Business Development Corp of America - FORM 10-Q

Attached files

file	filename
EX-32 - EXHIBIT 32 - Business Development Corp of America	bdca-6x30x17xexx32.htm
EX-31.2 - EXHIBIT 31.2 - Business Development Corp of America	bdca-6x30x17xexx312.htm
EX-31.1 - EXHIBIT 31.1 - Business Development Corp of America	bdca-6x30x17xexx311.htm
EX-3.2 - EXHIBIT 3.2 - Business Development Corp of America	bdca-6x30x17xexhibit32.htm
EX-3.1 - EXHIBIT 3.1 - Business Development Corp of America	bdca-6x30x17xexhibit31.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, 2017



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

Commission file number: 814-00821

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

(Exact Name of Registrant as Specified in its Charter)



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

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

(212) 588-6770

(Registrant’s Telephone Number, Including Area Code)

Not applicable

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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

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



Large accelerated filer o		Accelerated filer o

Non-accelerated filer x		Smaller reporting company o

		Emerging growth company o

(Do not check if a smaller reporting company)

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The number of shares of the registrant's common stock, $0.001 par value, outstanding as of August 9, 2017 was 178,138,925.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 2017

TABLE OF CONTENTS




	Page
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements	1
Consolidated Statements of Assets and Liabilities as of June 30, 2017 (Unaudited) and December 31, 2016	1
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2017 and 2016 (Unaudited)	2
Consolidated Statements of Changes in Net Assets for the Six Months Ended June 30, 2017 and 2016 (Unaudited)	4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016 (Unaudited)	5
Consolidated Schedules of Investments as of June 30, 2017 (Unaudited) and December 31, 2016	6
Notes to Consolidated Financial Statements (Unaudited)	27
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	58
Item 3. Quantitative and Qualitative Disclosures About Market Risk	70
Item 4. Controls and Procedures	71
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	71
Item 1A. Risk Factors	71
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 3. Defaults Upon Senior Securities	73
Item 4. Mine Safety Disclosures	74
Item 5. Other Information	74
Item 6. Exhibits	76
Signatures	77

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,
	2017			2016
ASSETS	(Unaudited)
Investments, at fair value:
Control Investments, at fair value (amortized cost of $269,050 and $271,711, respectively)	$	247,387		$	254,638
Affiliate Investments, at fair value (amortized cost of $359,233 and $383,894, respectively)	325,066			354,238
Non-affiliate Investments, at fair value (amortized cost of $1,918,958 and $1,859,933, respectively)	1,869,846			1,785,207
Investments, at fair value (amortized cost of $2,547,241 and $2,515,538, respectively)	2,442,299			2,394,083
Cash and cash equivalents	142,698			189,270
Interest and dividends receivable	26,838			28,608
Receivable for unsettled trades	26,757			4,293
Prepaid expenses and other assets	571			52
Total assets	$	2,639,163		$	2,616,306

LIABILITIES
Debt (net of deferred financing costs of $8,470 and $5,013, respectively)	$	1,000,188		$	910,484
Stockholder distributions payable	12,877			13,516
Management fees payable	9,691			9,571
Incentive fee on income payable	4,948			3,137
Accounts payable and accrued expenses	11,650			8,454
Payable for unsettled trades	77,660			74,020
Interest and debt fees payable	6,061			9,606
Payable for common stock repurchases	15			57,651
Directors' fees payable	68			133
Total liabilities	1,123,158			1,086,572
Commitments and contingencies (Note 6)

NET ASSETS
Preferred stock, $.001 par value, 50,000,000 shares authorized, none issued and outstanding	$	—		$	—
Common stock, $.001 par value, 450,000,000 shares authorized, 180,493,481 and 177,120,791 shares issued and outstanding, respectively	180			177
Additional paid in capital	1,758,827			1,729,865
Accumulated under distributed net investment income	25,319			48,944
Accumulated over distributed net realized gains	(164,144		)	(129,161		)
Net unrealized depreciation, net of deferred taxes	(107,308		)	(122,912		)
Total net assets attributable to Business Development Corporation of America	1,512,874			1,526,913
Net assets attributable to non-controlling interest	3,131			2,821
Total net assets	1,516,005			1,529,734

Total liabilities and net assets	$	2,639,163		$	2,616,306

Net asset value per share attributable to Business Development Corporation of America	$	8.38		$	8.62

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 June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
Investment income:
Interest from investments
Control investments	$	6,168		$	7,696		$	12,321		$	14,603
Affiliate investments	6,936			8,955			15,516			17,405
Non-affiliate investments	38,074			38,621			76,969			77,784
Total interest from investments	51,178			55,272			104,806			109,792
Interest from cash and cash equivalents	120			57			190			99
Total interest income	51,298			55,329			104,996			109,891
Other income	4,963			2,244			7,936			4,600
Total investment income	56,261			57,573			112,932			114,491

Operating expenses:
Management fees	9,691			9,593			19,229			19,006
Incentive fee on income	4,948			6,878			11,314			6,878
Interest and debt fees	10,810			9,440			20,660			18,775
Professional fees	1,344			1,460			2,824			2,780
Other general and administrative	1,720			2,133			3,346			5,014
Administrative services	203			203			406			453
Insurance	2			55			8			110
Directors' fees	214			148			409			274
Total expenses	28,932			29,910			58,196			53,290

Income tax expense, including excise tax	635			—			1,270			—

Net investment loss attributable to non-controlling interests	4			4			6			11

Net investment income	26,690			27,659			53,460			61,190

Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from investments
Control investments	—			—			—			—
Affiliate investments	(18,192		)	—			(17,221		)	180
Non-affiliate investments	(6,020		)	1,207			(17,762		)	2,224
Total net realized gain (loss) from investments	(24,212		)	1,207			(34,983		)	2,404
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
Control investments	755			(8,498		)	(5,196		)	(1,995		)
Affiliate investments	12,852			24,066			12,014			15,878
Non-affiliate investments	(1,275		)	(10,171		)	9,090			(22,929		)
Total net change in unrealized appreciation (depreciation) on investments, net of deferred taxes	12,332			5,397			15,908			(9,046		)
Net change in unrealized appreciation (depreciation) attributable to non-controlling interests	(96		)	684			(304		)	684

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 June 30,					For the Six Months Ended June 30,
	2017			2016		2017			2016

Net realized and unrealized gain (loss) on investments	(11,976		)	7,288		(19,379		)	(5,958		)

Net increase in net assets resulting from operations	$	14,714		$	34,947	$	34,081		$	55,232

Per share information - basic and diluted
Net investment income	$	0.15		$	0.15	$	0.30		$	0.34
Net increase in net assets resulting from operations	$	0.08		$	0.20	$	0.19		$	0.31
Weighted average shares outstanding	179,880,734			178,671,810		179,052,951			178,874,087

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,
	2017			2016
Operations:
Net investment income	$	53,460		$	61,190
Net realized gain (loss) from investments	(34,983		)	2,404
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes	15,908			(9,046		)
Net change in unrealized appreciation (depreciation) attributable to non-controlling interests	(304		)	684
Net increase in net assets from operations	34,081			55,232
Stockholder distributions:
Distributions	(77,086		)	(77,217		)
Net decrease in net assets from stockholder distributions	(77,086		)	(77,217		)
Capital share transactions:
Reinvestment of stockholder distributions	29,834			26,876
Repurchases of common stock	(868		)	(28,196		)
Net increase (decrease) in net assets from capital share transactions	28,966			(1,320		)
Total decrease in net assets, before non-controlling interest	(14,039		)	(23,305		)
Increase (decrease) in non-controlling interest	310			(675		)
Total decrease in net assets	(13,729		)	(23,980		)
Net assets at beginning of period	1,529,734			1,610,485
Net assets at end of period	$	1,516,005		$	1,586,505

Net asset value per common share attributable to Business Development Corporation of America	$	8.38		$	8.84
Common shares outstanding at end of period	180,493,481			179,089,123

Accumulated under (over) distributed net investment income	$	25,319		$	(7,656	)
Accumulated over distributed net realized gains	$	(164,144	)	$	(1,001	)

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,
	2017			2016
Operating activities:
Net increase in net assets resulting from operations	$	34,081		$	55,232
Adjustments to reconcile net increase in net assets from operations to net cash provided by (used in) operating activities:
Payment-in-kind interest income	(3,564		)	(9,984		)
Net accretion of discount on investments	(4,136		)	(3,593		)
Amortization of deferred financing costs	1,132			1,733
Amortization of discount on unsecured notes	156			157
Sales and repayments of investments	481,737			327,976
Purchases of investments	(540,723		)	(325,286		)
Net realized (gain) loss from investments	34,983			(2,404		)
Net unrealized (appreciation) depreciation on investments, gross of deferred taxes	(16,513		)	7,236
(Increase) decrease in operating assets:
Interest and dividends receivable	1,770			720
Prepaid expenses and other assets	(519		)	1,445
Receivable for unsettled trades	(22,464		)	(7,605		)
Increase (decrease) in operating liabilities:
Payable for unsettled trades	3,640			46,588
Management and incentive fees payable	1,931			6,708
Interest and debt fees payable	(3,545		)	2,093
Accounts payable and accrued expenses	3,196			3,616
Directors' fees payable	(65		)	6
Net cash provided by (used in) operating activities	(28,903		)	104,638

Financing activities:
Repurchases of common stock	(868		)	(28,196		)
Proceeds from debt	93,004			135,513
Payments on debt	—			(60,000		)
Payments for common stock repurchases	(57,636		)	(924		)
Payments of financing costs	(4,588		)	(250		)
Proceeds from affiliate	—			(10		)
Stockholder distributions	(47,891		)	(50,813		)
Increase in non-controlling interest	310			(675		)
Net cash used in financing activities	(17,669		)	(5,355		)

Net increase (decrease) in cash and cash equivalents	(46,572		)	99,283
Cash and cash equivalents, beginning of period	189,270			150,412
Cash and cash equivalents, end of period	$	142,698		$	249,695
Supplemental information:
Interest paid during the period	$	22,638		$	14,669
Taxes, including excise tax, paid during the period	$	21		$	145
Distributions reinvested	$	29,834		$	26,876

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, 2017 (Unaudited)

