Business Development Corp of America - FORM 10-Q

Attached files

file	filename
EX-32 - EXHIBIT 32 - Business Development Corp of America	tv500793_ex32.htm
EX-31.2 - EXHIBIT 31.2 - Business Development Corp of America	tv500793_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - Business Development Corp of America	tv500793_ex31-1.htm

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 June 30, 2018

¨	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 ¨

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 ¨ No ¨

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 ¨	Accelerated filer ¨

Non-accelerated filer x	Smaller reporting company ¨
(Do not check if a smaller reporting company)
	Emerging growth company ¨

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

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

The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of August 10, 2018 was 180,228,514

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 2018

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements	1
Consolidated Statements of Assets and Liabilities as of June 30, 2018 (Unaudited) and December 31, 2017	1
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2018 and 2017 (Unaudited)	2
Consolidated Statements of Changes in Net Assets for the Six Months Ended June 30, 2018 and 2017 (Unaudited)	4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017 (Unaudited)	5
Consolidated Schedules of Investments as of June 30, 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	67
Item 3. Quantitative and Qualitative Disclosures About Market Risk	82
Item 4. Controls and Procedures	82
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	83
Item 1A. Risk Factors	83
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

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)

	June 30,			December 31,
	2018			2017
	(Unaudited)
ASSETS
Investments, at fair value:
Control Investments, at fair value (amortized cost of $364,980 and $374,888, respectively)	$	339,080		$	350,279
Affiliate Investments, at fair value (amortized cost of $255,249 and $296,884, respectively)		234,340			236,801
Non-affiliate Investments, at fair value (amortized cost of $1,979,117 and $1,926,856, respectively)		1,950,223			1,916,443
Investments, at fair value (amortized cost of $2,599,346 and $2,598,628, respectively)		2,523,643			2,503,523
Cash and cash equivalents		107,616			99,822
Interest and dividends receivable		23,183			21,542
Receivable for unsettled trades		3,418			21,409
Prepaid expenses and other assets		1,866			6,218
Total assets	$	2,659,726		$	2,652,514

LIABILITIES
Debt (net of deferred financing costs of $13,345 and $10,926, respectively)	$	1,049,558		$	1,030,223
Stockholder distributions payable		9,587			9,923
Management fees payable		10,079			9,932
Incentive fee on income payable		4,931			4,558
Accounts payable and accrued expenses		13,811			11,137
Payable for unsettled trades		85,940			80,547
Interest and debt fees payable		11,509			11,611
Directors’ fees payable		68			67
Unrealized depreciation on forward currency exchange contracts		27			—
Total liabilities	$	1,185,510		$	1,157,998
Commitments and contingencies (Note 7)

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, 179,448,893 and 179,733,998 shares issued and outstanding, respectively		179			180
Additional paid in capital		1,750,384			1,752,793
Accumulated under distributed net investment income		27,693			33,469
Accumulated over distributed net realized losses		(228,053	)		(197,348	)
Net unrealized depreciation, net of deferred taxes		(78,473	)		(97,399	)
Total net assets attributable to Business Development Corporation of America		1,471,730			1,491,695
Net assets attributable to non-controlling interest		2,486			2,821
Total net assets		1,474,216			1,494,516
Total liabilities and net assets	$	2,659,726		$	2,652,514
Net asset value per share attributable to Business Development Corporation of America	$	8.20		$	8.30

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands except share and per share data)

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Investment income:
From control investments
Interest income	$	5,874		$	6,168		$	11,683		$	12,321
Dividend income		2,124			473			5,207			946
Fee and other income		20			—			20			—
Total investment income from control investments		8,018			6,641			16,910			13,267
From affiliate investments
Interest income		5,146			4,952			10,365			11,261
Dividend income		731			2,685			2,083			5,677
Fee and other income		3			3			5			3
Total investment income from affiliate investments		5,880			7,640			12,453			16,941
From non-affiliate investments
Interest income		43,431			38,098			84,784			76,993
Dividend income		112			551			225			931
Fee and other income		1,364			3,211			2,810			4,610
Total investment income from non-affiliate investments		44,907			41,860			87,819			82,534
Interest from cash and cash equivalents		117			120			245			190
Total investment income		58,922			56,261			117,427			112,932
Operating expenses:
Management fees		10,079			9,691			20,035			19,229
Incentive fee on income		4,931			4,948			9,542			11,314
Interest and debt fees		13,783			10,810			27,233			20,660
Professional fees		1,704			1,344			2,836			2,824
Other general and administrative		1,879			1,720			4,343			3,346
Administrative services		199			203			399			406
Insurance		1			2			3			8
Directors’ fees		261			214			533			409
Total expenses		32,837			28,932			64,924			58,196
Income tax expense, including excise tax		270			635			540			1,270
Net investment gain (loss) attributable to non-controlling interests		—			4			(4	)		6
Net investment income		25,815			26,690			51,967			53,460
Realized and unrealized gain (loss):
Net realized gain (loss):
Control investments		(394	)		—			—			—
Affiliate investments		239			(18,192	)		(40,789	)		(17,221	)
Non-affiliate investments		3,867			(6,020	)		10,067			(17,762	)
Net realized gain (loss) on foreign currency transactions		(9	)		—			17			—
Total net realized gain (loss)		3,703			(24,212	)		(30,705	)		(34,983	)
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
Control investments		2,238			755			(2,071	)		(5,196	)

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands except share and per share data)

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Affiliate investments		(1,396	)		12,852			39,174			12,014
Non-affiliate investments		(12,136	)		(1,275	)		(18,481	)		9,090
Total net change in unrealized appreciation (depreciation) on investments, net of deferred taxes		(11,294	)		12,332			18,622			15,908
Net change in unrealized appreciation (depreciation) attributable to non-controlling interests		16			(96	)		331			(304	)
Net change in unrealized depreciation from forward currency exchange contracts		(27	)		—			(27	)		—
Net realized and unrealized losses		(7,602	)		(11,976	)		(11,779	)		(19,379	)
Net increase in net assets resulting from operations	$	18,213		$	14,714		$	40,188		$	34,081
Per share information - basic and diluted
Net investment income	$	0.14		$	0.15		$	0.29		$	0.30
Net increase in net assets resulting from operations	$	0.10		$	0.08		$	0.22		$	0.19
Weighted average shares outstanding		179,033,251			179,880,734			179,139,837			179,052,951

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(dollars in thousands except share and per share data)

(Unaudited)

	For the Six Months Ended June 30,
	2018			2017
Operations:
Net investment income	$	51,967		$	53,460
Net realized loss from investments		(30,722	)		(34,983	)
Net realized gain on foreign currency transactions		17			—
Net change in unrealized appreciation on investments, net of deferred taxes		18,622			15,908
Net change in unrealized appreciation (depreciation) attributable to non-controlling interests		331			(304	)
Net change in unrealized depreciation from forward currency exchange contracts		(27	)		—
Net increase in net assets resulting from operations		40,188			34,081
Stockholder distributions:
Distributions		(57,743	)		(77,086	)
Net decrease in net assets from stockholder distributions		(57,743	)		(77,086	)
Capital share transactions:
Reinvestment of stockholder distributions		20,138			29,834
Repurchases of common stock		(22,548	)		(868	)
Net (decrease) increase in net assets from capital share transactions		(2,410	)		28,966
Total decrease in net assets, before non-controlling interest		(19,965	)		(14,039	)
(Decrease) increase in non-controlling interest		(335	)		310
Total decrease in net assets		(20,300	)		(13,729	)
Net assets at beginning of period		1,494,516			1,529,734
Net assets at end of period	$	1,474,216		$	1,516,005

Net asset value per common share attributable to Business Development Corporation of America	$	8.20		$	8.38
Common shares outstanding at end of period		179,448,893			180,493,481

Accumulated under distributed net investment income	$	27,693		$	25,319
Accumulated over distributed net realized losses	$	(228,053	)	$	(164,144	)

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)

	For the Six Months Ended June 30,
	2018			2017
Operating activities:
Net increase in net assets resulting from operations	$	40,188		$	34,081
Adjustments to reconcile net increase in net assets from operations to net cash provided by (used in) operating activities:
Payment-in-kind interest income		(2,855	)		(3,564	)
Net accretion of discount on investments		(4,201	)		(4,136	)
Amortization of deferred financing costs		1,573			1,132
Amortization of discount on unsecured notes		247			156
Sales and repayments of investments		533,806			481,737
Purchases of investments		(558,190	)		(540,723	)
Net realized loss from investments		30,722			34,983
Net realized gain on foreign currency transactions		(17	)		—
Net unrealized appreciation on investments, gross of deferred taxes		(19,401	)		(16,513	)
Net unrealized depreciation from forward currency exchange contracts		27			—
(Increase) decrease in operating assets:
Interest and dividends receivable		(1,641	)		1,770
Receivable for unsettled trades		17,991			(22,464	)
Prepaid expenses and other assets		4,352			(519	)
Increase (decrease) in operating liabilities:
Management fees payable		147			120
Incentive fee on income payable		373			1,811
Accounts payable and accrued expenses		2,674			3,196
Payable for unsettled trades		5,393			3,640
Interest and debt fees payable		(102	)		(3,545	)
Directors’ fees payable		1			(65	)
Net cash provided by (used in) operating activities		51,087			(28,903	)

Financing activities:
Repurchases of common stock		(22,548	)		(58,504	)
Proceeds from debt		491,298			93,004
Payments on debt		(469,791	)		—
Payments of financing costs		(3,993	)		(4,588	)
Stockholder distributions		(37,941	)		(47,891	)
(Decrease) increase in non-controlling interest		(335	)		310
Net cash used in financing activities		(43,310	)		(17,669	)

Net increase (decrease) in cash and cash equivalents		7,777			(46,572	)
Effect of foreign currency exchange rates		17			—
Cash and cash equivalents, beginning of period		99,822			189,270
Cash and cash equivalents, end of period	$	107,616		$	142,698

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)

	For the Six Months Ended June 30,
	2018		2017
Supplemental information:
Interest paid during the period	$	24,981	$	22,638
Taxes, including excise tax, paid during the period	$	—	$	21
Distributions reinvested	$	20,138	$	29,834

