2017		November 1, 2017		0.06				6,303				3,574				9,877
November 30, 2017		December 1, 2017		0.05				6,140				3,443				9,583
December 31, 2017		January 2, 2018		0.06				6,388				3,535				9,923
								$	85,065			$	50,785			$	135,850
2018:
January 31, 2018		February 1, 2018		0.06				$	6,443			$	3,503			$	9,946
February 28, 2018		March 1, 2018		0.05				5,809				3,129				8,938
March 31, 2018		April 1, 2018		0.06				6,436				3,407				9,843
								$	18,688			$	10,039			$	28,727

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.

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 March 31, 2018

(Unaudited)

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 the Code. Generally, a RIC is exempt from federal income taxes if it meets, certain quarterly asset diversification requirements, annual income tests, and distributes to stockholders its ‘‘investment company taxable income,’’ as defined in the Code, each taxable year. Distributions declared prior to the filing of the previous year's tax return and paid up to one year after the previous tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its RIC status each year. The Company may also be subject to federal excise taxes of 4%.

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

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 2017, 2016, 2015 and 2014 federal tax returns remain subject to examination by the Internal Revenue Service.

As of March 31, 2018, the Company had a deferred tax asset of $1.6 million and a deferred tax liability of $(4.2) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $1.6 million. As of December 31, 2017, the Company had a deferred tax asset of $1.6 million and a deferred tax liability of $(3.6) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $1.6 million.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“the Tax Act”) was signed into law. The Tax Act reduced the statutory income tax rate applicable to corporations from 35 percent to 21 percent. Additionally, the Tax Act makes changes regarding the use of net operating losses, repeals the corporate alternative minimum tax, restricts corporate deductibility of interest expense, and makes significant changes to the U.S. international tax rules. These changes affect the Company’s estimates of the current income tax expense and the deferred tax asset and liability balances used in the calculation of its net asset value.

The Company has assessed that the reduction in the corporate tax rate did not have a significant impact on the Company’s net asset value. The Company will continue to assess the effects of the Tax Act on the deferred tax asset and liability balances and valuation allowances and continually assess the recoverability of their deferred tax assets based upon the weight of available evidence.

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.

57

---

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 March 31, 2018

(Unaudited)

Note 13 — Financial Highlights

The following is a schedule of financial highlights for the three months ended March 31, 2018 and March 31, 2017:

	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2018				2017
Per share data:
Net asset value, beginning of period	$	8.30			$	8.62
Results of operations (1)        Net investment income	0.15				0.15
Net realized and unrealized gain (loss), net of deferred taxes	(0.03		)		(0.04		)
Net increase in net assets resulting from operations	0.12				0.11
Stockholder distributions (2)        Distributions from net investment income	(0.16		)		(0.21		)
Net decrease in net assets resulting from stockholder distributions	(0.16		)		(0.21		)
Capital share transactions        Issuance of common stock (3)	—				—
Repurchases of common stock	—				—
Net decrease in net assets resulting from capital share transactions	—				—
Net asset value, end of period	$	8.26			$	8.52
Shares outstanding at end of period	178,245,519				178,750,498
Total return (4)	1.47		%		1.32		%
Ratio/Supplemental data:
Net assets, end of period (in thousands)	$	1,475,064			$	1,525,136
Ratio of net investment income to average net assets (6) (7)	8.09		%		8.38		%
Ratio of total expenses to average net assets (6) (7)	7.82		%		6.50		%
Portfolio turnover rate (5)	6.26		%		7.23		%

______________

(1)	The 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 during the period.

58

---

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 March 31, 2018

(Unaudited)

Note 14 – Schedules of Investments and Advances to Affiliates

The following table presents the Schedule of Investments and Advances to Affiliates as of March 31, 2018:

Portfolio Company (1)		Type of Asset		Amount of dividends and interest included in income				Beginning Fair Value at December 31, 2017				Gross additions*				Gross reductions**				Realized Gain/(Loss)				Change in Unrealized Gain (Loss) (6)				Fair Value at March 31, 2018
Control Investments
California Resources Development JV, LLC - Preferred Equity		Equity/Other		$	1,457			$	26,984			$	—			$	(2,134	)		$	—			$	102			$	24,952
Capstone Nutrition Common Stock (fka Integrity Nutraceuticals, Inc.) (4)		Equity/Other		—				—				—				—				—				—				—
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (4)		Senior Secured First Lien Debt		—				—				2,829				—				—				47				2,876
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (4)		Senior Secured First Lien Debt		—				4,096				—				—				—				(1,127		)		2,969
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (4)		Senior Secured First Lien Debt		—				9,467				—				—				—				(2,605		)		6,862
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) (4)		Equity/Other		—				—				—				—				—				—				—
Kahala Ireland OpCo Designated Activity Company (3)		Senior Secured First Lien Debt		4,600				141,549				—				—				—				—				141,549
Kahala Ireland OpCo Designated Activity Company - Common Equity (3)		Equity/Other		—				11,709				—				—				—				(2,860		)		8,849
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (3)		Equity/Other		—				3,250				—				—				—				—				3,250
Kahala US OpCo LLC - Class A Preferred Units (3)		Equity/Other		—				—				—				10				—				(10		)		—
NexSteppe Inc. - Series C Preferred Stock Warrant		Equity/Other		—				—				—				—				—				—				—
NexSteppe Inc.		Senior Secured First Lien Debt		—				—				250				—				—				(250		)		—
NexSteppe Inc.		Senior Secured First Lien Debt		—				—				—				—				—				—				—
NMFC Senior Loan Program I, LLC		Equity/Other		1,626				50,805				—				—				—				321				51,126
South Grand MM CLO I, LLC		Equity/Other		—				28,904				—				(19,800		)		394				1,098				10,596
Park Ave RE Holdings, LLC - Common Shares (2)		Equity/Other		—				12,678				—				102				—				1,517				14,297
Park Ave RE Holdings, LLC - Preferred Shares (2)		Equity/Other		—				23,645				—				—				—				—				23,645
Park Ave RE Holdings, LLC (2)		Subordinated Debt		1,209				37,192				—				—				—				—				37,192
Total Control Investments				$	8,892			$	350,279			$	3,079			$	(21,822	)		$	394			$	(3,767	)		$	328,163
Affiliate Investments
Answers Corporation - Common Equity		Equity/Other		$	—			$	14,231			$	—			$	—			$	—			$	(3,266	)		10,965
Answers Corporation		Senior Secured First Lien Debt		54				2,916				5				(7		)		—				(5		)		2,909
Answers Corporation		Senior Secured Second Lien Debt		143				4,371				39				(12		)		1				(39		)		4,360

