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Item 9A. Controls and Procedures

2023-03-15 compared with 2022-03-17 · 1114 added, 262 removed, 1024 unchanged (57% of the section changed)

18 unchanged sentences

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 period ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our 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 year ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

12 unchanged sentences

The information required by Item 13 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days following the end of our fiscal year.

PRINCIPAL ACCOUNTING FEES AND SERVICES

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days following the end of our fiscal year.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

The following exhibits are included, or incorporated by reference, in this Annual Report on Form 10-K for the year ended December 31, 2022 (and are numbered in accordance with Item 601 of Regulation S-K).

5 unchanged sentences

814-01360) filed on August 25, 2021 and incorporated herein by reference).

Amended and Restated Bylaws (filed herewith).

Amended and Restated Bylaws (previously filed as Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 17, 2022 and herein incorporated by reference).

Description of Securities (previously filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K filed on March 29, 2021 and incorporated herein by reference).

22 unchanged sentences

Second Amendment to Loan and Servicing Agreement, dated as of December 15, 2021, by and among FBCC Lending I, LLC, the Company, Morgan Stanley Bank, N.A., and Morgan Stanley Asset Funding, Inc.

(filed herewith).

(previously filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K (File No.

814-01360) filed on March 17, 2022 and incorporated herein by reference).

Third Amendment to Loan and Servicing Agreement, dated as of January 31, 2022, by and among FBCC Lending I, LLC, the Company, Morgan Stanley Bank, N.A., Canadian Imperial Bank of Commerce, and Morgan Stanley Asset Funding, Inc.

(filed herewith).

Code of Business Conduct and Ethics (filed herewith).

(previously filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K (File No.

814-01360) filed on March 17, 2022 and incorporated herein by reference).

First Amendment to Revolving Credit Agreement, dated as of April 20, 2022, by and among the Company, Morgan Stanley, N.A.

and Morgan Stanley Asset Funding Inc.

(previously filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No.

814-01360) filed on May 13, 2022 and incorporated herein by reference).

Fourth Amendment to Loan and Servicing Agreement, dated as of June 28, 2022, by and among FBCC Lending I, LLC, the Company, Morgan Stanley Bank, N.A.

and Canadian Imperial Bank of Commerce, as lenders, and Morgan Stanley Asset Funding Inc., as administrative agent (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No.

814-01360) filed on July 5, 2022 and incorporated herein by reference).

Code of Business Conduct and Ethics (previously filed as Exhibit 14.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed March 17, 2022 and herein incorporated by reference).

Subsidiaries of the Registrant (filed herewith).

3 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

104 Cover Page Interactive Data File (embedded within the Inline XBRL document) (filed herewith).

FORM 10-K SUMMARY

21 unchanged sentences

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Audited Consolidated Financial Statements:

Consolidated Statement s of Assets and Liabilities as of December 31, 2021 and 2020

Consolidated Statements of Operations for the year ended December 31, 2021 and for the period from January 29, 2020 (date of inception) to December 31, 2020

Consolidated Statements of Changes in Net Assets for the year ended December 31, 2021 and for the period from January 29, 2020 (date of inception) to December 31, 2020

Consolidated Statement of Cash Flows for the year ended December 31, 2021

Consolidated Schedule of Investments as of December 31, 2021

Consolidated Statements of Assets and Liabilities as of December 31, 2022 and 2021

Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 , and for the period from January 29, 2020 (date of inception) to December 31, 2020

Consolidated Statements of Changes in Net Assets for the years ended December 31, 2022 and 2021 , and for the period from January 29, 2020 (date of inception) to December 31, 2020

Consolidated Statement s of Cash Flows for the year s ended December 31, 202 2 and 2021

Consolidated Schedule s of Investments as of December 31, 202 2 and 2021

Notes to Consolidated Financial Statements

3 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of assets and liabilities of Franklin BSP Capital Corporation (the “Company”), as of December 31, 2021 and 2020, including the consolidated schedule of investments as of December 31, 2021, and the related consolidated statements of operations and changes in net assets for the year ended December 31, 2021 and for the period from January 29, 2020 (date of inception) to December 31, 2020, and the consolidated statement of cash flows for the year ended December 31, 2021 and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and changes in its net assets for the year ended December 31, 2021 and for the period from January 29, 2020 (date of inception) to December 31, 2020, and its cash flows for the year ended December 31, 2021, in conformity with U.S.

We have audited the accompanying consolidated statements of assets and liabilities of Franklin BSP Capital Corporation (the “Company”), including the consolidated schedules of investments, as of December 31, 2022 and 2021, the related consolidated statements of operations and changes in net assets for each of the two years in the period ended December 31, 2022 and for the period from January 29, 2020 (date of inception) to December 31, 2020, the consolidated statements of cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and changes in its net assets for each of the two years in the period ended December 31, 2022 and for the period from January 29, 2020 (date of inception) to December 31, 2020, and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

11 unchanged sentences

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our procedures included confirmation of investments owned as of December 31, 2021, by correspondence with the custodian, brokers or the underlying investee or by other appropriate auditing procedures where replies from brokers were not received.

Our procedures included confirmation of investments owned as of December 31, 2022 and 2021, by correspondence with the custodian and brokers;

when replies were not received from brokers, we performed other auditing procedures.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

6 unchanged sentences

(dollars in thousands, except share and per share data)

December 31, December 31,

Investments, at fair value:

Control Investments, at fair value (amortized cost of $ 62,113 and $ 55,154 , respectively)

$ 62,156 $ 55,154

Affiliate Investments, at fair value (amortized cost of $ 0 and $ 13 , respectively)

Non-Affiliate Investments, at fair value (amortized cost of $ 726,116 and $ 460,025 , respectively)

720,224 462,030

Investments, at fair value (amortized cost of $ 788,229 and $ 515,192 , respectively)

782,380 517,300

Cash and cash equivalents 26,239 12,860

Deferred offering costs 100 127

Interest receivable 2,324 —

Interest and dividends receivable 6,444 2,324

Receivable for unsettled trades 713 166

3 unchanged sentences

Debt (net of deferred financing costs of $ 2,320 and $ 2,360 , respectively)

$ 379,580 $ 237,540

Short-term borrowings 20,792 41,302

Stockholder distributions payable 33 —

Management fees payable 1,007 526

2 unchanged sentences

Interest and debt fees payable 1,407 474

Directors' fees payable 17 —

Other liabilities 2,250 2,959

2 unchanged sentences

Redeemable convertible preferred stock Series A, $ 0.001 par value, 50,000,000 shares authorized;

5,000 issued and outstanding at December 31, 2021, and none issued and outstanding at December 31, 2020 4,992 —

36,147 issued and outstanding at December 31, 2022 and 5,000 issued and outstanding at December 31, 2021

Net Assets attributable to common stock:

2 unchanged sentences

Additional paid in capital 375,557 231,200

Total distributable gain (loss) 4,758 (414)

Total distributable earnings (loss) ( 3,161 ) 4,758

Total net assets attributable to common stock 372,421 235,973

1 unchanged sentence

Net asset value per share attributable to common stock $ 15.13 $ 15.46

(1) Less than $1.

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

2 unchanged sentences

(dollars in thousands, except share and per share data)

For the year ended December 31, For the period from January 29, 2020 (date of inception) to December 31,

For the year ended December 31, For the period

29, 2020 (date

of inception) to

2022 2021 2020

Investment income:

1 unchanged sentence

Interest income $ 2,899 $ 12 $ —

Dividend income 2,698 — —

Fee and other income 3 — —

Total investment income from control investments 5,600 12 —

4 unchanged sentences

Interest income 49,324 11,864 —

Dividend income 67 — —

Fee and other income 1,561 307 —

4 unchanged sentences

Management fees 3,378 1,109 —

Organization costs — 297

Organizational costs — — 297

Incentive fee on income 4,720 711 —

3 unchanged sentences

Other general and administrative 1,205 979 —

Amortization of offering costs 596 —

Amortization of common stock offering costs 16 596 —

Administrative services 226 113 —

6 unchanged sentences

Net investment income (loss) 31,470 4,143 ( 414 )

Realized and unrealized gain:

Net realized gain

Realized and unrealized gain (loss):

Net realized gain (loss)

Affiliate investments — 567 —

Non-affiliate investments 467 51 —

Total net realized gain 618 —

Net change in unrealized appreciation on investments

Affiliate investments 103 —

Total net realized gain (loss) 467 618 —

Net change in unrealized appreciation (depreciation) on investments

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

2 unchanged sentences

(dollars in thousands, except share and per share data)

For the year ended December 31, For the period from January 29, 2020 (date of inception) to December 31,

For the year ended December 31, For the period

29, 2020 (date

of inception) to

2022 2021 2020

Control investments 43 — —

Affiliate investments — 103 —

Non-affiliate investments ( 8,000 ) 2,005 —

Total net change in unrealized appreciation on investments 2,108 —

Net realized and unrealized gain 2,726 —

Net change in deferred taxes ( 780 ) — —

Total net change in unrealized appreciation (depreciation) on investments ( 8,737 ) 2,108 —

Net realized and unrealized gain (loss) ( 8,270 ) 2,726 —

Net increase (decrease) in net assets resulting from operations attributable to participating securities $ 23,200 $ 6,869 $ ( 414 )

Accretion to redemption value of Series A redeemable convertible preferred stock ( 3 ) — —

Accrual of Series A redeemable convertible preferred stock distributions ( 1,367 ) — —

Net increase (decrease) in net assets resulting from operations attributable to common stockholders $ 21,830 $ 6,869 $ ( 414 )

1 unchanged sentence

Net investment income (loss) $ 1.68 $ 0.78 $ ( 4,133.15 )

Net increase (decrease) in net assets resulting from operations attributable to common stockholders $ 1.30 $ (4,133.15)

Basic and diluted earnings (loss) per share $ 1.12 $ 1.30 $ ( 4,133.15 )

Weighted average common shares outstanding 18,679,387 5,301,096 100

3 unchanged sentences

(dollars in thousands, except share and per share data)

For the year ended December 31, For the period from January 29, 2020 (date of inception) to December 31,

For the year ended December 31, For the period

29, 2020 (date

of inception) to

2022 2021 2020

Net investment income (loss) $ 31,470 $ 4,143 $ ( 414 )

Net realized gain from investments 618 —

Net change in unrealized appreciation on investments 2,108 —

Net realized gain (loss) from investments 467 618 —

Net change in unrealized appreciation (depreciation) on investments ( 7,957 ) 2,108 —

Net change in deferred taxes ( 780 ) — —

Accretion to redemption value of Series A redeemable convertible preferred stock ( 3 ) — —

Accrual of Series A redeemable convertible preferred stock distributions ( 1,367 ) — —

Net increase (decrease) in net assets resulting from operations attributable to common stockholders 21,830 6,869 ( 414 )

Common Stockholder distributions:

Stockholder distributions:

Common stockholder distributions ( 27,309 ) ( 2,293 ) —

Net decrease in net assets from common stockholder distributions

Net decrease in net assets attributable to common stock from stockholder distributions ( 27,309 ) ( 2,293 ) —

Capital share transactions:

6 unchanged sentences

Net asset value per share attributable to common stock $ 15.13 $ 15.46 $ ( 4,120.15 )

Common shares outstanding at end of period 15,260,764 100

Common shares outstanding at end of year 24,609,132 15,260,764 100

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands, except share and per share data)

1 unchanged sentence

Operating activities

Net increase in net assets resulting from operations attributable to common stockholders $ 6,869