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		Assets (b)
Senior Secured First Lien Debt - 121.0% (b)
Abaco Systems Holding Corp. (c) (i)	Business Services	L+6.00% (8.33%), 12/7/2021	$	23,577	$	23,248	$	23,066		1.6	%
ABC Financial Intermediate, LLC (c) (j)	Media	L+4.25% (6.35%), 1/2/2025		7,720		7,684		7,720		0.5	%
AccentCare, Inc. (c) (f) (i)	Health Care	L+4.50% (6.84%), 4/3/2024		21,551		21,344		21,335		1.4	%
Adams Publishing Group, LLC (c) (i)	Media	L+7.00% (9.30%), 11/3/2020		14,463		14,360		14,463		1.0	%
Adams Publishing Group, LLC (c) (i)	Media	L+7.00% (9.30%), 11/3/2020		4,099		4,099		4,099		0.3	%
AHP Health Partners, Inc.	Health Care	9.75%, 7/15/2026		6,589		6,499		6,589		0.4	%
Aleris International, Inc. (j)	Metals & Mining	L+4.75% (6.86%), 2/27/2023		18,386		18,225		18,208		1.2	%
Alvogen Pharma US, Inc. (j)	Health Care	L+4.75% (6.84%), 4/1/2022		13,857		13,765		13,866		0.9	%
American Greetings Corporation (c) (j)	Consumer Products	L+4.50% (6.59%), 4/5/2024		1,764		1,729		1,729		0.1	%
AMI Entertainment Network, LLC (c) (f) (i)	Hotels, Restaurants & Leisure	L+6.00% (8.33%), 7/21/2022		14,447		14,212		14,205		1.0	%
AP Gaming I, LLC (i) (j)	Gaming/Lodging	L+4.25% (6.34%), 2/15/2024		33,423		33,361		33,604		2.3	%
AP NMT Acquisition B.V. (a) (j)	Media	L+5.75% (8.09%), 8/13/2021		6,603		6,620		6,588		0.4	%
AqGen Ascensus Inc. (j)	Technology	L+3.50% (5.59%), 12/3/2022		24,514		24,507		24,484		1.7	%
Ardent Legacy Acquisitions, Inc. (i)	Health Care	L+4.50% (6.60%), 6/16/2025		18,983		18,793		18,888		1.3	%
Avantor Performance Materials, Inc.	Health Care	9.00%, 10/1/2025		10,000		10,334		10,077		0.7	%
Avatar Purchaser, Inc. (c)	Business Services	L+7.50% (10.00%), 11/17/2025		11,716		11,392		11,391		0.8	%
Avaya Holdings Corp. (a) (j)	Communications Equipment	L+4.25% (6.32%), 12/15/2024		26,515		26,277		26,531		1.8	%
BCP Raptor, LLC (j)	Energy Equipment & Services	L+4.25% (6.42%), 6/24/2024		14,258		14,136		13,920		0.9	%
BCP Renaissance, LLC (j)	Energy Equipment & Services	L+4.00% (6.36%), 10/31/2024		8,472		8,434		8,449		0.6	%
BDS Solutions Group, LLC (c) (i) (m)	Business Services	L+8.75% (11.09%), 6/1/2021		31,756		31,335		31,438		2.1	%
BDS Solutions Group, LLC (c)	Business Services	L+8.75% (11.09%), 6/1/2021		2,775		2,737		2,747		0.2	%
Beaver-Visitec International Holdings, Inc. (c) (j)	Health Care	L+5.00% (7.09%), 8/21/2023		6,546		6,546		6,546		0.4	%
Black Mountain Sand, LLC (c)	Energy Equipment & Services	L+9.00% (11.31%), 11/30/2021		13,050		12,883		12,879		0.9	%
Black Mountain Sand, LLC (c) (f)	Energy Equipment & Services	L+9.00% (10.99%), 11/30/2021		9,788		9,602		9,660		0.7	%
Blount International, Inc. (j)	Commercial Services & Supplies	L+4.25% (6.23%), 4/12/2023		12,469		12,441		12,523		0.8	%
BMC Software Finance, Inc. (i)	Software	L+3.25% (5.15%), 6/28/2025		23,309		23,076		23,163		1.6	%
Bomgar Corp. (c) (j)	Software	L+4.00% (6.33%), 4/17/2025		6,328		6,312		6,312		0.4	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		Assets (b)
California Resources Corp. (a) (c) (j)	Metals & Mining	L+4.75% (6.84%), 12/31/2022	$	12,259	$	12,035	$	12,492		0.8	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (c) (l) (o) (t)	Food Products	L+12.50% (14.86%), 9/25/2020		22,002		16,406		3,080		0.2	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (c) (l) (o) (t)	Food Products	L+12.50% (14.86%), 9/25/2020		50,847		33,647		7,119		0.5	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (c) (l) (o) (t)	Food Products	L+12.50% (14.86%), 9/25/2020		3,044		2,829		2,983		0.2	%
CareCentrix, Inc. (c) (j)	Health Care	L+4.50% (6.84%), 4/2/2025		9,727		9,680		9,678		0.7	%
CCW, LLC (c) (i)	Hotels, Restaurants & Leisure	L+7.00% (9.13%), 3/21/2021		27,625		27,362		27,625		1.9	%
CCW, LLC (c) (f)	Hotels, Restaurants & Leisure	L+7.00% (9.13%), 3/18/2021		1,600		1,600		1,600		0.1	%
Chicken Soup for the Soul Publishing, LLC (c)	Media	L+6.25% (8.34%), 1/8/2019		27,386		27,350		24,236		1.6	%
Chloe Ox Parent, LLC (c) (j)	Health Care Providers & Services	L+4.50% (6.83%), 12/23/2024		10,741		10,641		10,715		0.7	%
Clarion Events, Ltd (a) (c) (j)	Business Services	L+5.00% (7.31%), 3/22/2025		10,550		10,339		10,254		0.7	%
Clover Technologies Group, LLC (j)	Commercial Services & Supplies	L+4.50% (6.59%), 5/8/2020		13,250		13,210		12,190		0.8	%
Cold Spring Brewing Company (c) (f) (i)	Food & Beverage	L+5.25% (7.32%), 5/15/2024		3,545		3,476		3,475		0.2	%
Community Care Health Network, LLC (j)	Health Care	L+4.75% (6.92%), 2/16/2025		2,686		2,679		2,698		0.2	%
CONSOL Energy Inc. (j)	Metals & Mining	L+6.00% (8.32%), 11/28/2022		3,224		3,167		3,302		0.2	%
Contura Energy Inc. (a) (c) (j)	Energy Equipment & Services	L+5.00% (7.10%), 3/18/2024		7,388		7,328		7,373		0.5	%
Corfin Industries LLC (c) (f) (i)	Industrials	L+6.50% (8.14%), 2/15/2024		8,615		8,453		8,451		0.6	%
Cvent, Inc. (j)	Internet Software & Services	L+3.75% (5.84%), 11/29/2024		16,395		16,300		16,354		1.1	%
Eagle Rx, LLC (c) (i)	Health Care Providers & Services	L+4.25% (6.23%), 8/15/2019		27,035		26,977		27,035		1.8	%
Elo Touch Solutions, Inc (c) (j)	Technology	L+6.00% (8.13%), 10/31/2023		3,088		3,060		3,111		0.2	%
Excelitas Technologies Corp. (j)	Electronic Equipment, Instruments & Components	L+3.50% (5.83%), 12/2/2024		9,950		9,927		9,944		0.7	%
Frontier Communications (a) (j)	Diversified Telecommunication Services	L+3.75% (5.85%), 6/17/2024		5,527		5,457		5,456		0.4	%
Genesys Telecommunications Laboratories, Inc. (j)	Diversified Telecommunication Services	L+3.50% (5.83%), 12/1/2023		18,966		18,745		18,942		1.3	%
Green Energy Partners/Stonewall LLC (c) (j)	Utilities	L+5.50% (7.83%), 11/15/2021		1,015		1,013		1,007		0.1	%
Green Energy Partners/Stonewall LLC (c) (j)	Utilities	L+5.50% (7.83%), 11/15/2021		1,344		1,341		1,334		0.1	%
Greenwave Holdings, Inc. (c) (d) (l)	Internet Software & Services	13.00%, 7/8/2019		8,359		8,338		7,941		0.5	%
GTCR Valor Companies, Inc. (j)	Internet Software & Services	L+3.25% (5.58%), 6/16/2023		9,539		9,518		9,510		0.6	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		Assets (b)
Harrison Gypsum, LLC (c) (f)	Building Materials	L+7.00% (9.10%), 4/27/2024	$	187	$	185	$	185		—	%
Harrison Gypsum, LLC (c) (i)	Building Materials	L+7.00% (9.10%), 4/27/2024		6,703		6,638		6,636		0.5	%
HC Group Holdings III, Inc. (j)	Health Care	L+3.75% (5.84%), 4/7/2022		14,705		14,517		14,724		1.0	%
Hexion Inc.	Chemicals	10.38%, 2/1/2022		5,000		4,935		4,891		0.3	%
Hexion Inc.	Chemicals	6.63%, 4/15/2020		5,000		4,560		4,685		0.3	%
Hexion Inc.	Chemicals	10.00%, 4/15/2020		5,000		4,988		4,925		0.3	%
ICR Operations, LLC (c) (i)	Business Services	L+5.50% (7.83%), 3/26/2025		13,636		13,373		13,363		0.9	%
ICR Operations, LLC (c) (f)	Business Services	L+5.50% (7.83%), 3/26/2024		165		162		162		—	%
Ideal Tridon Holdings, Inc. (c) (m)	Commercial Services & Supplies	L+6.50% (8.80%), 7/31/2023		23,790		23,387		23,435		1.6	%
Ideal Tridon Holdings, Inc. (c) (f)	Commercial Services & Supplies	L+6.50% (8.80%), 7/31/2022		1,639		1,608		1,614		0.1	%
Ideal Tridon Holdings, Inc. (c)	Commercial Services & Supplies	L+6.50% (8.53%), 7/31/2023		5,198		5,121		5,121		0.3	%
Indivior Finance S.A.R.L. (a) (i)	Health Care	L+4.50% (6.85%), 12/18/2022		11,817		11,785		11,743		0.8	%
InMotion Entertainment Group, LLC (c) (i)	Specialty Retail	L+7.25% (9.59%), 10/1/2021		12,962		12,925		12,962		0.9	%
InMotion Entertainment Group, LLC (c) (f) (i)	Specialty Retail	L+7.75% (10.09%), 10/1/2021		318		318		318		—	%
Intelsat S.A. (a) (j)	Diversified Telecommunication Services	L+4.50% (6.60%), 1/2/2024		665		665		689		—	%
Intelsat S.A. (a) (j)	Diversified Telecommunication Services	L+4.50% (6.63%), 1/2/2024		2,211		2,211		2,279		0.2	%
Internap Corporation (a) (c) (j)	Communications Equipment	L+5.75% (7.83%), 4/6/2022		11,940		11,923		11,940		0.8	%
IPC Corp. (j)	Diversified Telecommunication Services	L+4.50% (6.86%), 8/6/2021		3,784		3,734		3,689		0.3	%
Iridium Communications, Inc.	Diversified Telecommunication Services	10.25%, 4/15/2023		3,536		3,536		3,784		0.3	%
K2 Pure Solutions NoCal, L.P. (c) (i)	Chemicals	L+6.00% (8.09%), 2/19/2021		6,400		6,355		6,400		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. (a) (c)	Chemicals	8.38%, 12/1/2022		21,199		21,502		21,725		1.5	%
Lakeland Tours, LLC (c)	Diversified Consumer Services	L+4.00% (6.34%), 12/15/2024		5,619		5,606		5,612		0.4	%
Lakeland Tours, LLC	Diversified Consumer Services	L+4.00% (6.34%), 12/15/2024		464		464		463		—	%
Lightsquared LP (l)	Diversified Telecommunication Services	L+8.75% (11.07%), 12/7/2020		11,925		11,294		9,655		0.7	%
Lionbridge Technologies, Inc. (c) (i)	Business Services	L+5.50% (7.59%), 2/28/2024		13,695		13,639		13,488		0.9	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		Assets (b)
Loparex International Holding B.V. (c) (j)	Industrials	L+4.25% (6.58%), 4/11/2025	$	2,003	$	1,993	$	2,004		0.1	%
MCS Acquisition Corp. (c) (j)	Professional Services	L+4.75% (7.08%), 5/18/2024		14,225		14,172		13,727		0.9	%
Medallion Midland Acquisition, L.P. (j)	Energy Equipment & Services	L+3.25% (5.34%), 11/13/2024		4,428		4,418		4,383		0.3	%
Medical Depot Holdings, Inc. (c) (i)	Health Care	L+5.50% (7.83%), 1/3/2023		19,518		18,178		17,695		1.2	%
Michael Baker International, LLC (c) (j)	Business Services	L+4.50% (6.59%), 11/21/2022		5,593		5,543		5,596		0.4	%
Midwest Can Company, LLC (c) (i)	Energy Equipment & Services	L+6.75% (8.63%), 4/11/2024		4,692		4,647		4,645		0.3	%
Midwest Can Company, LLC (c) (f)	Energy Equipment & Services	L+5.00% (7.38%), 4/11/2023		156		155		155		—	%
MMM Holdings, LLC (c) (f) (i) (l)	Health Care	L+6.25% (8.59%), 3/14/2023		20,578		20,191		20,189		1.4	%
Monitronics International, Inc. (j)	Diversified Consumer Services	L+5.50% (7.83%), 9/30/2022		10,124		10,151		9,643		0.7	%
Montreign Operating Company, LLC (c) (j)	Hotels, Restaurants & Leisure	L+8.25% (10.34%), 1/24/2023		27,093		26,707		26,055		1.8	%
Mood Media Corporation (c) (i)	Business Services	L+7.25% (9.58%), 6/28/2022		13,700		13,460		13,429		0.9	%
Murray Energy Holdings Co. (j)	Energy Equipment & Services	L+7.25% (9.34%), 10/17/2022		9,277		9,116		8,725		0.6	%
National Technical Systems, Inc. (c) (i)	Professional Services	L+6.25% (8.23%), 6/12/2021		16,469		16,389		15,481		1.0	%
Navitas Midstream Midland Basin, LLC (c) (j)	Energy Equipment & Services	L+4.50% (6.58%), 12/13/2024		8,440		8,404		8,245		0.6	%
New Star Metals, Inc. (c) (i) (l)	Business Services	L+6.00% (8.33%), 12/22/2021		24,267		23,884		24,024		1.6	%
NexSteppe Inc. (c) (l) (o) (t)	Chemicals	12.00%, 9/30/2018		1,891		1,750		—		—	%
NexSteppe Inc. (c) (l) (o) (t)	Chemicals	12.00%, 9/30/2018		12,740		10,453		—		—	%
Noosa Acquirer, Inc. (c) (i)	Food Products	L+5.25% (7.34%), 11/21/2020		25,000		24,850		25,000		1.7	%
NTM Acquisition Corp. (c) (i)	Media	L+6.25% (8.58%), 6/7/2022		18,186		18,022		18,095		1.2	%
Office Depot, Inc. (a) (j)	Specialty Retail	L+7.00% (8.93%), 11/8/2022		8,674		8,519		8,869		0.6	%
Optiv, Inc. (j)	Business Services	L+3.25% (5.31%), 2/1/2024		4,432		4,225		4,299		0.3	%
Orchid Underwriters Agency, LLC (c) (i)	Insurance Broker	L+5.00% (7.33%), 3/17/2022		16,508		16,385		16,508		1.1	%
Orchid Underwriters Agency, LLC (c) (f)	Insurance Broker	L+5.00% (7.33%), 3/17/2022		1,100		1,100		1,100		0.1	%
ORG Chemical Holdings, LLC (c) (i)	Chemicals	L+5.75% (8.08%), 6/30/2022		27,682		27,240		26,785		1.8	%
ORG GC Holdings, LLC (c) (i)	Business Services	L+6.00% (8.33%), 7/31/2022		25,485		25,173		25,103		1.7	%
PeopLease Holdings, LLC (c) (i)	Commercial Services & Supplies	L+9.00% (11.34%), 2/26/2021		20,000		19,892		17,000		1.2	%
PGX Holdings, Inc. (c) (j)	Transportation Infrastructure	L+5.25% (7.35%), 9/29/2020		12,365		12,327		11,994		0.8	%
Premier Dental Services, Inc. (i) (j)	Health Care	L+4.50% (6.59%), 6/30/2023		32,852		32,622		32,893		2.2	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		Assets (b)
Premier Global Services, Inc. (j)	Diversified Telecommunication Services	L+6.50% (8.86%), 12/8/2021	$	9,100	$	8,875	$	8,770		0.6	%
Pride Plating, Inc. (c) (i)	Aerospace & Defense	L+5.50% (7.83%), 6/13/2019		8,004		7,989		8,004		0.5	%
PSKW, LLC (c) (i)	Health Care Providers & Services	L+4.25% (6.58%), 11/25/2021		1,506		1,498		1,506		0.1	%
PSKW, LLC (c) (i)	Health Care Providers & Services	L+8.26% (10.56%), 11/25/2021		17,750		17,548		17,750		1.2	%
PSKW, LLC (c) (i)	Health Care Providers & Services	L+8.26% (10.56%), 11/25/2021		1,972		1,939		1,972		0.1	%
PSKW, LLC (c) (i)	Health Care Providers & Services	L+8.27% (10.60%), 11/25/2021		1,930		1,911		1,930		0.1	%
PT Network, LLC (c) (i) (l)	Health Care	L+5.50% (7.84%), 11/30/2021		16,850		16,735		16,354		1.1	%
PT Network, LLC (c) (f)	Health Care	L+5.50% (7.84%), 11/30/2021		658		658		639		—	%
Pure Barre, LLC (c) (i)	Hotels, Restaurants & Leisure	L+8.25% (10.34%), 6/12/2020		25,629		25,454		25,245		1.7	%
Pure Barre, LLC (c)	Hotels, Restaurants & Leisure	L+8.25% (10.23%), 6/12/2020		502		502		494		—	%
Quorum Health Corporation (j)	Health Care	L+6.75% (8.84%), 4/29/2022		4,255		4,339		4,322		0.3	%
Resco Products, Inc. (c) (i)	Metals & Mining	L+6.25% (8.34%), 3/7/2020		10,000		10,000		9,850		0.7	%
Sage Automotive Holdings, Inc. (c) (j)	Auto Components	L+5.00% (7.09%), 11/8/2022		18,368		18,244		18,368		1.2	%
SHO Holding II Corporation (c) (j)	Specialty Retail	L+5.00% (7.36%), 10/27/2022		9,720		9,659		8,651		0.6	%
Skillsoft Corp. (j)	Technology	L+4.75% (6.73%), 4/28/2021		17,134		16,469		16,154		1.1	%
Squan Holding Corp. (c)	Diversified Telecommunication Services	L+6.00% (8.34%), 10/10/2019		16,704		14,972		13,363		0.9	%
SSH Group Holdings, Inc. (c) (i)	Diversified Consumer Services	L+5.00% (7.45%), 10/2/2024		6,058		6,003		6,058		0.4	%
Steel City Media (c)	Media	P+3.50% (8.50%), 3/29/2020		37,956		37,955		37,576		2.5	%
Stepstone Group LP (c) (i)	Financial Services	L+4.00% (5.97%), 3/27/2025		2,925		2,911		2,925		0.2	%
Subsea Global Solutions, LLC (c) (i)	Business Services	L+7.00% (9.31%), 3/28/2023		8,454		8,294		8,330		0.6	%
Subsea Global Solutions, LLC (c) (f)	Business Services	9.36%, 3/28/2023		67		67		66		—	%
Tax Defense Network, LLC (c) (l) (p) (t)	Diversified Consumer Services	L+10.00% (12.34%), 8/27/2019		31,316		26,532		7,516		0.5	%
Thoughtworks, Inc. (c) (f)	Business Services	L+4.00% (6.09%), 10/11/2024		1,189		1,183		1,189		0.1	%
Thoughtworks, Inc. (c) (j)	Business Services	L+4.50% (6.38%), 10/12/2024		4,420		4,420		4,420		0.3	%
Tillamook Country Smoker, LLC (c) (i)	Food Products	L+5.75% (8.08%), 5/19/2022		10,244		10,125		10,123		0.7	%
Tillamook Country Smoker, LLC (c) (f)	Food Products	L+5.75% (8.11%), 5/19/2022		1,348		1,348		1,332		0.1	%
Transperfect Global, Inc. (c) (i)	Business Services	L+6.75% (8.83%), 5/7/2024		6,842		6,708		6,705		0.5	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		Assets (b)
Traverse Midstream Partners, LLC (j)	Energy Equipment & Services	L+4.00% (6.34%), 9/27/2024	$	6,352	$	6,323	$	6,344		0.4	%
Trilogy International Partners, LLC (a)	Diversified Telecommunication Services	8.88%, 5/1/2022		14,875		14,816		15,117		1.0	%
Trojan Battery Company, LLC (c) (j)	Auto Components	L+4.75% (7.09%), 6/11/2021		10,424		10,378		10,424		0.7	%
Turning Tech LLC (c) (i)	Software	L+9.75% (12.09%), 6/30/2020		18,580		18,455		17,186		1.2	%
Twenty Eighty, Inc. (c) (f) (l) (p)	Media	8.00%, 3/31/2020		6,421		4,972		6,341		0.4	%
Twenty Eighty, Inc. (c) (f) (l) (p)	Media	L+8.00% (10.33%), 3/31/2020		2,262		1,961		2,240		0.2	%
Twenty Eighty, Inc. (c) (f) (l) (p)	Media	9.00%, 3/31/2020		6,010		4,697		5,935		0.4	%
United Central Industrial Supply Company, LLC (c) (i) (j)	Commercial Services & Supplies	L+7.25% (9.35%), 10/9/2018		8,544		8,536		8,416		0.6	%
USF S&H Holdco, LLC (c) (i)	Hotels, Restaurants & Leisure	L+5.75% (8.08%), 3/19/2024		24,245		23,899		23,891		1.6	%
USF S&H Holdco, LLC (c) (f)	Hotels, Restaurants & Leisure	L+5.75% (7.80%), 3/16/2023		323		323		319		—	%
US Salt, LLC (c) (i)	Food Products	L+4.75% (6.84%), 12/1/2023		5,176		5,129		5,127		0.3	%
US Salt, LLC (c) (f)	Food Products	L+4.75% (6.84%), 12/1/2023		1,251		1,251		1,239		0.1	%
VCVH Holding Corp. (c) (i) (j)	Health Care	L+5.00% (7.34%), 6/1/2023		26,034		25,906		26,213		1.8	%
Veritas US Inc.	Technology	10.50%, 2/1/2024		15,393		15,206		12,622		0.9	%
Veritas US Inc. (j)	Technology	L+4.50% (6.59%), 1/27/2023		14,943		14,981		13,658		0.9	%
Vertex Aerospace Services (c) (i)	Industrials	L+4.75% (6.84%), 6/16/2025		8,859		8,815		8,815		0.6	%
VetCor Professional Practices LLC (c) (f) (i)	Diversified Consumer Services	P+5.25% (10.25%), 4/20/2021		17,942		17,870		17,943		1.2	%
Von Drehle Corporation (c) (i) (l)	Life Sciences Tools & Services	L+9.50% (11.80%), 3/6/2023		26,176		25,824		25,918		1.8	%
Vyaire Medical, Inc. (c) (j)	Health Care	7.23%, 4/16/2025		8,985		8,633		8,626		0.6	%
Xplornet Communications, Inc. (a) (j) (l)	Diversified Telecommunication Services	L+4.00% (6.33%), 9/9/2021		13,061		12,995		13,061		0.9	%
Sub Total Senior Secured First Lien Debt					$	1,875,083	$	1,789,111		121.0	%
Senior Secured Second Lien Debt - 17.1% (b)
Anchor Glass Container Corporation (c)	Containers & Packaging	L+7.75% (9.82%), 12/7/2024	$	20,000	$	19,839	$	13,290		0.9	%
Answers Corporation (c) (p)	Technology	L+5.00% (6.90%), 9/15/2021		4,652		4,145		4,419		0.3	%
Astro AB Merger Sub, Inc. (a)	Diversified Financial Services	L+7.50% (9.86%), 4/30/2023		7,758		7,758		7,836		0.5	%
Boston Market Corporation (c)	Hotels, Restaurants & Leisure	L+8.25% (10.42%), 12/16/2018		24,039		24,003		20,913		1.4	%
BrandMuscle Holdings Inc. (c)	Internet Software & Services	L+8.50% (10.84%), 6/1/2022		24,500		24,203		24,500		1.7	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		Assets (b)
Carlisle FoodService Products, Incorporated (c)	Food Products	L+7.75% (9.83%), 3/20/2026	$	10,719	$	10,512	$	10,510		0.7	%
CDS U.S. Intermediate Holdings, Inc. (a) (c)	Hotels, Restaurants & Leisure	L+8.25% (10.34%), 7/8/2023		7,927		7,819		7,669		0.5	%
CP VI Bella Blocker Topco, LLC (c)	Health Care	L+6.75% (8.84%), 12/28/2025		2,009		1,999		2,000		0.1	%
CREDITCORP	Consumer Finance	12.00%, 7/15/2018		13,250		13,249		13,140		0.9	%
Dentalcorp Perfect Smile ULC (a) (c) (f)	Health Care	L+7.50% (9.59%), 6/1/2026		8,111		8,030		8,030		0.5	%
Edelman Financial Services LLC (a) (c)	Financial Services	L+6.75% (9.09%), 6/26/2026		6,764		6,730		6,730		0.5	%
Epic Health Services, Inc. (c)	Health Care Providers & Services	L+8.00% (10.09%), 3/17/2025		15,000		14,810		14,700		1.0	%
Genex Holdings, Inc.	Health Care	L+7.00% (9.03%), 3/6/2026		2,305		2,283		2,282		0.2	%
Hertz Corp. (a)	Automobiles	7.63%, 6/1/2022		14,194		14,194		13,626		0.9	%
Northstar Financial Services Group, LLC (c)	Media Entertaiment	L+7.50% (9.59%), 5/25/2026		3,381		3,364		3,364		0.2	%
PetVet Care Centers, LLC (c)	Business Services	L+6.25% (8.33%), 2/13/2026		3,539		3,522		3,541		0.2	%
PI US Holdco III Limited (a) (c)	Consumer Finance	L+7.25% (9.34%), 12/20/2025		6,696		6,632		6,616		0.5	%
Recess Holdings, Inc. (c)	Hotels, Restaurants & Leisure	L+7.75% (10.20%), 9/29/2025		13,008		12,829		12,813		0.9	%
Renaissance Holding Corp (c)	Education	L+7.00% (9.33%), 5/25/2026		8,456		8,288		8,287		0.6	%
River Cree Entertaiment (a) (z)	Gaming/Lodging	10.00%, 5/17/2025	CAD	21,275		16,388		15,957		1.1	%
TierPoint, LLC (c)	Technology	L+7.25% (9.34%), 5/5/2025		5,334		5,288		5,281		0.4	%
Safe Fleet Holdings LLC	Industrials	L+6.75% (8.66%), 2/2/2026		3,143		3,128		3,135		0.2	%
U.S. Auto (c)	Diversified Consumer Services	L+10.50% (12.60%), 6/8/2020		30,000		29,795		29,850		2.0	%
US Salt, LLC (c)	Food Products	L+8.75% (10.66%), 12/1/2024		12,872		12,695		12,691		0.9	%
Sub Total Senior Secured Second Lien Debt					$	261,503	$	251,180		17.1	%