59

---

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 March 31, 2018

(Unaudited)

Portfolio Company (1)		Type of Asset		Amount of dividends and interest included in income				Beginning Fair Value at December 31, 2017				Gross additions*				Gross reductions**				Realized Gain/(Loss)				Change in Unrealized Gain (Loss) (6)				Fair Value at March 31, 2018
B&M CLO 2014-1, LTD. Subordinated Notes		Collateralized Securities		392				12,804				—				(592		)		(1,857		)		1,965				12,320
Basho Technologies, Inc. (7)		Senior Secured First Lien Debt		—				—				—				—				(6,484		)		6,484				—
Basho Technologies, Inc. (7)		Senior Secured First Lien Debt		—				—				—				—				(2,550		)		2,550				—
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (7)		Equity/Other		—				—				—				—				(2,000		)		2,000				—
CVP Cascade CLO, LTD. Subordinated Notes		Collateralized Securities		278				4,121				—				(334		)		(5,500		)		4,136				2,423
Figueroa CLO 2014-1, LTD. Subordinated Notes		Collateralized Securities		189				12,508				—				(342		)		(4,000		)		4,032				12,198
Danish CRJ LTD. - Common Equity		Equity/Other		—				605				—				—				—				(145		)		460
MidOcean Credit CLO II, LLC Income Notes		Collateralized Securities		602				20,651				—				—				—				1,169				21,820
MidOcean Credit CLO III, LLC Subordinated Notes		Collateralized Securities		135				17,508				—				(698		)		(3,300		)		3,329				16,839
MidOcean Credit CLO IV, LLC Income Notes		Collateralized Securities		501				12,212				—				(223		)		—				1,101				13,090
NewStar Arlington Senior Loan Program LLC Subordinated Notes		Collateralized Securities		1,340				25,439				—				(469		)		—				466				25,436
NewStar Exeter Fund CLO – Debt		Collateralized Securities		287				8,660				40				—				—				(255		)		8,445
NewStar Exeter Fund CLO – Equity		Collateralized Securities		(58		)		13,089				—				(850		)		(7,000		)		5,832				11,071
OFSI Fund VI, Ltd. - Subordinated Note		Collateralized Securities		313				10,162				—				(777		)		(1,000		)		1,385				9,770
PennantPark Credit Opportunities Fund II, LP		Equity/Other		253				10,136				—				—				—				31				10,167
Related Fee Agreements (5)		Collateralized Securities		(50		)		3,917				—				(710		)		(343		)		635				3,499
Silver Spring CLO, Ltd. Subordinated Notes		Collateralized Securities		217				10,363				—				(553		)		(6,000		)		4,692				8,502
Tax Defense Network, LLC		Senior Secured First Lien Debt		157				7,477				—				—				—				236				7,713
Tax Defense Network, LLC		Equity/Other		—				—				—				—				—				—				—
Tennenbaum Waterman Fund, L.P.		Equity/Other		350				10,427				—				—				—				3				10,430
THL Credit Greenway Fund II LLC		Equity/Other		749				11,373				—				(1,615		)		—				(362		)		9,396
Twenty Eighty, Inc. - Class A Common Equity		Equity/Other		—				—				—				—				—				—				—
Twenty Eighty, Inc.		Senior Secured First Lien Debt		274				4,719				213				—				—				1,297				6,229
Twenty Eighty, Inc.		Senior Secured First Lien Debt		113				2,853				53				(36		)		5				12				2,887
Twenty Eighty, Inc.		Senior Secured First Lien Debt		262				3,739				259				—				—				1,764				5,762
WhiteHorse VIII, Ltd. CLO Subordinated Notes		Collateralized Securities		72				8,761				—				(389		)		(1,000		)		1,523				8,895
World Business Lenders, LLC - Preferred Stock		Equity/Other		—				3,759				—				—				—				—				3,759

60

---

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 March 31, 2018

(Unaudited)

Portfolio Company (1)		Type of Asset		Amount of dividends and interest included in income				Beginning Fair Value at December 31, 2017				Gross additions*				Gross reductions**				Realized Gain/(Loss)				Change in Unrealized Gain (Loss) (6)				Fair Value at March 31, 2018
Total Affiliate Investments				$	6,573			$	236,801			$	609			$	(7,607	)		$	(41,028	)		$	40,570			$	229,345
Total Control & Affiliate Investments				$	15,465			$	587,080			$	3,688			$	(29,429	)		$	(40,634	)		$	36,803			$	557,508

______________________________________________________

*     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. During the period the cost basis for certain CLO positions was reduced due to the realization of an other than temporary impairment amounts realized were reserved against fair value in prior periods.

(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 March 31, 2018.

(3)	This investment was not deemed significant under Regulation S-X as of March 31, 2018.

(4)	This investment was not deemed significant under Regulation S-X as of March 31, 2018.

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

(6)	Gross of deferred taxes in the amount of $0.5 million.

(7)	Investment no longer held as of March 31, 2018.

Dividends and interest for the three months ended March 31, 2018 and March 31, 2017 attributable to Controlled and Affiliated investments no longer held as of March 31, 2018 and March 31, 2017 was $0.0 and $0.05 million, respectively.

    

Realized gain (loss) for the three months ended March 31, 2018 and March 31, 2017 attributable to Controlled Affiliated investments no longer held as of March 31, 2018 and March 31, 2017 was $0.01 million and $0.9 million, respectively.

    

Change in unrealized gain (loss) for the three months ended March 31, 2018 and March 31, 2017 attributable to Controlled and Affiliated investments no longer held as of March 31, 2018 and March 31, 2017 was $(0.01) million and $(0.9) million, respectively.