Adjustments to reconcile net increase in net assets resulting from operations attributable to common stockholders to net cash used in operating activities:

Net increase in net assets resulting from operations $ 23,200 $ 6,869

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:

Payment-in-kind interest income ( 2,042 ) ( 120 )

2 unchanged sentences

Amortization of deferred offering costs 27 476

Accretion of redemption value of Series A redeemable convertible preferred stock ( 3 ) —

Sales and repayments of investments 58,562 8,723

Purchases of investments ( 327,891 ) ( 522,821 )

Net realized gain from investments

Net change in unrealized appreciation on investments (2,108)

Net realized (gain) loss from investments ( 467 ) ( 618 )

Net change in unrealized (appreciation) depreciation on investments 7,957 ( 2,108 )

(Increase) decrease in operating assets:

7 unchanged sentences

Interest and debt fees payable 933 474

Directors' fees payable 17 —

Other liabilities ( 708 ) 1,942

2 unchanged sentences

Proceeds from issuance of shares of common stock 142,020 222,617

Proceeds from issuance of shares of redeemable convertible preferred stock, net 4,992

Proceeds from issuance of shares of preferred stock 31,101 4,992

Proceeds from debt 242,500 269,900

Payments on debt ( 100,500 ) ( 30,000 )

Proceeds from short-term borrowings 189,060 60,902

Repayments on short-term borrowings ( 209,570 ) ( 19,600 )

Payments of financing costs ( 1,149 ) ( 3,007 )

Common stockholder distributions ( 19,203 ) ( 1,503 )

Preferred stockholder distributions ( 1,367 ) —

Net cash provided by financing activities 272,892 504,301

2 unchanged sentences

Cash and cash equivalents, end of year $ 26,239 $ 12,860

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands, except share and per share data)

For the year ended December 31,

Supplemental information:

Interest paid during the year $ 2,348

Interest and non-usage fees paid during the year $ 15,139 $ 2,348

Taxes, including excise tax, paid during the year $ 476 $ 99

Distributions reinvested $ 790

Distributions reinvested during the year $ 8,073 $ 790

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands, expect share and per share data)

December 31, 2022

Portfolio Company (f) (g) (m) Industry Investment Coupon Rate/ Maturity (j) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b)

Senior Secured First Lien Debt - 178.0 % (b)

1236904 BC, Ltd.

4,183 $ 4,120 $ 4,247 1.1 %

Absolute Software Corp.

(a) (c) (h) Software/Services L+ 6.00 % ( 10.73 %), 7/1/2027

19,502 19,197 19,209 5.2 %

Acrisure, LLC (h) Financials L+ 4.25 % ( 8.63 %), 2/15/2027

4,582 4,552 4,425 1.2 %

ADCS Clinics Intermediate Holdings, LLC (c) (h) Healthcare L+ 6.50 % ( 11.43 %), 5/7/2027

5,756 5,667 5,649 1.5 %

ADCS Clinics Intermediate Holdings, LLC (c) (h) Healthcare L+ 6.50 % ( 11.70 %), 5/7/2027

1,180 1,180 1,158 0.3 %

Alera Group Intermediate Holdings, Inc.

3,240 3,240 3,179 0.9 %

Alera Group Intermediate Holdings, Inc.

2,895 2,839 2,840 0.8 %

American Rock Salt Company, LLC (h) Chemicals L+ 4.00 % ( 8.38 %), 6/9/2028

2,039 2,034 1,912 0.5 %

Armada Parent, Inc.

1,016 1,016 1,000 0.3 %

Armada Parent, Inc.

20,162 19,818 19,838 5.3 %

Avalara, Inc.

19,896 19,409 19,415 5.2 %

Aveanna Healthcare, LLC (h) Healthcare L+ 3.75 % ( 7.77 %), 7/17/2028

5,961 5,937 4,560 1.2 %

Aventine Holdings, LLC (c) (h) Media/Entertainment L+ 6.00 % ( 10.38 %) 4.00 % PIK, 6/18/2027

4,356 4,356 4,299 1.2 %

Aventine Holdings, LLC (c) Media/Entertainment 10.25 % PIK, 6/18/2027

11,270 11,052 11,028 3.0 %

Aventine Holdings, LLC (c) (h) Media/Entertainment L+ 6.00 % ( 10.38 %) 4.00 % PIK, 6/18/2027

11,916 11,715 11,760 3.2 %

BCPE Oceandrive Buyer, Inc.

786 786 759 0.2 %

BCPE Oceandrive Buyer, Inc.

1,547 1,547 1,495 0.4 %

BCPE Oceandrive Buyer, Inc.

9,286 9,100 8,969 2.4 %

BCPE Oceandrive Buyer, Inc.

1,559 1,559 1,506 0.4 %

Center Phase Energy, LLC (c) (h) Utilities S+ 7.00 % ( 11.98 %), 6/23/2027

11,809 11,591 11,597 3.1 %

Communication Technology Intermediate, LLC (c) (h) Business Services L+ 5.50 % ( 9.88 %), 5/5/2027

7,554 7,417 7,554 2.0 %

Communication Technology Intermediate, LLC (c) (h) Business Services L+ 5.50 % ( 9.88 %), 5/5/2027

2,628 2,628 2,628 0.7 %

Communication Technology Intermediate, LLC (c) Business Services L+ 5.50 % ( 9.88 %), 5/5/2027

86 86 86 0.0 %

Community Brands ParentCo, LLC (c) (h) Software/Services S+ 5.75 % ( 10.17 %), 2/24/2028

9,152 8,987 8,987 2.4 %

Coronis Health, LLC (c) (h) Healthcare S+ 6.25 % ( 10.57 %), 7/27/2029

24,299 23,809 23,833 6.4 %

Division Holding Corp.

(h) Business Services L+ 4.75 % ( 9.13 %), 5/27/2028

3,742 3,709 3,643 1.0 %

Eliassen Group, LLC (c) Business Services S+ 5.50 % ( 8.88 %), 4/14/2028

217 217 215 0.1 %

Eliassen Group, LLC (c) (h) Business Services S+ 5.50 % ( 10.08 %), 4/14/2028

5,738 5,685 5,687 1.5 %

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands, expect share and per share data)

December 31, 2022

Portfolio Company (f) (g) (m) Industry Investment Coupon Rate/ Maturity (j) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b)

Faraday Buyer, LLC (c) (h) Utilities S+ 7.00 % ( 11.32 %), 10/11/2028

12,902 $ 12,521 $ 12,529 3.4 %

FGT Purchaser, LLC (c) (h) Consumer S+ 5.50 % ( 10.18 %), 9/13/2027

9,658 9,496 9,658 2.6 %

FGT Purchaser, LLC (c) Consumer L+ 5.50 % ( 10.18 %), 9/13/2027

371 371 371 0.1 %

First Eagle Holdings, Inc.

13,860 13,471 13,483 3.6 %

Florida Food Products, LLC (c) (h) Food & Beverage L+ 5.00 % ( 9.38 %), 10/18/2028

12,633 12,413 11,938 3.2 %

FR Flow Control Luxco 1 Sarl (c) (h) Industrials S+ 5.50 % ( 9.94 %), 6/28/2026

4,462 4,422 4,462 1.2 %

Galway Borrower, LLC (c) (h) Financials L+ 5.25 % ( 9.98 %), 9/29/2028

13,541 13,355 13,304 3.6 %

Geosyntec Consultants, Inc.

11,523 11,332 11,340 3.0 %

Gordian Medical, Inc.

4,405 4,314 4,057 1.1 %

Green Energy Partners/Stonewall, LLC (c) (h) Utilities L+ 6.00 % ( 10.73 %), 11/12/2026

4,618 4,543 4,618 1.2 %

IG Investments Holdings, LLC (c) (h) Business Services L+ 6.00 % ( 10.38 %), 9/22/2028

8,018 7,880 7,945 2.1 %

IG Investments Holdings, LLC (c) (h) Business Services L+ 6.00 % ( 10.38 %), 9/22/2028

145 143 143 0.0 %

IG Investments Holdings, LLC (c) Business Services L+ 6.00 % ( 10.39 %), 9/22/2027

253 253 250 0.1 %

Indigo Buyer, Inc.

8,981 8,814 8,819 2.4 %

Indigo Buyer, Inc.

256 256 251 0.1 %

IQN Holding Corp.

95 95 94 0.0 %

IQN Holding Corp.

5,460 5,410 5,412 1.5 %

Kissner Milling Co., Ltd.

Industrials 4.88 %, 5/1/2028

2,275 2,275 1,955 0.5 %

Knowledge Pro Buyer, Inc.

1,052 1,052 1,034 0.3 %

Knowledge Pro Buyer, Inc.

11,121 10,936 10,926 2.9 %

Liquid Tech Solutions Holdings, LLC (h) Industrials L+ 4.75 % ( 8.92 %), 3/20/2028

5,452 5,431 5,153 1.4 %

Medical Management Resource Group, LLC (c) (h) Healthcare L+ 5.75 % ( 9.83 %), 9/30/2027

3,001 3,001 2,960 0.8 %

Medical Management Resource Group, LLC (c) (h) Healthcare L+ 5.75 % ( 10.17 %), 9/30/2027

7,267 7,147 7,169 1.9 %

Mirra-Primeaccess Holdings, LLC (c) (h) Healthcare L+ 6.50 % ( 10.88 %), 7/29/2026

21,394 21,054 21,394 5.8 %

Mirra-Primeaccess Holdings, LLC (c) Healthcare L+ 6.50 % ( 10.57 %), 7/29/2026

1,286 1,286 1,286 0.3 %

Monumental RSN, LLC (c) (h) Media/Entertainment S+ 6.00 % ( 10.32 %), 9/20/2027

13,645 13,512 13,781 3.7 %

Odessa Technologies, Inc.

6,524 6,414 6,408 1.7 %

Pie Buyer, Inc.

11,293 11,029 11,293 3.0 %

Pie Buyer, Inc.

2,443 2,443 2,443 0.7 %

Pie Buyer, Inc.

185 185 185 0.0 %

Pie Buyer, Inc.

837 822 837 0.2 %

Pluralsight, LLC (c) (h) Software/Services L+ 8.00 % ( 11.83 %), 4/6/2027

7,499 7,380 7,375 2.0 %

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands, expect share and per share data)

December 31, 2022

Portfolio Company (f) (g) (m) Industry Investment Coupon Rate/ Maturity (j) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b)

Pluralsight, LLC (c) (h) Software/Services L+ 8.00 % ( 12.75 %), 4/6/2027

2,680 $ 2,635 $ 2,636 0.7 %

Pluralsight, LLC (c) Software/Services L+ 8.00 % ( 12.75 %), 4/6/2027

319 319 314 0.1 %

Point Broadband Acquisition, LLC (c) Telecom L+ 6.00 % ( 10.56 %), 10/2/2028

1,733 1,733 1,697 0.5 %

Point Broadband Acquisition, LLC (c) (h) Telecom L+ 6.00 % ( 9.75 %), 10/2/2028

8,707 8,514 8,529 2.3 %

Relativity Oda, LLC (c) (h) Software/Services L+ 7.50 % ( 11.89 %) PIK, 5/12/2027

2,241 2,202 2,168 0.6 %

Roadsafe Holdings, Inc.

3,330 3,277 3,276 0.9 %

Roadsafe Holdings, Inc.

2,921 2,921 2,873 0.8 %

RSC Acquisition, Inc.

638 638 638 0.2 %

RSC Acquisition, Inc.