Subordinated Debt - 7.5% (b)
BMC Software Finance, Inc. (i)	Software	8.13%, 7/15/2021	$	19,461	$	19,453	$	19,899		1.4	%
Frontier Communications (a)	Diversified Telecommunication Services	8.13%, 10/1/2018		5,500		5,494		5,541		0.4	%
Frontier Communications (a)	Diversified Telecommunication Services	8.50%, 4/15/2020		10,000		9,311		10,219		0.7	%
Gold, Inc. (c)	Textiles, Apparel & Luxury Goods	10.00%, 6/30/2019		3,742		3,704		3,592		0.2	%
Park Ave RE Holdings, LLC (c) (d) (l) (o)	Real Estate Management & Development	13.00%, 12/31/2021		37,192		37,192		37,192		2.5	%
Steel City Media (c) (l) (t)	Media	16.00%, 3/30/2020		25,829		24,536		21,438		1.5	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		Assets (b)
Xplornet Communications, Inc. (a) (l)	Diversified Telecommunication Services	9.63%, 6/1/2022	$	11,094	$	11,094	$	11,260		0.8	%
Sub Total Subordinated Debt					$	110,784	$	109,141		7.5	%
Collateralized Securities - 11.6% (b)
Collateralized Securities - Debt Investment
Figueroa - Class F Notes (a) (c) (p)	Diversified Investment Vehicles	12.34%, 1/15/2027	$	8,000	$	8,000	$	8,000		0.6	%
NewStar Arlington Senior Loan Program LLC Class FR Notes (a) (c) (p)	Diversified Investment Vehicles	13.36%, 4/25/2031		4,750		4,523		4,525		0.3	%
NewStar Exeter Fund CLO - Debt (a) (c) (p)	Diversified Investment Vehicles	9.86%, 1/20/2027		10,728		9,342		8,796		0.6	%
WhiteHorse VIII, Ltd. CLO - Debt (a) (c) (p)	Diversified Investment Vehicles	8.02%, 5/1/2026		8,000		7,650		7,596		0.5	%
Collateralized Securities - Equity Investment (n)
B&M CLO 2014-1, LTD. Subordinated Notes (a) (c) (p) (v)	Diversified Investment Vehicles	5.38%, 4/16/2026	$	40,250	$	12,486	$	11,973		0.8	%
CVP Cascade CLO, LTD. Subordinated Notes (a) (c) (p) (v)	Diversified Investment Vehicles	40.02%, 1/16/2026		31,000		1,441		2,240		0.2	%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (c) (p) (v)	Diversified Investment Vehicles	13.61%, 1/15/2027		35,057		11,940		12,116		0.8	%
MidOcean Credit CLO II, LLC Income Notes (a) (c) (p) (v)	Diversified Investment Vehicles	13.18%, 1/29/2030		37,600		20,876		20,475		1.4	%
MidOcean Credit CLO III, LLC Subordinated Notes (a) (c) (p) (v)	Diversified Investment Vehicles	14.92%, 4/21/2031		43,300		17,670		17,678		1.2	%
MidOcean Credit CLO IV, LLC Income Notes (a) (c) (p) (v)	Diversified Investment Vehicles	16.18%, 4/15/2027		21,500		13,066		12,010		0.8	%
NewStar Arlington Senior Loan Program LLC Class FR Notes (a) (c) (p) (v)	Diversified Investment Vehicles	20.31%, 4/25/2031		31,603		20,563		29,220		2.0	%
NewStar Exeter Fund CLO - Equity (a) (c) (p) (v)	Diversified Investment Vehicles	0.00%, 1/19/2027		31,575		10,766		10,476		0.7	%
OFSI Fund VI, Ltd. Subordinated Notes (a) (c) (p) (v)	Diversified Investment Vehicles	0.00%, 3/20/2025		38,000		11,502		7,745		0.5	%
Related Fee Agreements (a) (c) (s)	Diversified Investment Vehicles			13,840		5,205		2,740		0.2	%
Silver Spring CLO, Ltd. Subordinated Notes (a) (c) (p) (v)	Diversified Investment Vehicles	4.84%, 10/16/2026		31,500		8,382		7,506		0.5	%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (c) (p) (v)	Diversified Investment Vehicles	0.00%, 5/1/2026		36,000		11,126		7,580		0.5	%
Sub Total Collateralized Securities					$	174,538	$	170,676		11.6	%