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

Senior Secured First Lien Debt - 111.4% (b)
Abaco Systems Holding Corp. (i)	Business Services	L+6.00% (7.16%), 12/7/2021	$	23,819	$	23,391	$	23,597	1.6	%
Ability Networks Inc. (j)	Health Care Providers & Services	L+5.00% (6.30%), 5/14/2021	13,642		13,571		13,642		0.9	%
Adams Publishing Group, LLC (f) (i)	Media	L+7.00% (8.30%), 11/3/2020	18,037		17,852		18,037		1.2	%
Aleris International, Inc. (x)	Metals & Mining	9.50%, 4/1/2021	2,882		3,068		2,971		0.2	%
Alvogen Pharma US, Inc. (j)	Health Care	L+5.00% (6.23%), 4/2/2022	14,469		14,346		14,346		1.0	%
Amports, Inc. (m)	Transportation Infrastructure	L+5.00% (6.30%), 5/19/2020	14,876		14,823		14,728		1.0	%
Amteck, LLC (f) (i)	Commercial Services & Supplies	L+7.50% (8.80%), 7/2/2020	22,313		22,080		21,866		1.4	%
Answers Corporation (p) (t)	Technology	L+5.00% (6.23%), 4/15/2021	3,022		2,950		2,991		0.2	%
AP Gaming I, LLC (i) (j)	Gaming/Lodging	L+5.50% (6.59%), 2/15/2024	29,500		29,427		29,697		2.0	%
APCO Holdings (i)	Diversified Consumer Services	L+6.00% (7.23%), 1/29/2022	8,611		8,400		8,439		0.6	%
Applied Merchant Systems West Coast, Inc. (m)	Diversified Financial Services	L+11.50% (12.65%), 10/26/2020	19,109		18,849		18,345		1.2	%
Applied Merchant Systems West Coast, Inc. (m)	Diversified Financial Services	L+11.50% (12.69%), 10/26/2020	6,500		6,412		6,240		0.4	%
Ascensus, Inc. (j)	Technology	L+4.00% (5.30%), 12/3/2022	19,736		18,895		19,736		1.3	%
Avaya, Inc. Term Loan B-3 (j) (t)	Communications Equipment	L+4.50% (5.67%), 10/26/2017	9,685		8,784		7,698		0.5	%
Avaya, Inc. Term Loan B-6 (j) (t)	Communications Equipment	L+5.50% (6.67%), 3/31/2018	8,457		8,461		6,766		0.5	%
Avaya, Inc. Term Loan B-7 (i) (j) (t)	Communications Equipment	L+5.25% (6.42%), 5/29/2020	9,793		9,725		7,815		0.5	%
Basho Technologies, Inc. (d) (l) (t)	Software	17.00%, 3/9/2018	7,720		7,542		—		—	%
Basho Technologies, Inc. (d) (l) (t)	Software	17.00%, 11/15/2017	2,550		2,550		—		—	%
BCP Raptor, LLC (j)	Energy Equipment & Services	L+4.25% (5.47%), 6/24/2024	20,086		19,885		19,835		1.3	%
BDS Solutions Group, LLC (i) (m)	Business Services	L+8.75% (10.05%), 6/1/2021	36,830		36,176		36,830		2.4	%
BDS Solutions Group, LLC (i) (m)	Business Services	L+8.75% (10.05%), 6/1/2021	500		489		500		—	%
Berner Food & Beverage LLC (f) (i)	Food Products	L+7.00% (8.30%), 3/16/2022	18,853		18,498		18,476		1.2	%
Blount International, Inc. (j)	Electronic Equipment, Instruments & Components	L+5.00% (6.22%), 4/12/2023	12,406		12,094		12,406		0.8	%
Broder Bros, Co. (m)	Distributors	L+5.75% (7.00%), 6/3/2021	6,764		6,667		6,763		0.5	%
Broder Bros, Co. (m)	Distributors	L+12.25% (13.50%), 6/3/2021	7,009		6,909		7,009		0.5	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (l) (o) (t)	Food Products	L+12.50% (13.80%), 4/28/2019	17,055		16,406		3,411		0.2	%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (l) (o) (t)	Food Products	L+12.50% (13.80%), 4/28/2019	39,415		33,647		7,883		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, 2017 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate / Maturity (y)	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Catapult Learning, LLC (i) (m)	Diversified Consumer Services	L+6.50% (7.67%), 7/16/2020	$	27,500	$	27,164	$	26,400	1.7	%
CCW, LLC (f) (i)	Hotels, Restaurants & Leisure	L+7.00% (8.25%), 3/21/2021	24,375		24,103		24,253		1.6	%
Central Security Group, Inc. (i) (j)	Commercial Services & Supplies	L+5.63% (6.85%), 10/6/2020	25,424		25,118		25,424		1.7	%
Chicken Soup for the Soul Publishing, LLC (i)	Media	L+6.25% (7.50%), 1/8/2019	27,686		27,580		25,886		1.7	%
Clover Technologies Group, LLC (j)	Commercial Services & Supplies	L+4.50% (5.71%), 5/8/2020	13,620		13,556		13,075		0.9	%
Contura Energy Inc. (j)	Energy Equipment & Services	L+5.00% (6.23%), 3/18/2024	7,724		7,649		7,649		0.5	%
ConvergeOne Holdings Corp. (j)	Technology	L+4.75% (5.97%), 6/20/2024	16,558		16,393		16,434		1.1	%
Covenant Surgical Partners, Inc. (x)	Health Care	8.75%, 8/1/2019	392		381		385		—	%
Covenant Surgical Partners, Inc. (x)	Health Care	8.75%, 8/1/2019	10,000		9,552		9,591		0.6	%
Cvent, Inc. (j)	Internet Software & Services	L+5.00% (6.30%), 11/29/2023	9,975		9,875		9,975		0.7	%
Danish CRJ LTD. (a) (p)	Aerospace & Defense	13.50%, 12/23/2028	20		—		20		—	%
DigiCert, Inc (j)	Internet Software & Services	L+5.00% (6.30%), 10/21/2021	10,800		10,565		10,800		0.7	%
Eagle Rx, LLC (i)	Health Care Providers & Services	L+4.00% (5.30%), 8/15/2019	14,450		14,419		14,450		1.0	%
ECI Acquisition Holdings, Inc. (i)	Internet Software & Services	L+6.25% (7.55%), 3/11/2019	12,443		12,422		12,256		0.8	%
ERG Holding Company (i) (m)	Health Care Providers & Services	L+6.75% (8.05%), 4/4/2019	34,300		33,948		33,785		2.2	%
Everi Payments, Inc. (j)	Hotels, Restaurants & Leisure	L+4.50% (5.75%), 5/9/2024	10,708		10,691		10,762		0.7	%
Excelitas Technologies Corp. (j)	Electronic Equipment, Instruments & Components	L+5.00% (6.30%), 11/2/2020	13,642		13,601		13,607		0.9	%
Genesys Telecommunications Laboratories, Inc. (j)	Diversified Telecommunication Services	L+4.00% (5.30%), 12/1/2023	24,875		24,531		24,931		1.6	%
Greenwave Holdings, Inc. (l)	Internet Software & Services	13.00%, 7/8/2019	15,932		15,846		16,250		1.1	%
GTCR Valor Companies, Inc. (j)	Software	L+6.00% (7.30%), 6/16/2023	24,750		23,904		24,855		1.6	%
HC Group Holdings III, Inc. (j)	Health Care	L+5.00% (6.23%), 4/7/2022	14,857		14,616		14,833		1.0	%
Hexion Inc. (x)	Chemicals	10.38%, 2/1/2022	920		920		908		0.1	%
Icynene US Acquisition Corp. (f) (i) (m)	Building Products	L+6.25% (7.42%), 11/4/2020	20,352		20,124		20,047		1.3	%
ILC Dover LP (i) (l)	Aerospace & Defense	L+9.00% (10.23%), 3/20/2020	14,056		14,025		12,088		0.8	%
Indivior Finance S.A.R.L. (j)	Health Care	L+6.00% (7.17%), 12/19/2019	8,091		8,091		8,091		0.5	%
InMotion Entertainment Group, LLC (f) (i)	Specialty Retail	L+7.75% (9.05%), 10/1/2018	14,059		13,968		14,059		0.9	%
Internap Corporation (m)	Communications Equipment	L+7.00% (8.09%), 4/6/2022	8,249		8,130		8,125		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, 2017 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate / Maturity (y)	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
IPC Corp. (j)	Diversified Telecommunication Services	L+4.50% (5.67%), 8/6/2021	$	9,140	$	9,010	$	8,591	0.6	%
Jackson Hewitt, Inc. (j)	Diversified Consumer Services	L+7.00% (8.17%), 7/30/2020	6,720		6,631		6,451		0.4	%
K2 Pure Solutions NoCal, L.P. (i)	Chemicals	L+6.00% (7.23%), 2/19/2021	6,500		6,452		6,500		0.4	%
Kahala Ireland OpCo Designated Activity Company (a) (d) (l) (o)	Aerospace & Defense	L+8.00% (13.00%), 12/23/2028	149,531		149,531		149,531		9.9	%
Kissner Milling Co. Ltd. (x)	Chemicals	8.38%, 12/1/2022	21,199		21,558		21,994		1.5	%
LenderLive Services, LLC	Business Services	L+12.00% (13.17%), 8/11/2020	10,000		9,844		9,700		0.6	%
Lightsquared LP (l)	Diversified Telecommunications Services	L+8.75% (9.97%), 6/15/2020	10,760		9,962		10,430		0.7	%
Lionbridge Technologies, Inc. (i)	Business Services	L+5.50% (6.73%), 2/6/2024	13,833		13,767		13,764		0.9	%
MCS Acquisition Corp. (j)	Professional Services	L+4.75% (5.96%), 5/18/2024	12,600		12,538		12,537		0.8	%
Medical Depot Holdings, Inc. (i)	Health Care	L+5.50% (6.80%), 1/3/2023	20,025		18,358		18,334		1.2	%
Metal Services LLC (j)	Metals & Mining	L+7.50% (8.80%), 6/30/2019	10,861		10,755		10,861		0.7	%
Midwest Can Company, LLC (f) (i)	Energy Equipment & Services	L+6.75% (7.80%), 1/26/2022	5,092		5,011		5,003		0.3	%
MMM Holdings, LLC (j) (l)	Health Care	L+8.75% (10.25%), 6/28/2019	7,028		7,027		6,888		0.5	%
Monitronics International, Inc. (j)	Diversified Consumer Services	L+5.50% (6.80%), 9/30/2022	2,978		2,964		3,002		0.2	%
Montreign Operating Company, LLC (m)	Hotels, Restaurants & Leisure	L+8.25% (9.48%), 1/24/2023	27,161		26,691		27,511		1.8	%
Mood Media Corporation (m)	Business Services	L+7.25% (8.54%), 6/28/2022	14,124		13,815		13,842		0.9	%
Motion Recruitment Partners, LLC (f) (i)	Professional Services	L+6.00% (7.30%), 2/13/2020	17,444		17,227		17,444		1.2	%
Motorsports Aftermarket Group, Inc.	Auto Components	L+4.00% (5.42%), 5/14/2021	26,146		24,913		11,504		0.8	%
MSO of Puerto Rico, LLC (j) (l)	Health Care	L+8.75% (10.25%), 6/28/2019	5,110		5,108		5,007		0.3	%
Murray Energy Holdings Co. (j)	Energy Equipment & Services	L+7.25% (8.55%), 4/16/2020	14,723		14,045		14,355		0.9	%
MWI Holdings, Inc. (j)	Machinery	L+5.50% (6.80%), 6/28/2020	9,900		9,825		9,900		0.7	%
National Technical Systems, Inc. (i)	Professional Services	L+6.00% (7.05%), 6/12/2021	16,469		16,362		15,646		1.0	%
New Star Metals Inc. (d) (l) (m)	Business Services	L+9.50% (11.00%), 12/22/2021	24,510		24,036		24,039		1.6	%
NexSteppe Inc. (l) (t)	Chemicals	18.00%, 3/30/2018	10,691		10,457		4,597		0.3	%
Noosa Acquirer, Inc. (i) (m)	Food Products	L+5.25% (6.55%), 11/21/2020	25,000		24,788		25,000		1.6	%
NTM Acquisition Corp. (i)	Media	L+6.25% (7.55%), 6/7/2022	19,175		18,957		19,079		1.3	%
Orchid Underwriters Agency, LLC (f) (i)	Insurance Broker	L+5.00% (6.16%), 3/17/2022	19,950		19,762		19,950		1.3	%
ORG Chemical Holdings, LLC (i) (m)	Chemicals	L+5.75% (7.05%), 6/30/2022	27,962		27,403		27,403		1.8	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2017 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate / Maturity (y)	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Otter Box Holdings, Inc. (j)	Electronic Equipment, Instruments & Components	L+4.75% (5.98%), 6/3/2020	$	13,604	$	13,442	$	13,468	0.9	%
Peabody Energy Corp. (j)	Metals & Mining	L+4.50% (5.73%), 3/31/2022	5,541		5,527		5,529		0.4	%
PeopLease Holdings, LLC (i)	Commercial Services & Supplies	L+9.00% (10.30%), 2/26/2021	20,000		19,852		18,500		1.2	%
PetVet Care Centers, LLC (f) (i)	Business Services	L+6.00% (7.22%), 6/8/2023	19,552		19,379		19,357		1.3	%
PetVet Care Centers, LLC (f) (i)	Business Services	L+6.00% (7.22%), 6/8/2023	92		92		91		—	%
PGX Holdings, Inc. (j)	Transportation Infrastructure	L+5.25% (6.48%), 9/29/2020	12,990		12,932		12,991		0.9	%
Premier Dental Services, Inc. (i) (j)	Health Care	L+6.50% (7.55%), 6/30/2023	28,846		28,557		28,629		1.9	%
Premier Global Services, Inc. (j)	Diversified Telecommunication Services	L+6.50% (7.59%), 12/8/2021	9,614		9,309		9,560		0.6	%
Pre-Paid Legal Services, Inc. (j)	Diversified Consumer Services	L+5.25% (6.50%), 7/1/2019	12,130		12,150		12,130		0.8	%
Pride Plating, Inc. (i)	Aerospace & Defense	L+5.50% (6.80%), 6/13/2019	8,612		8,568		8,440		0.6	%
PSKW, LLC (i)	Health Care Providers & Services	L+4.25% (5.55%), 11/25/2021	1,575		1,563		1,575		0.1	%
PSKW, LLC (m)	Health Care Providers & Services	L+8.29% (9.59%), 11/25/2021	17,750		17,489		17,750		1.2	%
PT Network, LLC (f) (i)	Health Care	L+6.50% (7.72%), 11/30/2021	17,020		16,870		17,016		1.1	%
PT Network, LLC (f)	Health Care	L+6.50% (7.72%), 11/30/2021	1,555		1,555		1,554		0.1	%
Pure Barre, LLC (f) (i) (m)	Hotels, Restaurants & Leisure	L+7.00% (8.23%), 6/11/2020	26,399		26,126		26,135		1.7	%
Pure Barre, LLC (f)	Hotels, Restaurants & Leisure	L+7.00% (8.23%), 6/11/2020	200		200		198		—	%
Resco Products, Inc. (i)	Metals & Mining	L+6.25% (7.48%), 3/7/2020	10,000		10,000		9,750		0.6	%
RVNB Holdings, Inc. (dba All My Sons Moving & Storage) (f) (i)	Diversified Consumer Services	L+6.50% (7.75%), 2/25/2020	21,129		20,904		21,129		1.4	%
Sage Automotive Holdings, Inc. (j)	Auto Components	L+5.00% (6.23%), 11/8/2022	14,925		14,790		14,925		1.0	%
SHO Holding II Corporation (j)	Specialty Retail	L+5.00% (6.23%), 10/27/2022	11,820		11,728		11,761		0.8	%
Skillsoft Corp. (j)	Technology	L+4.75% (5.98%), 4/28/2021	7,536		7,140		7,112		0.5	%
Squan Holding Corp. (p)	Diversified Telecommunication Services	L+4.00% (5.30%), 10/10/2019	10,315		7,339		6,808		0.4	%
STG-Fairway Acquisitions, Inc. (j)	Professional Services	L+5.25% (6.55%), 6/30/2022	13,359		13,213		12,758		0.8	%
SunGard Availability Services Capital, Inc. (j)	IT Services	L+5.00% (6.23%), 3/31/2019	8,741		8,709		8,566		0.6	%
Tax Defense Network, LLC (f) (i) (l) (m) (t)	Diversified Consumer Services	L+12.50% (13.80%), 8/28/2019	26,799		26,532		15,417		1.0	%
Tillamook Country Smoker, LLC (f) (i)	Food Products	L+5.75% (6.97%), 5/19/2022	10,244		10,094		10,090		0.7	%
Tillamook Country Smoker, LLC (f) (i)	Food Products	L+5.75% (6.97%), 5/19/2022	135		135		133		—	%

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, 2017 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate / Maturity (y)	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Trilogy International Partners, LLC (x)	Diversified Telecommunication Services	8.88%, 5/1/2022	$	14,875	$	14,803	$	15,489	1.0	%
Trojan Battery Company, LLC (j)	Auto Components	L+4.75% (5.99%), 6/12/2021	10,532		10,471		10,453		0.7	%
Turning Tech LLC (i)	Software	L+10.75% (12.05%), 6/30/2020	24,226		23,971		20,593		1.4	%
Twenty Eighty, Inc. (l) (p)	Media	8.00%, 3/31/2020	6,074		4,041		3,948		0.3	%
Twenty Eighty, Inc. (l) (p)	Media	L+8.00% (9.12%), 3/31/2020	2,845		2,285		2,703		0.2	%
Twenty Eighty, Inc. (l) (p)	Media	9.00%, 3/31/2020	5,506		3,673		3,029		0.2	%
United Central Industrial Supply Company, LLC (i) (j)	Commercial Services & Supplies	L+7.25% (8.50%), 10/9/2018	8,549		8,513		7,438		0.5	%
VCVH Holding Corp. (j)	Health Care	L+5.00% (6.30%), 6/1/2023	12,870		12,761		12,831		0.8	%
Veritas US Inc. (j)	Technology	L+4.50% (5.80%), 1/27/2023	25,131		25,206		25,206		1.7	%
VetCor Professional Practices LLC (f) (i)	Diversified Consumer Services	L+6.25% (7.55%), 4/20/2021	4,934		4,896		4,835		0.3	%
VetCor Professional Practices LLC (f) (i)	Diversified Consumer Services	L+6.25% (7.55%), 4/20/2021	634		634		621		—	%
VetCor Professional Practices LLC (f) (i)	Diversified Consumer Services	L+6.25% (7.55%), 4/20/2021	9,800		9,737		9,604		0.6	%
Xplornet Communications, Inc. (a) (j)	Diversified Telecommunication Services	L+6.00% (7.30%), 9/9/2021	12,338		12,258		12,461		0.8	%
Sub Total Senior Secured First Lien Debt					$	1,777,310	$	1,688,412	111.4	%