6,850 6,844 6,850 1.8 %

Safe Fleet Holdings, LLC (c) (h) Industrials S+ 5.00 % ( 9.12 %), 2/23/2029

6,038 5,863 5,856 1.6 %

Saturn SHC Buyer Holdings, Inc.

16,715 16,405 16,715 4.5 %

Saturn SHC Buyer Holdings, Inc.

14,893 14,631 14,893 4.0 %

SCIH Salt Holdings, Inc.

(h) Industrials L+ 4.00 % ( 8.42 %), 3/16/2027

1,099 1,095 1,066 0.3 %

Sherlock Buyer Corp.

5,001 4,906 4,914 1.3 %

Simplifi Holdings, Inc.

15,967 15,694 15,700 4.2 %

SitusAMC Holdings Corp.

6,771 6,714 6,771 1.8 %

Skillsoft Corp.

(h) Technology S+ 5.25 % ( 9.58 %), 7/14/2028

591 583 490 0.1 %

Striper Buyer, LLC (c) (h) Paper & Packaging L+ 5.50 % ( 9.57 %), 12/30/2026

4,910 4,866 4,910 1.3 %

SunMed Group Holdings, LLC (c) (h) Healthcare L+ 5.75 % ( 10.48 %), 6/16/2028

3,864 3,809 3,806 1.0 %

SunMed Group Holdings, LLC (c) Healthcare L+ 5.75 % ( 10.49 %), 6/16/2027

124 124 123 0.0 %

Tecta America Corp.

(h) Industrials S+ 4.25 % ( 8.69 %), 4/10/2028

3,861 3,830 3,697 1.0 %

The NPD Group, LP (c) (h) Business Services S+ 5.75 % ( 10.07 %) 2.75 % PIK, 12/1/2028

16,786 16,466 16,472 4.4 %

The NPD Group, LP (c) Business Services S+ 5.75 % ( 10.07 %) 2.75 % PIK, 12/1/2027

113 113 111 0.0 %

Therapy Brands Holdings, LLC (c) (h) Healthcare L+ 4.00 % ( 8.35 %), 5/18/2028

1,811 1,805 1,811 0.5 %

Tivity Health, Inc.

32,102 31,346 31,357 8.4 %

Trinity Air Consultants Holdings Corp.

1,651 1,651 1,626 0.5 %

Trinity Air Consultants Holdings Corp.

8,788 8,653 8,656 2.3 %

Triple Lift, Inc.

11,934 11,734 11,731 3.1 %

Triple Lift, Inc.

534 534 525 0.1 %

US Oral Surgery Management Holdco, LLC (c) Healthcare L+ 5.50 % ( 10.72 %), 11/18/2027

1,591 1,591 1,575 0.4 %

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands, expect share and per share data)

December 31, 2022

Portfolio Company (f) (g) (m) Industry Investment Coupon Rate/ Maturity (j) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b)

US Oral Surgery Management Holdco, LLC (c) (h) Healthcare L+ 6.00 % ( 10.68 %), 11/18/2027

5,495 $ 5,385 $ 5,440 1.5 %

US Salt Investors, LLC (c) (h) Chemicals L+ 5.50 % ( 9.17 %), 7/19/2028

8,575 8,429 8,415 2.3 %

Vensure Employer Services, Inc.

4,784 4,757 4,784 1.3 %

Victors CCC Buyer, LLC (c) (h) Business Services S+ 5.75 % ( 10.69 %), 6/1/2029

7,238 7,101 7,105 1.9 %

West Coast Dental Services, Inc.

109 109 107 0.0 %

West Coast Dental Services, Inc.

8,440 8,300 8,305 2.2 %

Westwood Professional Services, Inc.

433 433 433 0.1 %

Westwood Professional Services, Inc.

3,679 3,624 3,679 1.0 %

WHCG Purchaser III, Inc.

12,554 12,340 11,181 3.0 %

WHCG Purchaser III, Inc.

3,051 3,051 2,717 0.7 %

WHCG Purchaser III, Inc.

715 715 654 0.2 %

WIN Holdings III Corp.

13,430 13,204 13,218 3.6 %

Zendesk, Inc.

21,216 20,792 20,800 5.6 %

Subtotal Senior Secured First Lien Debt $ 666,045 $ 662,975 178.0 %

Senior Secured Second Lien Debt - 14.5 % (b)

American Rock Salt Company, LLC (c) (h) Chemicals L+ 7.25 % ( 11.63 %), 6/11/2029

6,010 $ 5,950 $ 5,746 1.5 %

Asp Ls Acquisition Corp.

4,275 4,263 3,533 0.9 %

Corelogic, Inc.

4,645 4,603 3,976 1.1 %

Mercury Merger Sub, Inc.

6,080 6,037 5,885 1.6 %

Proofpoint, Inc.

(h) Software/Services L+ 6.25 % ( 10.99 %), 8/31/2029

3,380 3,367 3,234 0.9 %

RealPage, Inc.

(h) Software/Services L+ 6.50 % ( 10.88 %), 4/23/2029

5,445 5,374 5,214 1.4 %

Tecta America Corp.

2,155 2,104 2,110 0.6 %

Therapy Brands Holdings, LLC (c) (h) Healthcare L+ 6.75 % ( 11.10 %), 5/18/2029

1,947 1,935 1,947 0.5 %

TRC Cos, Inc.

7,045 6,980 6,742 1.8 %

USIC Holdings, Inc.

2,449 2,426 2,361 0.6 %

Victory Buyer, LLC (c) (h) Industrials L+ 7.00 % ( 11.35 %), 11/19/2029

14,304 14,174 13,274 3.6 %

Subtotal Senior Secured Second Lien Debt $ 57,213 $ 54,022 14.5 %

Subordinated Debt- 8.5 % (b)

Encina Equipment Finance, LLC (c) (k) Financials L+ 7.75 % ( 11.94 %), 12/31/2028

6,914 $ 6,914 $ 6,914 1.9 %

Encina Equipment Finance, LLC (c) (k) Financials L+ 7.75 % ( 11.94 %), 12/31/2028

24,500 24,422 24,500 6.6 %

Subtotal Subordinated Debt $ 31,336 $ 31,414 8.5 %

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands, expect share and per share data)

December 31, 2022

Portfolio Company (f) (g) (m) Industry Investment Coupon Rate/ Maturity (j) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b)

Equity/Other - 9.1 % (b) (d)

Center Phase Energy, LLC (c) (i) Utilities 1,680 $ 1,680 $ 1,742 0.5 %

Encina Equipment Finance, LLC (c) (i) (k) Financials 29,908,561 30,777 30,742 8.2 %

Jakks Pacific, Inc.

Point Broadband Acquisition, LLC (c) (e) (i) Telecom 1,159,828 1,160 1,369 0.4 %

Subtotal Equity/Other $ 33,635 $ 33,969 9.1 %

Total Investments- 210.1 % (b)

$ 788,229 $ 782,380 210.1 %

(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, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets.

At December 31, 2022, qualifying assets represent 97.6 % 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 attributable to common stock as of December 31, 2022.

(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 defined below) as required by the 1940 Act.

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

(d) All amounts are in thousands except share amounts.

(e) Non-income producing at December 31, 2022.

(f) The Company has various unfunded commitments to portfolio companies.

Please refer to Note 6 - Commitments and Contingencies for details of these unfunded commitments.

(g) Unless otherwise indicated, all investments in the consolidated schedules of investments are non-affiliated, non-controlled investments.

(h) The Company's investment or a portion thereof is pledged as collateral under the MS Credit Facility (as defined in Note 5).

(i) Investments are held in the taxable wholly-owned, consolidated subsidiary, FBCC EEF Holdings LLC.

(j) The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L"), Secured Overnight Financing Rate (“SOFR” or “S”), or Prime ("P") and which reset daily, monthly, quarterly, or semiannually.

For each, the Company has provided the spread over the relevant reference rate and the current interest rate in effect at December 31, 2022.

Certain investments are subject to reference rate floors.

For fixed rate loans, a spread above a reference rate is not applicable.

For floating rate securities, the all-in rate is disclosed within parentheses.

(k) The provisions of the 1940 Act classify investments based on the level of control that the Company maintains in a particular portfolio company.

As defined in the 1940 Act, a company is generally presumed to be “non-controlled” when the Company owns 25% or less of the portfolio company’s voting securities and/or does not have the power to exercise control over the management or policies of such portfolio company.

A company is generally presumed to be “controlled” when the Company owns more than 25% of the portfolio company’s voting securities and/or has the power to exercise control over the management or policies of such portfolio company.

The Company classifies this investment as “controlled”.

(l) The Company purchased the investment, pursuant to a repurchase agreement with a rate of 0.22 basis points per day with Macquarie US Trading LLC, dated December 5, 2022 due January 19, 2023.

(m) Unless otherwise indicated, all securities are restricted securities.

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands, expect share and per share data)

December 31, 2022

The following table shows the portfolio composition by industry grouping based on fair value at December 31, 2022:

At December 31, 2022

Investments at Fair Value Percentage of Total Portfolio

Healthcare $ 185,426 23.7 %

Software/Services 117,768 15.1 %

Financials 113,646 14.4 %

Business Services 111,454 14.2 %

Industrials 71,302 9.1 %

Media/Entertainment 56,568 7.2 %

Utilities 30,486 3.9 %

Food & Beverage 26,696 3.4 %

Consumer 23,363 3.0 %

Chemicals 16,073 2.1 %

Paper & Packaging 13,980 1.8 %

Telecom 11,595 1.5 %

Transportation 3,533 0.5 %

Technology 490 0.1 %

Total $ 782,380 100.0 %

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands, expect share and per share data)

December 31, 2021

Portfolio Company (f) (g) Industry Investment Coupon Rate/ Maturity (i) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b)

2 unchanged sentences

4,183 $ 4,108 $ 4,309 1.8 %

Absolute Software Corp.

(a) (c) (h) Software/Services L+ 6.00 % ( 6.75 %), 7/1/2027

20,069 19,693 19,701 8.4 %

Acrisure, LLC (h) Financials L+ 4.25 % ( 4.75 %), 2/16/2027

4,628 4,594 4,620 2.0 %

ADCS Clinics Intermediate Holdings, LLC (c) (h) Healthcare L+ 6.25 % ( 7.25 %), 5/7/2027

5,815 5,706 5,711 2.4 %

ADCS Clinics Intermediate Holdings, LLC (c) Healthcare L+ 6.25 % ( 7.25 %), 5/7/2027

895 895 879 0.4 %

Armada Parent, Inc.

20,366 19,966 19,971 8.5 %

Armada Parent, Inc.

204 204 200 0.1 %

American Rock Salt Company, LLC (h) Chemicals L+ 4.00 % ( 4.75 %), 6/9/2028

2,060 2,055 2,052 0.9 %

Aveanna Healthcare, LLC (a) (h) Healthcare L+ 3.75 % ( 4.25 %), 7/17/2028

5,626 5,599 5,592 2.4 %

Aventine Holdings, LLC (c) (m) Media/Entertainment 10.25 %, 6/18/2027

10,198 9,944 9,944 4.2 %

Aventine Holdings, LLC (c) (n) Media/Entertainment L+ 6.00 % ( 6.75 %), 6/18/2027

11,434 11,206 11,207 4.8 %

BCPE Oceandrive Buyer, Inc.