Equity/Other - 14.0% (b)
Answers Corporation - Common Equity (c) (e) (p)	Technology			908,911	$	11,361	$	10,150		0.7	%
Avaya Holdings Corp. (a) (e) (aa)	Communications Equipment			222		3,532		4,466		0.3	%
California Resources Development JV, LLC - Preferred Equity (a) (c) (o) (u)	Metals & Mining	9.00%		38,858,603		35,947		37,304		2.5	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		Assets (b)
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			5,002		—		312		—	%
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			—		—		8,842		0.6	%
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (a) (c) (e) (h) (o)	Aerospace & Defense			3,250,000		2,831		3,250		0.2	%
Kahala US OpCo LLC - Class A Preferred Units (a) (c) (e) (k) (o)	Aerospace & Defense	13.00%		4,413,472		—		—		—	%
Mood Media Corporation - Warrants (c) (e)	Business Services			121,021		27		68		—	%
New Star Metals Inc. - Warrants (c) (e)	Business Services	Expire 12/22/2036		100,216		151		302		—	%
NexSteppe Inc. - Series C Preferred Stock Warrant (c) (e) (o)	Chemicals			237,240		737		—		—	%
NMFC Senior Loan Program I, LLC (a) (o)	Diversified Investment Vehicles			50,000		50,000		51,066		3.5	%
Orchid Underwriters Agency, LLC - Preferred Shares (c) (e) (u)	Insurance Broker			5,000		113		798		0.1	%
Orchid Underwriters Agency, LLC - Common Shares (c) (e) (u)	Insurance Broker			5,000		—		185		—	%
Park Ave RE Holdings, LLC - Common Shares (c) (e) (o) (w)	Real Estate Management & Development			1,000		102		15,315		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		10,210		0.7	%
South Grand MM CLO I, LLC (a) (o)	Diversified Investment Vehicles		$	6,691		6,262		7,735		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		—		35		—	%
Tax Defense Network, LLC - Common Equity (c) (e)	Diversified Consumer Services			425,000		425		—		—	%
Tennenbaum Waterman Fund, L.P. (a) (p)	Diversified Investment Vehicles		$	10,000		10,000		10,908		0.8	%
TCG BDC, Inc. - Common Stock (fka Carlyle GMS Finance, Inc.) (a)	Diversified Investment Vehicles			304,557		5,841		5,028		0.3	%
THL Credit Greenway Fund II LLC (a) (p)	Diversified Investment Vehicles		$	10,566		10,566		9,470		0.7	%
Twentyeighty, Inc. - Class A Common Equity (c)	Media			54,586		—		—		—	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		Assets (b)
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		397		—	%
U.S. Auto - Series C Preferred Equity Units (c) (e) (u)	Diversified Consumer Services			56		56		111		—	%
World Business Lenders, LLC - Preferred Stock (c) (e) (p)	Consumer Finance			922,669		3,750		3,759		0.3	%
Sub Total Equity/Other					$	177,438	$	203,535		14.0	%

TOTAL INVESTMENTS - 171.2% (b)					$	2,599,346	$	2,523,643		171.2	%

Forward foreign currency contracts:

Unrealized

Appreciation/

Counterparty

Contract to Deliver

In Exchange For

Maturity Date

(Depreciation)

Goldman Sachs International

CAD 21,275

16,198

10/3/2018

(27

)

(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 73.0% 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 $1,474,216 as of June 30, 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 June 30, 2018.

(f)

The Company has various unfunded commitments to portfolio companies. The remaining amount of these unfunded commitments as of June 30, 2018 are comprised of the following:

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

			Original		Remaining
Portfolio Company Name	Investment Type	Commitment Type	Commitment		Commitment
Accent Care, Inc.	Senior Secured First Lien Debt	Delayed draw term loan	$	4,310	$	4,310
AMI Entertainment Network, LLC	Senior Secured First Lien Debt	Revolver term loan		1,234		1,234
Black Mountain Sand, LLC	Senior Secured First Lien Debt	Delayed draw term loan		13,050		3,263
CCW, LLC	Senior Secured First Lien Debt	Revolver term loan		3,000		1,400
Cold Spring Brewing Company	Senior Secured First Lien Debt	Revolver term loan		232		232
Corfin Industries LLC	Senior Secured First Lien Debt	Revolver term loan		956		956
Dentalcorp Perfect Smile ULC	Senior Secured Second Lien Debt	Delayed draw term loan		2,028		2,028
Harrison Gypsum, LLC	Senior Secured First Lien Debt	Delayed draw term loan		2,873		2,686
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		1,092
InMotion Entertainment Group, LLC	Senior Secured First Lien Debt	Delayed draw term loan		2,161		1,843
Midwest Can Company, LLC	Senior Secured First Lien Debt	Revolver term loan		547		391
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
Orchid Underwriters Agency, LLC	Senior Secured First Lien Debt	Revolver term loan		2,200		1,100
PennantPark Credit Opportunities Fund II, LP	Equity capital commitment	Equity capital commitment		10,491		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
Subsea Global Solutions, LLC	Senior Secured First Lien Debt	Revolver term loan		963		896
Thoughtworks, Inc.	Senior Secured First Lien Debt	Delayed draw term loan		892		892
Tillamook Country Smoker, LLC	Senior Secured First Lien Debt	Revolver term loan		2,696		1,348
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		1,294		43
USF S&H Holdco, LLC	Senior Secured First Lien Debt	Revolver term loan		1,616		1,293
VetCor Professional Practices LLC	Senior Secured First Lien Debt	Delayed draw term loan		3,654		2,852
Total			$	73,302	$	43,948

(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 June 30, 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.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2018

(Unaudited)

										PIK Earned for the
										three months
										ended June 30,
Portfolio Company	Investment Type	Cash		PIK			All-in Rate			2018
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.)	Senior Secured First Lien Debt	—	%		14.86	%		14.86	%	$	—
Greenwave Holdings, Inc.	Senior Secured First Lien Debt	10.00	%		3.00	%		13.00	%		73
Kahala Ireland OpCo Designated Activity Company	Senior Secured First Lien Debt	13.00	%		—	%		13.00	%		—
Lightsquared LP	Senior Secured First Lien Debt	—	%		11.07	%		11.07	%		320
MMM Holdings, Inc.	Senior Secured First Lien Debt	8.59	%		—	%		8.59	%		—
New Star Metals, Inc.	Senior Secured First Lien Debt	8.33	%		—	%		8.33	%		—
NextSteppe Inc.	Senior Secured First Lien Debt	—	%		12.00	%		12.00	%		—
Park Ave RE Holdings, LLC	Subordinated Debt	13.00	%		—	%		13.00	%		—
Pure Barre, LLC	Senior Secured First Lien Debt	9.09	%		1.25	%		10.34	%		81
Pure Barre, LLC	Senior Secured First Lien Debt	8.98	%		1.25	%		10.23	%		2
Steel City Media	Subordinated Debt	—	%		16.00	%		16.00	%		—
Tax Defense Network, LLC	Senior Secured First Lien Debt	7.84	%		4.50	%		12.34	%		—
Twenty Eighty, Inc.	Senior Secured First Lien Debt	6.33	%		4.00	%		10.33	%		64
Twenty Eighty, Inc.	Senior Secured First Lien Debt	—	%		8.00	%		8.00	%		130
Twenty Eighty, Inc.	Senior Secured First Lien Debt	0.25	%		8.75	%		9.00	%		—
United Central Industrial Supply Company, LLC	Senior Secured First Lien Debt	7.35	%		2.00	%		9.35	%		85
Von Drehle Corporation	Senior Secured First Lien Debt	9.80	%		2.00	%		11.80	%		131
Xplornet Communications, Inc.	Senior Secured First Lien Debt	6.33	%		—	%		6.33	%		—
Xplornet Communications, Inc.	Subordinated Debt	—	%		9.63	%		9.63	%		559
Total										$	1,445

(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 $2.7 million that are classified as Affiliated Investments.

(t)

The investment is on non-accrual status as of June 30, 2018.

(u)

Investments are held in the taxable wholly-owned, consolidated subsidiary, 54^th 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 June 30, 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.

(z)

The principal amount (par amount) is denominated in Canadian Dollars or CAD.

(aa)

The investment is not a restricted security. All other securities are restricted securities.

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

The following table shows the portfolio composition by industry grouping based on fair value at June 30, 2018:

	At June 30, 2018
	Investments at		Percentage of
	Fair Value		Total Portfolio
Diversified Investment Vehicles	$	265,093		10.5	%
Health Care		255,387		10.1
Business Services		202,981		8.1
Aerospace & Defense		161,957		6.4
Hotels, Restaurants & Leisure		160,829		6.4
Media		148,731		5.9
Diversified Telecommunication Services		121,860		4.8
Technology		89,879		3.6
Energy Equipment & Services		84,778		3.4
Metals & Mining		81,156		3.2
Commercial Services & Supplies		80,299		3.2
Food Products		79,204		3.2
Diversified Consumer Services		77,593		3.1
Real Estate Management & Development		76,152		3.0
Health Care Providers & Services		75,608		3.0
Chemicals		69,411		2.8
Software		66,739		2.6
Internet Software & Services		58,305		2.3
Gaming/Lodging		49,561		2.0
Communications Equipment		42,937		1.7
Specialty Retail		30,800		1.2
Professional Services		29,208		1.2
Auto Components		28,792		1.1
Life Sciences Tools & Services		25,918		1.0
Consumer Finance		23,515		0.9
Industrials		22,405		0.9
Insurance Broker		18,591		0.7
Automobiles		13,626		0.5
Containers & Packaging		13,290		0.5
Transportation Infrastructure		11,994		0.5
Electronic Equipment, Instruments & Components		9,944		0.4
Financial Services		9,655		0.4
Education		8,287		0.3
Diversified Financial Services		7,836		0.3
Building Materials		6,821		0.3
Textiles, Apparel & Luxury Goods		3,592		0.1
Food & Beverage		3,475		0.1
Media Entertainment		3,364		0.1
Utilities		2,341		0.1
Consumer Products		1,729		0.1
Total	$	2,523,643		100.0	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		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.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		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.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		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.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		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.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		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.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		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.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		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.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

			Principal /
		Investment Coupon	Number of		Amortized				% of Net
Portfolio Company (q)	Industry	Rate / Maturity (y)	Shares		Cost		Fair Value		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.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2017

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

(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.

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)

(i)

(j)

(k)

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

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)

(n)

(o)

(p)

(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)

(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.

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.

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 June 30, 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 six months ended June 30, 2018, the Company invested approximately $558.2 million to portfolio companies to contribute to the support of their business objectives of which some were contractually obligated. See Note 7 - Commitments and Contingencies. As of June 30, 2018, the Company held investments in loans it made to investee companies with aggregate principal amounts of $2,307.8 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 June 30, 2018, the Company had issued 198.2 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 June 30, 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.

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 June 30, 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.

Although Congress passed the Small Business Credit Availability Act (the “SBCAA”) on March 23, 2018, which amended the 1940 Act to permit BDCs to incur increased leverage if certain conditions are met, we do not presently intend to avail ourselves of the increased leverage limits permitted by the SBCAA. If we were to avail ourselves of the increased leverage permitted by the SBCAA, this would effectively allow the Company to double its leverage, which would increase leverage risk and expenses.

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.

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 June 30, 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. However, there can be no assurance that we will be able to sell such investment at a price equal to its net asset value per share and we may ultimately sell such investment at a discount to its net asset value per share.

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.

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 June 30, 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 June 30, 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 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.

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 June 30, 2018

(Unaudited)

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 13 - 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.

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 June 30, 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 13 - 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 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.

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 June 30, 2018

(Unaudited)

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

Note 3 — Fair Value of Financial Instruments

The Company’s fair value measurements are classified into a fair value hierarchy in accordance with ASC Topic 820, Fair Value Measurement, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

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

•

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

•

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

•

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

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

For investments for which Level 1 inputs, such as quoted prices, were not available at June 30, 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 June 30, 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.

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 June 30, 2018

(Unaudited)

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 and derivative, refer to Note 5 and Note 6, respectively.

The following table presents fair value measurements of investments, by major class, as of June 30, 2018, according to the fair value hierarchy:

	Fair Value Measurements
							Measured at
							Net Asset
	Level 1		Level 2		Level 3		value ⁽¹⁾		Total
Senior Secured First Lien Debt	$	—	$	494,357	$	1,294,754	$	—	$	1,789,111
Senior Secured Second Lien Debt		—		63,645		187,535		—		251,180
Subordinated Debt		—		46,919		62,222		—		109,141
Collateralized Securities		—		—		170,676		—		170,676
Equity/Other		4,466		5,028		104,652		89,389		203,535
Total	$	4,466	$	609,949	$	1,819,839	$	89,389	$	2,523,643

⁽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.

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 June 30, 2018

(Unaudited)

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
							Measured at
							Net Asset
	Level 1		Level 2		Level 3		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

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the six months ended June 30, 2018:

				Senior Secured
	Senior Secured			Second Lien			Subordinated			Collateralized			Equity/
	First Lien Debt			Debt			Debt			Securities			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		7,631			(8,941	)		25			29,470			(6,487	)		21,698
Purchases and other adjustments to cost		298,283			42,740			1,157			21,992			11,954			376,126
Sales and redemptions		(318,839	)		(42,816	)		—			(10,981	)		(7,035	)		(379,671	)
Net realized gains (losses)		(6,435	)		499			(49	)		(30,000	)		2,482			(33,503	)
Transfers in		98,718			—			—			—			—			98,718
Transfers out		(39,107	)		(7,828	)		—			—			—			(46,935	)
Balance as of June 30, 2018	$	1,294,754		$	187,535		$	62,222		$	170,676		$	104,652		$	1,819,839
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:	$	5,837		$	(9,131	)	$	25		$	29,470		$	(1,422	)	$	24,779

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

For the six months ended June 30, 2018, there were no transfers out of Level 1 to Level 2. For the six months ended June 30, 2018, eleven investments were transferred out of Level 2 to Level 3. For the six months ended June 30, 2018, five 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.