The following table presents the Schedule of Investments and Advances to Affiliates as of December 31, 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 December 31, 2017
Control Investments
California Resources Development JV, LLC - Preferred Equity		Equity/Other		$	1,987			$	—			$	26,182			$	—			$	—			$	802			$	26,984
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (4)		Senior Secured First Lien Debt		—				19,708				—				—				—				(6,145		)		13,563
Capstone Nutrition Common Stock (fka Integrity Nutraceuticals, Inc.) (4)		Equity/Other		—				—				—				—				—				—				—
Capstone Nutrition Common Stock (fka Integrity Nutraceuticals, Inc.) (4)		Equity/Other		—				—				—				—				—				—				—
Kahala Ireland OpCo Designated Activity Company (3)		Senior Secured First Lien Debt		19,245				149,409				140				(8,000		)		—				—				141,549
Kahala Ireland OpCo Designated Activity Company - Common Equity (3)		Equity/Other		—				8,180				—				—				—				3,529				11,709

61

---

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 March 31, 2018

(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 December 31, 2017
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (3)		Equity/Other		—				3,250				—				(48		)		—				48				3,250
Kahala US OpCo LLC (4)		Senior Secured First Lien Debt		120				2,690				—				(2,690		)		—				—				—
Kahala US OpCo LLC - Class A Preferred Units (4)		Equity/Other		—				4,000				—				(2,491		)		(1,702		)		193				—
NexSteppe Inc.		Senior Secured First Lien Debt		381				—				8,250				(185		)		—				(8,065		)		—
NexSteppe Inc.		Senior Secured First Lien Debt		—				—				1,500				—				—				(1,500		)		—
NexSteppe Inc. - Series C Preferred Stock Warrant		Equity/Other		—				—				1,280				(1,000		)		—				(280		)		—
NMFC Senior Loan Program I, LLC		Equity/Other		6,782				—				47,057				—				—				3,748				50,805
Park Ave RE Holdings, LLC (2)		Subordinated Debt		4,902				37,192				—				—				—				—				37,192
Park Ave RE Holdings, LLC (2) - Common Shares		Equity/Other		—				6,564				—				—				—				6,114				12,678
Park Ave RE Holdings, LLC (2) - Preferred Shares		Equity/Other		946				23,645				—				—				—				—				23,645
South Grand MM CLO I, LLC		Equity/Other		2,223				—				28,382				—				—				522				28,904
Total Control Investments				$	36,586			$	254,638			$	112,791			$	(14,414	)		$	(1,702	)		$	(1,034	)		$	350,279
Affiliate Investments
Answers Corporation		Senior Secured First Lien Debt		$	151			$	—			$	2,967			$	(23	)		$	1			$	(29	)		2,916
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		418				—				4,118				(35		)		4				284				4,371
Answers Corporation		Equity/Other		—				—				11,361				—				—				2,870				14,231
B&M CLO 2014-1, LTD. Subordinated Notes		Collateralized Securities		277				16,772				—				(4,946		)		—				978				12,804
Basho Technologies, Inc.		Senior Secured First Lien Debt		72				—				3,904				(3,967		)		69				(6		)		—
Basho Technologies, Inc.		Senior Secured First Lien Debt		—				—				918				—				—				(918		)		—
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant		Equity/Other		—				—				—				—				—				—				—
Basho Technologies, Inc. - Series G Senior Preferred Stock		Equity/Other		—				—				—				—				—				—				—
CVP Cascade CLO, LTD. Subordinated Notes		Collateralized Securities		3				8,868				—				(2,934		)		—				(1,813		)		4,121
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		)		—				(13		)		—
Danish CRJ LTD.		Equity/Other		—				407				—				—				—				198				605

62

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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 March 31, 2018

(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 December 31, 2017
Figueroa CLO 2014-1, LTD. Subordinated Notes		Collateralized Securities		(103		)		16,101				—				(3,520		)		—				(73		)		12,508
MidOcean Credit CLO II, LLC Income Notes		Collateralized Securities		2,380				22,419				—				(2,216		)		—				448				20,651
MidOcean Credit CLO III, LLC Subordinated Notes		Collateralized Securities		715				23,341				—				(3,674		)		—				(2,159		)		17,508
MidOcean Credit CLO IV, LLC Income Notes		Collateralized Securities		689				15,505				—				(1,871		)		—				(1,422		)		12,212
NewStar Arlington Senior Loan Program LLC Subordinated Notes		Collateralized Securities		4,930				24,491				—				(1,945		)		—				2,893				25,439
NewStar Exeter Fund CLO – Debt		Collateralized Securities		1,106				8,455				162				—				—				43				8,660
NewStar Exeter Fund CLO – Equity		Collateralized Securities		1,645				20,579				—				(2,609		)		—				(4,881		)		13,089
NMFC Senior Loan Program I, LLC		Equity/Other		—				47,057				—				(47,057		)		—				—				—
Ocean Trails CLO V, LTD. (7)		Collateralized Securities		48				29,144				—				(29,128		)		906				(922		)		—
OFSI Fund VI, Ltd. Subordinated Notes		Collateralized Securities		617				17,354				—				(5,007		)		—				(2,185		)		10,162
PennantPark Credit Opportunities Fund II, LP		Equity/Other		705				9,788				2,691				(2,691		)		10				338				10,136
Related Fee Agreements (5)		Collateralized Securities		922				9,647				—				(3,607		)		42				(2,165		)		3,917
Silver Spring CLO, Ltd. Subordinated Notes		Collateralized Securities		94				12,007				—				(3,554		)		—				1,910				10,363
South Grand MM CLO I, LLC		Equity/Other		—				28,382				—				(28,382		)		—				—				—
Squan Holding Corp.		Senior Secured First Lien Debt		—				6,895				—				(6,895		)		—				—				—
Squan Holding Corp. - Class A Common Stock		Equity/Other		—				—				—				—				—				—				—
Squan Holding Corp. - Series A Preferred Stock		Equity/Other		—				—				—				—				—				—				—
Tax Defense Network, LLC		Senior Secured First Lien Debt		1,075				—				18,682				(117		)		1				(11,089		)		7,477
Tax Defense Network, LLC - Common Equity		Equity/Other		—				—				—				—				—				—				—
Tennenbaum Waterman Fund, L.P.		Equity/Other		1,270				—				10,169				—				—				258				10,427
Twentyeighty, Inc. - First Lien Debt (TLA 3/20)		Senior Secured First Lien Debt		378				—				2,426				—				—				427				2,853
Twentyeighty, Inc. - First Lien Debt (TLB 3/20)		Senior Secured First Lien Debt		928				—				4,535				—				—				184				4,719
Twentyeighty, Inc. - First Lien Debt (TLC 3/20)		Senior Secured First Lien Debt		881				—				4,164				—				—				(425		)		3,739
Twentyeighty, Inc. - Class A Common Equity		Equity/Other		—				—				—				—				—				—				—
Twentyeighty, Inc. - Revolver (TL 3/20)		Senior Secured First Lien Debt		2				—				—				—				—				—				—
THL Credit Greenway Fund II LLC		Equity/Other		957				12,850				—				(1,849		)		—				372				11,373
WhiteHorse VIII, Ltd. CLO Subordinated Notes		Collateralized Securities		712				12,563				—				(2,859		)		—				(943		)		8,761
World Business Lenders, LLC - Preferred Stock		Equity/Other		—				—				4,441				—				—				(682		)		3,759
Total Affiliate Investments				$	21,063			$	354,238			$	90,556			$	(188,049	)		$	(20,019	)		$	75			$	236,801
Total Control & Affiliate Investments				$	57,649			$	608,876			$	203,347			$	(202,463	)		$	(21,721	)		$	(959	)		$	587,080

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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 March 31, 2018

(Unaudited)

______________________________________________________

*     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, 2017.