9,356 9,146 9,146 3.9 %

Chudy Group, LLC (c) (h) Healthcare L+ 5.75 % ( 6.75 %), 6/30/2027

8,880 8,755 8,758 3.7 %

Cobblestone Intermediate Holdco, LLC (c) Consumer L+ 5.50 % ( 6.25 %), 1/29/2026

445 444 445 0.2 %

Cobblestone Intermediate Holdco, LLC (c) (h) Consumer L+ 5.25 % ( 6.25 %), 1/29/2026

5,980 5,944 5,980 2.5 %

Communication Technology Intermediate, LLC (c) Business Services L+ 5.75 % ( 6.75 %), 5/5/2027

2,654 2,654 2,654 1.1 %

Communication Technology Intermediate, LLC (c) (h) Business Services L+ 5.75 % ( 6.75 %), 5/5/2027

7,631 7,486 7,631 3.2 %

Division Holding Corp.

(h) Business Services L+ 4.75 % ( 5.50 %), 5/26/2028

3,780 3,744 3,782 1.6 %

FGT Purchaser, LLC (c) (h) Consumer L+ 5.50 % ( 6.50 %), 9/13/2027

9,756 9,569 9,571 4.1 %

FGT Purchaser, LLC (c) Consumer L+ 5.50 % ( 6.50 %), 9/13/2027

293 293 287 0.1 %

Florida Food Products, LLC (h) Food & Beverage L+ 5.00 % ( 5.75 %), 10/18/2028

12,728 12,477 12,505 5.3 %

Galway Borrower, LLC (c) (h) Financials L+ 5.25 % ( 6.00 %), 9/29/2028

11,986 11,768 11,755 5.0 %

Gogo Intermediate Holdings, LLC (a) (h) Telecom L+ 3.75 % ( 4.50 %), 4/28/2028

3,601 3,525 3,598 1.5 %

Gordian Medical, Inc.

(h) Healthcare L+ 6.25 % ( 7.00 %), 1/31/2027

4,450 4,335 4,413 1.9 %

Green Energy Partners/Stonewall, LLC Utilities L+ 6.00 % ( 6.50 %), 11/12/2026

4,661 4,569 4,614 2.0 %

IG Investments Holdings, LLC (c) (h) Business Services L+ 6.00 % ( 6.75 %), 9/22/2028

8,099 7,942 7,943 3.4 %

IG Investments Holdings, LLC (c) Business Services L+ 6.00 % ( 6.75 %), 9/22/2027

316 316 310 0.1 %

Kissner Milling Co., Ltd.

Industrials 4.88 %, 5/1/2028

2,275 2,275 2,190 0.9 %

Knowledge Pro Buyer, Inc.

11,233 11,011 11,011 4.7 %

Knowledge Pro Buyer, Inc.

275 275 270 0.1 %

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands, expect share and per share data)

1 unchanged sentence

Portfolio Company (f) (g) Industry Investment Coupon Rate/ Maturity (i) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b)

Knowledge Pro Buyer, Inc.

Liquid Tech Solutions Holdings, LLC (c) (h) Industrials L+ 4.75 % ( 5.50 %), 3/20/2028

5,508 $ 5,483 $ 5,508 2.3 %

Medical Management Resource Group, LLC (c) (h) Healthcare L+ 5.75 % ( 6.50 %), 9/30/2027

7,341 7,200 7,200 3.1 %

Mirra-Primeaccess Holdings, LLC (c) (h) Healthcare L+ 6.50 % ( 7.50 %), 7/29/2026

21,611 21,203 21,611 9.2 %

Odessa Technologies, Inc.

6,573 6,444 6,446 2.7 %

Pie Buyer, Inc.

11,436 11,122 11,436 4.9 %

Pie Buyer, Inc.

592 592 592 0.3 %

Pilot Air Freight, LLC (c) Transportation L+ 5.25 % ( 6.25 %), 7/25/2024

937 937 937 0.4 %

Pilot Air Freight, LLC (c) (h) Transportation L+ 5.25 % ( 6.25 %), 7/25/2024

3,612 3,568 3,612 1.5 %

Pluralsight, LLC (c) (h) Software/Services L+ 8.00 % ( 9.00 %), 4/6/2027

7,499 7,361 7,362 3.1 %

Pluralsight, LLC (c) (h) Software/Services L+ 8.00 % ( 9.00 %), 4/6/2027

2,680 2,629 2,631 1.1 %

Point Broadband Acquisition, LLC (c) (h) Telecom L+ 6.00 % ( 7.00 %), 9/29/2028

8,795 8,582 8,583 3.6 %

Relativity Oda, LLC (c) (h) Software/Services L+ 7.50 % ( 8.50 %) PIK, 5/12/2027

2,062 2,016 2,021 0.9 %

Roadsafe Holdings, Inc.

3,364 3,302 3,304 1.4 %

Roadsafe Holdings, Inc.

1,237 1,237 1,215 0.5 %

RSC Acquisition, Inc.

1,916 1,916 1,897 0.8 %

RSC Acquisition, Inc.

833 825 825 0.4 %

RSC Acquisition, Inc.

583 583 577 0.2 %

Saturn SHC Buyer Holdings, Inc.

15,043 14,748 14,748 6.3 %

Saturn SHC Buyer Holdings, Inc.

1,505 1,504 1,475 0.6 %

SCIH Salt Holdings, Inc.

(h) Industrials L+ 4.00 % ( 4.75 %), 3/16/2027

1,113 1,108 1,101 0.5 %

Sherlock Buyer Corp.

5,039 4,938 4,939 2.1 %

Simplifi Holdings, Inc.

16,128 15,815 15,818 6.7 %

SitusAMC Holdings Corp.

6,822 6,754 6,755 2.9 %

Skillsoft Corp.

(a) (h) Technology L+ 4.75 % ( 5.50 %), 7/14/2028

628 619 629 0.3 %

STRIPER BUYER, LLC (c) (h) Paper & Packaging L+ 5.50 % ( 6.25 %), 12/30/2026

4,960 4,913 4,960 2.1 %

SunMed Group Holdings, LLC (c) (h) Healthcare L+ 5.75 % ( 6.50 %), 6/16/2028

3,903 3,839 3,840 1.6 %

SunMed Group Holdings, LLC (c) Healthcare L+ 5.75 % ( 6.50 %), 6/16/2027

41 41 41 0.0 %

Tecta America Corp.

(h) Industrials L+ 4.25 % ( 5.00 %), 4/6/2028

3,900 3,865 3,895 1.7 %

Therapy Brands Holdings, LLC (c) (h) Healthcare L+ 4.00 % ( 4.75 %), 5/18/2028

1,454 1,448 1,454 0.6 %

Trinity Air Consultants Holdings Corp.

8,788 8,624 8,627 3.7 %

Trinity Air Consultants Holdings Corp.

686 686 673 0.3 %

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands, expect share and per share data)

1 unchanged sentence

Portfolio Company (f) (g) Industry Investment Coupon Rate/ Maturity (i) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b)

Trinity Air Consultants Holdings Corp.

Triple Lift, Inc.

9,705 $ 9,522 $ 9,705 4.1 %

TSL Engineered Products, LLC (c) (h) Industrials L+ 4.75 % ( 5.50 %), 1/7/2028

3,136 3,107 3,136 1.3 %

US Oral Surgery Management Holdco, LLC (c) (h) Healthcare L+ 5.50 % ( 6.25 %), 11/18/2027

5,495 5,387 5,387 2.3 %

US Oral Surgery Management Holdco, LLC (c) Healthcare L+ 5.50 % ( 6.25 %), 11/18/2027

193 193 189 0.1 %

US Salt Investors, LLC (c) (h) Chemicals L+ 5.50 % ( 6.25 %), 7/19/2028

8,662 8,497 8,500 3.6 %

Vensure Employer Services, Inc.

3,871 3,839 3,871 1.6 %

Westwood Professional Services, Inc.

3,716 3,648 3,623 1.5 %

Westwood Professional Services, Inc.

433 433 422 0.2 %

WHCG Purchaser III, Inc.

12,681 12,439 12,447 5.3 %

WHCG Purchaser III, Inc.

396 396 389 0.2 %

WHCG Purchaser III, Inc.

100 100 98 0.0 %

WIN Holdings III Corp.

13,566 13,310 13,312 5.6 %

WIN Holdings III Corp.

239 238 234 0.1 %

Subtotal Senior Secured First Lien Debt $ 405,509 $ 407,074 172.5 %

1 unchanged sentence

American Rock Salt Company, LLC (h) Chemicals L+ 7.25 % ( 8.00 %), 6/11/2029

6,010 $ 5,950 $ 6,025 2.6 %

Asp Ls Acquisition Corp.

(h) Transportation L+ 7.50 % ( 8.25 %), 4/30/2029

935 926 939 0.4 %

Corelogic, Inc.

(h) Business Services L+ 6.50 % ( 7.00 %), 6/4/2029

4,645 4,602 4,677 2.0 %

Mercury Merger Sub, Inc.

6,080 6,032 6,080 2.6 %

Proofpoint, Inc.

3,681 3,665 3,681 1.6 %

RealPage, Inc.

5,445 5,365 5,489 2.3 %

Tecta America Corp.

2,155 2,103 2,155 0.9 %

Therapy Brands Holdings, LLC (c) (h) Healthcare L+ 6.75 % ( 7.50 %), 5/18/2029

1,370 1,357 1,370 0.6 %

TRC Cos, Inc.

7,045 6,975 6,975 3.0 %

USIC Holdings, Inc.

2,449 2,425 2,449 1.0 %

Victory Buyer, LLC (c) Industrials L+ 7.00 % ( 7.50 %), 11/15/2029

14,304 14,161 14,161 6.0 %

Subtotal Senior Secured Second Lien Debt $ 53,561 $ 54,001 22.9 %

Subordinated Debt- 10.3 % (b)

Luna Sub 2, LLC (c) (k) Financials L+7.75% (9.00%), 12/31/2028 24,500 24,412 24,412 10.3 %

Encina Equipment Finance, LLC (c) (k) Financials L+ 7.75 % ( 9.00 %), 12/31/2028

24,500 $ 24,412 $ 24,412 10.3 %

Subtotal Subordinated Debt $ 24,412 $ 24,412 10.3 %

Equity/Other - 13.5 % (b) (d)

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

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands, expect share and per share data)

1 unchanged sentence

Portfolio Company (f) (g) Industry Investment Coupon Rate/ Maturity (i) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b)

Subtotal Subordinated Debt $ 24,412 $ 24,412 10.3 %

Equity/Other - 13.5% (b) (d)

Luna Sub 2, LLC (c) (e) (k) Financials 29,908,561 30,742 30,742 13.0 %

Encina Equipment Finance, LLC (c) (e) (k) Financials 29,908,561 $ 30,742 $ 30,742 13.0 %

Jakks Pacific, Inc.

3 unchanged sentences

Total Investments- 219.2 % (b)

$ 515,192 $ 517,300 219.2 %

(a) All of the Company's investments, except the investments noted by this footnote, are qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended (the "1940 Act").

29 unchanged sentences

FRANKLIN BSP CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

CONSOLIDATED SCHEDULES OF INVESTMENTS

(dollars in thousands, expect share and per share data)

36 unchanged sentences

middle market companies.

The Company defines middle market companies as those with annual revenues up to $1 billion, although the Company may invest in larger or smaller companies.

The Company defines middle market companies as those with EBITDA of between $ 25 million and $ 100 million annually, although the Company may invest in larger or smaller companies.

The Company also may purchase interests in loans or corporate bonds through secondary market transactions.

18 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

Certain prior period information has been reclassified to conform to the current period presentation.

The reclassification has no effect on the Company’s financial position or result of operations as previously reported.