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 June 30, 2018

(Unaudited)

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
	Senior Secured			Second Lien			Subordinated			Collateralized			Equity/
	First Lien Debt			Debt			Debt			Securities			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.

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

The composition of the Company’s investments as of June 30, 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	$	1,875,083	$	1,789,111		70.9	%
Senior Secured Second Lien Debt		261,503		251,180		9.9
Subordinated Debt		110,784		109,141		4.3
Collateralized Securities		174,538		170,676		6.8
Equity/Other		177,438		203,535		8.1
Total	$	2,599,346	$	2,523,643		100.0	%

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 June 30, 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 June 30, 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
			Primary Valuation	Unobservable							Weighted
Asset Category	Fair Value		Technique	Inputs	Minimum			Maximum			Average ^(a)
Senior Secured First Lien Debt ^(b)	$	923,117	Yield Analysis	Market Yield		6.50	%		21.50	%		10.01	%
Senior Secured First Lien Debt ^{(b) (c)}	$	141,549	Waterfall Analysis	Discount Rate		17.00	%		19.00	%		N/A
Senior Secured Second Lien Debt ^(d)	$	161,124	Yield Analysis	Market Yield		9.59	%		20.38	%		13.75	%
Subordinated Debt ^{(c) (e)}	$	37,192	Waterfall Analysis	Discount Rate		8.35	%		8.45	%		N/A
Subordinated Debt ^{(c) (e)}	$	3,592	Yield Analysis	Market Yield		11.20	%		13.10	%		N/A
Collateralized Securities ^(f)	$	162,674	Discounted Cash Flow	Discount Rate		5.70	%		32.00	%		19.15	%
Equity/Other ^(g)	$	51,052	Waterfall Analysis	Discount Rate		8.50	%		18.00	%		10.75	%
Equity/Other ^(g)	$	37,616	Discounted Cash Flow	Discount Rate		6.02	%		11.69	%		11.64	%
Equity/Other ^(g)	$	1,829	Waterfall Analysis	EBITDA Multiple		1.40	x		10.50	x		7.14	x
Equity/Other ^(g)	$	68	Option Pricing Method	Volatility		30.00	%		50.00	%		40.00	%

^(a)

Weighted averages are calculated based on fair value of investments.

^(b)

The remaining $230.1 million of senior secured first lien debt consisted of $115.3 million which were valued using a Scenario-Based analysis technique factoring in various unobservable inputs and $114.8 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 $26.4 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 $21.4 million of subordinated debt were valued using a Scenario-Based analysis technique factoring in various unobservable inputs.

^(f)

The remaining $8.0 million of collateralized securities were valued based on their respective acquisition prices as the investments closed near year end.

^(g)

The remaining $13.9 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.

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 June 30, 2018

(Unaudited)

There were no significant changes in valuation approach or technique as of June 30, 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
			Primary Valuation	Unobservable							Weighted
Asset Category	Fair Value		Technique	Inputs	Minimum			Maximum			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		4.00	x		10.50	x		9.31	x
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.

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended June 30, 2018

(Unaudited)

As of June 30, 2018, the Company had four portfolio companies, which represented seven portfolio investments, on non-accrual status with a total principal amount of $144.6 million, amortized cost of $113.3 million, and fair value of $39.2 million which represented 4.7%, 4.4% 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.

The Triangle Transaction

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 agreed to 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 participated 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 was 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.

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 were 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.

On July 31, 2018, BSP completed the Triangle Transaction. The gross cash proceeds paid to Triangle were approximately $793.3 million, after adjustments to take into account portfolio activity and other matters occurring since December 31, 2017, as described in greater detail in the APA. In accordance with BSP’s allocation policy, Business Development Corporation of America acquired approximately 24% of the assets in the Portfolio for an aggregate purchase price of approximately $188.1 million.

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.

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 June 30, 2018

(Unaudited)

Base Management Fee

The base management fee is calculated at an annual rate of 1.5% of the Company’s average gross assets. Any unrealized appreciation or depreciation associated with a derivative contract, if any, increases or decreases, respectively, the Company’s 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 June 30, 2018 and December 31, 2017, $10.1 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

•

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 June 30, 2018 and December 31, 2017, $4.9 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.

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 June 30, 2018

(Unaudited)

The BSP 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 June 30, 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

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.

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 June 30, 2018

(Unaudited)

Note 5 — Borrowings

Wells Fargo Credit Facility

On July 24, 2012, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, Funding I, entered into a revolving credit facility with Wells Fargo and U.S. Bank as collateral agent, account bank and collateral custodian (the “Wells Fargo Credit Facility”). The Wells Fargo Credit Facility, which was subsequently amended on April 26, 2013, September 9, 2013, June 30, 2014, May 29, 2015, November 4, 2015, May 18, 2017, April 3, 2018, and May 9, 2018 provides for borrowings in an aggregate principal amount of up to $500.0 million on a committed basis. The Wells Fargo Credit Facility has a maturity date of May 9, 2023.

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.

On April 6, 2018, the Company borrowed $90.6 million under the 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.

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 maturity date of the UBS Credit Facility was April 7, 2018.

On April 6, 2018, the Company repaid the UBS Facility and all related liens were released.

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 June 30, 2018

(Unaudited)

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.

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 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.

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 June 30, 2018

(Unaudited)

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.

2023 Notes

On May 11, 2018, Business Development Corporation of America (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 $60 million aggregate principal amount of its 5.375% fixed rate notes due 2023 (the “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 144Apromulgated 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 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 Notes were approximately $58.7 million, after deducting an offering price discount of approximately $0.3 million, as well as Initial Purchaser’s discounts and commissions of approximately $0.6 million and estimated offering expenses of approximately $0.4 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 Notes were issued pursuant to an Indenture dated as of December 19, 2017 (the “Base Indenture”), between the Company and U.S. Bank National Association, trustee (the “Trustee”), and a Second Supplemental Indenture, dated as of May 16, 2018 (the “Second Supplemental Indenture” and together with the Base Indenture, the “Indenture”), between the Company and the Trustee. The Notes will mature on May 30, 2023, unless repurchased or redeemed in accordance with their terms prior to such date. The Notes bear interest at a rate of 5.375% per year payable semi-annually on May 30 and November 30 of each year, commencing on November 30, 2018. The 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 Notes. The 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 Investment Company Act of 1940, whether or not it is subject to those requirements, and (ii) provide financial information to the holders of the 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 Notes will have the right, at their option, to require the Company to repurchase for cash some or all of the Notes at a repurchase price equal to 100% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date.

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 June 30, 2018

(Unaudited)

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.

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

The weighted average annualized interest cost for all borrowings for the six months ended June 30, 2018, and June 30, 2017 was 4.42% and 3.85%, respectively. The average daily debt outstanding for the six months ended June 30, 2018, and June 30, 2017 was $1.3 billion and $942.3 million, respectively. The maximum debt outstanding for the six months ended June 30, 2018, and June 30, 2017 was $1.5 billion and $1.0 billion, respectively.

The following table represents borrowings as of June 30, 2018:

						Less			Amount
		Total Aggregate				Deferred			per
		Borrowing		Total Principal		Financing			Balance
	Maturity Date	Capacity		Outstanding		Costs			Sheet
Wells Fargo Credit Facility	5/9/2023	$	500,000	$	398,652	$	(8,560	)	$	390,092
Citi Credit Facility	5/28/2020		400,000		356,000		(1,530	)		354,470
2023 Notes	5/30/2023		60,000		59,680		(928	)		58,752
2022 Notes	12/30/2022		150,000		149,256		(2,054	)		147,202
2020 Notes	9/1/2020		100,000		99,315		(273	)		99,042
Totals		$	1,210,000	$	1,062,903	$	(13,345	)	$	1,049,558

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 June 30, 2018

(Unaudited)

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

						Less			Amount
		Total Aggregate				Deferred			per
		Borrowing		Total Principal		Financing			Balance
	Maturity Date	Capacity		Outstanding		Costs			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

The following table represents interest and debt fees for the three and six months ended June 30, 2018:

	Three Months Ended June 30, 2018								Six Months Ended June 30, 2018

		Non-			Deferred					Non-			Deferred
	Interest	Usage	Interest		Financing		Other		Interest	Usage	Interest		Financing		Other
	Rate	Rate	Expense		Costs ⁽³⁾		Fees ⁽⁴⁾		Rate	Rate	Expense		Costs ⁽³⁾		Fees ⁽⁴⁾
Wells Fargo Credit Facility	⁽¹⁾	⁽²⁾	$	4,547	$	405	$	167	⁽¹⁾	⁽²⁾	$	6,709	$	760	$	665
Citi Credit Facility	L+1.60%	0.50%		3,806		200		54	L+1.70%	0.50%		6,604		395		150
UBS Credit Facility	L+4.05%	n/a		325		7		21	L+4.05%	n/a		3,696		110		46
2023 Notes	5.38%	n/a		411		20		—	5.38%	n/a		411		20		—
2022 Notes	4.75%	n/a		1,822		114		4	4.75%	n/a		3,644		226		8
2020 Notes	6.00%	n/a		1,579		31		—	6.00%	n/a		3,157		62		—
JPMC PB Account	L+0.90%	n/a		270		—		—	L+0.90%	n/a		570		—		—
Totals			$	12,760	$	777	$	246			$	24,791	$	1,573	$	869

⁽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.

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 June 30, 2018

(Unaudited)

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

	Three Months Ended June 30, 2017								Six Months Ended June 30, 2017
		Non-			Deferred					Non-			Deferred
	Interest	Usage	Interest		Financing		Other		Interest	Usage	Interest		Financing		Other
	Rate	Rate	Expense		Costs ⁽³⁾		Fees ⁽⁴⁾		Rate	Rate	Expense		Costs ⁽³⁾		Fees ⁽⁴⁾
Wells Fargo Credit Facility	⁽¹⁾	⁽²⁾	$	2,860	$	285	$	265	⁽¹⁾	⁽²⁾	$	5,228	$	498	$	503
Citi Credit Facility	L+1.70%	0.50%		2,264		184		124	L+1.70%	0.50%		4,295		367		264
UBS Credit Facility	L+4.05%	n/a		3,054		103		32	L+4.05%	n/a		5,985		205		55
Unsecured Notes	6.00%	n/a		1,579		31		—	6.00%	n/a		3,156		62		7
JPMC PB Account	L+0.90%	n/a		29		—		—	L+0.90%	n/a		35		—		—
Totals			$	9,786	$	603	$	421			$	18,699	$	1,132	$	829

⁽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 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, 2022 Notes and 2023 Notes are derived from market indications provided by Bloomberg Finance L.P. at June 30, 2018. The fair value of the Company’s 2020 Notes and 2022 Notes are derived from market indications provided by Bloomberg Finance L.P. at December 31, 2017.

At June 30, 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 June 30, 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 June 30, 2018		Fair Value at June 30, 2018
Wells Fargo Credit Facility	3	$	398,652	$	398,652
Citi Credit Facility	3		356,000		356,000
2023 Notes	3		59,680		60,048
2022 Notes	3		149,256		151,742
2020 Notes	3		99,315		103,862
Totals		$	1,062,903	$	1,070,304

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 June 30, 2018

(Unaudited)

	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
Totals		$	1,041,149	$	1,044,903

Note 6 — Derivatives

Foreign Currency

The Company may enter into forward foreign currency contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies or to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date (usually the security transaction settlement date) at a negotiated forward rate. These contracts are marked-to-market by recognizing the difference between the contract exchange rate and the current market rate as unrealized appreciation or depreciation. Realized gains or losses are recognized when contracts are settled. The Company’s forward foreign currency contracts generally have terms of approximately three months. The volume of open contracts at the end of each reporting period is reflective of the typical volume of transactions during each calendar quarter. Risks may arise as a result of the potential inability of the counterparties to meet the terms of their contracts. The Company attempts to limit this risk by dealing with creditworthy counterparties.

At June 30, 2018, the forward foreign currency contract was classified within Level 2 of the fair value hierarchy. The derivative held at period end was not subject to a master netting arrangement or other similar agreement.

Note 7 — Commitments and Contingencies

Commitments

In the ordinary course of business, the Company may enter into future funding commitments. As of June 30, 2018, the Company had unfunded commitments on delayed draw term loans of $29.0 million, unfunded commitments on revolver term loans of $15.4 million and unfunded equity capital commitments of $0.5 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.

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.

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 June 30, 2018

(Unaudited)

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 8 — 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 9 — 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 June 30, 2018, the Company sold 198.2 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. From inception of the Company’s DRIP plan to June 30, 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 six months ended June 30, 2018 (dollars in thousands except share amounts):

	Shares			Value
Shares Sold		—		$	—
Shares Issued through DRIP		2,426,736			20,138
Share Repurchases		(2,711,841	)		(22,548	)
		(285,105	)	$	(2,410	)

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

	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

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 June 30, 2018

(Unaudited)

Note 10 — 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.

								Aggregate
						Repurchase		Consideration for
		Shares		Shares		Price Per		Repurchased Shares
Offer Date	Repurchase Date	Tendered		Repurchased		Share		(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 June 30, 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.

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 June 30, 2018

(Unaudited)

Note 11 — 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 June 30, 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 and six months ended June 30, 2018 and June 30, 2017.

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Basic and diluted
Net increase in net assets resulting from operations	$	18,213	$	14,714	$	40,188	$	34,081
Weighted average common shares outstanding		179,033,251		179,880,734		179,139,837		179,052,951
Net increase in net assets resulting from operations per share	$	0.10	$	0.08	$	0.22	$	0.19

Note 12 — Distributions

From time to time, the Company may also pay interim distributions at the discretion of its board of directors. The Company may fund its cash distributions to stockholders from any sources of funds available to it, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets and non-capital gains proceeds from the sale of assets. The Company’s distributions may exceed its earnings, especially during the period before the Company has substantially invested the proceeds from its IPO and Follow-on. As a result, a portion of the distributions the Company will make may represent a return of capital for tax purposes. As of June 30, 2018, the Company had accrued $9.6 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.