(3)	For the year ended December 31, 2017, the Company had determined that it must include audited financial statements of Kahala Ireland Opco Designated Activity Company because it was a controlled investment and was required to do so under SEC Rule 3-09. The audited financial statements were attached as Exhibit 99.1 in the Company's 2017 Form 10-K.

(4)	This investment was not deemed significant under Regulation S-X as of December 31, 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 December 31, 2017.

Dividends and interest for the year ended December 31, 2017 attributable to Controlled and Affiliated investments no longer held as of December 31, 2017 was $49 thousand.

    

Realized gain (loss) for the year ended December 31, 2017 attributable to Controlled Affiliated investments no longer held as of December 31, 2017 was $0.9 million.

    

Change in unrealized gain (loss) for the year ended December 31, 2017 attributable to Controlled and Affiliated investments no longer held as of December 31, 2017 was $(0.9) million, respectively.

Note 15 – Subsequent Events

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

Asset Purchase Agreement

On April 3, 2018, Benefit Street Partners L.L.C. (“BSP”), through an affiliate, entered into an Asset Purchase Agreement (the “APA”) with Triangle Capital Corporation (“Triangle”) under which certain funds advised by BSP will acquire Triangle’s Investment Portfolio (the “Triangle Portfolio”) for $981.2 million in cash, as adjusted in accordance with the terms of the APA (the “Triangle Transaction”). Our Adviser is an affiliate of BSP, and we intend to participate in the Triangle Transaction by purchasing a portion of the Triangle Portfolio. The final allocation of the assets in the Triangle Portfolio among the Company and the other funds advised by BSP will be determined prior to the closing of the Triangle Transaction in accordance with BSP’s allocation policy. This allocation policy typically results in the Company receiving approximately 20-25% of the allocation of each BSP transaction in which the Company participates. However, the final allocation of the investments in the Triangle Portfolio by BSP will be based on a number of factors, including, among others, our available capital at the time of allocation, changes in the composition of the Triangle Portfolio between the signing of the APA and the closing of the Triangle Transaction, the suitability of the investments in Triangle’s Portfolio for the Company as compared to the other funds managed by BSP, regulatory guidance (if any) regarding the allocation of certain Triangle Portfolio assets between funds managed by BSP and changes in the relative size of the funds managed by BSP. Subject to certain required approvals, including stockholder approval, and closing conditions, as described below, the parties anticipate that the Triangle Transaction will close in June or July of 2018.

The APA contains customary representations, warranties and covenants, including covenants regarding the non-solicitation of competing offers from third parties. The obligations of the parties to complete the Triangle Transaction are subject to certain customary conditions, including: (a) the approval by Triangle’s stockholders of the APA and the matters that are conditions to closing of the APA; (b) the approval by Triangle’s stockholders of the matters to be voted upon by them that are conditions to

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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 March 31, 2018

(Unaudited)

closing under the Stock Purchase and Transaction Agreement (the “SPA”) by and between Triangle and Barings LLC; (c) no law, injunction, order, decree entered by a governmental entity is in effect preventing or prohibiting the transactions contemplated by the APA; (d) if applicable, the expiration or termination of all waiting periods (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and (e) the absence of a pending suit or proceeding by a governmental entity that has a reasonable likelihood of success (i) challenging the Triangle Transaction, seeking to restrain or prohibit the consummation of the Triangle Transaction or seeking to obtain from Triangle or BSP any damages that are material in relation to Triangle and its subsidiaries taken as a whole, or (ii) seeking to prohibit BSP or any of its subsidiaries from effectively controlling in any material respect the business or operations of Triangle and its subsidiaries.

 

Triangle and BSP have the right to terminate the APA under certain circumstances, including (a) by mutual written agreement of each party; or (b) by either Triangle or BSP if: (i) any governmental entity that must grant regulatory approval has issued an order, decree or ruling or taken any other action, in each case permanently restraining, enjoining or otherwise prohibiting any of the transactions contemplated by the APA and such order, decree, ruling or other action has become final and nonappealable; (ii) the Triangle Transaction has not closed on or prior to October 5, 2018; (iii) Triangle’s stockholders do not approve the APA and the matters that are conditions to closing under the SPA; or (iv) there is a material breach of any covenants, agreements, representations or warranties by the other party that is not cured prior to the date of the closing of the Triangle Transaction.

Amendments to Wells Fargo Credit Facility

On April 3, 2018, the Company, through a wholly-owned, consolidated special purpose financing subsidiary Funding I, entered into an amendment to its revolving credit facility with BDCA, as the servicer, Wells Fargo Bank, National Association, as the administrative agent, and U.S. Bank as collateral agent, account bank and collateral custodian (the “Wells Fargo Credit Facility”), to, among other things, increase the aggregate amount of principal under the Wells Fargo Credit Facility from $400.0 million to $500.0 million.

On May 9, 2018, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, Funding I, entered into another amendment to its revolving credit facility with BDCA, as the servicer, Wells Fargo Bank, National Association, as the administrative agent, and U.S. Bank as collateral agent, account bank and collateral custodian, to, among other things, extend the maturity date to May 9, 2023.

Maturity of UBS Credit Facility

On April 6, 2018, BDCA borrowed $90.6 million under Wells Fargo Credit Facility and used such proceeds, together with cash on hand, to repay at maturity the debt financing facility that it had entered into with UBS AG, London Branch through a wholly-owned special-purpose, bankruptcy-remote subsidiary, BDCA Helvetica Funding, Ltd.

JPMC PB Account Closure

On May 8, 2018 the Company fully repaid its borrowings under the JPMC PB Account and closed the account.

DRIP Sales

From April 1, 2018 through the filing of this Form 10-Q, the Company has 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 $6.7 million.