Use of Estimates

6 unchanged sentences

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:

The board of directors (the “Board of Directors”) has delegated to the Adviser as valuation designee (the “Valuation Designee”) the responsibility of determining the fair value of the Company’s investment portfolio, subject to oversight of the Board of Directors, pursuant to Rule 2a-5 under the 1940 Act.

As such, the Valuation Designee is charged with determining the fair value of the Company’s investment portfolio, subject to oversight of the Board of Directors.

On a quarterly basis, the Valuation Designee 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.

The Valuation Designee 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 Valuation Designee determines whether the quote obtained is readily available according to U.S.

GAAP to determine the fair value of the security.

If determined to be readily available, the Company uses the quote obtained.

If determined to be readily available, the Valuation Designee uses the quote obtained.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate.

2 unchanged sentences

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:

In following these approaches, the types of factors that the Valuation Designee 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.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2021

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 the Company's board of directors (the “Board of Directors”);

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

• Each portfolio company or investment will be valued by the Valuation Designee, with assistance from one or more independent valuation firms engaged by the Company's Board of Directors;

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

• 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).

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.

• The Valuation Designee, under the supervision of the Board of Directors, determines the fair value of each investment, in good faith, based on the input of independent valuation firms (to the extent applicable) and the Valuation Designee’s own analysis.

The Valuation Designee also has established a Valuation Committee to assist the Valuation Designee in carrying out its designated responsibilities, subject to oversight of the Board of Directors.

Because there is not a readily available market value for most of the investments in its portfolio, the Valuation Designee 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.

13 unchanged sentences

Cash and cash equivalents are carried at cost which approximates fair value.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

Organization and Offering Costs

3 unchanged sentences

Offering costs are capitalized as a deferred charge and amortized to expense on a straight-line basis over 12 months from the commencement of operations.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2021

The Company will bear the organization and offering expenses incurred in connection with the formation of the Company and the offering of shares of its Common Stock, including the out-of-pocket expenses of the Adviser and its agents and affiliates.

2 unchanged sentences

To the extent the Company’s capital commitments later increase, the Adviser or its affiliates may be reimbursed for past payments of excess organization and offering costs made on the Company’s behalf provided that the total organization and offering costs borne by the Company do not exceed 0.10 % of total capital commitments and provided further that the Adviser or its affiliates may not be reimbursed for payment of excess organization and offering expenses that were incurred more than three years prior to the proposed reimbursement.

For the year ended December 31, 2021, and the period ended December 31, 2020, there were no reimbursements from the Adviser.

In connection with the Company’s private placement of shares of it’s Series A Preferred Stock, the Company incurred various offering costs.

For the years ended December 31, 2022 and 2021, and for the period ended December 31, 2020, there were no reimbursements from the Adviser.

In connection with the Company’s private placement of shares of its Series A Preferred Stock, the Company incurred various offering costs.

These costs are capitalized as a deferred cost and included within redeemable convertible preferred stock Series A on the consolidated statement of assets and liabilities as the preferred shares are issued.

10 unchanged sentences

The Company calculates each stockholder’s specific distribution amount for the quarter using record and declaration dates.

The distributions are payable by the fifth day following each record date.

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.

6 unchanged sentences

See Note 13 - Income Tax Information and Distributions to Stockholders for additional information.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

Revenue Recognition

4 unchanged sentences

The amortized cost of investments represents the original cost adjusted for the accretion of discount and amortization of premium on investments.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2021

Dividend Income

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected.

Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies.

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

18 unchanged sentences

The Company may be subject to federal excise tax imposed at a rate of 4% on certain undistributed amounts.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

The Company evaluates tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether it is “more-likely-than-not” (i.e., greater than 50-percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position.

3 unchanged sentences

See Note 13 - Income Tax Information and Distributions to Stockholders for additional information.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2021

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting if certain criteria are met.

The guidance is effective from March 12, 2020 through December 31, 2022.

The Company adopted ASU 2020-04 for the period ended September 30, 2021 and there was no impact to the accompanying financial statements and related disclosures.

Note 3 - Fair Value of Financial Instruments

11 unchanged sentences

The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter.

For investments for which Level 1 inputs, such as quoted prices, were not available at December 31, 2021, 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.

For investments for which Level 1 inputs, such as quoted prices, were not available at December 31, 2022 and 2021, 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 December 31, 2021 may differ materially from values that would have been used had a ready market for the securities existed.

Due to the inherent uncertainty in the valuation process, the estimate of fair value of the Company’s investment portfolio at December 31, 2022 and 2021 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.

14 unchanged sentences

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:

In following these approaches, the types of factors that the Valuation Designee may take into account in fair value pricing the Company's investments include, as relevant:

When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

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).

As part of the Company's quarterly valuation process, the Valuation Designee may be assisted by one or more independent valuation firms.

The Valuation Designee under the supervision of the Board of Directors determines the fair value of each investment, in good faith, based on the input of the independent valuation firm(s) (to the extent applicable) and the Valuation Designee’s own analysis.

Determination of fair values involves subjective judgments and estimates.

9 unchanged sentences

Total $ — $ 35,348 $ 747,032 $ 782,380

The following table presents fair value measurements of investments, by major class, as of December 31, 2021, according to the fair value hierarchy:

Fair Value Measurements

Level 1 Level 2 Level 3 Total

Senior Secured First Lien Debt $ — $ 48,991 $ 358,083 $ 407,074

Senior Secured Second Lien Debt $ — $ 11,641 $ 42,360 $ 54,001

Subordinated Debt $ — $ — $ 24,412 $ 24,412

Equity/Other $ — $ — $ 31,813 $ 31,813

Total $ — $ 60,632 $ 456,668 $ 517,300

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

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, 2022:

1 unchanged sentence

Balance as of January 1, 2022 $ 358,083 $ 42,360 $ 24,412 $ 31,813 $ 456,668

Paid-in-kind interest income 111 — 9 — 120

Net unrealized gains 1,336 276 — 104 1,716

Purchases 362,573 42,074 24,999 31,709 461,355

Market discount / premium 302 10 9 — 321

Sales and redemptions (6,311) — (1,148) — (7,459)

Net realized gains from investments 72 — 543 — 615

Purchases and other adjustments to cost $ 317,946 $ 3,941 $ 6,924 $ 1,891 $ 330,702

Sales and repayments $ ( 54,420 ) $ — $ — $ 35 $ ( 54,385 )

Net realized gain (loss) $ 426 $ — $ — $ — $ 426

Transfers in $ 21,533 $ 11,641 $ — $ — $ 33,174

Transfers out $ ( 5,508 ) $ ( 9,170 ) $ — $ — $ ( 14,678 )

Net change in unrealized appreciation (depreciation) on investments $ ( 1,986 ) $ ( 3,197 ) $ 78 $ 230 $ ( 4,875 )

Balance as of December 31, 2022 $ 636,074 $ 45,575 $ 31,414 $ 33,969 $ 747,032

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 year:

$ ( 1,978 ) $ ( 3,197 ) $ 78 $ 230 $ ( 4,867 )

For the year ended December 31, 2022, transfers from Level 2 to Level 3 were due to current assessments of investment liquidity and a decrease in the number of observable market inputs.

For the year ended December 31, 2022, transfers from Level 3 to Level 2 were due to an increase in the number of observable market inputs.

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, 2021:

Senior Secured First Lien Debt Senior Secured Second Lien Debt Subordinated Debt Equity/Other Total

Balance as of January 1, 2021 $ — $ — $ — $ — $ —

Purchases and other adjustments to cost $ 362,986 $ 42,084 $ 25,017 $ 31,709 $ 461,796

Sales and repayments $ ( 6,311 ) $ — $ ( 1,148 ) $ — $ ( 7,459 )

Net realized gain (loss) $ 72 $ — $ 543 $ — $ 615

Transfers in $ — $ — $ — $ — $ —

Transfers out $ — $ — $ — $ — $ —

Net change in unrealized appreciation (depreciation) on investments $ 1,336 $ 276 $ — $ 104 $ 1,716

Balance as of December 31, 2021 $ 358,083 $ 42,360 $ 24,412 $ 31,813 $ 456,668

Net change in unrealized appreciation for the period relating to those Level 3 assets that were still held by the Company at the end of the period:

14 unchanged sentences

Total $ 788,229 $ 782,380 100.0 %

The Company commenced investment operations on January 7, 2021 and, as a result, did not have investments as of December 31, 2020.

The composition of the Company’s investments as of December 31, 2021, 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 $ 405,509 $ 407,074 78.7 %

Senior Secured Second Lien Debt $ 53,561 $ 54,001 10.4

Subordinated Debt $ 24,412 $ 24,412 4.7

Equity/Other $ 31,710 $ 31,813 6.2

Total $ 515,192 $ 517,300 100.0 %

Significant Unobservable Inputs

2 unchanged sentences

Asset Category Fair Value Primary Valuation Technique Unobservable Inputs Minimum Maximum Weighted Average (a)

Senior Secured First Lien Debt $ 218,428 Discounted Cash Flow Market Yield 6.25% 9.87% 7.63%

Senior Secured First Lien Debt $ 636,074 Yield Analysis Market Yield 8.57 % 13.33 % 10.57 %

Senior Secured Second Lien Debt $ 45,575 Yield Analysis Market Yield 12.20 % 19.80 % 14.82 %

Subordinated Debt $ 31,414 Waterfall Analysis Tangible Net Asset Value Multiple 1.87 x 1.87 x 1.87 x

Equity/Other (b)

$ 30,742 Waterfall Analysis Tangible Net Asset Value Multiple 1.87 x 1.87 x 1.87 x

Equity/Other $ 3,111 Waterfall Analysis EBITDA Multiple 14.25 x 20.75 x 17.11 x

Equity/Other (b)

$ 116 Yield Analysis Market Yield 13.00 % 13.00 % 13.00 %

Total $ 747,032

______________

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

(b) This asset category contains one investment.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of December 31, 2021.

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

Asset Category Fair Value Primary Valuation Technique Unobservable Inputs Minimum Maximum Weighted Average (a)

Senior Secured First Lien Debt $ 218,428 Yield Analysis Market Yield 6.25 % 9.87 % 7.63 %

Senior Secured First Lien Debt (c)

3 unchanged sentences

$ 21,136 N/A N/A N/A N/A N/A

Senior Secured Second Lien Debt 11,569 Discounted Cash Flow Market Yield 7.00% 7.25% 7.13%

Senior Secured Second Lien Debt $ 11,569 Yield Analysis Market Yield 7.00 % 7.25 % 7.13 %

Senior Secured Second Lien Debt $ 9,655 Yield Analysis Market Yield 8.03 % 10.67 % 8.77 %

Subordinated Debt (b)(c)

3 unchanged sentences

Equity/Other (b)

116 Discounted Cash Flow Market Yield 9.75% 9.75% 9.75%

$ 116 Yield Analysis Market Yield 9.75 % 9.75 % 9.75 %

Total $ 456,668

6 unchanged sentences

Financial instruments that are included in this category include investments in privately held entities where the fair value is based on unobservable inputs.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2021

The income and market approaches were used in the determination of fair value of certain Level 3 assets as of December 31, 2021.

The income and market approaches were used in the determination of fair value of certain Level 3 assets as of December 31, 2022 and 2021.

The significant unobservable inputs used in the income approach are the discount rate or market yield used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments.

8 unchanged sentences

Increases or decreases in either of these inputs in isolation may result in a significantly lower or higher fair value measurement of the respective subject instrument.