Senior Secured Second Lien Debt - 18.8% (b)
Anchor Glass Container Corporation (m)	Containers & Packaging	L+7.75% (8.81%), 12/7/2024	$	20,000	$	19,814	$	20,242	1.3	%
Answers Corporation (p) (t)	Technology	L+5.00% (6.23%), 9/15/2021	4,699		4,028		4,558		0.3	%
Appriss Holdings, Inc. (m)	IT Services	L+9.25% (10.55%), 5/21/2021	13,985		13,856		13,705		0.9	%
Asurion LLC (j)	IT Services	L+7.50% (8.73%), 3/3/2021	10,000		9,401		10,038		0.7	%
Boston Market Corporation (m)	Hotels, Restaurants & Leisure	L+8.25% (9.55%), 12/16/2018	24,226		24,111		24,226		1.6	%
BrandMuscle Holdings Inc. (m)	Internet Software & Services	L+8.50% (9.65%), 6/1/2022	24,500		24,128		24,500		1.6	%
Cayan Holdings (m)	IT Services	L+8.50% (9.80%), 3/24/2022	20,000		19,609		20,000		1.3	%
CDS U.S. Intermediate Holdings, Inc. (m)	Hotels, Restaurants & Leisure	L+8.25% (9.55%), 7/8/2023	7,927		7,798		7,967		0.5	%
CIG Financial, LLC (a) (f) (m)	Consumer Finance	10.50%, 6/30/2019	13,000		12,948		12,415		0.8	%
CIG Financial, LLC (a) (f)	Consumer Finance	10.50%, 6/30/2019	1,000		1,000		955		0.1	%
CREDITCORP (x)	Consumer Finance	12.00%, 7/15/2018	13,250		13,227		11,412		0.8	%
Epic Health Services, Inc. (m)	Health Care Providers & Services	L+8.00% (9.23%), 3/17/2025	15,000		14,781		14,780		1.0	%
Hertz Corp. (x)	Automobiles	7.63%, 6/1/2022	21,165		21,165		21,112		1.4	%
J. C. Bromac Corporation (dba EagleRider, Inc.) (f) (m)	Hotels, Restaurants & Leisure	L+8.75% (10.05%), 2/10/2021	19,900		19,661		19,801		1.3	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2017 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate / Maturity (y)	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
J. C. Bromac Corporation (dba EagleRider, Inc.) (f)	Hotels, Restaurants & Leisure	L+8.75% (10.05%), 2/10/2021	$	4,484	$	4,484	$	4,461	0.3	%
NCP Finance Limited Partnership (j)	Consumer Finance	L+9.75% (11.00%), 10/1/2018	12,073		12,048		11,409		0.8	%
Rx30 HoldCo, Inc. (m)	Health Care Technology	L+9.00% (10.15%), 6/15/2022	11,500		11,337		11,500		0.8	%
Schulman Associates Institutional Review Board, Inc. (m)	Life Sciences Tools & Services	L+8.00% (9.15%), 6/3/2021	17,000		16,794		17,000		1.1	%
TierPoint, LLC (m)	Technology	L+7.25% (8.48%), 5/5/2025	5,334		5,282		5,281		0.3	%
U.S. Auto (m)	Diversified Consumer Services	L+11.75% (12.81%), 6/8/2020	30,000		29,684		29,400		1.9	%
Sub Total Senior Secured Second Lien Debt					$	285,156	$	284,762	18.8	%

Subordinated Debt - 4.9% (b)
Gold, Inc. (m)	Textiles, Apparel & Luxury Goods	10.00%, 6/30/2019	$	7,003	$	6,984	$	5,953	0.4	%
Park Ave RE Holdings, LLC (d) (l) (o)	Real Estate Management & Development	L+8.00% (13.00%), 12/29/2017	37,192		37,192		37,192		2.4	%
Steel City Media (l)	Media	16.00%, 3/29/2020	22,207		21,969		20,874		1.4	%
Xplornet Communications, Inc. (a) (j)		9.63%, 6/1/2022	10,000		10,000		10,375		0.7	%
Zimbra, Inc. (t)	Software	12.00%, 7/10/2018	287		287		468		—	%
Sub Total Subordinated Debt					$	76,432	$	74,862	4.9	%

Collateralized Securities - 12.4% (b)
Collateralized Securities - Debt Investment
Fifth Street Senior Loan Fund I, LLC - 1A Class F (a) (p)	Diversified Investment Vehicles	L+7.50% (8.66%), 1/19/2027	$	10,728	$	9,181	$	8,612	0.6	%
Collateralized Securities - Equity Investment (n)
B&M CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	2.08%, 4/16/2026	$	40,250	$	17,487	$	14,493	1.0	%
CVP Cascade CLO, LTD. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	0.00%, 1/16/2026	31,000		9,362		6,157		0.4	%
CVP Cascade CLO-2, LTD. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	0.00%, 7/18/2026	35,250		12,588		9,045		0.6	%
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	11.51%, 1/19/2027	31,575		21,113		16,853		1.1	%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	0.00%, 1/15/2027	35,057		17,832		11,607		0.8	%
MidOcean Credit CLO II, LLC Income Notes (a) (p) (v)	Diversified Investment Vehicles	8.58%, 1/29/2025	37,600		21,820		19,624		1.3	%
MidOcean Credit CLO III, LLC Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	9.31%, 7/21/2026	40,250		22,145		20,177		1.3	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2017 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate / Maturity (y)	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
MidOcean Credit CLO IV, LLC Income Notes (a) (p) (v)	Diversified Investment Vehicles	10.81%, 4/15/2027	$	21,500	$	14,316	$	12,727	0.7	%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	21.75%, 7/25/2025	31,603		22,825		26,141		1.7	%
OFSI Fund VI, Ltd. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	9.86%, 3/20/2025	38,000		16,617		15,589		1.0	%
Related Fee Agreements (a) (s)	Diversified Investment Vehicles		—		8,750		6,878		0.5	%
Silver Spring CLO, Ltd. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	0.00%, 10/16/2026	31,500		16,296		11,403		0.8	%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	0.79%, 5/1/2026	36,000		13,757		8,985		0.6	%
Sub Total Collateralized Securities					$	224,089	$	188,291	12.4	%

Equity/Other - 13.6% (b)
Answers Corporation (e) (p)	Technology		909		$	11,361	$	13,873	0.9	%
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (e)	Software	Expire 3/9/2025	306,122		—		—		—	%
Basho Technologies, Inc. - Series G Senior Preferred Stock (e)	Software		2,000,000		2,000		—		—	%
California Resources Corp. - Preferred Equity (u)	Metals & Mining	9.00%	15,025,000		14,724		14,725		1.0	%
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o)	Food Products		6,023		1,630		—		—	%
Capstone Nutrition - Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o) (u)	Food Products		24,656		—		—		—	%
Danish CRJ LTD. (a) (e) (p) (r)	Aerospace & Defense		5,002		1		254		—	%
Evolution Research Group - Preferred Equity (e)	Health Care Providers & Services	8.00%	500,000		500		624		—	%
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (e)	Internet Software & Services	Expire 8/16/2025	172,414		—		284		—	%
Kahala Ireland OpCo Designated Activity Company - Common Equity (a) (e) (h) (o)	Aerospace & Defense		137		—		10,826		0.7	%
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (a) (e) (h) (o)	Aerospace & Defense		3,250,000		2,838		3,250		0.2	%
Kahala US OpCo LLC - Class A Preferred Units (e) (k) (o)	Aerospace & Defense	13.00%	4,413,472		4,161		4,413		0.3	%
Mood Media Corporation - Warrants (e)	Business Services		121		27		119		—	%
New Star Metals Inc. - Warrants (e)	Business Services	Expire 12/22/2036	133,074		151		156		—	%
NexSteppe Inc. - Series C Preferred Stock Warrant (e)	Chemicals	Expire 3/9/2025	176,585		500		—		—	%

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, 2017 (Unaudited)

Portfolio Company (q)	Industry	Investment Coupon Rate / Maturity (y)	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
NMFC Senior Loan Program I, LLC (a) (p)	Diversified Investment Vehicles		50,000		$	50,000	$	50,369	3.3	%
Orchid Underwriters Agency, LLC - Preferred Shares (e) (u)	Insurance Broker		5,000		113		703		0.1	%
Orchid Underwriters Agency, LLC - Common Shares (e) (u)	Insurance Broker		5,000		—		12		—	%
Park Ave RE Holdings, LLC - Common Shares (e) (o) (w)	Real Estate Management & Development		1,000		—		7,236		0.5	%
Park Ave RE Holdings, LLC - Preferred Shares (o) (w)	Real Estate Management & Development	8.00%	47,290		23,645		23,645		1.6	%
PennantPark Credit Opportunities Fund II, LP (a) (f) (g) (p)	Diversified Investment Vehicles		$	7,262	7,262		7,225		0.5	%
South Grand MM CLO I, LLC (a) (f) (p)	Diversified Investment Vehicles		$	29,524	29,095		28,491		1.9	%
Squan Holding Corp. - Class A Common Stock (e) (p)	Diversified Telecommunication Services		180,835		—		—		—	%
Squan Holding Corp. - Series A Preferred Stock (e) (p)	Diversified Telecommunication Services		8,962		—		—		—	%
Tax Defense Network, LLC (e)	Diversified Consumer Services		425		425		—		—	%
Tennenbaum Waterman Fund, L.P. (a)	Diversified Investment Vehicles		$	10,000	10,000		10,712		0.7	%
TCG BDC, Inc. - Common Stock (fka Carlyle GMS Finance, Inc.) (a)	Diversified Investment Vehicles		404,899		7,765		7,292		0.5	%
The SAVO Group, Ltd. - Warrants (e)	Internet Software & Services	Expire 3/23/2023	138,000		—		—		—	%
THL Credit Greenway Fund II LLC (a) (p)	Diversified Investment Vehicles		$	13,806	13,806		13,043		0.9	%
Twentyeighty, Inc. - Class A Common Equity (e)	Media		54,586		—		—		—	%
U.S. Auto - Series A Common Units (e) (u)	Diversified Consumer Services		10,000		10		—		—	%
U.S. Auto - Series A Preferred Units (e) (u)	Diversified Consumer Services		490		490		406		—	%
World Business Lenders, LLC (e)	Consumer Finance		3,750,000		3,750		3,759		0.2	%
Xplornet Communications, Inc. - Warrants (a) (e)	Diversified Telecommunication Services	Expire 10/25/2023	10,284		—		4,344		0.3	%
Zimbra, Inc. - Warrants (Third Lien Bridge Note) (e)	Software	Expire 7/11/2023	1,000,000		—		211		—	%
Sub Total Equity/Other					$	184,254	$	205,972	13.6	%

TOTAL INVESTMENTS - 161.1% (b)					$	2,547,241	$	2,442,299	161.1	%

_____________

(a)

All of the Company's investments, except the investments noted by this footnote, are qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended (the "1940 Act"). Under the 1940 Act, we may not require any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets. Qualifying assets represent 77.5% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.


(b)	Percentages are based on net assets of $1,516,005 as of June 30, 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)

June 30, 2017

(Unaudited)


(c)	The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's board of directors as required by the 1940 Act. (See Note 3 to the 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, 2017.

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



Portfolio Company Name	Investment Type	Commitment Type	Original Commitment		Remaining Commitment
Adams Publishing Group, LLC	Senior Secured First Lien Debt	Delayed draw term loan	$	4,432	$	4,432
Amteck, LLC	Senior Secured First Lien Debt	Revolver term loan	5,000		5,000
Berner Food & Beverage LLC	Senior Secured First Lien Debt	Delayed draw term loan	2,693		2,693
CCW, LLC	Senior Secured First Lien Debt	Revolver term loan	3,000		3,000
CIG Financial, LLC	Senior Secured Second Lien Debt	Delayed draw term loan	5,000		4,000
Icynene US Acquisition Corp.	Senior Secured First Lien Debt	Delayed draw term loan	5,000		5,000
Icynene US Acquisition Corp.	Senior Secured First Lien Debt	Revolver term loan	5,000		5,000
InMotion Entertainment Group, LLC	Senior Secured First Lien Debt	Delayed draw term loan	2,200		1,843
J. C. Bromac Corporation (dba EagleRider, Inc.)	Senior Secured Second Lien Debt	Delayed draw term loan	5,000		516
Midwest Can Company, LLC	Senior Secured First Lien Debt	Delayed draw term loan	828		828
Midwest Can Company, LLC	Senior Secured First Lien Debt	Revolver term loan	1,035		883
Motion Recruitment Partners, LLC	Senior Secured First Lien Debt	Revolver term loan	2,000		2,000
Orchid Underwriters Agency, LLC	Senior Secured First Lien Debt	Revolver term loan	2,200		2,200
PennantPark Credit Opportunities Fund II, LP	Equity/Other	Equity capital commitment	10,800		538
PetVet Care Centers, LLC	Senior Secured First Lien Debt	Delayed draw term loan	6,704		6,704
PetVet Care Centers, LLC	Senior Secured First Lien Debt	Revolver term loan	1,676		1,584
PT Network, LLC	Senior Secured First Lien Debt	Delayed draw term loan	6,579		5,024
PT Network, LLC	Senior Secured First Lien Debt	Revolver term loan	1,316		1,316
Pure Barre, LLC	Senior Secured First Lien Debt	Revolver term loan	2,500		2,300
RVNB Holdings, Inc. (dba All My Sons Moving & Storage)	Senior Secured First Lien Debt	Revolver term loan	852		852
South Grand MM CLO I, LLC	Equity/Other	Equity capital commitment	35,000		5,477
Tax Defense Network, LLC	Senior Secured First Lien Debt	Delayed draw term loan	5,000		1,000
Tillamook Country Smoker, LLC	Senior Secured First Lien Debt	Revolver term loan	2,696		2,561
VetCor Professional Practices LLC	Senior Secured First Lien Debt	Delayed draw term loan	2,574		1,940
Total			$	119,085	$	66,691


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


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


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


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


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

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

June 30, 2017

(Unaudited)

(l)For the three months ended June 30, 2017, the following investments paid or have the option to pay all or a portion of interest and dividends via payment-in-kind (“PIK”):



Portfolio Company	Investment Type	Cash		PIK		All-in Rate		PIK Earned for the three months ended June 30, 2017
Basho Technologies, Inc.	Senior Secured First Lien Debt	17.00	%	—	%	17.00	%	$	—
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.)	Senior Secured First Lien Debt	—	%	13.80	%	13.80	%	—
Greenwave Holdings, Inc.	Senior Secured First Lien Debt	10.00	%	3.00	%	13.00	%	120
ILC Dover LP	Senior Secured First Lien Debt	8.23	%	2.00	%	10.23	%	71
Kahala Ireland OpCo Designated Activity Company	Senior Secured First Lien Debt	—	%	13.00	%	13.00	%	62
Kahala US OpCo LLC	Senior Secured First Lien Debt	13.00	%	—	%	13.00	%	—
Lightsquared LP	Senior Secured First Lien Debt	—	%	9.97	%	9.97	%	264
MMM Holdings, LLC	Senior Secured First Lien Debt	10.25	%	—	%	10.25	%	—
MSO of Puerto Rico, LLC	Senior Secured First Lien Debt	10.25	%	—	%	10.25	%	—
New Star Metals Inc.	Senior Secured First Lien Debt	11.00	%	—	%	11.00	%	(180		)
NexSteppe Inc.	Senior Secured First Lien Debt	10.00	%	8.00	%	18.00	%	—
Park Ave RE Holdings, LLC	Subordinated Debt	13.00	%	—	%	13.00	%	—
Steel City Media	Subordinated Debt	8.00	%	8.00	%	16.00	%	437
Tax Defense Network, LLC	Senior Secured First Lien Debt	9.80	%	4.00	%	13.80	%	—
Twentyeighty, Inc.	Senior Secured First Lien Debt	4.62	%	4.50	%	9.12	%	22
Twentyeighty, Inc.	Senior Secured First Lien Debt	1.00	%	7.00	%	8.00	%	106
Twentyeighty, Inc.	Senior Secured First Lien Debt	0.25	%	8.75	%	9.00	%	119
Xplornet Communications, Inc.	Subordinated Debt	—	%	13.00	%	13.00	%	946
Total								$	1,967


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


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


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


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


(q)	Unless otherwise indicated, all investments in the schedule of investments are non-affiliated, non-controlled investments.


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


(s)	Related Fee Agreements consist of one investment with a fair value of $0.5 million that is classified as a Non-affiliated Investment and five investments with a total fair value of $6.3 million that are classified as Affiliated Investments.