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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 obligations 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.

Our investment objective is to generate both current income and to a lesser extent long-term capital appreciation through

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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 March 31, 2018, 81.4% 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 March 31, 2018:
	Investment Portfolio	$	2,626.9
	Net Assets attributable to Business Development Corporation of America	1,472.6
	Debt (net of deferred financing costs)	1,164.1
	Net Asset Value per share	8.26
Portfolio Activity for the Three Months Ended March 31, 2018:
	Cost of investments purchased during period, including PIK	285.8
	Sales, repayments and other exits during the period	160.6
	Number of portfolio companies at end of period	168
Operating results for the Three Months Ended March 31, 2018:
	Net investment income per share	0.15
	Distributions declared per share	(0.16		)
	Net increase in net assets resulting from operations per share	0.12
	Net investment income	26.2
	Net realized and unrealized gain (loss) net of deferred taxes	(4.2		)
	Net increase in net assets resulting from operations	22.0

Portfolio and Investment Activity

During the three months ended March 31, 2018, we made $284.4 million of investments in new and existing portfolio companies and had $160.6 million in aggregate amount of exits and repayments, resulting in net investments of $123.8 million for the period. The portfolio composition by loan market consisted of 74.6% Middle Market ⁽¹⁾, 11.7% Large Corporate ⁽²⁾, and 13.7% Other ⁽³⁾ investments. In addition, the total portfolio of debt investments at fair value consisted of 91.5% bearing variable interest rates and 8.5% 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.

Our portfolio composition, based on fair value at March 31, 2018 was as follows:

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	March 31, 2018
	Percentage of Total Portfolio			Weighted Average Current Yield for Total Portfolio (1)
Senior Secured First Lien Debt	72.4	%		8.6	%
Senior Secured Second Lien Debt	9.0			10.3
Subordinated Debt	4.9			10.6
Collateralized Securities (2)	6.2			8.3
Equity/Other	7.5			N/A
Total	100.0	%		9.2	%

______________

⁽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, 2017, we made $1,102.0 million of investments in new and existing portfolio companies and had $980.9 million in aggregate amount of exits and repayments, resulting in net investments of $121.1 million for the period. The portfolio composition by loan market consisted of 75.3% Middle Market ⁽¹⁾, 8.9% Large Corporate ⁽²⁾, and 15.8% Other ⁽³⁾ investments. In addition, the total portfolio of debt investments at fair value consisted of 92.7% bearing variable interest rates and 7.3% 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, 2017 was as follows:

	December 31, 2017
	Percentage of Total Portfolio			Weighted Average Current Yield for Total Portfolio (1)
Senior Secured First Lien Debt	71.0	%		8.7	%
Senior Secured Second Lien Debt	9.5			10.4
Subordinated Debt	3.8			13.0
Collateralized Securities (2)	6.4			6.3
Equity/Other	9.3			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).

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 2.33 and 2.32 as of March 31, 2018 and December 31, 2017, respectively. As of March 31, 2018, we had four portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $142.7 million, amortized cost of $116.2 million, and fair value of $41.4 million, which represented 4.5%, 4.3% and 1.6% of the investment portfolio's total principal, amortized cost and fair value, respectively. As of December 31, 2017, we had four portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $120.2 million, amortized cost of $97.6 million, and fair value of $21.0 million which represented 4.0%, 3.8% and 0.8% of the investment portfolio's 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 our non-accrual policy.

RESULTS OF OPERATIONS

Operating results for the three months ended March 31, 2018 and March 31, 2017 was as follows (dollars in thousands):

	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2018				2017
Total investment income	$	58,504			$	56,672
Total expenses	32,085				29,264
Income tax expense, including excise tax	270				635
Net investment loss attributable to non-controlling interests	(5		)		3
Net investment income	$	26,154			$	26,770

 Investment Income

For the three months ended March 31, 2018, total investment income was $58.5 million and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.6 billion and a weighted average current yield of 9.2%. Included within total investment income was $1.4 million of fee income for the three months ended March 31, 2018. Fee income consists primarily of prepayment and amendment fees. For the three months ended March 31, 2017, total investment income was $56.7 million 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 9.6%. Included within total investment income was $1.4 million of fee income for the three months ended March 31, 2017. Fee income consists primarily of prepayment and amendment fees.

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Operating Expenses

The composition of our operating expenses for the three months ended March 31, 2018 and March 31, 2017 was as follows (dollars in thousands):

	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2018				2017
Management fees	$	9,955			$	9,538
Incentive fee on income	4,611				6,367
Interest and debt fees	13,450				9,850
Professional fees	1,132				1,480
Other general and administrative	2,464				1,625
Administrative services	199				203
Insurance	1				6
Directors' fees	273				195
Total operating expenses	$	32,085			$	29,264

For the three months ended March 31, 2018, we incurred $10.0 million of management fees, of which the Adviser did not waive any such fees. For the three months ended March 31, 2018, we incurred $4.6 million of incentive fees on income, of which the Adviser did not waive any such fees. For the three months ended March 31, 2017, we incurred $9.5 million of management fees, of which the Adviser did not waive any such fees. For the three months ended March 31, 2017, we incurred $6.4 million of incentive fees on income, of which the Adviser did not waive any such fees.

For the three months ended March 31, 2018 and March 31, 2017, we incurred interest and debt fees of $13.5 million and $9.9 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, 2022 Notes, 2020 Notes and the JPMC PB Account. The increase in debt fees for the three months ended March 31, 2018 as compared to the same period in 2017 is a result of the issuance of the 2022 Notes, an increase in average debt outstanding under the Company's credit facilities and an increase in LIBOR rates.

Net Realized Gain (Loss) and Net Change in Unrealized Appreciation (Depreciation) on Investments and foreign currency transactions

Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments, net of deferred taxes for the three months ended March 31, 2018 and March 31, 2017 were as follows (dollars in thousands):

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	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2018				2017
Net realized gain (loss)
Control investments	$	394			$	—
Affiliate investments	(41,028		)		970
Non-affiliate investments	6,199				(11,741		)
Net realized gain on foreign currency transactions	26				—
Total net realized loss	(34,409		)		(10,771		)
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
Control investments	(4,309		)		(5,950		)
Affiliate investments	40,570				745
Non-affiliate investments	(6,345		)		8,781
Total net change in unrealized appreciation on investments, net of deferred taxes	29,916				3,576
Net change in unrealized (appreciation) depreciation attributable to non-controlling interests	315				(208		)
Net realized and unrealized loss	$	(4,178	)		$	(7,403	)

Net realized and unrealized loss on investments and foreign currency transactions, net of deferred taxes, resulted in a net loss of $(4.2) million for the three months ended March 31, 2018 compared to a net loss of $(7.4) million for the same period in 2017. 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 months ended March 31, 2018 was the result of approximately $30.0 million of realized loss on CLOs as a result of the Company's assessment for other than temporary impairment ("OTTI") in accordance with ASC 325-40. As this OTTI was previously reserved for as part of unrealized depreciation on CLOs, the movement between unrealized and realized gain(loss) during the period relates to the approximately $30.0 million realization and the offsetting reversal of approximately $30.0 million of previously reported unrealized depreciation of approximately $30.0 million. The remaining loss was driven by unrealized depreciation on investments.