As of December 31, 2021 , the Company had no portfolio companies on non-accrual status.

As of December 31, 2022 and 2021 , the Company h ad no po rtfolio companies on non-accrual status, respectively.

Refer to Note 2 - Summary of Significant Accounting Policies - for additional details regarding the Company’s non-accrual policy.

The Company commenced investment operations on January 7, 2021 and, as a result, did not have investments as of December 31, 2020.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

Note 4 - Related Party Transactions

Investment Advisory Agreement

The Company entered into an Investment Advisory Agreement with the Adviser in which the Adviser, subject to the overall supervision of the Company’s Board of Directors, manages the day-to-day operations of, and provides investment advisory services to the Company.

Pursuant to the Investment Advisory Agreement, the Company pays the Adviser a fee for investment advisory and management services consisting of two components - a base management fee (the “Management Fee”) and an incentive fee, which will consist of two components (together, the “Incentive Fee”).

The Company entered into an Investment Advisory Agreement with the Adviser pursuant to which the Adviser, subject to the overall supervision of the Company’s Board of Directors, manages the day-to-day operations of, and provides investment advisory services to the Company.

The Investment Advisory Agreement was approved by the Board of Directors and the sole stockholder for a two year term on September 23, 2020.

The Board of Directors renewed the Investment Advisory Agreement on January 30, 2023.

Pursuant to the Investment Advisory Agreement, the Company pays the Adviser a fee for investment advisory and management services consists of two components - a base management fee (the “Management Fee”) and an incentive fee, which consists of two components (together, the “Incentive Fee”).

Management Fee

5 unchanged sentences

Any fees waived under the Investment Advisory Agreement are not subject to reimbursement to the Adviser.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2021

As of December 31, 2021, and December 31, 2020, $0.5 million and $0 was payable to the Adviser for Management Fees, respectively.

For the year ended December 31, 2021 and for the period ended December 31, 2020, the Company incurred $1.1 million and $0, respectively, in Management Fees under the Investment Advisory Agreement.

As of December 31, 2022 and 2021, $ 1.0 million and $ 0.5 million was payable to the Adviser for Management Fees, respectively.

For the years ended December 31, 2022 and 2021, and for the period ended December 31, 2020, the Company incurred $ 3.4 million, $ 1.1 million, and $ 0 , respectively, in Management Fees under the Investment Advisory Agreement.

Incentive Fee

3 unchanged sentences

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.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

“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 Management Fee, expenses payable under the Administration Agreement (as defined below) and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee).

10 unchanged sentences

• 100 % of Pre-Incentive Fee Net Investment Income, if any, that exceeds the Preferred Return but is less than or equal to 1.8175 % in any calendar quarter ( 7.27 % annualized), which portion of the incentive fee on income is referred to as the “catch up” and is intended to provide the Adviser with an incentive fee of 17.5 % on all of Pre-Incentive Fee Net Investment Income when Pre-Incentive Fee Net Investment Income reaches 1.8175 % ( 7.27 % annualized) in any calendar quarter;

• For any quarter in which Pre-Incentive Fee Net Investment Income exceeds 1.8175 % ( 7.27 % annualized), the incentive fee on income equals 17.5 % of the amount of Pre-Incentive Fee Net Investment Income, as the Preferred Return and catch-up will have been achieved.

Notwithstanding the foregoing, for a period of 15 months commencing on the date of the closing of a liquidity event, the Adviser will irrevocably waive any incentive fee on income otherwise payable in excess of any amounts calculated at the pre-IPO or pre-Exchange Listing rates.

Any fees waived under the Investment Advisory Agreement are not subject to reimbursement to the Adviser.

For the years ended December 31, 2022 and 2021, and for the period ended December 31, 2020, the Company incurred $ 4.7 million, $ 0.7 million, and $ 0 , respectively, in incentive fees on income, none of which was payable to the Adviser under the Investment Advisory Agreement.

FRANKLIN BSP CAPITAL CORPORATION

2 unchanged sentences

For the year ended December 31, 2022

• For any quarter in which Pre-Incentive Fee Net Investment Income exceeds 1.8175% (7.27% annualized), the incentive fee on income equals 17.5% of the amount of Pre-Incentive Fee Net Investment Income, as the Preferred Return and catch-up will have been achieved.

Notwithstanding the foregoing, for a period of 15 months commencing on the date of the closing of a Liquidity Event, the Adviser will irrevocably waive any incentive fee on income otherwise payable in excess of any amounts calculated at the pre-IPO or pre-Exchange Listing rates.

Any fees waived under the Investment Advisory Agreement are not subject to reimbursement to the Adviser.

For the year ended December 31, 2021 and for the period ended December 31, 2020, the Company incurred $0.7 million and $0, respectively, in incentive fees on income, none of which was payable to the Adviser under the Investment Advisory Agreement.

The second part of the incentive fee, referred to as the “incentive fee on capital gains during operations,” is an incentive fee on capital gains earned on cumulative realized capital gains of the Company net of cumulative realized capital losses and unrealized capital depreciation and is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, if earlier).

2 unchanged sentences

GAAP requires that the incentive fee accrual be calculated assuming a hypothetical liquidation of the Company based upon investments held at the end of each period.

In such a calculation, in order to calculate the accrual for the capital gains incentive fee in accordance with GAAP for a given period, the Company includes unrealized appreciation in calculating the accrual for the capital gains incentive fee even though such unrealized appreciation is not included in in calculating the capital gains incentive fee payable under the Investment Advisory Agreement.

In such a calculation, in order to calculate the accrual for the capital gains incentive fee in accordance with U.S.

GAAP for a given period, the Company includes unrealized appreciation in calculating the accrual for the capital gains incentive fee even though such unrealized appreciation is not included in in calculating the capital gains incentive fee payable under the Investment Advisory Agreement.

There can be no assurance that such unrealized appreciation will be realized in the future.

Accordingly, the accrual for the capital gains incentive fee, as calculated and accrued in accordance with GAAP, does not necessarily represent amounts that will be payable under the Investment Advisory Agreement.

For the year ended December 31, 2021 and for the period ended December 31, 2020, the Company accrued $0.4 million and $0, respectively, in incentive fees on capital gains in accordance with GAAP, none of which was payable to the Adviser under the Investment Advisory Agreement.

Accordingly, the accrual for the capital gains incentive fee, as calculated and accrued in accordance with U.S.

GAAP, does not necessarily represent amounts that will be payable under the Investment Advisory Agreement.

For the years ended December 31, 2022 and 2021 and for the period ended December 31, 2020, the Company accrued $( 0.4 ) million, $ 0.4 million, and $ 0 , respectively, in incentive fees on capital gains in accordance with U.S.

GAAP, none of which was payable to the Adviser under the Investment Advisory Agreement.

Administration Agreement

The Company entered into an administration agreement with Benefit Street Partners (the “Administration Agreement”), pursuant to which Benefit Street Partners (in such capacity, the “Administrator”) provides the Company with office facilities and certain administrative services necessary for the Company to conduct its business.

As of December 31, 2021 and December 31, 2020, $0.7 million and $0 was payable to BSP under the Administration Agreement, respectively.

For the year ended December 31, 2021 and for the period ended December 31, 2020, the Company incurred $0.7 million and $0, respectively, in administrative service fees under the Administration Agreement, which are included in the other general and administrative on the consolidated statements of operations.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2021

As of December 31, 2022 and 2021, $ 0.8 million and $ 0.7 million was payable to BSP under the Administration Agreement, respectively.

For the years ended December 31, 2022 and 2021, and for the period ended December 31, 2020, the Company incurred $ 0.8 million, $ 0.7 million, and $ 0 , respectively, in administrative service fees under the Administration Agreement, which are included in the other general and administrative on the consolidated statements of operations.

Co-Investment Relief

3 unchanged sentences

Due to Related Party

Included within other liabilities on the consolidated statement of assets and liabilities as of December 31, 2021, and December 31, 2020, are $1.7 million and $1.0 million of payables to Affiliated Funds or the Adviser, respectively.

As of December 31, 2022 and 2021, $ 0 and $ 1.7 million of payables to Affiliated Funds or the Adviser were included within other liabilities on the consolidated statements of assets and liabilities.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

Note 5 - Borrowings

5 unchanged sentences

The obligations of FBCC Lending under the MS Credit Facility are nonrecourse to the Company.

Any amounts borrowed under the Credit Facility will mature, and will be due and payable, on the maturity date, which is March 15, 2025.

Borrowings under the MS Credit Facility bear interest at three-month LIBOR, with a LIBOR floor of zero, plus a spread of 2.25%.

Any amounts borrowed under the MS Credit Facility will mature, and will be due and payable, on the maturity date, which is March 15, 2025.

Prior to the Third Amendment (defined below), borrowings under the MS Credit Facility bore interest at three-month LIBOR, with a LIBOR floor of zero , plus a spread of 2.25 %.

Interest is payable quarterly in arrears.

FBCC Lending is subject to a non-usage fee of 0.50% on the difference between total commitments and the greater of the (i) drawn amounts and (ii) minimum utilization requirement, and, in addition, after the ramp-up period, FBCC Lending would pay interest on undrawn amounts up to the minimum utilization requirement under the MS Credit Facility, at three-month LIBOR floor of zero, plus spread of 1.125%, if drawn amounts are less than such minimum utilization requirement.

On July 1, 2021, FBCC Lending amended the MS Credit Facility to, among other things, increase the maximum permissible borrowings under the MS Credit Facility from $100.0 million to $200.0 million on a committed basis.

On December 15, 2021, FBCC Lending amended the MS Credit Facility to, among other things, increase the maximum permissible borrowings under the MS Credit Facility from $200.0 million to $250.0 million on a committed basis.

MS Subscription Facility

On April 22, 2021, the Company entered into a revolving credit agreement (the “MS Subscription Facility”) with Morgan Stanley Asset Funding, Inc., as administrative agent and sole lead arranger, and Morgan Stanley Bank, N.A., as the letter of credit issuer and lender.

The MS Subscription Facility allows the Company to borrow up to $50.0 million, subject to certain restrictions, including availability under the borrowing base, which is based on unfunded capital commitments.

The amount of permissible borrowings under the MS Subscription Facility may be increased up to an aggregate of $150.0 million with the consent of the lenders.

The MS Subscription Facility has a maturity date of April 22, 2022, which may be extended for an additional two terms of not more than 12 months each with the consent of the administrative agent and lenders.

FBCC Lending is subject to a non-usage fee of 0.50 % on the difference between total commitments and the greater of the (i) drawn amounts and (ii) minimum utilization requirement, and, in addition, after the ramp-up period, FBCC Lending would pay interest on undrawn amounts up to the minimum utilization requirement under the MS Credit Facility if drawn amounts are less than such minimum utilization requirement.

The Company paid an upfront fee and incurred other customary costs and expenses in connection with the MS Credit Facility.

On July 1, 2021, FBCC Lending amended the MS Credit Facility to, among other things, increase the maximum permissible borrowings under the MS Credit Facility from $ 100.0 million to $ 200.0 million on a committed basis (the “First Amendment”).

On December 15, 2021, FBCC Lending amended the MS Credit Facility to, among other things, increase the maximum permissible borrowings under the MS Credit Facility from $ 200.0 million to $ 250.0 million on a committed basis (the “Second Amendment”).

On January 31, 2022, FBCC Lending amended the MS Credit Facility to, among other things, increase the maximum permissible borrowings from $ 250.0 million to $ 300.0 million on a committed basis, transition the benchmark rate to Adjusted Term SOFR and included the Canadian Imperial Bank of Commerce ("CIBC") as a lender (the “Third Amendment”).