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


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

(v)

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


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


(x)	The Company's investment 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, 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)

June 30, 2017

(Unaudited)

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



	At June 30, 2017
	Investments at Fair Value		Percentage of Total Portfolio
Diversified Investment Vehicles	$	305,423	12.5	%
Aerospace & Defense	188,822		7.7
Hotels, Restaurants & Leisure	145,314		5.9
Business Services	141,995		5.8
Diversified Consumer Services	137,834		5.7
Health Care	137,505		5.6
Diversified Telecommunication Services	102,989		4.2
Health Care Providers & Services	96,606		4.0
Technology	95,191		3.9
Media	93,556		3.8
Commercial Services & Supplies	86,303		3.5
Internet Software & Services	74,065		3.0
Real Estate Management & Development	68,073		2.8
Food Products	64,993		2.7
Chemicals	61,402		2.5
Professional Services	58,385		2.4
IT Services	52,309		2.2
Energy Equipment & Services	46,842		1.9
Software	46,127		1.9
Metals & Mining	43,836		1.8
Consumer Finance	39,950		1.7
Electronic Equipment, Instruments & Components	39,481		1.6
Auto Components	36,882		1.5
Communications Equipment	30,404		1.3
Gaming/Lodging	29,697		1.2
Transportation Infrastructure	27,719		1.1
Specialty Retail	25,820		1.1
Diversified Financial Services	24,585		1.0
Automobiles	21,112		0.9
Insurance	20,665		0.8
Containers & Packaging	20,242		0.8
Building Products	20,047		0.8
Life Sciences Tools & Services	17,000		0.7
Distributors	13,772		0.6
Health Care Technology	11,500		0.5
Machinery	9,900		0.4
Textiles, Apparel & Luxury Goods	5,953		0.2
Total	$	2,442,299	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, 2016

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

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

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016

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

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016

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

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016

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

Senior Secured Second Lien Debt - 17.1% (b)
Anchor Glass Container Corporation	Containers & Packaging	L+7.75% (8.75%), 12/7/2024	$	20,000	$	19,801	$	20,325	1.3	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016

Portfolio Company (q)	Industry	Investment Coupon Rate / Maturity (n) (x)	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
Appriss Holdings, Inc. (m)	IT Services	L+9.25% (10.25%), 5/21/2021	$	13,985	$	13,839	$	13,775	0.9	%
Asurion LLC (j)	IT Services	L+7.50% (8.50%), 3/3/2021	10,000		9,320		10,156		0.7	%
Boston Market Corporation (m)	Hotels, Restaurants & Leisure	L+8.25% (9.25%), 12/16/2018	24,351		24,196		24,107		1.6	%
BrandMuscle Holdings Inc. (m)	Internet Software & Services	L+8.50% (9.50%), 6/1/2022	24,500		24,091		24,500		1.6	%
Cayan Holdings (m)	IT Services	L+8.50% (9.50%), 3/24/2022	20,000		19,579		19,600		1.3	%
CDS U.S. Intermediate Holdings, Inc. (m)	Hotels, Restaurants & Leisure	L+8.25% (9.25%), 7/8/2023	4,800		4,680		4,668		0.3	%
CIG Financial, LLC (a) (f) (m)	Consumer Finance	10.50%, 6/30/2019	13,000		12,935		12,415		0.8	%
CREDITCORP	Consumer Finance	12.00%, 7/15/2018	13,250		13,217		10,401		0.7	%
Epic Health Services, Inc. (m)	Health Care Providers & Services	L+9.25% (10.25%), 8/17/2021	15,933		15,703		15,933		1.0	%
J. C. Bromac Corporation (dba EagleRider, Inc.) (f) (m)	Hotels, Restaurants & Leisure	L+8.75% (9.59%), 2/10/2021	6,950		6,887		6,776		0.4	%
Linc Energy Finance USA, Inc. (t)	Oil, Gas & Consumable Fuels	12.50%, 10/31/2017	9,000		8,914		—		—	%
NCP Finance Limited Partnership (j)	Consumer Finance	L+9.75% (11.00%), 10/1/2018	12,145		12,109		11,386		0.7	%
Rx30 HoldCo, Inc. (m)	Health Care Technology	L+9.00% (10.00%), 6/15/2022	11,500		11,320		11,500		0.8	%
Schulman Associates Institutional Review Board, Inc. (m)	Life Sciences Tools & Services	L+8.00% (9.00%), 6/3/2021	17,000		16,768		16,745		1.1	%
Stratose Intermediate Holdings II, LLC (m)	Health Care Providers & Services	L+9.50% (10.50%), 7/26/2022	30,000		29,593		30,000		2.0	%
U.S. Auto (m)	Diversified Consumer Services	L+11.75% (12.75%), 6/8/2020	30,000		29,561		29,700		1.9	%
Sub Total Senior Secured Second Lien Debt					$	272,513	$	261,987	17.1	%

Subordinated Debt - 5.3% (b)
Gold, Inc. (m)	Textiles, Apparel & Luxury Goods	10.00%, 6/30/2019	$	7,003	$	6,924	$	5,953	0.4	%
Park Ave RE Holdings, LLC (d) (l) (o)	Real Estate Management & Development	L+8.00% (13.00%), 12/29/2017	37,192		37,192		37,192		2.4	%
Steel City Media (l)	Media	16.00%, 3/29/2020	21,418		21,146		20,561		1.4	%
Xplornet Communications, Inc. (a) (l)	Diversified Telecommunication Services	13.00%, 10/25/2020	14,591		14,591		15,102		1.0	%
Zimbra, Inc. (t)	Software	12.00%, 7/10/2018	1,203		1,203		1,732		0.1	%
Sub Total Subordinated Debt					$	81,056	$	80,540	5.3	%

Collateralized Securities - 16.3% (b)
Collateralized Securities - Debt Investment
Fifth Street Senior Loan Fund I, LLC - 1A Class F (a) (p)	Diversified Investment Vehicles	L+7.50% (8.38%), 1/19/2027	$	10,728	$	9,100	$	8,455	0.5	%
Collateralized Securities - Equity Investment
B&M CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	7.71%, 4/16/2026	$	40,250	$	20,331	$	16,772	1.1	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016

Portfolio Company (q)	Industry	Investment Coupon Rate / Maturity (n) (x)	Principal / Number of Shares		Amortized Cost		Fair Value (c)		% of Net Assets (b)
CVP Cascade CLO, LTD. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	0.04%, 1/16/2026	$	31,000	$	10,552	$	8,868	0.6	%
CVP Cascade CLO-2, LTD. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	4.80%, 7/18/2026	35,250		13,667		11,593		0.8	%
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	13.83%, 1/19/2027	31,575		22,079		20,579		1.3	%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	4.65%, 1/15/2027	35,057		19,941		16,101		1.1	%
MidOcean Credit CLO II, LLC (a) (p) (v)	Diversified Investment Vehicles	7.44%, 1/29/2025	37,600		23,092		22,419		1.5	%
MidOcean Credit CLO III, LLC (a) (p) (v)	Diversified Investment Vehicles	11.89%, 7/21/2026	40,250		23,998		23,341		1.5	%
MidOcean Credit CLO IV, LLC (a) (p) (v)	Diversified Investment Vehicles	13.77%, 4/15/2027	21,500		15,160		15,505		1.0	%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	23.61%, 7/25/2025	31,603		23,795		24,491		1.6	%
Ocean Trails CLO V, LTD. (a) (p) (v)	Diversified Investment Vehicles	14.78%, 10/13/2026	40,518		28,222		29,144		1.9	%
OFSI Fund VI, Ltd. Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	13.59%, 3/20/2025	38,000		19,012		17,354		1.1	%
Related Fee Agreements (a) (s)	Diversified Investment Vehicles		—		11,345		10,390		0.7	%
Silver Spring CLO, Ltd. (a) (p) (v)	Diversified Investment Vehicles	0.26%, 10/16/2026	31,500		18,676		12,007		0.8	%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (p) (v)	Diversified Investment Vehicles	6.99%, 5/1/2026	36,000		15,806		12,563		0.8	%
Sub Total Collateralized Securities					$	274,776	$	249,582	16.3	%

Equity/Other - 11.2% (b)
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (e)	Software	Expire 3/9/2025	306,122		$	—	$	—	—	%
Basho Technologies, Inc. - Series G Senior Preferred Stock (e)	Software		2,040,816		2,000		—		—	%
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o)	Food Products		6,023		1,630		—		—	%
Capstone Nutrition - Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o) (u)	Food Products		24,656		—		—		—	%
Carlyle GMS Finance, Inc. (a) (f)	Diversified Investment Vehicles		$	6,587	6,587		6,273		0.4	%
Danish CRJ LTD. (a) (e) (p) (r)	Aerospace & Defense		10,000		1		407		—	%
Evolution Research Group - Preferred Equity (e)	Health Care Providers & Services	8.00%	200		500		610		—	%
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (e)	Internet Software & Services	Expire 8/16/2025	172,414		—		19		—	%

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016

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

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016

Portfolio Company (q)	Industry	Investment Coupon Rate / Maturity (n) (x)	Principal / Number of Shares	Amortized Cost		Fair Value (c)		% of Net Assets (b)
Sub Total Equity/Other				$	160,360	$	171,313	11.2	%

TOTAL INVESTMENTS - 156.5% (b)				$	2,515,538	$	2,394,083	156.5	%

_____________

(a)

All of the Company's investments, except the investments noted by this footnote, are qualifying assets under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not require any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets. Qualifying assets represent 77.9% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.


(b)	Percentages are based on net assets of $1,529,734 as of December 31, 2016.


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


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


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

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



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


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


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


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


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

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016


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

(l)For the year ended December 31, 2016, the following investments paid or have the option to pay all or a portion of interest and dividends via payment-in-kind (“PIK”):



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


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


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


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


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


(q)	Unless otherwise indicated, all investments in the schedule of investments are non-affiliated, non-controlled investments.


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


(s)	Related Fee Agreements consist of one investment with a fair value of $0.7 million that is classified as a Non-affiliated Investment and six investments with a total fair value of $9.6 million that are classified as Affiliated Investments.


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


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

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands)

December 31, 2016

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



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

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

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, 2017

(Unaudited)

Note 1 — Organization and Basis of Presentation

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

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

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

On January 25, 2011, the Company commenced its initial public offering (the “IPO”) on a “reasonable best efforts basis” of up to 150.0 million shares of common stock, $0.001 par value per share, and subsequently amended the offering to issue up to an additional 101.1 million shares of its common stock (the “Offering”). The Company closed the Offering to new investments on April 30, 2015. In order to allow for associated processing time needed, the transfer agent for the Company accepted subscriptions in good order dated on or before April 30, 2015 and received no later than June 30, 2015. As of June 30, 2017, the Company had issued 193.1 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, 2017, the Company had repurchased a cumulative 12.6 million shares of common stock through its share repurchase program for payments of $114.3 million.

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

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

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

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, 2017

(Unaudited)

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Company is an investment company and follows accounting and reporting guidance in Accounting Standards Codification ("ASC") Topic 946 - Financial Services - Investment Companies ("ASC 946").

The Company consolidates the following subsidiaries for accounting purposes: BDCA Funding I, LLC (“Funding I”), BDCA 2L Funding I, LLC (“2L Funding I”), BDCA-CB Funding, LLC (“CB Funding”), BDCA Helvetica Funding, Ltd. (“Helvetica Funding”), 54th Street Equity Holdings, Inc. and the Consolidated Holding Companies. All significant intercompany balances and transactions have been eliminated in consolidation. In conjunction with the consolidation of subsidiaries, the Company recognizes non-controlling interests attributable to third party ownership in the following Consolidated Holding Companies: Kahala Aviation Holdings, LLC, Kahala Aviation US, Inc., and Kahala LuxCo.

Interim financial statements are prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X, as appropriate. Accordingly, the consolidated financial statements may not include all of the information and notes required by U.S. GAAP for annual consolidated financial statements. U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on December 31, 2017.

Use of Estimates

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

Consolidation

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

Valuation of Portfolio Investments

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

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

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, 2017

(Unaudited)

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

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


•	Each portfolio company or investment will be valued by the Adviser, with assistance from one or more independent valuation firms engaged by our board of directors or as noted below, with respect to investments in an investment fund;


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


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

For an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC 946, as of the Company's measurement date.

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

Investment Classification

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

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

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, 2017

(Unaudited)

Cash and Cash Equivalents

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

Offering Costs

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

Pursuant to the Investment Advisory Agreement, the Company and the Adviser have agreed that the Company will not be liable for organization and offering costs, including transfer agent fees, in excess of 1.5% of the aggregate gross proceeds from the Company’s on-going offering. Should the Company resume continually offering its shares, any offering costs incurred will be capitalized and amortized as an expense on a straight-line basis over a 12-month period. As of June 30, 2017 and December 31, 2016, the Company did not incur any offering costs.

Deferred Financing Costs

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

Distributions

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

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

The Company may fund cash distributions to stockholders from any sources of funds available to the Company, including advances from the Adviser that are subject to reimbursement, as well as offering proceeds, borrowings, net investment income from operations, capital gain proceeds from the sale of assets, and non-capital gain proceeds from the sale of assets. The Company has not established limits on the amount of funds it may use from available sources to make distributions. See Note 12 - Income Tax Information and Distributions to Stockholders for additional information.

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, 2017

(Unaudited)

Revenue Recognition

Interest Income

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

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

Fee Income

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

Payment-in-Kind Interest/Dividends

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

Non-accrual income

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

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

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

Income Taxes

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

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, 2017

(Unaudited)

be subject to federal excise taxes of 4%. See Note 12 - Income Tax Information and Distributions to Stockholders for additional information.

New Accounting Pronouncements

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

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

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

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

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

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

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.

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, 2017

(Unaudited)

Note 3 — Fair Value of Financial Instruments

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

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


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


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


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

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

All of the Company’s investment portfolio at June 30, 2017 was comprised of debt and equity instruments for which Level 1 inputs, such as quoted prices, were not available. Therefore, at June 30, 2017, the investments were valued at fair value as determined in good faith using the valuation policy approved by the board of directors using Level 2 and Level 3 inputs. The Company evaluates the source of inputs, including any markets in which the Company's investments are trading, in determining fair value. Due to the inherent uncertainty in the valuation process, the estimate of fair value of the Company’s investment portfolio at June 30, 2017 may differ materially from values that would have been used had a ready market for the securities existed.

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

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, 2017

(Unaudited)

include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

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

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

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

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

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



	Fair Value Measurements
	Level 1		Level 2		Level 3		Measured at Net Asset Value ⁽¹⁾		Total
Senior Secured First Lien Debt	$	—	$	173,391	$	1,515,021	$	—	$	1,688,412
Senior Secured Second Lien Debt	—		42,562		242,200		—		284,762
Subordinated Debt	—		10,375		64,487		—		74,862
Collateralized Securities	—		—		188,291		—		188,291
Equity/Other	—		7,292		88,840		109,840		205,972
Total	$	—	$	233,620	$	2,098,839	$	109,840	$	2,442,299

______________

⁽¹⁾ In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the 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, 2017

(Unaudited)

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



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

______________

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, 2017:



	Senior Secured First Lien Debt			Senior Secured Second Lien Debt			Subordinated Debt			Collateralized Securities			Equity/Other			Total
Balance as of December 31, 2016	$	916,099		$	205,051		$	80,540		$	249,582		$	56,794		$	1,508,066
Net change in unrealized appreciation (depreciation) on investments	(21,719		)	469			(1,429		)	(10,603		)	6,463			(26,819		)
Purchases and other adjustments to cost	340,327			45,827			1,854			80			26,113			414,201
Sales and redemptions	(170,514		)	(46,105		)	(17,463		)	(51,717		)	(534		)	(286,333		)
Net realized gains (losses)	1,290			579			985			949			4			3,807
Transfers in	449,538			36,379			—			—			—			485,917
Transfers out	—			—			—			—			—			—
Balance as of June 30, 2017	$	1,515,021		$	242,200		$	64,487		$	188,291		$	88,840		$	2,098,839
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:
Net change in unrealized appreciation (depreciation):	$	(21,717	)	$	876		$	(918	)	$	(9,667	)	$	6,463		$	(24,963	)

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

For the six months ended June 30, 2017, there were no transfers out of Level 1 to Level 2 and Level 3 to Level 2. For the six months ended June 30, 2017, thirty seven companies were transferred out of Level 2 to Level 3.