Changes in Net Assets from Operations

For the three months ended March 31, 2018, we recorded a net increase in net assets resulting from operations of $22.0 million versus a net increase in net assets resulting from operations of $19.4 million for the three months ended March 31, 2017. The increase is primarily attributable to an increase in investment income. Based on the weighted average shares of common stock outstanding for the periods ended March 31, 2018 and 2017, respectively, our per share net increase in net assets resulting from operations was $0.12 for the three months ended March 31, 2018, versus a net increase in net assets resulting from operations of $0.11 for the three months ended March 31, 2017.

Cash Flows

For the three months ended March 31, 2018, net cash used in operating activities was $117.1 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 decrease in cash flows used in operating activities for the three months ended March 31, 2018 was primarily the result of purchases of investments of $284.4 million, offset by sales and repayments of investments of $160.6 million.

Net cash provided by financing activities of $91.8 million during the three months ended March 31, 2018 primarily related to net proceeds from the Wells Fargo Credit Facility, Citi Credit Facility, and the JPMC PB Account of $132.9 million partially offset by net repurchases of common stock of $22.2 million and payments of stockholder distributions of $18.6 million.

For the three months ended March 31, 2017, net cash used in operating activities was $12.9 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

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investments, among other factors. Net cash used in operating activities was primarily a result of purchases of investments of $171.2 million as well as an increase in receivable for unsettled trades of $27.7 million and a decrease in payable for unsettled trades of $47.3 million, partially offset by sales and repayments of investments of $202.8 million.

Net cash provided by financing activities of $49.1 million during the three months ended March 31, 2017 primarily related to net repurchases of common stock of $57.6 million and payments of stockholder distributions of $23.5 million, partially offset by proceeds from the Wells Fargo Credit Facility, Citi Credit Facility, UBS Credit Facility and the JPMC PB Account of $31.9 million.

    

Recent Developments

Asset Purchase Agreement

On April 3, 2018, Benefit Street Partners L.L.C. (“BSP”), through an affiliate, entered into an Asset Purchase Agreement (the “APA”) with Triangle Capital Corporation (“Triangle”) under which certain funds advised by BSP will acquire Triangle’s Investment Portfolio (the “Triangle Portfolio”) for $981.2 million in cash, as adjusted in accordance with the terms of the APA (the “Triangle Transaction”). Our Adviser is an affiliate of BSP, and we intend to participate in the Triangle Transaction by purchasing a portion of the Triangle Portfolio. The final allocation of the assets in the Triangle Portfolio among BDCA and the other funds advised by BSP will be determined prior to the closing of the Triangle Transaction in accordance with BSP’s allocation policy. This allocation policy typically results in BDCA receiving approximately 20-25% of the allocation of each BSP transaction in which BDCA participates. However, the final allocation of the investments in the Triangle Portfolio by BSP will be based on a number of factors, including, among others, our available capital at the time of allocation, changes in the composition of the Triangle Portfolio between the signing of the APA and the closing of the Triangle Transaction, the suitability of the investments in Triangle’s Portfolio for BDCA as compared to the other funds managed by BSP, regulatory guidance (if any) regarding the allocation of certain Triangle Portfolio assets between funds managed by BSP and changes in the relative size of the funds managed by BSP. Subject to certain required approvals, including stockholder approval, and closing conditions, as described below, the parties anticipate that the Triangle Transaction will close in June or July of 2018.

The APA contains customary representations, warranties and covenants, including covenants regarding the non-solicitation of competing offers from third parties. The obligations of the parties to complete the Triangle Transaction are subject to certain customary conditions, including: (a) the approval by Triangle’s stockholders of the APA and the matters that are conditions to closing of the APA; (b) the approval by Triangle’s stockholders of the matters to be voted upon by them that are conditions to closing under the Stock Purchase and Transaction Agreement (the “SPA”) by and between Triangle and Barings LLC; (c) no law, injunction, order, decree entered by a governmental entity is in effect preventing or prohibiting the transactions contemplated by the APA; (d) if applicable, the expiration or termination of all waiting periods (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and (e) the absence of a pending suit or proceeding by a governmental entity that has a reasonable likelihood of success (i) challenging the Triangle Transaction, seeking to restrain or prohibit the consummation of the Triangle Transaction or seeking to obtain from Triangle or BSP any damages that are material in relation to Triangle and its subsidiaries taken as a whole, or (ii) seeking to prohibit BSP or any of its subsidiaries from effectively controlling in any material respect the business or operations of Triangle and its subsidiaries.

 

Triangle and BSP have the right to terminate the APA under certain circumstances, including (a) by mutual written agreement of each party; or (b) by either Triangle or BSP if: (i) any governmental entity that must grant regulatory approval has issued an order, decree or ruling or taken any other action, in each case permanently restraining, enjoining or otherwise prohibiting any of the transactions contemplated by the APA and such order, decree, ruling or other action has become final and nonappealable; (ii) the Triangle Transaction has not closed on or prior to October 5, 2018; (iii) Triangle’s stockholders do not approve the APA and the matters that are conditions to closing under the SPA; or (iv) there is a material breach of any covenants, agreements, representations or warranties by the other party that is not cured prior to the date of the closing of the Triangle Transaction.

Amendments to Wells Fargo Credit Facility

On April 3, 2018, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, Funding I, entered into an amendment to its revolving credit facility with the Company, as the servicer, Wells Fargo Bank, National Association, as the administrative agent, and U.S. Bank as collateral agent, account bank and collateral custodian (the “Wells Fargo Credit Facility”), to, among other things, increase the aggregate amount of principal under the Wells Fargo Credit Facility from $400.0 million to $500.0 million.