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 June 30, 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
April 30, 2018	May 1, 2018		0.05		6,288		3,255			9,543
May 31, 2018	June 1, 2018		0.06		6,577		3,309			9,886
June 29, 2018	July 2, 2018		0.05		6,405		3,182			9,587
				$	37,958	$	19,785		$	57,743

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.

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 June 30, 2018

(Unaudited)

Note 13 — 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 June 30, 2018, the Company had a deferred tax asset of $1.6 million and a deferred tax liability of $(4.4) 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.

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 June 30, 2018

(Unaudited)

Note 14 — Financial Highlights

The following is a schedule of financial highlights for the six months ended June 30, 2018 and June 30, 2017:

	For the Six Months Ended			For the Six Months Ended
	June 30,			June 30,
	2018			2017
Per share data:
Net asset value, beginning of period	$	8.30		$	8.62
Results of operations ⁽¹⁾
Net investment income		0.29			0.30
Net realized and unrealized loss, net of deferred taxes		(0.07	)		(0.11	)
Net increase in net assets resulting from operations		0.22			0.19
Stockholder distributions ⁽²⁾
Distributions from net investment income		(0.32	)		(0.43	)
Net decrease in net assets resulting from stockholder distributions		(0.32	)		(0.43	)
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	$	8.20		$	8.38
Shares outstanding at end of period		179,448,893			180,493,481
Total return ⁽⁴⁾		2.72	%		2.20	%
Ratio/Supplemental data:
Net assets, end of period (in thousands)	$	1,474,216		$	1,516,005
Ratio of net investment income to average net assets ^{(6) (7)}		7.71	%		7.83	%
Ratio of total expenses to average net assets ^{(6) (7)}		8.17	%		6.95	%
Portfolio turnover rate ⁽⁵⁾		21.24	%		19.92	%

⁽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.

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 June 30, 2018

(Unaudited)

Note 15 — Schedules of Investments and Advances to Affiliates

The following table presents the Schedule of Investments and Advances to Affiliates as of June 30, 2018:

			Amount of		Beginning
			dividends		Fair Value												Fair
			and interest		at							Realized		Change in			Value at
			included in		December		Gross		Gross			Gain/		Unrealized			June 30,
Portfolio Company ⁽¹⁾	Type of Asset	Industry	income		31, 2017		additions^*		reductions^**			(Loss)		Gain (Loss) ⁽⁶⁾			2018
Control Investments
California Resources Development JV, LLC - Preferred Equity - 9.00% ⁽¹¹⁾	Equity/Other	Metals & Mining	$	2,101	$	26,984	$	11,899	$	(2,134	)	$	—	$	555		$	37,304
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) ^{(4) (10) (11)}	Equity/Other	Food Products		—		—		—		—			—		—			—
Capstone Nutrition (fka Integrity Nutraceuticals) - L+12.50% (14.86%), 9/25/2020 ^{(4) (8) (11)}	Senior Secured First Lien Debt	Food Products		—		—		2,829		—			—		154			2,983
Capstone Nutrition (fka Integrity Nutraceuticals) - L+12.50% (14.86%), 9/25/2020 ^{(4) (8) (11)}	Senior Secured First Lien Debt	Food Products		—		4,096		—		—			—		(1,016	)		3,080
Capstone Nutrition (fka Integrity Nutraceuticals) - L+12.50% (14.86%), 9/25/2020 ^{(4) (8)}	Senior Secured First Lien Debt	Food Products		—		9,467		—		—			—		(2,348	)		7,119
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) ^{(4) (10) (11)}	Equity/Other	Food Products		—		—		—		—			—		—			—
Kahala Ireland OpCo Designated Activity Company - L+8.00% (13.00%), 12/23/2028 ^{(3) (8) (11)}	Senior Secured First Lien Debt	Aerospace & Defense		9,252		141,549		—		—			—		—			141,549
Kahala Ireland OpCo Designated Activity Company - Common Equity ^{(3) (10) (11)}	Equity/Other	Aerospace & Defense		—		11,709		—		—			—		(2,867	)		8,842
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note ^{(3) (10) (11)}	Equity/Other	Aerospace & Defense		—		3,250		—		(20	)		—		20			3,250
Kahala US OpCo LLC - Class A Preferred Units - 13.00% ^{(3) (10) (11)}	Equity/Other	Aerospace & Defense		—		—		—		—			—		—			—
NexSteppe Inc. - Series C Preferred Stock Warrant ^{(10) (11)}	Equity/Other	Chemicals		—		—		—		—			—		—			—
NexSteppe Inc. - 12.00%, 9/30/2018 ^{(8) (11)}	Senior Secured First Lien Debt	Chemicals		—		—		250		—			—		(250	)		—
NexSteppe Inc. - 12.00%, 9/30/2018 ^{(8) (11)}	Senior Secured First Lien Debt	Chemicals		—		—		—		—			—		—			—
NMFC Senior Loan Program I, LLC	Equity/Other	Diversified Investment Vehicles		3,126		50,805		—		—			—		261			51,066
Park Ave RE Holdings, LLC - 13.00%, 12/31/2021 ^{(2) (8) (9) (11)}	Subordinated Debt	Real Estate Management & Development		2,431		37,192		—		—			—		—			37,192
Park Ave RE Holdings, LLC - Common Shares ^{(2) (10) (11)}	Equity/Other	Real Estate Management & Development		—		12,678		—		102			—		2,535			15,315
Park Ave RE Holdings, LLC - Preferred Shares - 8.00% ^{(2) (10) (11)}	Equity/Other	Real Estate Management & Development		—		23,645		—		—			—		—			23,645
South Grand MM CLO I, LLC	Equity/Other	Diversified Investment Vehicles		—		28,904		—		(22,833	)		—		1,664			7,735
Total Control Investments			$	16,910	$	350,279	$	14,978	$	(24,885	)	$	—	$	(1,292	)	$	339,080

Affiliate Investments

Answers Corporation - Common Equity ^{(10) (11)}	Equity/Other	Technology	$	—	$	14,231	$	—	$	—		$	—	$	(4,081	)		10,150
Answers Corporation ^{(7) (11)}	Senior Secured First Lien Debt	Technology		82		2,916		7		(3,007	)		55		29			—
Answers Corporation - L+5.00% (6.90%), 9/15/2021 ⁽¹¹⁾	Senior Secured Second Lien Debt	Technology		287		4,371		79		(24	)		3		(10	)		4,419

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 June 30, 2018

(Unaudited)

			Amount of
			dividends
			and interest			Beginning Fair Value at							Realized			Change in			Fair Value at
			included in			December		Gross		Gross			Gain/			Unrealized			June 30,
Portfolio Company ⁽¹⁾	Type of Asset	Industry	income			31, 2017		additions^*		reductions^**			(Loss)			Gain (Loss) ⁽⁶⁾			2018
B&M CLO 2014-1, LTD. Subordinated Notes - 5.38%, 4/16/2026 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles	$	543		$	12,804	$	—	$	(1,041	)	$	(1,857	)	$	2,067		$	11,973
Basho Technologies, Inc. ⁽⁷⁾	Senior Secured First Lien Debt	Software		—			—		—		(92	)		(6,393	)		6,485			—
Basho Technologies, Inc. ⁽⁷⁾	Senior Secured First Lien Debt	Software		—			—		—		—			(2,550	)		2,550			—
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant ⁽⁷⁾	Equity/Other	Software		—			—		—		—			(2,000	)		2,000			—
CVP Cascade CLO, LTD. Subordinated Notes - 40.02%, 1/16/2026 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		528			4,121		—		(677	)		(5,500	)		4,296			2,240
Figueora - Class F Notes - 12.34%, 1/15/2027 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		—			—		8,000		—			—			—			8,000
Figueroa CLO 2014-1, LTD. Subordinated Notes - 13.61%, 1/15/2027	Collateralized Securities	Diversified Investment Vehicles		882			12,508		—		(481	)		(4,000	)		4,089			12,116
Danish CRJ LTD. - Common Equity ^{(10) (11)}	Equity/Other	Aerospace & Defense		—			605		—		(2	)		—			(291	)		312
MidOcean Credit CLO II, LLC Income Notes - 13.18%, 1/29/2030 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		1,069			20,651		—		—			—			(176	)		20,475
MidOcean Credit CLO III, LLC Subordinated Notes - 14.92%, 4/25/2031 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		1,171			17,508		1,738		(1,091	)		(3,300	)		2,823			17,678
MidOcean Credit CLO IV, LLC Income Notes - 16.18%, 4/15/2027 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		947			12,212		—		(223	)		—			21			12,010
NewStar Arlington Senior Loan Program LLC Class FR Notes - 20.31%, 7/25/2025 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		2,265			25,439		—		(1,286	)		—			5,067			29,220
NewStar Arlington Senior Loan Program LLC Class FR Notes - 13.36%, 4/25/2031	Collateralized Securities	Diversified Investment Vehicles		121			—		4,523		—			—			2			4,525
NewStar Exeter Fund CLO – Debt - 9.86%, 1/20/2027 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		591			8,660		80		—			—			56			8,796
NewStar Exeter Fund CLO – Equity - 0.00%, 1/19/2027 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		(82	)		13,089		—		(1,704	)		(7,000	)		6,091			10,476
OFSI Fund VI, Ltd. - Subordinated Notes - 0.00%, 3/20/2025 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		183			10,162		—		(1,504	)		(1,000	)		87			7,745
PennantPark Credit Opportunities Fund II, LP	Equity/Other	Diversified Investment Vehicles		768			10,136		—		—			—			74			10,210
Related Fee Agreements ⁽⁵⁾	Collateralized Securities	Diversified Investment Vehicles		(6	)		3,917		—		(1,414	)		(343	)		580			2,740
Silver Spring CLO, Ltd. - 4.84%, 10/16/2026 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		335			10,363		—		(740	)		(6,000	)		3,883			7,506
Tax Defense Network, LLC - L +10.00% (12.34%), 8/27/2019 ^{(8) (11)}	Senior Secured First Lien Debt	Diversified Consumer Services		157			7,477		—		—			—			39			7,516
Tax Defense Network, LLC - Common Equity ^{(10) (11)}	Equity/Other	Diversified Consumer Services		—			—		—		—			—			—			—
Tennenbaum Waterman Fund, L.P.	Equity/Other	Diversified Investment Vehicles		686			10,427		—		—			—			481			10,908
THL Credit Greenway Fund II LLC	Equity/Other	Diversified Investment Vehicles		629			11,373		856		(2,431	)		—			(328	)		9,470

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 June 30, 2018

(Unaudited)

			Amount of			Beginning
			dividends			Fair Value													Fair
			and interest			at							Realized			Change in			Value at
			included in			December		Gross		Gross			Gain/			Unrealized			June 30,
Portfolio Company ⁽¹⁾	Type of Asset	Industry	income			31, 2017		additions^*		reductions^**			(Loss)			Gain (Loss) ⁽⁶⁾			2018
Twenty Eighty, Inc. - Class A Common Equity ^{(10) (11)}	Equity/Other	Media	$	—		$	—	$	—	$	—		$	—		$	—		$	—
Twentyeighty, Inc. - L+8.00% (10.33%), 3/31/2020 ^{(8) (11)}	Senior Secured First Lien Debt	Media		227			2,853		100		(661	)		96			(148	)		2,240
Twentyeighty, Inc. - 8.00%, 3/31/2020 ^{(8) (11)}	Senior Secured First Lien Debt	Media		562			4,719		437		—			—			1,185			6,341
Twentyeighty, Inc. - 9.00%, 3/31/2020 ^{(8) (11)}	Senior Secured First Lien Debt	Media		538			3,739		533		—			—			1,663			5,935
WhiteHorse VIII, Ltd. CLO Subordinated Notes - 0.00%, 5/1/2026 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		(30	)		8,761		—		(821	)		(1,000	)		640			7,580
World Business Lenders, LLC - Preferred Stock ^{(10) (11)}	Equity/Other	Consumer Finance		—			3,759		—		—			—			—			3,759
Total Affiliate Investments			$	12,453		$	236,801	$	16,353	$	(17,199	)	$	(40,789	)	$	39,174		$	234,340
Total Control & Affiliate Investments			$	29,363		$	587,080	$	31,331	$	(42,084	)	$	(40,789	)	$	37,882		$	573,420

* 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 June 30, 2018.

⁽³⁾

This investment was not deemed significant under Regulation S-X as of June 30, 2018.

⁽⁴⁾

This investment was not deemed significant under Regulation S-X as of June 30, 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 $0.8 million.

⁽⁷⁾

Investment no longer held as of June 30, 2018.

⁽⁸⁾

Investment paid or has the option to pay all or a portion of interest and dividends via payment-in-kind.

⁽⁹⁾

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.

⁽¹⁰⁾

Investment is non-income producing at June 30, 2018.

⁽¹¹⁾

Dividends and interest for the six months ended June 30, 2018 and June 30, 2017 attributable to Controlled and Affiliated investments no longer held as of June 30, 2018 and June 30, 2017 was $0.1 million and $0.05 million, respectively.

Realized gain (loss) for the six months ended June 30, 2018 and June 30, 2017 attributable to Controlled and Affiliated investments no longer held as of June 30, 2018 and June 30, 2017 was $0.1 million and $0.9 million, respectively.

Change in unrealized gain (loss) for the six months ended June 30, 2018 and June 30, 2017 attributable to Controlled and Affiliated investments no longer held as of June 30, 2018 and June 30, 2017 was $0.03 million and $(0.9) million, respectively.