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, 2017

(Unaudited)

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

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

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended December 31, 2016:



	Senior Secured First Lien Debt			Senior Secured Second Lien Debt			Subordinated Debt			Collateralized Securities			Equity/Other			Total
Balance as of December 31, 2015	$	1,095,040		$	340,563		$	92,272		$	261,784		$	115,112		$	1,904,771
Net change in unrealized appreciation (depreciation) on investments	(39,045		)	4,506			1,120			48,557			(19,214		)	(4,076		)
Purchases and other adjustments to cost	255,985			27,416			5,813			162			201			289,577
Sales and redemptions	(241,206		)	(118,913		)	(7,403		)	(60,921		)	(4,069		)	(432,512		)
Net realized gains (losses)	(9,461		)	1,538			(11,262		)	—			(6,081		)	(25,266		)
Transfers in	4,252			—			—			—			—			4,252
Transfers out	(149,466		)	(50,059		)	—			—			(29,155		)	(228,680		)
Balance as of December 31, 2016	$	916,099		$	205,051		$	80,540		$	249,582		$	56,794		$	1,508,066
Net change in unrealized appreciation (depreciation) for the period relating to those Level 3 assets that were still held by the Company at the end of the period:
Net change in unrealized appreciation (depreciation):	$	(41,722	)	$	1,653		$	(603	)	$	48,557		$	(21,841	)	$	(13,956	)

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

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

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



	Investments at Amortized Cost		Investments at Fair Value		Fair Value Percentage of Total Portfolio
Senior Secured First Lien Debt	$	1,777,310	$	1,688,412	69.1	%
Senior Secured Second Lien Debt	285,156		284,762		11.7
Subordinated Debt	76,432		74,862		3.1
Collateralized Securities	224,089		188,291		7.7
Equity/Other	184,254		205,972		8.4
Total	$	2,547,241	$	2,442,299	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, 2017

(Unaudited)

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



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

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, 2017. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.



					Range
Asset Category	Fair Value		Primary Valuation Technique	Unobservable Inputs	Minimum		Maximum		Weighted Average^(a)
Senior Secured First Lien Debt ^(b)	$	1,281,593	Yield Analysis	Market Yield	5.25	%	35.00	%	10.08	%
Senior Secured First Lien Debt ^(c)	$	11,294	Joint Venture/Merger Strategy	EBITDA Multiple	5.25x		5.75x		N/A
Senior Secured Second Lien Debt ^(d)	$	236,918	Yield Analysis	Market Yield	9.94	%	15.00	%	11.52	%
Subordinated Debt ^(e)	$	64,019	Yield Analysis	Market Yield	13.00	%	17.00	%	14.51	%
Collateralized Securities	$	188,291	Discounted Cash Flow	Discount Rate	12.00	%	27.50	%	17.43	%
Equity/Other ^(f)	$	38,885	Market Multiple Analysis	EBITDA Multiple	1.60x		22.40x		11.18x

______________


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


^(b)	Refer to note (c) below for one senior secured first lien debt investment valued using an alternative technique. The remaining $222.1 million of senior secured first lien debt were valued at their respective acquisition prices as the investments closed near period end.


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


^(d)	The remaining $5.3 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 $0.5 million of subordinated debt were valued based on a Monte-Carlo simulation.


^(f)	The remaining $49.9 million of equity/other investments consisted of $49.6 million which were valued with consideration of their respective appraisal value, $0.1 million which were valued at their respective acquisition prices as the investment closed in the current period, and $0.2 million which were based on a Monte-Carlo simulation.

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

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the period ended June 30, 2017

(Unaudited)

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



					Range
Asset Category	Fair Value		Primary Valuation Technique	Unobservable Inputs	Minimum		Maximum		Weighted Average^(a)
Senior Secured First Lien Debt ^(b)	$	823,974	Yield Analysis	Market Yield	6.00	%	27.00	%	10.88	%
Senior Secured First Lien Debt ^(c)	$	19,708	Joint Venture/Merger Strategy	EBITDA Multiple	6.75x		7.50x		N/A
Senior Secured Second Lien Debt	$	205,051	Yield Analysis	Market Yield	10.60	%	13.60	%	11.91	%
Subordinated Debt ^(d)	$	78,808	Yield Analysis	Market Yield	12.25	%	17.25	%	14.11	%
Collateralized Securities	$	249,582	Discounted Cash Flow	Discount Rate	7.54	%	45.06	%	19.84	%
Equity/Other ^(e)	$	10,279	Market Multiple Analysis	EBITDA Multiple	2.40x		11.20x		7.00x

______________


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


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


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


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


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

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

As of June 30, 2017, the Company had seven portfolio companies, which represented thirteen portfolio investments, on non-accrual status with a total principal amount of $140.2 million, amortized cost of $131.4 million, and fair value of $61.6 million, which represented 5.1%, 5.2% and 2.5% of the investment portfolio total principal, amortized cost and fair value, respectively. As of December 31, 2016, the Company had six portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $136.2 million, amortized cost of $127.6 million, and fair value of $51.2 million which represented 5.0%, 5.1% and 2.1% of the investment portfolio total principal, amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - in the consolidated financial statements included in this report for additional details regarding the Company’s non-accrual policy.

Note 4 — Related Party Transactions and Arrangements

Investment Advisory Agreement

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

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, 2017

(Unaudited)

Base Management Fee

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

Incentive Fees

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


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

•

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


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

The second part of the incentive fee, referred to as the “incentive fee on capital gains during operations,” shall be an incentive fee on capital gains earned on liquidated investments from the portfolio during operations prior to the Company’s liquidation and shall be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, if earlier). This fee shall equal 20.0% of the Company’s incentive fee capital gains, which shall equal the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees.

The Transaction

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

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, 2017

(Unaudited)

Administration Agreement

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

Co-Investment Relief

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

Transactions with Affiliates

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

Offering Costs

Due (to)/from affiliate

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

Other Affiliated Parties

The Adviser is the investment adviser of BDCA. The Adviser is an affiliate of BSP, an SEC registered investment adviser. The Adviser and BSP are under common control. The Adviser is affiliated and under common control with Providence Equity Capital Markets L.L.C. (“PECM”), an SEC registered investment adviser on the BSP platform. The Adviser is affiliated and under common control with Providence Equity Partners L.L.C. (“PEP”), an SEC registered investment adviser. PEP is a global private equity investment adviser and maintains an information barrier between itself and the Adviser, BSP and PECM. BSP, the Adviser, PECM, 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, 2017

(Unaudited)

Note 5 — Borrowings

Wells Fargo Credit Facility

On July 24, 2012, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, Funding I, entered into a revolving credit facility with Wells Fargo and U.S. Bank as collateral agent, account bank and collateral custodian (the “Wells Fargo Credit Facility”). The Wells Fargo Credit Facility, which was subsequently amended on April 26, 2013, September 9, 2013, June 30, 2014, May 29, 2015, November 4, 2015, and May 18, 2017 provides for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis.

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

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

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

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

Deutsche Bank Credit Facility

On February 21, 2014, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, 2L Funding I, entered into the credit facility with Deutsche Bank (the “Deutsche Bank Credit Facility”) as lender and as administrative agent and U.S. Bank as collateral agent and collateral custodian. The Deutsche Bank Credit Facility was amended on February 19, 2016, and it was terminated in accordance with its terms on June 3, 2016.

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

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, 2017

(Unaudited)

Citi Credit Facility

On June 27, 2014, the Company, through a wholly-owned, special purpose financing subsidiary, CB Funding, entered into a credit facility with Citi (the “Citi Credit Facility”) 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 June 22, 2017 to extend the investment period for an additional three months to September 30, 2017. The Citi Credit Facility has a maturity date of June 27, 2018.

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

UBS Credit Facility

On April 7, 2015, the Company, through a wholly-owned, special-purpose, bankruptcy-remote subsidiary, Helvetica Funding, entered into a debt financing facility with UBS AG, London Branch (“UBS”), pursuant to which $150.0 million will be made available to the Company to fund investments in new securities and for other general corporate purposes (the “UBS Credit Facility”). The UBS Credit Facility was subsequently amended on July 10, 2015 to increase the amount of debt available to the Company under the facility from $150.0 million to $210.0 million. On June 6, 2016, the UBS credit facility was again amended to increase the amount of debt available from $210.0 million to $232.5 million. In addition, the amended facility increased the applicable spread over a three-month LIBOR from 3.90% to 4.05% per annum for the relevant period and increased the permissible percentage of second lien loans from 60% to 70%. Pricing under the transaction is based on three-month LIBOR plus a spread of 4.05% per annum for the relevant period. The UBS Credit Facility has a maturity date of April 4, 2018.

Unsecured Notes

On August 26, 2015, the Company entered into a Purchase Agreement with the initial purchasers, relating to the Company’s sale of $100.0 million aggregate principal amount of its 6.00% fixed rate senior notes due 2020 to the initial purchasers in a private placement in reliance on Section 4(a)(2) of the Securities Act and for initial resale by the initial purchasers to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act (the “Unsecured Notes”). The Company relied upon these exemptions from registration based in part on representations made by the initial purchasers. The Purchase Agreement includes customary representations, warranties and covenants by the Company. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the initial purchasers against certain liabilities under the Securities Act. The Unsecured Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The net proceeds from the sale of the Unsecured Notes was approximately $97.9 million, after deducting initial purchasers’ discounts and commissions of approximately $1.6 million payable by the Company and estimated offering expenses of approximately $0.5 million payable by the Company. The Company used the net proceeds to make investments in accordance with the Company’s investment objectives and for general corporate purposes.

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

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, 2017

(Unaudited)

structurally junior to all existing and future indebtedness incurred by the Company’s subsidiaries, financing vehicles or similar facilities, including credit facilities held by the Company’s wholly owned, special purpose financing subsidiaries.

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

JP Morgan Securities LLC Prime Brokerage Account

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

As of June 30, 2017, the Company had borrowings of $34.0 million and additional borrowing capacity of $0.9 million under the JPMC PB Account. For the six months ended June 30, 2017, the Company incurred approximately $0.03 million of interest expense as calculated using the cost of borrow noted above.

The weighted average annualized interest cost for all borrowings for the six months ended June 30, 2017 and June 30, 2016 was 3.85% and 3.48%, respectively. The average daily debt outstanding for the six months ended June 30, 2017 and June 30, 2016 was $942.3 million and $887.2 million, respectively. The maximum debt outstanding for the six months ended June 30, 2017 and June 30, 2016 was $1.0 billion and $977.9 million, respectively.

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



	Level	Maturity Date	Total Aggregate Borrowing Capacity		Total Principal Outstanding		Less Deferred Financing Costs			Amount per Balance Sheet
Wells Fargo Credit Facility	3	5/18/2022	$	400,000	$	327,152	$	(7,024	)	$	320,128
Citi Credit Facility	3	6/27/2018	400,000		316,003		(731		)	315,272
UBS Credit Facility	3	4/7/2018	232,500		232,500		(317		)	232,183
Unsecured Notes	3	9/1/2020	100,000		98,999		(398		)	98,601
JPMC PB Account	n/a	n/a	34,860		34,004		—			34,004
Totals			$	1,167,360	$	1,008,658	$	(8,470	)	$	1,000,188

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, 2017

(Unaudited)

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



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

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



	Three months ended June 30, 2017								Six months ended June 30, 2017
	Interest Rate	Non-Usage Rate	Interest Expense		Deferred Financing Costs ⁽³⁾		Other Fees ⁽⁴⁾		Interest Rate	Non-Usage Rate	Interest Expense		Deferred Financing Costs ⁽³⁾		Other Fees ⁽⁴⁾
Wells Fargo Credit Facility	⁽¹⁾	⁽²⁾	$	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.

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, 2017

(Unaudited)

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



	Three months ended June 30, 2016								Six months ended June 30, 2016
	Interest Rate	Non-Usage Rate	Interest Expense		Deferred Financing Costs ⁽⁵⁾		Other Fees ⁽⁶⁾		Interest Rate	Non-Usage Rate	Interest Expense		Deferred Financing Costs⁽⁵⁾		Other Fees ⁽⁶⁾
Wells Fargo Credit Facility	⁽¹⁾	⁽²⁾	$	1,999	$	215	$	316	⁽¹⁾	⁽²⁾	$	3,871	$	647	$	586
Deutsche Bank Credit Facility	L+4.25%	^{(3) (4)}	351		330		50		L+4.25%	⁽³⁾	679		412		294
Citi Credit Facility	L+2.00%	0.50%	1,637		184		159		L+2.00%	0.50%	3,214		516		322
UBS Credit Facility	L+4.05%	n/a	2,479		79		14		L+4.05%	n/a	4,871		95		14
Unsecured Notes	6.00%	n/a	1,595		32		n/a		6.00%	n/a	3,191		63		n/a
Totals			$	8,061	$	840	$	539			$	15,826	$	1,733	$	1,216

_________________

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

⁽²⁾ The non-usage fee per annum for the first six months is 0.50%; thereafter, 0.50% for the first 20% of the unused balance and 2.0% for the unused balance that exceeds 20%.

⁽³⁾ The undrawn rate is 0.75% per annum based on average undrawn amount. The Facility is subject to minimum utilization of 82.5% of the loan amount measured quarterly. If the utilized portion of the loan amount is less than the foregoing, such thresholds bears interest at LIBOR + 4.25%.

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

⁽⁵⁾ Amortization of deferred financing costs.

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

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate fair value. The fair value of short-term financial instruments such as cash and cash equivalents, due to affiliates and accounts payable approximate their carrying value on the accompanying statements of assets and liabilities due to their short-term nature. The fair value of the Company's Unsecured Notes is derived from the closing market price from Bloomberg Finance L.P. at June 30, 2017 and December 31, 2016, respectively.

At June 30, 2017, the carrying amount of our borrowings under the Facilities 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 under the Facilities 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, 2017 and December 31, 2016, the Facilities would be deemed to be Level 3, as defined in Note 3.