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On May 9, 2018, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, Funding I, entered into another amendment to its revolving credit facility with the Company, as the servicer, Wells Fargo Bank, National Association, as the administrative agent, and U.S. Bank as collateral agent, account bank and collateral custodian, to, among other things, extend the maturity date to May 9, 2023.

Maturity of UBS Credit Facility

On April 6, 2018, BDCA borrowed $90.6 million under Wells Fargo Credit Facility and used such proceeds, together with cash on hand, to repay at maturity the debt financing facility that it had entered into with UBS AG, London Branch through a wholly-owned special-purpose, bankruptcy-remote subsidiary, BDCA Helvetica Funding, Ltd.

JPMC PB Account Closure

On May 8, 2018 the Company fully repaid its borrowings under the JPMC PB Account and closed the account.

Distribution Reinvestment Plan (“DRIP”) Sales

From April 1, 2018 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 $6.7 million.

Liquidity and Capital Resources

We generate cash flows from fees, interest and dividends earned from our investments, as well as proceeds from sales of our investments and, previously, from the net proceeds of our Offering. As of March 31, 2018, we had issued 197.0 million shares of our common stock for gross proceeds of $2.1 billion, including the shares purchased by affiliates 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.

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.

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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, and as a result, a portion of the distributions we make may represent a return of capital for tax purposes.

The table below shows the components of the distributions we have declared and/or paid during the three months ended March 31, 2018 and 2017 (dollars in thousands).

	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2018				2017
Distributions declared	$	28,727			$	38,176
Distributions paid	$	28,807			$	38,442
Portion of distributions paid in cash	$	18,640			$	23,544
Portion of distributions paid in DRIP shares	$	10,167			$	14,898

As of March 31, 2018, we had $9.8 million of distributions accrued and unpaid. As of December 31, 2017, we had $9.9 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 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 three months ended March 31, 2018 and 2017, no portion of our distributions was 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, 2018 will be reported to stockholders shortly after the end of the calendar year 2018 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 three months ended March 31, 2018 and 2017 (dollars in thousands):

	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2018				2017
Monthly distributions	$	28,727			$	38,176
Total distributions	$	28,727			$	38,176

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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.

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

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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 (the “Securities Act”). On November 7, 2016, we issued approximately 1.2 million shares of our common stock to such BSP affiliate.

 

Borrowings

We are only allowed to borrow money such that our asset coverage, which, as defined in the 1940 Act, measures the ratio of total assets less total liabilities not represented by senior securities to total borrowings, equals at least 200% after such borrowing, with certain limited exceptions. The Company is continually exploring additional forms of alternative debt financing, which could include new or expanded credit facilities or the issuance of debt securities. We may use borrowed funds, known as “leverage,” to make investments and to attempt to increase returns to our stockholders by reducing our overall cost of capital. We currently have credit facilities with Wells Fargo, Citi, JP Morgan Securities LLC and UBS and have sold $250.0 million in aggregate principal of unsecured notes.

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, subject to compliance with a borrowing base. 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%.

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.

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. 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 November 28, 2017 to extend the investment period to May 31, 2019. The Citi Credit Facility has a maturity date of May 28, 2020.

The Citi Credit Facility is priced at three month LIBOR, with no LIBOR floor, plus a spread of 1.60% per annum through and including the last day of the investment period 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

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been borrowed. The non-usage fee per annum is 0.50%. 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.

2020 Notes

On August 26, 2015, the Company entered into a Purchase Agreement relating to the Company’s sale of $100.0 million aggregate principal amount of its 6.00% fixed rate senior notes due September 1, 2020 (the “2020 Notes”). The 2020 Notes are subject to customary indemnification provisions and representations, warranties and covenants. The net proceeds from the sale of the 2020 Notes were approximately $97.9 million. The 2020 Notes bear interest at a rate of 6.00% per year payable semi-annually.

2022 Notes

On December 14, 2017, the Company entered into a Purchase Agreement relating to the Company's sale of $150.0 million aggregate principal amount of its 4.75% fixed rate notes due December 30, 2022 (the “2022 Notes”). The 2020 Notes are subject to customary indemnification provisions and representations, warranties and covenants. The net proceeds from the sale of the 2022 Notes was approximately $147.0 million. The Notes bear interest at a rate of 4.75% per year payable semi-annually.

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 March 31, 2018, the Company had borrowings of $71.2 million and additional borrowing capacity of $0.9 million under the JPMC PB Account.

See Note 5 to our consolidated financial statements contained in this Quarterly Report on Form 10-Q for a more detailed discussion of our borrowings.

Contractual Obligations

The following table shows our payment obligations for repayment of debt and other contractual obligations at March 31, 2018 (dollars in thousands):

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					Payment Due by Period
	Total				Less than 1 year				1 - 3 years				3- 5 years				More than 5 years
Wells Fargo Credit Facility (1)	$	266,052			$	—			$	—			$	266,052			$	—
Citi Credit Facility (2)	356,003				—				356,003				—				—
UBS Credit Facility (3)	232,500				232,500				—				—				—
2022 Notes (4)	149,216				—				—				149,216				—
2020 Notes (5)	99,236				—				99,236				—				—
JPMC PB Account (6)	71,173				—				—				—				71,173
Total contractual obligations	$	1,174,180			$	232,500			$	455,239			$	415,268			$	71,173

______________

(1)	As of March 31, 2018, we had $133.9 million of unused borrowing capacity under the Wells Fargo Credit Facility, subject to borrowing base limits.

(2)	As of March 31, 2018, we had $44.0 million of unused borrowing capacity under the Citi Credit Facility, subject to borrowing base limits.

(3)	As of March 31, 2018, we had no unused borrowing capacity under the UBS Credit Facility, subject to borrowing base limits.

(4)	As of March 31, 2018, we had no unused borrowing capacity under the 2022 Notes.

(5)	As of March 31, 2018, we had no unused borrowing capacity under the 2020 Notes.

(6)	As of March 31, 2018, we had $0.9 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, we may enter into future funding commitments. As of March 31, 2018, we had unfunded commitments on delayed draw term loans of $28.1 million, unfunded commitments on revolver term loans of $21.5 million and unfunded equity capital commitments of $6.0 million. As of December 31, 2017, we had unfunded commitments on delayed draw term loans of $38.7 million, unfunded commitments on revolver term loans of $19.8 million and unfunded equity capital commitments of $6.0 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

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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.