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 June 30, 2018

(Unaudited)

The following table presents the Schedule of Investments and Advances to Affiliates as of December 31, 2017:

			Amount of			Beginning
			dividends			Fair Value													Fair
			and interest			at							Realized			Change in			Value at
			included in			December		Gross		Gross			Gain/			Unrealized			December
Portfolio Company ⁽¹⁾	Type of Asset	Industry	income			31, 2016		additions^*		reductions^**			(Loss)			Gain (Loss) ⁽⁶⁾			31, 2017
Control Investments
California Resources Development JV, LLC - Preferred Equity - 9.00% ⁽¹¹⁾	Equity/Other	Metals & Mining	$	1,987		$	—	$	26,182	$	—		$	—		$	802			26,984
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) - L+12.50% (13.88%), 4/28/2019 ^{(4) (8) (11)}	Senior Secured First Lien Debt	Food Products		—			19,708		—		—			—			(6,145	)		13,563
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) ^{(4) (10) (11)}	Equity/Other	Food Products		—			—		—		—			—			—			—
Capstone Nutrition Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) ^{(4) (10) (11)}	Equity/Other	Food Products		—			—		—		—			—			—			—
Kahala Ireland OpCo Designated Activity Company - L+8.00% (13.00%), 12/23/2028 ^{(3) (8) (11)}	Senior Secured First Lien Debt	Aerospace & Defense		19,245			149,409		140		(8,000	)		—			—			141,549
Kahala Ireland OpCo Designated Activity Company - Common Equity ^{(3) (10) (11)}	Equity/Other	Aerospace & Defense		—			8,180		—		—			—			3,529			11,709
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note ^{(3) (10) (11)}	Equity/Other	Aerospace & Defense		—			3,250		—		(48	)		—			48			3,250
Kahala US OpCo LLC ^{(4) (7)}	Senior Secured First Lien Debt	Aerospace & Defense		120			2,690		—		(2,690	)		—			—			—
Kahala US OpCo LLC - Class A Preferred Units - 13.00% ^{(4) (10) (11)}	Equity/Other	Aerospace & Defense		—			4,000		—		(2,491	)		(1,702	)		193			—
NexSteppe Inc. - 12.00%, 9/30/2018 ^{(8) (11)}	Senior Secured First Lien Debt	Chemicals		381			—		8,250		(185	)		—			(8,065	)		—
NexSteppe Inc. - 12.00%, 9/30/2018 ^{(8) (11)}	Senior Secured First Lien Debt	Chemicals		—			—		1,500		—			—			(1,500	)		—
NexSteppe Inc. - Series C Preferred Stock Warrant ^{(10) (11)}	Equity/Other	Chemicals		—			—		1,280		(1,000	)		—			(280	)		—
NMFC Senior Loan Program I, LLC	Equity/Other	Diversified Investment Vehicles		6,782			—		47,057		—			—			3,748			50,805
Park Ave RE Holdings, LLC - L +8.00% (13.00%), 12/31/2021 ^{(2) (8) (9) (11)}	Subordinated Debt	Real Estate Management & Development		4,902			37,192		—		—			—			—			37,192
Park Ave RE Holdings, LLC - Common Shares ^{(2) (10) (11)}	Equity/Other	Real Estate Management & Development		—			6,564		—		—			—			6,114			12,678
Park Ave RE Holdings, LLC - Preferred Shares - 8.00% ^{(2) (10) (11)}	Equity/Other	Real Estate Management & Development		946			23,645		—		—			—			—			23,645
South Grand MM CLO I, LLC	Equity/Other	Diversified Investment Vehicles		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 - L+5.00% (6.57%), 4/15/2021 ⁽¹¹⁾	Senior Secured First Lien Debt	Technology	$	151		$	—	$	2,967	$	(23	)	$	1		$	(29	)		2,916
Answers Corporation - L+5.00% (6.57%), 4/15/2021 ⁽¹¹⁾	Senior Secured First Lien Debt	Technology		(1	)		—		17,064		(15,365	)		(18,223	)		16,524			—
Answers Corporation - L+5.00% (6.57%), 4/15/2021 ⁽¹¹⁾	Senior Secured First Lien Debt	Technology		1			—		2,954		(2,954	)		—			—			—

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 June 30, 2018

(Unaudited)

			Amount of			Beginning
			dividends			Fair Value													Fair
			and interest			at							Realized			Change in			Value at
			included in			December		Gross		Gross			Gain/			Unrealized			December
Portfolio Company ⁽¹⁾	Type of Asset	Industry	income			31, 2016		additions^*		reductions^**			(Loss)			Gain (Loss) ⁽⁶⁾			31, 2017
Answers Corporation - L+7.90% (9.00%), 9/15/2021 ⁽¹¹⁾	Senior Secured Second Lien Debt	Technology	$	418		$	—	$	4,118	$	(35	)	$	4		$	284			4,371
Answers Corporation - Common Equity ^{(10) (11)}	Equity/Other	Technology		—			—		11,361		—			—			2,870			14,231
B&M CLO 2014-1, LTD. Subordinated Notes - 0.00%, 4/16/2026 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		277			16,772		—		(4,946	)		—			978			12,804
Basho Technologies, Inc. - 17.00%, 5/31/2018 ^{(8) (9) (11)}	Senior Secured First Lien Debt	Software		72			—		3,904		(3,967	)		69			(6	)		—
Basho Technologies, Inc. - 17.00%, 5/31/2018 ^{(8) (9) (11)}	Senior Secured First Lien Debt	Software		—			—		918		—			—			(918	)		—
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant - Expire 3/9/2025 ^{(10) (11)}	Equity/Other	Software		—			—		—		—			—			—			—
Basho Technologies, Inc. - Series G Senior Preferred Stock ^{(10) (11)}	Equity/Other	Software		—			—		—		—			—			—			—
CVP Cascade CLO, LTD. Subordinated Notes - 0.00%, 1/16/2026 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		3			8,868		—		(2,934	)		—			(1,813	)		4,121
CVP Cascade CLO-2, LTD. Subordinated Notes ^{(7) (11)}	Collateralized Securities	Diversified Vehicles Investment		191			11,593		—		(10,837	)		(2,829	)		2,073			—
Danish CRJ LTD. ⁽⁷⁾	Senior Secured First Lien Debt	Aerospace & Defense		—			20		—		(7	)		—			(13	)		—
Danish CRJ LTD. - Common Equity ^{(10) (11)}	Equity/Other	Aerospace & Defense		—			407		—		—			—			198			605
Figueroa CLO 2014-1, LTD. Subordinated Notes - 0.00%, 1/15/2027 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		(103	)		16,101		—		(3,520	)		—			(73	)		12,508
MidOcean Credit CLO II, LLC Income Notes -15.75%, 1/29/2025 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		2,380			22,419		—		(2,216	)		—			448			20,651
MidOcean Credit CLO III, LLC Subordinated Notes - 1.31%, 7/21/2026 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		715			23,341		—		(3,674	)		—			(2,159	)		17,508
MidOcean Credit CLO IV, LLC Income Notes - 1.44%, 4/15/2027 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		689			15,505		—		(1,871	)		—			(1,422	)		12,212
NewStar Arlington Senior Loan Program LLC Subordinated Notes - 12.62%, 7/25/2025 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		4,930			24,491		—		(1,945	)		—			2,893			25,439
NewStar Exeter Fund CLO – Debt - L+7.50% (8.86%), 1/19/2027 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		1,106			8,455		162		—			—			43			8,660
NewStar Exeter Fund CLO – Equity - 3.45%, 1/19/2027 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		1,645			20,579		—		(2,609	)		—			(4,881	)		13,089
NMFC Senior Loan Program I, LLC	Equity/Other	Diversified Investment Vehicles		—			47,057		—		(47,057	)		—			—			—
Ocean Trails CLO V, LTD. ⁽⁷⁾	Collateralized Securities	Diversified Investment Vehicles		48			29,144		—		(29,128	)		906			(922	)		—
OFSI Fund VI, Ltd. Subordinated Notes - 0.00%, 3/20/2025 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		617			17,354		—		(5,007	)		—			(2,185	)		10,162
PennantPark Credit Opportunities Fund II, LP	Equity/Other	Diversified Investment Vehicles		705			9,788		2,691		(2,691	)		10			338			10,136
Related Fee Agreements ⁽⁵⁾	Collateralized Securities	Diversified Investment Vehicles		922			9,647		—		(3,607	)		42			(2,165	)		3,917
Silver Spring CLO, Ltd. Subordinated Notes - 0.00%, 10/16/2026 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		94			12,007		—		(3,554	)		—			1,910			10,363

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 June 30, 2018

(Unaudited)

			Amount of		Beginning
			dividends		Fair Value													Fair
			and interest		at							Realized			Change in			Value at
			included in		December		Gross		Gross			Gain/			Unrealized			December
Portfolio Company ⁽¹⁾	Type of Asset	Industry	income		31, 2016		additions^*		reductions^**			(Loss)			Gain (Loss) ⁽⁶⁾			31, 2017
South Grand MM CLO I, LLC	Equity/Other	Diversified Investment Vehicles	$	—	$	28,382	$	—	$	(28,382	)	$	—		$	—			—
Squan Holding Corp. - L+4.50% (6.20%), 10/10/2019 ⁽¹¹⁾	Senior Secured First Lien Debt	Diversified Telecommunication Services		—		6,895		—		(6,895	)		—			—			—
Squan Holding Corp. - Class A Common Stock ^{(10) (11)}	Equity/Other	Diversified Telecommunication Services		—		—		—		—			—			—			—
Squan Holding Corp. - Series A Preferred Stock ^{(10) (11)}	Equity/Other	Diversified Telecommunication Services		—		—		—		—			—			—			—
Tax Defense Network, LLC - L +13.00% (14.70%), 8/28/2019 ^{(8) (11)}	Senior Secured First Lien Debt	Diversified Consumer Services		1,075		—		18,682		(117	)		1			(11,089	)		7,477
Tax Defense Network, LLC - Common Equity ^{(10) (11)}	Equity/Other	Diversified Consumer Services		—		—		—		—			—			—			—
Tennenbaum Waterman Fund, L.P.	Equity/Other	Diversified Investment Vehicles		1,270		—		10,169		—			—			258			10,427
Twentyeighty, Inc. - First Lien Debt - L+8.00% (9.42%), 3/31/2020 ^{(8) (11)}	Senior Secured First Lien Debt	Media		378		—		2,426		—			—			427			2,853
Twentyeighty, Inc. - First Lien Debt - 8.00%, 3/31/2020 ^{(8) (11)}	Senior Secured First Lien Debt	Media		928		—		4,535		—			—			184			4,719
Twentyeighty, Inc. - First Lien Debt - 9.00%, 3/31/2020 ^{(8) (11)}	Senior Secured First Lien Debt	Media		881		—		4,164		—			—			(425	)		3,739
Twentyeighty, Inc. - Class A Common Equity ^{(10) (11)}	Equity/Other	Media		—		—		—		—			—			—			—
Twentyeighty, Inc. - Revolver ⁽⁷⁾	Senior Secured First Lien Debt	Media		2		—		—		—			—			—			—
THL Credit Greenway Fund II LLC	Equity/Other	Diversified Investment Vehicles		957		12,850		—		(1,849	)		—			372			11,373
WhiteHorse VIII, Ltd. CLO Subordinated Notes - 10.03%, 5/1/2026 ⁽¹¹⁾	Collateralized Securities	Diversified Investment Vehicles		712		12,563		—		(2,859	)		—			(943	)		8,761
World Business Lenders, LLC - Preferred Stock ^{(10) (11)}	Equity/Other	Consumer Finance		—		—		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

⁽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.

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 June 30, 2018

(Unaudited)

⁽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.

⁽⁸⁾

Investment paid or has the option to pay all or a portion of interest and dividends via payment-in-kind.

⁽⁹⁾

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.

⁽¹⁰⁾

Investment is non-income producing at December 31, 2017.

⁽¹¹⁾

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 16 — Subsequent Events

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

DRIP Sales

From July 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 $6.4 million.

Share Repurchase Program

On June 15, 2018, the Company offered to purchase no less than 2,200,000 and up to approximately 2,900,000 shares of its common stock pursuant to its SRP at a price equal to $8.26 per share. The offer expired on July 16, 2018 (the “Expiration Date”). As of the date of this filing and timing consistent with previous tender offers, the actual amount to be repurchased has not yet been finalized. Once final, the Company intends to file all necessary regulatory filings.

The Triangle Transaction

On July 31, 2018, BSP completed the Triangle Transaction pursuant to the terms the APA between Triangle and an affiliate of BSP.

The gross cash proceeds paid to Triangle were approximately $793.3 million, after adjustments to take into account portfolio activity and other matters occurring since December 31, 2017, as described in greater detail in the APA. In accordance with BSP’s allocation policy, we acquired approximately 24% of the assets in the Portfolio for an aggregate purchase price of approximately $188.1 million. Triangle’s Consolidated Schedule of Investments as of December 31, 2017 and Unaudited Consolidated Schedule of Investments as of March 31, 2018 are contained in Triangle’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 filed with SEC on May 2, 2018.

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 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 June 30, 2018, 80.8% 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 June 30, 2018:
Investment Portfolio	$	2,523.6
Net Assets attributable to Business Development Corporation of America		1,471.7
Debt (net of deferred financing costs)		1,049.6
Net Asset Value per share		8.20

Portfolio Activity for the Six Months Ended June 30, 2018:
Cost of investments purchased during period, including PIK		561.0
Sales, repayments and other exits during the period		533.8
Number of portfolio companies at end of period		169

Operating results for the Six Months Ended June 30, 2018:
Net investment income per share		0.29
Distributions declared per share		(0.32	)
Net increase in net assets resulting from operations per share		0.22
Net investment income		52.0
Net realized and unrealized gain (loss) net of deferred taxes		(11.8	)
Net increase in net assets resulting from operations		40.2

Portfolio and Investment Activity

During the six months ended June 30, 2018, we made $558.2 million of investments in new and existing portfolio companies and had $533.8 million in aggregate amount of exits and repayments, resulting in net investments of $24.4 million for the period. The portfolio composition by loan market consisted of 74.0% Middle Market (1), 14.0% Large Corporate (2), and 12.0% Other (3) investments. In addition, the total portfolio of debt investments at fair value consisted of 87.5% bearing variable interest rates and 12.5% 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 June 30, 2018 was as follows:

	June 30, 2018
				Weighted Average
	Percentage of			Current Yield for
	Total Portfolio			Total Portfolio ^{(1) (2)}
Senior Secured First Lien Debt		70.9	%		9.0	%
Senior Secured Second Lien Debt		9.9			11.4
Subordinated Debt		4.3			8.8
Collateralized Securities ⁽³⁾		6.8			10.7
Equity/Other		8.1			—
Total		100.0	%		8.6	%

⁽¹⁾

Includes the effect of the amortization or accretion of loan premiums or discounts.