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, 2017

(Unaudited)

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



	Level	Carrying Amount at June 30, 2017		Fair Value at June 30, 2017
Wells Fargo Credit Facility	3	$	327,152	$	327,152
Citi Credit Facility	3	316,003		316,003
UBS Credit Facility	3	232,500		232,500
Unsecured Notes	3	98,999		99,124
JPMC PB Account	n/a	34,004		34,004
		$	1,008,658	$	1,008,783



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

Note 6 — Commitments and Contingencies

Commitments

In the ordinary course of business, the Company may enter into future funding commitments. As of June 30, 2017, the Company had unfunded commitments on delayed draw term loans of $34.0 million, unfunded commitments on revolver term loans of $26.7 million and unfunded equity capital commitments of $6.0 million. As of December 31, 2016, the Company had unfunded commitments on delayed draw term loans of $35.7 million, unfunded commitments on revolver term loans of $24.7 million and unfunded equity capital commitments of $9.4 million. The unfunded commitments are disclosed in the Company's consolidated schedule of investments. The Company maintains sufficient cash on hand and available borrowings to fund such unfunded commitments.

Litigation and Regulatory Matters

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

Indemnifications

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

Guarantees

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

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, 2017

(Unaudited)

Note 7 — Economic Dependency

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

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

Note 8 — Common Stock

On August 25, 2011, the Company had raised sufficient funds to break escrow on its IPO. On July 1, 2014, the Company's registration statement on Form N-2 (File No.333-193241) for its Follow-on was declared effective by the SEC. Simultaneously with the effectiveness of the registration statement of the Follow-on, the Company's IPO terminated. Through June 30, 2017, the Company sold 193.1 million shares of common stock for gross proceeds of $2.1 billion, including shares purchased by an affiliate of BSP and shares issued under the DRIP. Following the time the Company's updated registration statement was declared effective on June 30, 2015, the Company issued shares for subscription agreements that had been accepted through that date. The Company is no longer issuing new shares except for DRIP shares. As of June 30, 2017, the Company had repurchased 12.6 million shares of common stock through its share repurchase program for payments of $114.3 million.

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



	Shares		Value
Shares Sold	—		$	—
Shares Issued through DRIP	3,475,881		29,834
Share Repurchases	(103,191	)	(868		)
	3,372,690		$	28,966

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



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

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, 2017

(Unaudited)

Note 9 — Share Repurchase Program

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

•the effect of such repurchases on the Company's qualification as a RIC (including the consequences of

any necessary asset sales);

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

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

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

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

•the condition of the securities markets.

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



Quarterly Offer Date	Repurchase Date	Shares Tendered	Shares Repurchased	Repurchase Price Per Share		Aggregate Consideration for Repurchased Shares (in thousands)
September 12, 2012	October 8, 2012	—	—	$	9.71	$	—
December 13, 2012	January 15, 2013	46,975	10,732	$	9.90	$	106.22
March 27, 2013	April 25, 2013	29,625	29,625	$	10.18	$	301.58
July 15, 2013	August 13, 2013	30,365	30,365	$	10.18	$	308.97
October 22, 2013	November 21, 2013	55,255	55,255	$	10.36	$	572.44
February 4, 2014	March 6, 2014	68,969	68,969	$	10.36	$	714.52
June 6, 2014	July 11, 2014	117,425	117,425	$	10.36	$	1,216.38
August 7, 2014	September 10, 2014	111,854	111,854	$	10.36	$	1,158.80
December 19, 2014	January 23, 2015	313,101	313,101	$	10.36	$	3,243.73
March 16, 2015	April 15, 2015	162,688	162,688	$	10.36	$	1,685.45
June 26, 2015	July 31, 2015	533,527	533,527	$	9.72	$	5,185.88
September 18, 2015	October 20, 2015	728,874	728,874	$	9.53	$	6,946.17
December 23, 2015	January 25, 2016	7,375,871	3,053,869	$	9.22	$	28,156.67
July 26, 2016	December 31, 2016	17,004,354	6,715,864	$	8.58	$	57,622.10
June 8, 2017	July 6, 2017	11,747,753	3,433,482	$	8.52	$	28,576.26

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

Through June 30, 2017, the Company had repurchased an aggregate of 12.6 million shares of common stock for payments of $114.3 million. As of December 31, 2016, the Company had repurchased 12.5 million shares of common stock for payments of $113.4 million. Amounts include additional shares tendered for death and disability as permitted.

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, 2017

(Unaudited)

Note 10 — Net Increase in Net Assets

Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company had no potentially dilutive securities as of June 30, 2017 and December 31, 2016.

The following information sets forth the computation of the weighted average basic and diluted net increase in net assets per share from operations for the three and six months ended June 30, 2017 and June 30, 2016:



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2017		2016		2017		2016
Basic and diluted
Net increase in net assets from operations	$	14,714	$	34,947	$	34,081	$	55,232
Weighted average common shares outstanding	179,880,734		178,671,810		179,052,951		178,874,087
Net increase in net assets resulting from operations per share	$	0.08	$	0.20	$	0.19	$	0.31

The table below shows changes in the Company's offering price and distribution rates since the commencement of the Company's public offering through June 30, 2017.



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

Note 11 — Distributions

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, 2017

(Unaudited)

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, 2017, the Company had accrued $12.9 million in stockholder distributions that were unpaid. As of December 31, 2016, the Company had accrued $13.5 million in stockholder distributions that were unpaid.

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 1, 2017	0.06		6,308		3,695			10,003
				$	53,952	$	33,137		$	87,089
				$	152,746	$	90,777		$	243,523

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, 2017

(Unaudited)

Note 12 — Income Tax Information and Distributions to Stockholders

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

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.

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 2015, 2014 and 2013 federal tax returns remain subject to examination by the Internal Revenue Service.

As of June 30, 2017, the Company had a gross deferred tax asset of $2.5 million and a deferred tax liability of $(3.4) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.5 million. As of December 31, 2016, the Company had a gross deferred tax asset of $2.3 million and a deferred tax liability of $(2.6) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.2 million.

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

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, 2017

(Unaudited)

Note 13 — Financial Highlights

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



	For the Six Months Ended June 30,			For the Six Months Ended June 30,
	2017			2016
Per share data:
Net asset value, beginning of period	$	8.62		$	8.97

Results of operations ⁽¹⁾ Net investment income	0.30			0.34
Net realized and unrealized gain (loss) on investments, net of deferred taxes	(0.11		)	(0.03		)
Net increase in net assets resulting from operations	0.19			0.31

Stockholder distributions ⁽²⁾ Distributions	(0.43		)	(0.43		)
Net decrease in net assets resulting from stockholder distributions	(0.43		)	(0.43		)

Capital share transactions Issuance of common stock ⁽³⁾	—			(0.01		)
Repurchases of common stock	—			—
Net increase (decrease) in net assets resulting from capital share transactions	—			(0.01		)
Net asset value, end of period	$	8.38		$	8.84
Shares outstanding at end of period	180,493,481			179,089,123
Total return ⁽⁴⁾	2.20		%	3.51		%
Ratio/Supplemental data:
Net assets, end of period (in thousands)	$	1,516,005		$	1,586,505
Ratio of net investment income to average net assets ⁽⁶⁾⁽⁷⁾	7.83		%	7.70		%
Ratio of total expenses to average net assets ⁽⁶⁾⁽⁷⁾	6.95		%	6.70		%
Portfolio turnover rate ⁽⁵⁾	19.92		%	14.06		%

______________


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


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


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


⁽⁴⁾	Total return is calculated assuming a purchase of shares of common stock at the current net asset value on the first day and a sale at the current net asset value on the last day of the periods reported. Distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the DRIP.


⁽⁵⁾	Portfolio turnover rate is calculated using the lesser of year-to-date purchases or sales over the average of the invested assets at fair value. Not annualized.


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


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

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, 2017

(Unaudited)

Note 14 – Schedules of Investments and Advances to Affiliates

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



Portfolio Company ⁽¹⁾	Type of Asset	Amount of dividends and interest included in income			Beginning Fair Value at December 31, 2016		Gross additions^*		Gross reductions^**			Realized Gain/(Loss)			Change in Unrealized Gain (Loss) ⁽⁶⁾			Fair Value at June 30, 2017
Control Investments
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) ⁽⁴⁾	Senior Secured First Lien Debt	$	—		$	19,708	$	—	$	—		$	—		$	(8,414	)	$	11,294
Kahala Ireland OpCo Designated Activity Company ⁽³⁾	Senior Secured First Lien Debt	9,770			149,409		122		—			—			—			149,531
Kahala Ireland OpCo Designated Activity Company - Common Equity ⁽³⁾	Equity/Other	—			8,180		—		—			—			2,646			10,826
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note ⁽³⁾	Equity/Other	—			3,250		—		(62		)	—			62			3,250
Kahala US OpCo LLC ⁽³⁾	Senior Secured First Lien Debt	120			2,690				(2,690		)	—			—			—
Kahala US OpCo LLC - Class A Preferred Units ⁽³⁾	Equity/Other	—			4,000		—		(31		)	—			444			4,413
Park Ave RE Holdings, LLC ⁽²⁾	Subordinated Debt	2,431			37,192				—			—			—			37,192
Park Ave RE Holdings, LLC ⁽²⁾ - Common Shares	Equity/Other	—			6,564		—					—			672			7,236
Park Ave RE Holdings, LLC ⁽²⁾ - Preferred Shares	Equity/Other	946			23,645		—		—			—			—			23,645
Total Control Investments		$	13,267		$	254,638	$	122	$	(2,783	)	$	—		$	(4,590	)	$	247,387

Affiliate Investments
Answers Corporation	Senior Secured First Lien Debt	$	44		$	—	$	2,958	$	(8	)	$	—		$	41		2,991
Answers Corporation	Senior Secured First Lien Debt	(1		)	—		17,064		(15,365		)	(18,223		)	16,524			—
Answers Corporation	Senior Secured First Lien Debt	1			—		2,954		(2,954		)				—			—
Answers Corporation	Senior Secured Second Lien Debt	125			—		4,038		(12		)	2			530			4,558
Answers Corporation	Equity/Other	—			—		11,362		—			—			2,511			13,873
B&M CLO 2014-1, LTD. Subordinated Notes	Collateralized Securities	240			16,772		—		(2,843		)	—			564			14,493
CVP Cascade CLO, LTD. Subordinated Notes	Collateralized Securities	3			8,868		—		(1,189		)	—			(1,522		)	6,157
CVP Cascade CLO-2, LTD. Subordinated Notes	Collateralized Securities	191			11,593		—		(1,078		)	—			(1,470		)	9,045
Danish CRJ LTD.	Senior Secured First Lien Debt	—			20		—		(7		)	—			7			20
Danish CRJ LTD.	Equity/Other	—			407		—		—			—			(153		)	254
Fifth Street Senior Loan Fund LLC 2015-1A Class F	Collateralized Securities	540			8,455		80		—			—			77			8,612
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes	Collateralized Securities	1,293			20,579		—		(967		)	—			(2,759		)	16,853
Figueroa CLO 2014-1, LTD. Subordinated Notes	Collateralized Securities	(103		)	16,101		—		(2,109		)	—			(2,385		)	11,607
MidOcean Credit CLO II, LLC Income Notes	Collateralized Securities	1,022			22,419		—		(1,272		)	—			(1,523		)	19,624

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, 2017

(Unaudited)



Portfolio Company ⁽¹⁾	Type of Asset	Amount of dividends and interest included in income		Beginning Fair Value at December 31, 2016		Gross additions^*		Gross reductions^**			Realized Gain/(Loss)			Change in Unrealized Gain (Loss) ⁽⁶⁾			Fair Value at June 30, 2017
MidOcean Credit CLO III, LLC Subordinated Notes	Collateralized Securities	732		23,341		—		(1,852		)	—			(1,312		)	20,177
MidOcean Credit CLO IV, LLC Income Notes	Collateralized Securities	608		15,505		—		(845		)	—			(1,933		)	12,727
NMFC Senior Loan Program I, LLC	Equity/Other	3,599		47,057		—		—			—			3,312			50,369
NewStar Arlington Senior Loan Program LLC Subordinated Notes	Collateralized Securities	2,529		24,491		—		(970		)	—			2,620			26,141
Ocean Trails CLO V, LTD.	Collateralized Securities	49		29,144		—		(29,128		)	906			(922		)	—
OFSI Fund VI, Ltd. Subordinated Notes	Collateralized Securities	1,487		17,354		—		(2,395		)	—			630			15,589
PennantPark Credit Opportunities Fund II, LP	Equity/Other	350		9,788		—		(2,691		)	10			118			7,225
Related Fee Agreements ⁽⁵⁾	Collateralized Securities	488		9,647		—		(2,515		)	42			(833		)	6,341
South Grand MM CLO I, LLC	Equity/Other	1,144		28,382		—		—			—			109			28,491
Silver Spring CLO, Ltd. Subordinated Notes	Collateralized Securities	94		12,007		—		(2,381		)	—			1,777			11,403
Squan Holding Corp.	Senior Secured First Lien Debt	799		6,895		533		(139		)	42			(523		)	6,808
Twentyeighty, Inc. - First Lien Debt (TLA 3/20)	Senior Secured First Lien Debt	163		—		2,285		—			—			418			2,703
Twentyeighty, Inc. - First Lien Debt (TLB 3/20)	Senior Secured First Lien Debt	401		—		4,041		—			—			(93		)	3,948
Twentyeighty, Inc. - First Lien Debt (TLC 3/20)	Senior Secured First Lien Debt	380		—		3,673		—			—			(644		)	3,029
Twentyeighty, Inc. - Class A Common Equity (e)	Equity/Other	1		—		—		—			—			—			—
THL Credit Greenway Fund II LLC	Equity/Other	584		12,850		—		(184		)	—			377			13,043
WhiteHorse VIII, Ltd. CLO Subordinated Notes	Collateralized Securities	178		12,563		—		(2,049		)	—			(1,529		)	8,985
Total Affiliate Investments		$	16,941	$	354,238	$	48,988	$	(72,953	)	$	(17,221	)	$	12,014		$	325,066
Total Control & Affiliate Investments		$	30,208	$	608,876	$	49,110	$	(75,736	)	$	(17,221	)	$	7,424		$	572,453

______________________________________________________

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

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


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


⁽²⁾	This investment was not deemed significant under SEC Rule 4-08(g) as of June 30, 2017.


⁽³⁾	This investment was not deemed significant under SEC Rule 4-08(g) as of June 30, 2017.


⁽⁴⁾	This investment was not deemed significant under SEC Rule 4-08(g) as of June 30, 2017.


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


⁽⁶⁾	Gross of deferred taxes.