Following the Third Amendment, borrowings under the MS Credit Facility bear interest at Adjusted Term SOFR, with an Adjusted Term SOFR floor of zero, plus a spread of 2.00 %.

FBCC Lending is subject to non-usage fee of 0.50 % on the difference between total commitments and the greater of the (i) drawn amounts and (ii) minimum utilization requirement, and, in addition after the ramp-up period, FBCC Lending would pay interest on undrawn amounts up to the minimum utilization requirement under the MS Credit Facility, at three month SOFR floor of zero , plus spread of 1.125 %, if drawn amounts are less than such minimum utilization requirement.

The entire facility is subject to a 0.25 % administrative agent fee.

On June 28, 2022, FBCC Lending entered into a fourth amendment (together with any documents executed in connection therewith, the “Fourth Amendment”) to the MS Credit Facility.

The Fourth Amendment, among other things, increases the maximum permissible borrowings under the MS Credit Facility to $ 400.0 million from $ 300.0 million on a committed basis and amends the spread on borrowings under the MS Credit Facility to 2.25 %.

FRANKLIN BSP CAPITAL CORPORATION

2 unchanged sentences

For the year ended December 31, 2022

The MS Subscription Facility bears interest at a rate of:

(i) with respect LIBOR Rate Loans, Adjusted LIBOR for the applicable interest period plus 2.00% per annum and (ii) with respect to Base Rate Loans, the greatest of (a) the Prime Rate in effect on such day plus 1.00% per annum, (b) the Federal Funds Rate in effect on such day plus 0.50%, plus 1.00% per annum and (c) except during any period of time during which LIBOR is unavailable, one-month Adjusted LIBOR plus, without duplication, 100 basis points per annum.

MS Subscription Facility

On April 22, 2021, the Company entered into a $ 50.0 million revolving credit agreement (the “MS Subscription Facility”) with Morgan Stanley Asset Funding, Inc., as administrative agent and sole lead arranger, and Morgan Stanley Bank, N.A., as the letter of credit issuer and lender.

The MS Subscription Facility is subject to certain restrictions, including availability under the borrowing base, which is based on unfunded capital commitments.

The amount of permissible borrowings under the MS Subscription Facility may be increased up to an aggregate of $ 150.0 million with the consent of the lenders.

The MS Subscription Facility had a maturity date of April 22, 2022, which may be extended for an additional two terms of not more than 12 months each with the consent of the administrative agent and lenders.

On April 20, 2022, the Company entered into a first amendment (the “First Amendment”) to the MS Subscription Facility, which extended the maturity date to April 21, 2023, which may be extended for an additional term of not more than 12 months each with the consent of the administrative agent and lenders.

On September 30, 2022, pursuant to the terms of the agreement, the Company voluntarily reduced commitments from $ 50.0 million to $ 44.5 million and on December 9, 2022, pursuant to the terms of the agreement, the Company voluntarily reduced commitments from $ 44.5 million to $ 25.5 million (together, the “MS Subscription Facility Downsizes”).

Prior to the First Amendment, the MS Subscription Facility bore interest at a rate of:

(i) with respect LIBOR Rate Loans, Adjusted LIBOR (as defined in the MS Subscription Facility) for the applicable interest period plus 2.00 % per annum and (ii) with respect to Base Rate Loans, the greatest of (a) the Prime Rate in effect on such day plus 1.00 % per annum, (b) the Federal Funds Rate in effect on such day plus 0.50 %, plus 1.00 % per annum and (c) except during any period of time during which LIBOR is unavailable, one-month Adjusted LIBOR plus, without duplication, 100 basis points per annum.

The Company paid an upfront fee and incurred other customary costs and expenses in connection with the MS Subscription Facility.

Subsequent to the First Amendment, the MS Subscription Facility bears interest at a rate of:

(i) with respect to Term SOFR Loans, Term SOFR with a one-month Interest Period plus 2.10 % per annum and (ii) with respect to Base Rate Loans, the greatest of (a) the Prime Rate in effect on such day plus 100 basis points ( 1.00 %) per annum, (b) the Federal Funds Rate in effect on such day plus 0.50 % plus 1.00 % per annum and (c) except during any period of time during which Term SOFR is unavailable, Term SOFR for a one-month tenor in effect on such day plus without duplication, 100 basis points ( 1.00 %) per annum plus 100 basis points ( 1.00 %) per annum.

The Company paid an upfront fee and incurred other customary costs and expenses in connection with the First Amendment to MS Subscription Facility.

In addition, the Company will be subject to an unused commitment fee of 0.30 %.

4 unchanged sentences

Total $ 425,500 $ 381,900 $ ( 2,320 ) $ 379,580

The weighted average annualized interest cost for all facility borrowings for the year ended December 31, 2021 was 2.32%.

The average daily debt outstanding for facility borrowings for the year ended December 31, 2021 was $106.9 million.

The maximum debt outstanding for facility borrowings for the year ended December 31, 2021 was $264.9 million.

The following table represents facility borrowings as of December 31, 2021:

Maturity Date Total Aggregate Borrowing Capacity Total Principal Outstanding Less Deferred Financing Costs Amount per Consolidated Statements of Assets and Liabilities

MS Credit Facility 3/15/2025 $ 250,000 $ 190,000 $ ( 2,174 ) $ 187,826

MS Subscription Facility 4/22/2022 50,000 49,900 ( 186 ) 49,714

Total $ 300,000 $ 239,900 $ ( 2,360 ) $ 237,540

The weighted average annualized interest cost for all facility borrowings for the years ended December 31, 2022 and 2021 was 4.14 % and 2.32 %, respectively.

The average daily debt outstanding for facility borrowings for the years ended December 31, 2022 and 2021 was $ 324.3 million and $ 106.9 million, respectively.

The maximum debt outstanding for facility borrowings for the years ended December 31, 2022 and 2021 was $ 426.9 million and $ 264.9 million, respectively.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

Short-term Borrowings

3 unchanged sentences

The Company uses repurchase agreements as a short-term financing alternative.

As of December 31, 2021 and 2020, the Company had short-term borrowings outstanding of $41.3 million and $0, respectively.

For the year ended December 31, 2021 and for the period ended December 31, 2020, the Company recorded interest expense of $0.1 million and $0, respectively, in connection with short-term borrowings.

As of December 31, 2022 and 2021, the Company had short-term borrowings outstanding of $ 20.8 million and $ 41.3 million, respectively.

For the years ended December 31, 2022 and 2021, and for the period ended December 31, 2020, the Company recorded interest expense of $ 2.2 million, $ 0.1 million, and $ 0 , respectively, in connection with short-term borrowings.

For the year ended December 31, 2022, the Company had an average outstanding balance of short-term borrowings of $ 44.0 million and bore interest at a weighted average rate of 0.01 %.

For the period October 29, 2021 through December 31, 2021 (period for which the Company had short-term borrowings), the Company had an average outstanding balance of short-term borrowings of $ 19.3 million and bore interest at a weighted average rate of 0.01 %.

3 unchanged sentences

Other Fees (2)

MS Credit Facility (3)

0.50 % $ 10,908 $ 894 $ 1,398

MS Subscription Facility (4)

0.30 % 1,781 295 —

Short-term borrowings 2,191 — —

Total $ 14,880 $ 1,189 $ 1,398

(1) Amortization of deferred financing costs.

(2) Includes non-usage fees, custody fees, and administrative agent fees.

(3) From January 1, 2022 through January 30, 2022, the MS Credit Facility had an interest rate priced at three-month LIBOR, with a LIBOR floor of zero , plus a spread of 2.25 %.

From January 31, 2022 through June 27, 2022 the MS Credit Facility transitioned the benchmark rate to Adjusted Term SOFR.

Borrowings under the MS Credit Facility bore interest at Adjusted Term SOFR, with an Adjusted Term SOFR floor of zero , plus a spread of 2.00 %.

From June 28, 2022 to December 31, 2022 MS Credit Facility had an interest rate priced at Term SOFR, plus a spread of 2.25 %.

(4) From January 1, 2022 through April 19, 2022 the MS Subscription Facility bore interest at a rate of Adjusted LIBOR for the applicable interest period plus 2.00 % per annum.

From April 20, 2022 through December 31, 2022 bears interest at a rate of Term SOFR with a one-month Interest Period plus 2.10 % per annum.

The following table represents interest and debt fees for the year ended December 31, 2021:

Year Ended December 31, 2021

Interest Rate Non-Usage Rate Interest Expense Deferred Financing Costs (1)

Other Fees (2)

MS Credit Facility L+ 2.25 %

0.50 % $ 1,787 $ 365 $ 340

MS Subscription Facility L+ 2.00 %

0.30 % 654 282 14

Short-term borrowings 97 — —

2 unchanged sentences

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

As of December 31, 2020, the Company did not have any borrowings.

FRANKLIN BSP CAPITAL CORPORATION

2 unchanged sentences

For the year ended December 31, 2022

As of December 31, 2020 and during the period then ended, the Company did not have any borrowings.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate fair value.

3 unchanged sentences

The fair value of the Company's borrowings is estimated based upon market interest rates for the Company's own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any.

As of December 31, 2021, the Company's borrowings would be deemed to be Level 3, as defined in Note 3 - Fair Value of Financial Instruments.

As of December 31, 2022 and 2021, the Company's borrowings would be deemed to be Level 3, as defined in Note 3 - Fair Value of Financial Instruments.

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:

3 unchanged sentences

Total $ 381,900 $ 381,900

Level Carrying Amount as of December 31, 2021 Fair Value as of December 31, 2021

MS Credit Facility 3 $ 190,000 $ 190,000

MS Subscription Facility 3 49,900 49,900

Total $ 239,900 $ 239,900

Note 6 - Commitments and Contingencies

1 unchanged sentence

As of December 31, 2022, the Company had unfunded commitments on delayed draw term loans of $ 56.1 million, and unfunded commitments on revolver term loans of $ 47.5 million.

As of December 31, 2021, the Company had unfunded commitments on delayed draw term loans of $ 63.0 million, and unfunded commitments on revolver term loans of $ 27.8 million.

The Company maintains sufficient cash on hand, unfunded Capital Commitments, and available borrowings to fund such unfunded commitments.

2 unchanged sentences

ADCS Clinics Intermediate Holdings, LLC Senior Secured First Lien Debt Delayed Draw $ 1,513 $ 333

ADCS Clinics Intermediate Holdings, LLC Senior Secured First Lien Debt Delayed Draw 1,246 1,246

ADCS Clinics Intermediate Holdings, LLC Senior Secured First Lien Debt Revolver 533 533

Alera Group Intermediate Holdings, Inc.

Senior Secured First Lien Debt Delayed Draw 5,793 2,552

Armada Parent, Inc.

2 unchanged sentences

Senior Secured First Lien Debt Revolver 2,444 2,444

Avalara, Inc.

Senior Secured First Lien Debt Revolver 1,990 1,990

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

Portfolio Company Name Investment Type Commitment Type Total Commitment Remaining Commitment

Aventine Holdings, LLC Senior Secured First Lien Debt Delayed Draw $ 4,722 $ 366

BCPE Oceandrive Buyer, Inc.