⁽²⁾

The weighted average current yield including the effect of the amortization or accretion of loan premiums or discounts on income producing securities is 9.3%.

⁽³⁾

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
				Weighted Average
	Percentage of			Current Yield for
	Total Portfolio			Total Portfolio ^{(1) (2)}
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 ⁽³⁾		6.4			6.3
Equity/Other		9.3			—
Total		100.0	%		8.1	%

⁽¹⁾

Includes the effect of the amortization or accretion of loan premiums or discounts.

⁽²⁾

The weighted average current yield including the effect of the amortization or accretion of loan premiums or discounts on income producing securities is 8.9%.

⁽³⁾

Portfolio Asset Quality

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

Loan Rating		Summary Description

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

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

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

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

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

The weighted average risk ratings of our investments based on fair value was 2.33 and 2.33 as of June 30, 2018 and December 31, 2017, respectively. As of June 30, 2018, we had four portfolio companies, which represented seven portfolio investments, on non-accrual status with a total principal amount of $144.6 million, amortized cost of $113.3 million, and fair value of $39.2 million, which represented 4.7%,4.4% 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 and six months ended June 30, 2018 and June 30, 2017 was as follows (dollars in thousands):

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2018		2017		2018			2017
Total investment income	$	58,922	$	56,261	$	117,427		$	112,932
Total expenses		32,837		28,932		64,924			58,196
Income tax expense, including excise tax		270		635		540			1,270
Net investment gain (loss) attributable to non-controlling interests		—		4		(4	)		6
Net investment income	$	25,815	$	26,690	$	51,967		$	53,460

Investment Income

For the three and six months ended June 30, 2018, total investment income was $58.9 million and $117.4 million, respectively and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.5 billion and a weighted average current yield of 8.6%. Included within total investment income was $1.4 million and $2.8 million, respectively, of fee income for the three and six months ended June 30, 2018. Fee income consists primarily of prepayment and amendment fees. For the three and six months ended June 30, 2017, total investment income was $56.3 million and $112.9 million, respectively, and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.4 billion and a weighted average current yield of 8.9%. Included within total investment income was $3.2 million and $4.6 million, respectively, of fee income for the three and six months ended June 30, 2017. Fee income consists primarily of prepayment and amendment fees.

Operating Expenses

The composition of our operating expenses for the three and six months ended June 30, 2018 and June 30, 2017 was as follows (dollars in thousands):

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Management fees	$	10,079	$	9,691	$	20,035	$	19,229
Incentive fee on income		4,931		4,948		9,542		11,314
Interest and debt fees		13,783		10,810		27,233		20,660
Professional fees		1,704		1,344		2,836		2,824
Other general and administrative		1,879		1,720		4,343		3,346
Administrative services		199		203		399		406
Insurance		1		2		3		8
Directors’ fees		261		214		533		409
Total operating expenses	$	32,837	$	28,932	$	64,924	$	58,196

For the three and six months ended June 30, 2018, we incurred $10.1 million and $20.0 million, respectively, of management fees, of which the Adviser did not waive any such fees. For the three and six months ended June 30, 2018, we incurred $4.9 million and $9.5 million, respectively, of incentive fees on income, of which the Adviser did not waive any such fees. For the three and six months ended June 30, 2017, we incurred $9.7 million and $19.2 million, respectively, of management fees, of which the Adviser did not waive any such fees. For the three and six months ended June 30, 2017, we incurred $4.9 million and $11.3 million, respectively, of incentive fees on income, of which the Adviser did not waive any such fees.

For the three and six months ended June 30, 2018, we incurred interest and debt fees of $13.8 million and $27.2 million, respectively. For the three and six months ended June 30, 2017, we incurred interest and debt fees of $10.8 million and $20.7 million, respectively. Interest and debt fees are comprised of interest expense, non-usage fees, custody 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, 2023 Notes, 2022 Notes, 2020 Notes and the JPMC PB Account. The increase in debt fees for the three and six months ended June 30, 2018 as compared to the same period in 2017 is a result of the issuance of the 2023 Notes, 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, foreign currency transactions and forward currency exchange contracts

Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments and foreign currency transactions, net of deferred taxes for the three and six months ended June 30, 2018 and June 30, 2017 were as follows (dollars in thousands):

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Net realized gain (loss)
Control investments	$	(394	)	$	—		$	—		$	—
Affiliate investments		239			(18,192	)		(40,789	)		(17,221	)
Non-affiliate investments		3,867			(6,020	)		10,067			(17,762	)
Net realized gain (loss) on foreign currency transactions		(9	)		—			17			—
Total net realized gain (loss)		3,703			(24,212	)		(30,705	)		(34,983	)
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
Control investments		2,238			755			(2,071	)		(5,196	)
Affiliate investments		(1,396	)		12,852			39,174			12,014
Non-affiliate investments		(12,136	)		(1,275	)		(18,481	)		9,090
Total net change in unrealized appreciation (depreciation) on investments, net of deferred taxes		(11,294	)		12,332			18,622			15,908
Net change in unrealized appreciation (depreciation) attributable to non-controlling interests		16			(96	)		331			(304	)
Net change in unrealized depreciation from forward currency exchange contracts		(27	)		—			(27	)		—
Net realized and unrealized losses	$	(7,602	)	$	(11,976	)	$	(11,779	)	$	(19,379	)

Net realized and unrealized loss on investments and foreign currency transactions, net of deferred taxes, resulted in a net loss of $7.6 million and $11.8 million for the three and six months ended June 30, 2018 compared to a net loss of $12.0 million and $19.4 million, respectively, 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 and six months ended June 30, 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 net unrealized depreciation on investments.

Changes in Net Assets from Operations

For the three and six months ended June 30, 2018, we recorded a net increase in net assets resulting from operations of $18.2 million and $40.2 million, respectively, versus a net increase in net assets resulting from operations of $14.7 million and $34.1 million for the three and six months ended June 30, 2017. The increase is primarily attributable to an increase in investment income. Based on the weighted average shares of common stock outstanding for the three and six months ended June 30, 2018, our per share net increase in net assets resulting from operations was $0.10 and $0.22, respectively, for the three and six months ended June 30, 2018, versus a net increase in net assets resulting from operations of $0.08 and $0.19, respectively, for the three and six months ended June 30, 2017.

Cash Flows

For the six months ended June 30, 2018, net cash provided by operating activities was $51.1 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 increase in cash flows provided by operating activities for the six months ended June 30, 2018 was primarily the result of purchases of investments of $558.2 million, offset by sales and repayments of investments of $533.8 million and further offset by other miscellaneous operating activities.

Net cash used in financing activities of $43.3 million during the six months ended June 30, 2018 primarily related to net proceeds from the Wells Fargo Credit Facility, Citi Credit Facility, and the JPMC PB Account of $491.3 million offset by payments on debt of $469.8 million, net repurchases of common stock of $22.5 million and payments of stockholder distributions of $37.9 million.

For the six months ended June 30, 2017, net cash used in operating activities was $28.9 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and sales of portfolio investments, among other factors. Net cash used in operating activities was primarily a result of purchases of investments of $540.7 million as well as an increase in receivable for unsettled trades of $22.5 million and a decrease in payable for unsettled trades of $3.6 million, partially offset by sales and repayments of investments of $481.7 million.

Net cash used in financing activities of $17.7 million during the six months ended June 30, 2017 primarily related to net repurchases of common stock of $58.5 million and payments of stockholder distributions of $47.9 million, partially offset by proceeds from the Wells Fargo Credit Facility, Citi Credit Facility, UBS Credit Facility and the JPMC PB Account of $93.0 million.

Recent Developments

Distribution Reinvestment Plan (“DRIP”) Sales

From July 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 $6.4 million.

Share Repurchase Program

The Triangle Transaction

On July 31, 2018, BSP completed the Triangle Transaction pursuant to the terms the APA between Triangle and an affiliate of BSP.

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 June 30, 2018, we had issued 198.2 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.

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 six months ended June 30, 2018 and 2017 (dollars in thousands).

	For the Six Months Ended June 30,		For the Six Months Ended June 30,
	2018		2017
Distributions declared	$	57,743	$	77,086
Distributions paid	$	58,079	$	77,725
Portion of distributions paid in cash	$	37,941	$	47,891
Portion of distributions paid in DRIP shares	$	20,138	$	29,834

As of June 30, 2018, we had $9.6 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 six months ended June 30, 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 six months ended June 30, 2018 and 2017 (dollars in thousands):

	For the Six Months Ended June 30,		For the Six Months Ended June 30,
	2018		2017
Monthly distributions	$	57,743	$	77,086
Total distributions	$	57,743	$	77,086

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 BSP 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 Board most recently re-approved the Investment Advisory Agreement in August 2018. 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

On November 1, 2016, we entered into the Administration Agreement with BSP, pursuant to which BSP provides us with office facilities and administrative services. The Administration Agreement may be terminated by either party without penalty upon not less than 60 days’ written notice to the other. We paid BSP $610,000 and $2,600,000 in fees under the Administration Agreement for the quarter ended June 30, 2018 and the year ended December 31, 2017, respectively.

Co-Investment Relief

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

Transactions with Affiliates

In connection with the closing of the Transaction, an affiliate of BSP purchased $10.0 million of our common stock based on our net asset value per share as of September 30, 2016 in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (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, May 18, 2017, April 3, 2018, and May 9, 2018 provides for borrowings in an aggregate principal amount of up to $500.0 million on a committed basis, subject to compliance with a borrowing base. The Wells Fargo Credit Facility has a maturity date of May 9, 2023.

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.

UBS Credit Facility

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.

2023 Notes

On May 11, 2018, the Company entered into a Purchase Agreement relating to the Company’s sale of $60.0 million aggregate principal amount of its 5.375% fixed rate notes due May 30, 2023 (the “2023 Notes”). The 2020 Notes are subject to customary indemnification provisions and representations, warranties and covenants. The net proceeds from the sale of the 2023 Notes was approximately $58.7 million. The Notes bear interest at a rate of 5.375% per year payable semi-annually.

JP Morgan Securities LLC Prime Brokerage Account

On May 8, 2018 the Company fully repaid its borrowings under the JPMC PB Account and closed the 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 June 30, 2018 (dollars in thousands):

			Payment Due by Period
	Total Principal		Less than 1						More than 5
	Outstanding		year		1 - 3 years		3- 5 years		years
Wells Fargo Credit Facility ⁽¹⁾	$	398,652	$	—	$	—	$	398,652	$	—
Citi Credit Facility ⁽²⁾		356,000		—		356,000		—		—
2023 Notes ⁽³⁾		59,680		—		—		59,680		—
2022 Notes ⁽⁴⁾		149,256		—		—		149,256		—
2020 Notes ⁽⁵⁾		99,315		—		99,315		—		—
Total contractual obligations	$	1,062,903	$	—	$	455,315	$	607,588	$	—

⁽¹⁾

As of June 30, 2018, we had $101.3 million of unused borrowing capacity under the Wells Fargo Credit Facility, subject to borrowing base limits.

⁽²⁾

As of June 30, 2018, we had $44.0 million of unused borrowing capacity under the Citi Credit Facility, subject to borrowing base limits.

⁽³⁾

As of June 30, 2018, we had no unused borrowing capacity under the 2023 Notes.

⁽⁴⁾

As of June 30, 2018, we had no unused borrowing capacity under the 2022 Notes.

⁽⁵⁾

As of June 30, 2018, we had no unused borrowing capacity under the 2020 Notes.

Off-Balance Sheet Arrangements

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

Commitments

In the ordinary course of business, we may enter into future funding commitments. As of June 30, 2018, we had unfunded commitments on delayed draw term loans of $29.0 million, unfunded commitments on revolver term loans of $15.4 million and unfunded equity capital commitments of $0.5 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

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

Interest Income

Fee Income

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

Payment-in-Kind Interest/Dividends

We hold debt and equity investments in its portfolio that contain PIK interest and dividend provisions. The PIK interest and PIK dividend, which represent contractually deferred interest or dividends that add to the investment balance that is generally due at maturity, are generally recorded on the accrual basis.

Non-accrual income

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

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

As of June 30, 2018, our debt included variable-rate debt, bearing a weighted average interest rate of LIBOR plus 2.00% and fixed rate debt, bearing a weighted average interest rate of 5.27% with a total carrying value of $1,049.6 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.

	Estimated Percentage
	Change in Interest
	Income net of Interest
Change in Interest Rates	Expense
(-) 100 Basis Points		(10.86	)%
Base Interest Rate		—	%
(+) 100 Basis Points		10.86	%
(+) 200 Basis Points		21.71	%

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 June 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of June 30, 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

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.

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:

Cumulative

Number of Shares

Maximum Number (or

Purchased as Part

Approximate Dollar Value)

of Publicly

of Shares that May Yet Be

Total Number of

Average

Announced Plans

Purchased Under the Plans

Period

Shares Purchased

Price per Share

or Programs

or Programs (in millions)

April 1, 2018 through April 30, 2018

—

May 1, 2018 through May 31, 2018

—

June 1, 2018 through June 30, 2018

—

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

No applicable.

ITEM 6. EXHIBITS

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the six months ended June 30, 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 as Exhibit 10.3 to the Company’s Form 10-Q as filed on May 10, 2018).

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).

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	Chief Executive Officer, President and	August 14, 2018
Richard J. Byrne	Chairman of the Board of Directors
	(Principal Executive Officer)

/s/ Corinne D. Pankovcin	Chief Financial Officer and Treasurer	August 14, 2018
Corinne D. Pankovcin	(Principal Financial and Accounting Officer)

Business Development Corp of America - FORM 10-Q - August 14, 2018

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Business Development Corp of America Reports