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, 2017

(Unaudited)

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



Portfolio Company ⁽¹⁾	Type of Asset	Amount of dividends and interest included in income		Beginning Fair Value at December 31, 2015		Gross additions*		Gross reductions**			Realized Gain/(Loss)		Change in Unrealized Gain (Loss) ⁽⁶⁾			Fair Value at December 31, 2016
Control Investments
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) ⁽⁴⁾	Senior Secured First Lien Debt	$	713	$	29,731	$	8,933	$	—		$	—	$	(18,956	)	$	19,708
Capstone Nutrition Common Stock (fka Integrity Nutraceuticals, Inc.) ⁽⁴⁾	Equity/Other	—		—		—		—			—		—			—
Capstone Nutrition Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) ⁽⁴⁾	Equity/Other	—		—		—		—			—		—			—
Kahala Ireland OpCo Designated Activity Company ⁽³⁾	Senior Secured First Lien Debt	21,354		170,281		5,828		(26,700		)	—		—			149,409
Kahala Ireland OpCo Designated Activity Company - Common Equity ⁽³⁾	Equity/Other	—		29,428		—		—			—		(21,248		)	8,180
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note ⁽³⁾	Equity/Other	—		3,250		—		(166		)	—		166			3,250
Kahala US OpCo LLC	Senior Secured First Lien Debt	354		2,604		86		—			—		—			2,690
Kahala US OpCo LLC - Class A Preferred Units	Equity/Other	1		4,136		—		(250		)	—		114			4,000
Park Ave RE Holdings, LLC ⁽²⁾	Subordinated Debt	4,750		35,192		2,000		—			—		—			37,192
Park Ave RE Holdings, LLC ⁽²⁾ - Common Shares	Equity/Other	—		8,115		—		(587		)	—		(964		)	6,564
Park Ave RE Holdings, LLC ⁽²⁾ - Preferred Shares	Equity/Other	2,010		23,645		—		—			—		—			23,645
Total Control Investments		$	29,182	$	306,382	$	16,847	$	(27,703	)	$	—	$	(40,888	)	$	254,638

Affiliate Investments
B&M CLO 2014-1, LTD. Subordinated Notes	Collateralized Securities	$	1,938	$	19,169	$	—	$	(5,485	)	$	—	$	3,088		$	16,772
CVP Cascade CLO, LTD. Subordinated Notes	Collateralized Securities	981		11,114		—		(4,642		)	—		2,396			8,868
CVP Cascade CLO-2, LTD. Subordinated Notes	Collateralized Securities	860		12,216		—		(5,349		)	—		4,726			11,593
Danish CRJ LTD.	Senior Secured First Lien Debt	—		20		—		(13		)	—		13			20
Danish CRJ LTD.	Equity/Other	—		1,034		—		—			—		(627		)	407
Fifth Street Senior Loan Fund LLC 2015-1A Class F	Collateralized Securities	1,054		8,523		162		—			—		(230		)	8,455
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes	Collateralized Securities	2,919		23,566		—		(4,660		)	—		1,673			20,579
Figueroa CLO 2014-1, LTD. Subordinated Notes	Collateralized Securities	1,199		16,112		—		(4,518		)	—		4,507			16,101
MidOcean Credit CLO II, LLC	Collateralized Securities	2,463		23,603		—		(4,627		)	—		3,443			22,419
MidOcean Credit CLO III, LLC	Collateralized Securities	3,516		23,748		—		(5,133		)	—		4,726			23,341
MidOcean Credit CLO IV, LLC	Collateralized Securities	2,456		14,212		—		(2,488		)	—		3,781			15,505
NMFC Senior Loan Program I, LLC	Equity/Other	7,466		45,994		—		—			—		1,063			47,057
NewStar Arlington Senior Loan Program LLC Subordinated Notes	Collateralized Securities	5,109		24,461		—		(3,405		)	—		3,435			24,491
Ocean Trails CLO V, LTD.	Collateralized Securities	4,158		25,957		—		(3,266		)	—		6,453			29,144
OFSI Fund VI, Ltd. Subordinated Notes	Collateralized Securities	2,577		20,205		—		(5,497		)	—		2,646			17,354

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, 2017

(Unaudited)



Portfolio Company ⁽¹⁾	Type of Asset	Amount of dividends and interest included in income			Beginning Fair Value at December 31, 2015		Gross additions*		Gross reductions**			Realized Gain/(Loss)			Change in Unrealized Gain (Loss) ⁽⁶⁾			Fair Value at December 31, 2016
PennantPark Credit Opportunities Fund II, LP	Equity/Other	650			9,082		2,691		(1,615		)	180			(550		)	9,788
Related Fee Agreements ⁽⁵⁾	Collateralized Securities	1,434			11,679		—		(2,182		)	—			150			9,647
South Grand MM CLO I, LLC	Equity/Other	2,234			29,155		—		—			—			(773		)	28,382
Silver Spring CLO, Ltd.	Collateralized Securities	(229		)	12,269		—		(3,609		)	—			3,347			12,007
Squan Holding Corp.	Senior Secured First Lien Debt	—			—		20,421		(3,022		)	(11,017		)	513			6,895
Squan Holding Corp.	Senior Secured First Lien Debt	—			—		1,035		(1,045		)	—			10			—
Squan Holding Corp. - Class A Common Stock	Equity/Other	—			—		—		—			(12		)	12			—
Squan Holding Corp. - Series A Preferred Stock	Equity/Other	—			—		—		—			(1,139		)	1,139			—
THL Credit Greenway Fund II LLC	Equity/Other	1,135			16,910		—		(2,912		)	—			(1,148		)	12,850
WhiteHorse VIII, Ltd. CLO Subordinated Notes	Collateralized Securities	1,659			13,955		—		(5,781		)	—			4,389			12,563
Total Affiliate Investments		$	43,579		$	362,984	$	24,309	$	(69,249	)	$	(11,988	)	$	48,182		$	354,238
Total Control & Affiliate Investments		$	72,761		$	669,366	$	41,156	$	(96,952	)	$	(11,988	)	$	7,294		$	608,876

______________________________________________________


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

⁽²⁾

This investment was not deemed significant under SEC Rule 4-08(g) as of December 31, 2016. However, financial information is provided for comparative purposes. As of December 31, 2016, Park Ave RE Holdings LLC had total assets and liabilities of $136.3 million and $110.2 million, respectively. Total revenue and net income for the year ended December 31, 2016 were approximately $13.4 million and $1.9 million, respectively.

⁽³⁾

This investment was not deemed significant under SEC Rule 4-08(g) as of December 31, 2016. However, financial information is provided for comparative purposes. As of December 31, 2016, Kahala Ireland OpCo Designated Activity Company had total assets and liabilities of $463.1 million and $463.8 million, respectively. Total revenue and net income for the year ended December 31, 2016 were approximately $93.4 million and $2.2 million, respectively.


⁽⁴⁾	This investment is deemed significant under SEC Rule 4-08(g) as of December 31, 2016. As of December 31, 2016, Capstone Nutrition had total assets and liabilities of $86.0 million and $101.5 million, respectively. Total revenue and net (loss) for the year ended December 31, 2016 were approximately $129.3 million and $(51.6) million, respectively.


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


⁽⁶⁾	Gross of deferred taxes.

Note 15 – Subsequent Events

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

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, 2017

(Unaudited)

DRIP Sales

From July 1, 2017 through the filing of this Form 10-Q, the Company issued 1.0 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 $8.5 million.

Share Repurchase Program

On June 8, 2017, the Company offered to purchase no less than 3,300,000 and up to approximately 3,600,000 shares of its common stock pursuant to its SRP at a price equal to $8.52 per share. The offer expired on July 6, 2017 (the “Expiration Date”). On the Expiration Date, the Company purchased 3,433,482 shares of its common stock for aggregate consideration of $28.6 million pursuant to the limitations of the SRP as detailed in Note 9.

Dividend Declaration

On July 18, 2017, the Company announced that its board of directors declared monthly cash dividends payable in each of August, September, October and November 2017. These monthly dividends reflect an annualized distribution rate of $0.65 per share, a change from the prior annualized distribution rate of $0.87 per share.

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

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

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


•	our future operating results;


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


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


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


•	our contractual arrangements and relationships with third parties;


•	our expected financings and investments;


•	the adequacy of our cash resources and working capital;


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


•	our repurchase of shares;


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


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


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


•	the timing, form and amount of any distributions;


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


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


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


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

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


•	changes in the economy;


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


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

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

Overview

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

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 earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $10 million to $100 million, 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, 2017, 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, 2017:
	Investment Portfolio:	$	2,442.3
	Net Assets attributable to Business Development Corporation of America:	1,512.9
	Debt (net of deferred financing costs):	1,000.2
	Net Asset Value per share:	8.38

Portfolio Activity for the Six Months Ended June 30, 2017:
	Cost of investments purchased during period, including PIK:	544.3
	Sales, repayments and other exits during the period:	481.7
	Number of portfolio companies at end of period:	146

Operating results for the Six Months Ended June 30, 2017:
	Net investment income per share:	0.30
	Distributions declared per share:	0.43
	Net increase in net assets resulting from operations per share:	0.19
	Net investment income:	53.5
	Net realized and unrealized loss on investments:	(19.4		)
	Net increase in net assets resulting from operations:	34.1

Portfolio and Investment Activity

During the the six months ended June 30, 2017, we made $540.7 million of investments in new and existing portfolio companies and had $481.7 million in aggregate amount of exits and repayments, resulting in net investments of $59.0 million for the period. The portfolio composition by loan market consisted of 76.3% Middle Market ⁽¹⁾, 7.6% Large Corporate ⁽²⁾, and 16.1% Other ⁽³⁾ investments. In addition, the total portfolio of debt investments at fair value consisted of 91.1% bearing variable interest rates and 8.9% 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, 2017 was as follows:



	June 30, 2017
	Percentage of Total Portfolio		Weighted Average Current Yield for Total Portfolio ⁽¹⁾
Senior Secured First Lien Debt	69.1	%	8.6	%
Senior Secured Second Lien Debt	11.7		10.2
Subordinated Debt	3.1		13.6
Collateralized Securities ⁽²⁾	7.7		8.5
Equity/Other	8.4		N/A
Total	100.0	%	8.9	%

______________

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

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

During the year ended December 31, 2016, we made $678.5 million of investments in new and existing portfolio companies and had $587.9 million in aggregate amount of exits and repayments, resulting in net investments of $90.6 million for the period. The portfolio composition by loan market consisted of 75.2% Middle Market ⁽¹⁾, 7.2% Large Corporate ⁽²⁾, and 17.6% Other ⁽³⁾ investments. In addition, the total portfolio of debt investments at fair value consisted of 92.2% bearing variable interest rates and 7.8% bearing fixed interest rates.

______________

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

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

⁽³⁾Other represents collateralized securities and equity investments.

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



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

______________

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

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 2.24 and 2.18 as of June 30, 2017 and December 31, 2016, respectively. As of June 30, 2017, the Company had seven portfolio companies, which represented thirteen portfolio investments, on non-accrual status with a total principal amount of $140.2 million, amortized cost of $131.4 million, and fair value of $61.6 million, which represented 5.1%, 5.2% and 2.5% of the investment portfolio total principal, amortized cost and fair value, respectively. As of December 31, 2016, the Company had six portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $136.2 million, amortized cost of $127.6 million, and fair value of $51.2 million which represented 5.0%, 5.1% and 2.1% of the investment portfolio total principal, amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - in our consolidated financial statements included in this report for additional details regarding the Company’s non-accrual policy.

RESULTS OF OPERATIONS

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



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2017		2016		2017		2016
Total investment income	$	56,261	$	57,573	$	112,932	$	114,491
Total expenses	28,932		29,910		58,196		53,290
Income tax expense, including excise tax	635		—		1,270		—
Net investment loss attributable to non-controlling interests	4		4		6		11
Net investment income	$	26,690	$	27,659	$	53,460	$	61,190

Investment Income

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 $3.4 million and $5.1 million, respectively, of fee income for the three and six months ended June 30, 2017. Fee income consists primarily of prepayment and amendment fees. For the three and six months ended June 30, 2016, total investment income was $57.6 million and $114.5 million, respectively, and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.3 billion and a weighted average current yield of 9.7%. Included within total investment income was $2.2 million and $3.5 million, respectively, of fee income for the three and six months ended June 30, 2016. 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, 2017 and June 30, 2016 was as follows (dollars in thousands):



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2017		2016		2017		2016
Management fees	$	9,691	$	9,593	$	19,229	$	19,006
Incentive fee on income	4,948		6,878		11,314		6,878
Interest and debt fees	10,810		9,440		20,660		18,775
Professional fees	1,344		1,460		2,824		2,780
Other general and administrative	1,720		2,133		3,346		5,014
Administrative services	203		203		406		453
Insurance	2		55		8		110
Directors' fees	214		148		409		274
Total operating expenses	$	28,932	$	29,910	$	58,196	$	53,290

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, of which the Adviser did not waive any such fees. For the three and six months ended June 30, 2016, we incurred $9.6 million and $19.0 million, respectively, of management fees, of which the Adviser did not waive any such fees. For the three and six months ended June 30, 2016, we incurred $6.9 million and $6.9 million, respectively, of incentive fees, of which the Adviser did not waive any such fees.

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. For the three and six months ended June 30, 2016, we incurred interest and debt fees of $9.4 million and $18.8 million, respectively. Interest and debt fees are comprised of interest expense, non-usage fees, trustee fees, amortization of deferred financing costs and amortization of discount if applicable related to the Wells Fargo Credit Facility, Citi Credit Facility, UBS Credit Facility, Unsecured Notes and the JPMC PB Account. The increase in interest and debt fees for the three and six months ended June 30, 2017 as compared to the same periods in 2016 is a result of an increase in the average debt outstanding and an increase in amortization of deferred financing costs due to credit facility amendments.

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

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



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
Net realized gain (loss) from investments
Control investments	$	—		$	—		$	—		$	—
Affiliate investments	(18,192		)	—			(17,221		)	180
Non-affiliate investments	(6,020		)	1,207			(17,762		)	2,224
Total net realized gain (loss) from investments	(24,212		)	1,207			(34,983		)	2,404
Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
Control investments	755			(8,498		)	(5,196		)	(1,995		)
Affiliate investments	12,852			24,066			12,014			15,878
Non-affiliate investments	(1,275		)	(10,171		)	9,090			(22,929		)
Total net change in unrealized appreciation (depreciation) on investments, net of deferred taxes	12,332			5,397			15,908			(9,046		)
Net change in unrealized appreciation (depreciation) attributable to non-controlling interests	(96		)	684			(304		)	684
Net realized and unrealized gain (loss) on investments	$	(11,976	)	$	7,288		$	(19,379	)	$	(5,958	)

Net realized and unrealized gain (loss) on investments, net of deferred taxes, resulted in a net loss of $12.0 million and $19.4 million, respectively, for the three and six months ended June 30, 2017 compared to a net gain of $7.3 million and a net loss of $(6.0) million, respectively, for the same periods in 2016. We look at net realized gains (losses) and change in unrealized appreciation (depreciation) together, as movement in unrealized appreciation or depreciation can be the result of realizations.

The net realized and unrealized loss for the three and six months ended June 30, 2017 was primarily driven by realized losses on multiple senior secured investments and unrealized depreciation on our Collateralized Securities. The net realized and unrealized gain (loss) for the three and six months ended June 30, 2016 was primarily driven by the unrealized appreciation on our Collateralized Securities.

Changes in Net Assets from Operations

For the three and six months ended June 30, 2017, we recorded a net increase in net assets resulting from operations of $14.7 million and $34.1 million, respectively, versus a net increase in net assets resulting from operations of $34.9 million and $55.2 million, respectively, for the three and six months ended June 30, 2016. The decrease is primarily attributable to an increase in net realized and unrealized loss on investments. Based on the weighted average shares of common stock outstanding for the three and six months ended June 30, 2017, our per share net increase in net assets resulting from operations was $0.08 and $0.19, respectively, versus a net increase in net assets resulting from operations of $0.20 and $0.31, respectively, for the three and six months ended June 30, 2016.

Cash Flows

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. During the six months ended June 30, 2017, we used $28.9 million in operating activities, primarily as a result of purchases of investments of $540.7 million as well as an increase in receivable for unsettled trades of $22.5 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 $57.6 million and payments of stockholder distributions of $47.9 million, partially offset by proceeds from the Wells Fargo Credit Facility, Citi Credit Facility and the JPMC PB Account of $93.0 million.