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

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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 325-40-35, Beneficial Interests in Securitized Financial Assets ("ASC 325-40-35"). 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. In accordance with ASC 325-40, investments in CLOs are periodically assessed for other-than-temporary impairment ("OTTI"). When the Company determines that a CLO has OTTI, the amortized cost basis of the CLO is written down as of the date of the determination based on events and information evaluated and that write-down is recognized as a realized loss.

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.

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ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk associated with financial instruments and derivative financial instruments is the risk of loss from

adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to interest rate

fluctuations. Many factors including governmental monetary and tax policies, domestic and international economic and

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

    

As of March 31, 2018, our debt included variable-rate debt, bearing a weighted average interest rate of LIBOR plus 2.38% and fixed rate debt, bearing a weighted average interest rate of 5.25% with a total carrying value of $1,164.0 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 100 basis points assuming that our current statement of assets and liabilities was to remain constant and no actions were taken to alter our existing interest rate sensitivity.

Change in Interest Rates		Estimated Percentage Change in Interest Income net of Interest Expense
(-) 100 Basis Points		(8.48	)%
Base Interest Rate		—	%
(+) 100 Basis Points		8.61	%
(+) 200 Basis Points		17.23	%

Because we may borrow money to make investments, our net investment income may be dependent on the difference

between the rate at which we borrow funds and the rate at which we invest these funds. In periods of increasing interest rates,

our cost of funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a

significant change in market interest rates will not have a material adverse effect on our net investment income.

    

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

 

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

Change in Internal Control Over Financial Reporting

 

No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of March 31, 2018, we were 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, 2017, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2017, except as described below.

Risks Relating to the Triangle Transaction

The Triangle Transaction may not close, which may result in material adverse consequences to our business and operations.

             The Triangle Transaction is subject to closing conditions, including the receipt of approval from Triangle’s stockholders of the Triangle Transaction and a parallel transaction to sell the stock of Triangle to Barings LLC pursuant to the terms of the SPA, which if not satisfied or waived, will result in the Triangle Transaction not being completed. Triangle and BSP also have the right to terminate the APA under certain circumstances, including (a) by mutual written agreement of each party; or (b) by either Triangle or BSP if: (i) any governmental entity that must grant regulatory approval does not grant it; (ii) the Triangle Transaction has not closed on or prior to October 5, 2018; (iii) Triangle’s stockholders do not approve the APA and the matters that are conditions to closing under the SPA; or (iv) there is a material breach of any covenants, agreements, representations or warranties by the other party that is not cured prior to the date of the closing of the Triangle Transaction.

If the Triangle Transaction is not completed, we will not realize any of the benefits anticipated as a result of the Triangle Transaction. In addition, we may be adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Triangle Transaction.

We may be unable to realize the benefits anticipated by the Triangle Transaction, including estimated cost savings and synergies, or it may take longer than anticipated to achieve such benefits.

The realization of certain benefits anticipated as a result of the Triangle Transaction will depend in part on the integration of acquired portions of Triangle's investment portfolio with our investment portfolio, and the performance of the acquired assets. While management has undertaken a review of Triangle’s portfolio, there can be no assurance that the acquired portions of Triangle’s investment portfolio will perform profitably or integrated successfully into our investment portfolio in a timely fashion or at all. The dedication of management resources to overseeing and managing the additional assets may detract attention from tour day-to-day business and there can be no assurance that there will not be substantial costs associated with the transition process or there will not be other material adverse effects that will reduce the value of the acquired portfolio assets. Such effects, including but not limited to, incurring unexpected costs or delays in connection with such integration and failure of the acquired portions of Triangle’s investment portfolio to perform as expected, could have a material adverse effect on our financial results.  We also expect to achieve certain cost savings and economies of scale from the Triangle Transaction when we have fully integrated our investment portfolio with the acquired portion of Triangle’s investment portfolio. It is possible that the estimates of the potential cost savings and synergies could turn out to be incorrect. If the estimates turn out to be incorrect or we are not able to successfully combine our investment portfolio with the acquired portion of Triangle’s investment portfolio, the anticipated cost savings and synergies may not be fully realized or realized at all or may take longer to realize than expected.

Additionally, we do not know the ultimate allocation of assets from the Triangle Portfolio between us and other BSP advised and affiliated entities participating in the Triangle Transaction. The allocation will be made under the allocation policy of BSP and the funds it advises, and that the ultimate amount allocated to us will depend upon, among other things, refinancings and

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repayments between now and closing, regulatory guidance, if any, regarding the allocation of certain Triangle Portfolio assets between funds managed by BSP and changes in the relative size of the funds managed by BSP.

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

    

Issuer Purchases of Equity Securities

Repurchases of our common stock pursuant to our tender offer are as follows:

Period		Total Number of Shares Purchased			Average Price per Share				Cumulative Number of Shares Purchased as Part of Publicly Announced Plans or Programs			Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
January 1, 2018 through January 31, 2018		2,547,524			$	8.31			2,547,524			—
February 1, 2018 through February 28, 2018		—			$	—			—			—
March 1, 2018 through March 31, 2018		—			$	—			—			—

    

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Amendment No. 11 to Wells Fargo Credit Agreement

On May 9, 2018, the Company, though Funding I, entered into an amendment (the “Amendment”) to the Wells Fargo Credit Facility with Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, and U.S. Bank National Association to, among other things, extend the maturity date of the Wells Fargo Credit Facility to May 9, 2023.

A copy of the Amendment is attached hereto as Exhibit 10.3 and is incorporated herein by reference. The description of the Amendment contained herein is qualified in its entirety by reference to the foregoing.

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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 three months ended March 31, 2018 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit No.	Description
10.1	Asset Purchase Agreement, dated April 3, 2018, by and between Triangle Capital Corporation and BSP Asset Acquisition I, LLC (filed as exhibit (k)(33) to the Company’s Post-Effective Amendment No. 3 to its Registration Statement on Form N-2 (File No. 333-201619)).
10.2	Amendment No. 10 to Loan and Servicing Agreement, dated as of April 3, 2018 (as amended), by and among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, and U.S. Bank National Association (filed as exhibit (k)(34) to the Company’s Post-Effective Amendment No. 3 to its Registration Statement on Form N-2 (File No. 333-201619)).
10.3	Amendment No. 11 to Loan and Servicing Agreement, dated as of May 9, 2018, by and among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, and U.S. Bank National Association (filed herewith).
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)		May 10, 2018
/s/ Corinne D. Pankovcin Corinne D. Pankovcin		Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)		May 10, 2018

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