For the six months ended June 30, 2016, net cash provided by operating activities was $104.6 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and sales of portfolio

investments. The increase in cash flows used in operating activities for the six months ended June 30, 2016 was primarily due to $328.0 million in sales and repayments of investments, a net increase in net assets of $55.2 million and an increase in unsettled purchases of $46.6 million, offset by cash used in operating activities for purchases of $325.3 million.

Net cash used in financing activities of $5.4 million during the six months ended June 30, 2016 primarily related to net proceeds from the Wells Fargo Credit Facility, Citi Credit Facility and the UBS Credit Facility of $75.5 million. These inflows were partially offset by payments of stockholder distributions of $50.8 million and repurchases of common stock of $28.2 million.

Recent Developments

Distribution Reinvestment Plan ("DRIP") Sales

From July 1, 2017 through the filing of this Form 10-Q, we issued 1.0 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 $8.5 million.

Share Repurchase Program

On June 8, 2017, we offered to purchase no less than 3,300,000 and up to approximately 3,600,000 shares of our common stock pursuant to our share repurchase program (“SRP”) at a price equal to $8.52 per share. The offer expired on July 6, 2017 (the “Expiration Date”). On the Expiration Date, we purchased 3,433,482 shares of our common stock for aggregate consideration of $28.6 million pursuant to the limitations of the SRP as detailed in Note 9 to the consolidated financial statements.

Dividend Declaration

On July 18, 2017, we announced that our board of directors declared monthly cash dividends payable in each of August, September, October and November 2017. These monthly dividends reflect an annualized distribution rate of $0.65 per share, a change from the prior annualized distribution rate of $0.87 per share.

Liquidity and Capital Resources

We generate cash flows from fees, interest and dividends earned from our investments, as well as proceeds from sales of our investments and, previously, from the net proceeds of our Offering. As of June 30, 2017, we had issued 193.1 million shares of our common stock for gross proceeds of $2.1 billion, including shares issued to the BSP affiliate and shares issued pursuant to the DRIP.

Our principal demands for funds in both the short-term and long-term are for portfolio investments, for the payment of operating expenses, distributions to our investors, repurchases under our share repurchase program, and for the payment of principal and interest on our outstanding indebtedness. We may also from time to time enter into other agreements with third parties whereby third parties will contribute to specific investment opportunities. Other potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from private offerings, proceeds from the sale of investments and undistributed funds from operations. However, our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. Our ability to raise proceeds in our public offering will be dependent on a number of factors as well, including general market conditions for BDCs.

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


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


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


•	our investment plans and working capital requirements;


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


•	our history in repurchasing shares or portions thereof; and


•	the condition of the securities markets.

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

Distributions

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

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

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

The table below shows the components of the distributions we have declared and/or paid during the six months ended June 30, 2017 and 2016 (dollars in thousands).



	For the Six Months Ended June 30,
	2017		2016
Distributions declared	$	77,086	$	77,217
Distributions paid	$	77,725	$	77,689
Portion of distributions paid in cash	$	47,891	$	50,813
Portion of distributions paid in DRIP shares	$	29,834	$	26,876

As of June 30, 2017, we had $12.9 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, 2017 and 2016, no portion of our distributions were characterized as return of capital for tax purposes. You should understand that any such distributions were not based on our investment performance and can only be sustained if we achieve positive investment performance in future periods and/or our Adviser continues to make such reimbursements. 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, 2017 and 2016 (dollars in thousands):



	For the Six Months Ended June 30,
	2017		2016
Monthly distributions	$	77,086	$	77,217
Total distributions	$	77,086	$	77,217

Election as a RIC

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

Related Party Transactions and Agreements

The Transaction

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

Investment Advisory Agreement

We entered into an Investment Advisory Agreement on November 1, 2016 under which the Adviser, subject to the overall supervision of our board of directors manages the day-to-day operations of, and provides investment advisory services to us. The Adviser and its affiliates also provide investment advisory services to other funds that have investment mandates that are similar, in whole and in part, with ours. The Adviser and its affiliates serve as investment adviser or subadvisor 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 pursuant to the SEC exemptive order. In addition, any affiliated fund currently formed or formed in the future and managed by the Adviser or its affiliates may have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. However, in certain instances due to regulatory, tax, investment, or other restrictions, certain investment opportunities may not be appropriate for either us or other funds managed by the Adviser or its affiliates.

Administration Agreement

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

Co-Investment Relief

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

Transactions with Affiliates

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

Contractual Obligations

The following table shows our payment obligations for repayment of debt and other contractual obligations at June 30, 2017 (dollars in thousands):



			Payment Due by Period
	Total		Less than 1 year		1 - 3 years		3- 5 years		More than 5 years
Wells Fargo Credit Facility ⁽¹⁾	$	327,152	$	—	$	—	$	327,152	$	—
Citi Credit Facility ⁽²⁾	316,003		316,003		—		—		—
UBS Credit Facility ⁽³⁾	232,500		232,500		—		—		—
Unsecured Notes ⁽⁴⁾	98,999		—		—		98,999		—
JPMC PB Account ⁽⁵⁾	34,004		—		—		—		34,004
Total contractual obligations	$	1,008,658	$	548,503	$	—	$	426,151	$	34,004

______________


⁽¹⁾	As of June 30, 2017, we had $72.8 million of unused borrowing capacity under the Wells Fargo Credit Facility, subject to borrowing base limits.


⁽²⁾	As of June 30, 2017, we had $84.0 million of unused borrowing capacity under the Citi Credit Facility, subject to borrowing base limits.


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


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


⁽⁵⁾	As of June 30, 2017, we had $0.9 million of unused borrowing capacity under the JPMC PB Account.

Off-Balance Sheet Arrangements

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

Commitments

In the ordinary course of business, the Company may enter into future funding commitments. As of June 30, 2017, we had unfunded commitments on delayed draw term loans of $34.0 million, unfunded commitments on revolver term loans of $26.7 million and unfunded equity capital commitments of $6.0 million. As of December 31, 2016, we had unfunded commitments on delayed draw term loans of $35.7 million, unfunded commitments on revolver term loans of $24.7 million and unfunded equity capital commitments of $9.4 million. The unfunded commitments are disclosed in our consolidated schedule of investments. We 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

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

Fee Income

Payment-in-Kind Interest/Dividends

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

Non-accrual income

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

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

Gains or losses on the sale of investments are calculated using the specific identification method. 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, 2017, our debt included variable-rate debt, bearing a weighted average interest rate of LIBOR plus 3.52% and fixed rate debt, bearing an interest rate of 6.00% with a total carrying value of $1,008.7 million. The following table quantifies the potential changes in interest income net of interest expense should interest rates increase by 100 or 200 basis points or decrease by 25 basis points assuming that our current statement of assets and liabilities was to remain constant and no actions were taken to alter our existing interest rate sensitivity.



Change in Interest Rates	Estimated Percentage Change in Interest Income net of Interest Expense
(-) 25 Basis Points	1.39	%
Base Interest Rate	—	%
(+) 100 Basis Points	6.05	%
(+) 200 Basis Points	11.99	%

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, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of June 30, 2017, we are not defendants in any material pending legal proceeding, and no such material proceedings are known to be contemplated. However, from time to time, we may be party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under the contracts with our portfolio companies. Third parties may also seek to impose liability on us in connection with the activities of our portfolio companies.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I., “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. Other than as set forth below, there have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2016.

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

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

Collateralized Securities are exposed to leveraged credit risk.

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

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

If certain minimum collateral value ratios and/or interest coverage ratios are not met by a CLO, primarily due to loan defaults, then cash flow that otherwise would have been available to pay distributions to us on our CLO investments may

instead be used to redeem any senior notes or to purchase additional loans, until the ratios again exceed the minimum required levels or any senior notes are repaid in full. This could result in an elimination, reduction or deferral in the distribution and/or principal paid to the holders of such Collateralized Securities, which would adversely impact our returns.

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

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

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

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

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

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

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

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

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

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

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

If we hold more than 10% of the shares in a foreign corporation that is treated as a controlled foreign corporation (‘‘CFC’’) (including equity tranche investments in a CLO treated as CFC), we may be treated as receiving a deemed distribution (taxable as ordinary income) each year from such foreign corporation in an amount equal to our pro rata share of

the corporation’s income for the tax year (including both ordinary earnings and capital gains). If we are required to include such deemed distributions from a CFC in our income, we will be required to distribute such income to maintain our RIC status regardless of whether or not the CFC makes an actual distribution during such year.

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

Proposed regulations may impact our ability to qualify as a RIC if we do not receive timely distributions from our CLO investments.

As discussed above, we may be required to include in our income our proportionate share of the income of certain CLO investments to the extent that such CLOs are PFICs for which we have made a qualifying electing fund (‘‘QEF’’) election or are CFCs. To qualify as a RIC, we must, among other thing, derive in each taxable year at least 90% of our gross income from certain sources specified in the Code (the ‘‘90% Income Test’’). Although the Code generally provides that the income inclusions from a QEF or a CFC will be ‘‘good income’’ for purposes of this 90% Income Test to the extent that the QEF or the CFC distribute such income to us in the same taxable year to which the income is included in our income, the Code does not specifically provide whether these income inclusions would be ‘‘good income’’ for this 90% Income Test if we do not receive distributions from the QEF or CFC during such taxable year. The IRS has issued a series of private rulings in which it has concluded that all income inclusions from a QEF or a CFC included in a RIC’s gross income would constitute ‘‘good income’’ for purposes of the 90% Income Test. Such rulings are not binding on the IRS except with respect to the taxpayers to whom such rulings were issued. Accordingly, under current law, we believe that the income inclusions from a CLO that is a QEF or a CFC would be ‘‘good income’’ for purposes of the 90% Income Test. Recently, the IRS and U.S. Treasury Department issued proposed regulations that provide that the income inclusions from a QEF or a CFC would not be good income for purposes of the 90% Income Test unless we receive a cash distribution from such entity in the same year attributable to the included income. If such income were not considered ‘‘good income’’ for purposes of the 90% Income Test, we may fail to qualify as a RIC. If these regulations are finalized, we will carefully monitor our investments in CLOs to avoid disqualification as a RIC.

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

Legislation commonly referred to as the ‘‘Foreign Account Tax Compliance Act,’’ or FATCA, imposes a withholding tax of 30% on payments of U.S. source interest and distributions, and gross proceeds from the disposition of an instrument that produces U.S. source interest or distributions paid after December 31, 2018, to certain non-U.S. entities, including certain non U.S. financial institutions and investment funds, unless such non-U.S. entity complies with certain reporting requirements regarding its U.S. account holders and its U.S. owners. Most CLO vehicles in which we invest will be treated as non-U.S. financial entities for this purpose, and therefore will be required to comply with these reporting requirements to avoid the 30% withholding. If a CLO vehicle in which we invest fails to properly comply with these reporting requirements, it could reduce the amounts available to distribute to equity and junior debt holders in such CLO vehicle, which could materially and adversely affect our operating results and cash flows.

We may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock we are able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period.

As discussed above, we intend to conduct tender offers pursuant to our share repurchase program on a semi-annual basis. We may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock we are able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period. Our three most recent tender offers were oversubscribed.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Amendments to Second Articles of Amendment

During the Company’s 2017 annual meeting of shareholders (as such meeting may have been adjourned and reconvened), our shareholders approved amendments to our Second Articles of Amendment and Restatement by a majority of the votes cast at such meeting. As a result, on August 8, 2017, we filed the Third Articles of Amendment and Restatement (the “Articles of Amendment”) with the State of Maryland Department of Assessments and Taxation, pursuant to which our Second Articles of Amendment and Restatement were amended to classify our board of directors into three classes, with the directors in each class serving staggered three-year terms of office (with such Articles of Amendment referred to herein as the “Classified Board Amendment”).

The Classified Board Amendment classifies the board of directors into three separate classes designated as Class I, Class II, and Class III, with two of the classes comprised of two directors and one comprised of three directors. Beginning with the 2018 annual meeting, the classes shall rotate for election each year such that the directors in one class will be subject to election every third year to serve a three-year term staggered among the classes. The Classified Board Amendment also provides that a director elected by the board of directors to fill a vacancy will hold office until the next election of the class for which such director has been chosen, subject to election and qualification of a successor and to such director’s earlier death, resignation, or removal.

Following the filing of the Classified Board Amendment, our board of directors is now classified into the following classes:



Class and Names of Directors	Annual Meeting at which Term Expires
Class I	2018
Richard J. Byrne Lee S. Hillman Randolph C. Read

Class II	2019
Edward G. Rendell
Dennis M. Schaney
Class III	2020
Ronald J. Kramer Leslie D. Michelson

Committees of the Board

In accordance with the transactions described above, the board of directors reconstituted the committees of the board. The board of directors determined in its business judgment that each of the members of the below committees are “independent” as defined in the applicable rules and regulations of the SEC and disinterested as required under the 1940 Act. The reconstituted committees of the board of directors are as follows:

Audit Committee

The board of directors appointed Messrs. Hillman, Kramer, Michelson and Read to the Audit Committee with Lee Hillman serving as chair of the Audit Committee.

Compensation Committee

The board of directors appointed Messrs. Hillman, Read, Rendell, and Schaney to the Compensation Committee with Edward Rendell serving as chair of the Compensation Committee. The board of directors determined that the members of the

Compensation Committee are non-employee directors under the applicable rules and regulations of the SEC and outside directors under Section 162(m) of the Internal Revenue Code of 1986, as amended.

Nominating and Corporate Governance Committee

The board of directors appointed Messrs. Kramer, Michelson, Rendell and Schaney to the Nominating and Corporate Governance Committee with Mr. Kramer serving as chair of the Nominating and Corporate Governance Committee.

Appointment of Leslie D. Michelson as Lead Independent Director

The board of directors also reappointed Leslie D. Michelson to the position of Lead Independent Director.

Amendment of Bylaws

On August 3, 2017, the board of directors approved, effective immediately, amendments to and a restatement of our Bylaws (the “Bylaw Amendments”) in connection with the Company’s preparation to list its shares of common stock on a national securities exchange. The Bylaw Amendments implement an exclusive forum provision and make other technical or minor changes that are consistent with the bylaws enacted by other business development corporations whose securities are listed and traded on national securities exchanges. New Article XIII of the Bylaws provides that, unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive forum for certain legal actions involving the Company will be the Circuit Court for Baltimore City, Maryland (or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division).

The above descriptions of the Classified Board Amendment and the Bylaw Amendments are qualified in their entirety by reference to the complete text of the Articles of Amendment and the amended provisions contained in the Amended and Restated Bylaws, respectively, copies of which are filed with this Quarterly Report on Form 10-Q report as Exhibits 3.1 and 3.2, respectively, and are incorporated herein by reference.

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, 2017 (and are numbered in accordance with Item 601 of Regulation S-K).



Exhibit No.	Description

3.1	Third Articles of Amendment and Restatement of the Registrant.

3.2	Amended and Restated Bylaws.

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 Richard J. Byrne	Chief Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer)	August 10, 2017
/s/ Corinne D. Pankovcin Corinne D. Pankovcin	Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)	August 10, 2017

Business Development Corp of America - FORM 10-Q - August 10, 2017

Attached files

Business Development Corp of America Reports