Senior Secured First Lien Debt Delayed Draw 5,194 4,408

Center Phase Energy, LLC Senior Secured First Lien Debt Revolver 6,593 6,593

Communication Technology Intermediate, LLC Senior Secured First Lien Debt Revolver 998 912

Community Brands Parentco, LLC Senior Secured First Lien Debt Delayed Draw 1,085 1,085

Community Brands Parentco, LLC Senior Secured First Lien Debt Revolver 542 542

Coronis Health, LLC Senior Secured First Lien Debt Revolver 1,968 1,968

Eliassen Group, LLC Senior Secured First Lien Debt Delayed Draw 1,452 1,235

Encina Equipment Finance, LLC Subordinated Debt Delayed Draw 11,000 4,086

Faraday Buyer, LLC Senior Secured First Lien Debt Delayed Draw 1,260 1,260

FGT Purchaser, LLC Senior Secured First Lien Debt Revolver 976 605

Galway Borrower, LLC Senior Secured First Lien Debt Delayed Draw 125 125

Galway Borrower, LLC Senior Secured First Lien Debt Revolver 861 861

Geosyntec Consultants, Inc.

Senior Secured First Lien Debt Delayed Draw 5,503 5,503

Geosyntec Consultants, Inc.

Senior Secured First Lien Debt Revolver 2,017 2,017

Gogo Intermediate Holdings, LLC Senior Secured First Lien Debt Revolver 452 452

IG Investments Holdings, LLC Senior Secured First Lien Debt Revolver 632 379

Indigo Buyer, Inc.

Senior Secured First Lien Debt Delayed Draw 3,841 3,841

Indigo Buyer, Inc.

Senior Secured First Lien Debt Revolver 1,536 1,280

IQN Holding Corp.

Senior Secured First Lien Debt Delayed Draw 1,258 1,163

IQN Holding Corp.

Senior Secured First Lien Debt Revolver 503 503

Knowledge Pro Buyer, Inc.

Senior Secured First Lien Debt Delayed Draw 2,290 1,238

Knowledge Pro Buyer, Inc.

Senior Secured First Lien Debt Revolver 1,147 1,147

Medical Management Resource Group, LLC Senior Secured First Lien Debt Revolver 603 603

Mirra-Primeaccess Holdings, LLC Senior Secured First Lien Debt Revolver 3,429 2,143

Monumental RSN, LLC Senior Secured First Lien Debt Revolver 1,590 1,590

Odessa Technologies, Inc.

Senior Secured First Lien Debt Delayed Draw 1,217 1,217

Odessa Technologies, Inc.

Senior Secured First Lien Debt Revolver 1,704 1,704

Pie Buyer, Inc.

Senior Secured First Lien Debt Delayed Draw 2,905 2,905

Pie Buyer, Inc.

Senior Secured First Lien Debt Revolver 741 556

Pluralsight, LLC Senior Secured First Lien Debt Revolver 638 319

Point Broadband Acquisition, LLC Senior Secured First Lien Debt Delayed Draw 3,663 1,930

Relativity Oda, LLC Senior Secured First Lien Debt Revolver 196 196

Roadsafe Holdings, Inc.

Senior Secured First Lien Debt Delayed Draw 4,357 1,437

RSC Acquisition, Inc.

Senior Secured First Lien Debt Delayed Draw 2,179 1,541

Saturn SHC Buyer Holdings, Inc.

Senior Secured First Lien Debt Revolver 4,012 4,012

Sherlock Buyer Corp.

Senior Secured First Lien Debt Delayed Draw 1,454 1,454

Sherlock Buyer Corp.

Senior Secured First Lien Debt Revolver 581 581

Simplifi Holdings, Inc.

Senior Secured First Lien Debt Revolver 1,720 1,720

SunMed Group Holdings, LLC Senior Secured First Lien Debt Revolver 259 135

The NPD Group, LP Senior Secured First Lien Debt Revolver 943 830

Trinity Air Consultants Holdings Corp.

Senior Secured First Lien Debt Delayed Draw 3,001 1,350

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

Portfolio Company Name Investment Type Commitment Type Total Commitment Remaining Commitment

Trinity Air Consultants Holdings Corp.

Senior Secured First Lien Debt Revolver $ 857 $ 857

Triple Lift, Inc.

Senior Secured First Lien Debt Revolver 1,393 859

US Oral Surgery Management Holdco, LLC Senior Secured First Lien Debt Delayed Draw 2,176 585

US Oral Surgery Management Holdco, LLC Senior Secured First Lien Debt Delayed Draw 1,896 1,896

US Oral Surgery Management Holdco, LLC Senior Secured First Lien Debt Revolver 527 527

US Salt Investors, LLC Senior Secured First Lien Debt Revolver 934 934

Victors CCC Buyer, LLC Senior Secured First Lien Debt Delayed Draw 1,875 1,875

Victors CCC Buyer, LLC Senior Secured First Lien Debt Revolver 1,358 1,358

West Coast Dental Services, Inc.

Senior Secured First Lien Debt Delayed Draw 1,448 1,448

West Coast Dental Services, Inc.

Senior Secured First Lien Debt Revolver 1,087 978

Westwood Professional Services, Inc.

Senior Secured First Lien Debt Delayed Draw 1,299 866

Westwood Professional Services, Inc.

Senior Secured First Lien Debt Revolver 162 162

WHCG Purchaser III, Inc.

Senior Secured First Lien Debt Delayed Draw 5,886 2,836

WHCG Purchaser III, Inc.

Senior Secured First Lien Debt Revolver 1,821 1,106

WIN Holdings III Corp.

Senior Secured First Lien Debt Revolver 1,908 1,908

Zendesk, Inc.

Senior Secured First Lien Debt Delayed Draw 5,304 5,304

Zendesk, Inc.

Senior Secured First Lien Debt Revolver 2,184 2,184

$ 138,815 $ 103,592

As of December 31, 2021, the Company's unfunded commitments consisted of the following:

Portfolio Company Name Investment Type Commitment Type Total Commitment Remaining Commitment

ADCS Clinics Intermediate Holdings, LLC Senior Secured First Lien Debt Delayed Draw $ 1,522 $ 627

ADCS Clinics Intermediate Holdings, LLC Senior Secured First Lien Debt Revolver 533 533

Armada Parent, Inc.

Senior Secured First Lien Debt Delayed Draw 2,037 2,037

Armada Parent, Inc.

Senior Secured First Lien Debt Revolver 2,444 2,240

Aveanna Healthcare, LLC Senior Secured First Lien Debt Delayed Draw 1,312 1,312

15 unchanged sentences

Portfolio Company Name Investment Type Commitment Type Total Commitment Remaining Commitment

Encina Equipment Finance, LLC Subordinated Debt Delayed Draw $ 11,000 $ 11,000

FGT Purchaser, LLC Senior Secured First Lien Debt Revolver 976 683

7 unchanged sentences

Senior Secured First Lien Debt Revolver 1,147 872

Luna Sub 2, LLC Subordinated Debt Delayed Draw 11,000 11,000

Medical Management Resource Group, LLC Senior Secured First Lien Debt Delayed Draw 3,016 3,016

26 unchanged sentences

Therapy Brands Holdings, LLC Senior Secured First Lien Debt Delayed Draw 372 372

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2021

Portfolio Company Name Investment Type Commitment Type Total Commitment Remaining Commitment

Therapy Brands Holdings, LLC Senior Secured Second Lien Debt Delayed Draw 577 577

18 unchanged sentences

Senior Secured First Lien Debt Revolver 1,821 1,721

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

Portfolio Company Name Investment Type Commitment Type Total Commitment Remaining Commitment

WIN Holdings III Corp.

14 unchanged sentences

Investor Commitments

As of December 31, 2021 and December 31, 2020, the Company had $601.3 million and $136.0 million, respectively, in total capital commitments of Common Stock and Series A Preferred Stock, of which $365.2 million and $136.0 million, respectively, were unfunded.

The following table summarizes the total capital commitments and unfunded capital commitments of Common Stock and Series A Preferred Stock as of December 31, 2022 and as of December 31, 2021:

As of December 31, 2022 As of December 31, 2021

Capital Commitments Unfunded Capital Commitments Capital Commitments Unfunded Capital Commitments

Common Stock $ 586,156 $ 221,281 $ 573,763 $ 342,742

Series A Preferred Stock 77,500 41,354 27,500 22,500

Total $ 663,656 $ 262,635 $ 601,263 $ 365,242

Capital Drawdowns

The following tables summarizes the total shares issued and proceeds related to capital drawdowns of Common Stock for the year ended December 31, 2022:

FRANKLIN BSP CAPITAL CORPORATION

2 unchanged sentences

For the year ended December 31, 2022

As of December 31, 2021 and December 31, 2020, the Company had $573.8 million and $136.0 million, respectively, in total capital commitments of Common Stock, of which $342.7 million and $136.0 million, respectively, were unfunded.

As of December 31, 2021 and December 31, 2020, the Company had $27.5 million and $0, respectively, in total capital commitments of Series A Preferred Stock, of which $22.5 million and $0, respectively, were unfunded.

Capital Drawdowns

The following tables summarizes the total shares issued and proceeds related to capital drawdowns of Common Stock for the year ended December 31, 2021 and period ended December 31, 2020:

Share Issue Date Shares Issued Net Proceeds Received

For the year ended December 31, 2022

May 27, 2022 1,653,439 $ 25,000

July 15, 2022 2,621,233 40,000

September 28, 2022 3,289,476 50,000

November 23, 2022 1,256,895 18,854

Total Capital Drawdowns 8,821,043 $ 133,854

The following tables summarizes the total shares issued and proceeds related to capital drawdowns of Common Stock for the year ended December 31, 2021:

Share Issue Date Shares Issued Net Proceeds Received

For the year ended December 31, 2021

January 7, 2021 1,333,333 $ 20,000

7 unchanged sentences

Total Capital Drawdowns 15,208,778 $ 231,019

Share Issue Date Shares Issued Net Proceeds Received

For the period ended December 31, 2020

October 1, 2020 100 $ 2

Total Capital Drawdowns 100 $ 2

The issuances of Common Stock described above were exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(a)(2) thereof and Regulation D thereunder.

The Company relied, in part, upon representations from investors in the relevant Subscription Agreements that each investor is an "accredited investor," as defined in Regulation D under the Securities Act.

The following tables summarizes the total shares issued and proceeds related to capital drawdowns of Series A Preferred Stock:

The following table summarizes the total shares issued and proceeds, net of issuance, costs related to capital drawdowns of Series A Preferred Stock year ended December 31, 2022:

Share Issue Date Shares Issued Net Proceeds Received

For the year ended December 31, 2022

April 7, 2022 5,000 $ 4,993

July 15, 2022 10,000 9,985

November 23, 2022 16,147 16,123

Total Capital Drawdowns 31,147 $ 31,101

The following table summarizes the total shares issued and proceeds, net of issuance, costs related to capital drawdowns of Series A Preferred Stock year ended December 31, 2021:

Share Issue Date Shares Issued Net Proceeds Received

For the year ended December 31, 2021

December 27, 2021 5,000 $ 4,992

5 unchanged sentences

Note 9 - Common Stock

The following table reflects the net assets attributable to common stock activity for the year ended December 31, 2021 and for the period ended December 31, 2020:

The following table reflects the net assets attributable to Common Stock activity for the years ended December 31, 2022 and 2021, and the period ended December 31, 2020:

Common stock - shares Common stock - par Additional paid in capital Total distributable earnings (loss) Total net assets attributable to common stock

Balance as of January 29, 2020 (date of inception) — $ — $ — $ — $ —

Net loss — — — (414) (414)

Net investment income (loss) — — — ( 414 ) ( 414 )

Issuance of common stock, net of issuance costs 100 — (1)

1 unchanged sentence

$ 2 $ ( 414 ) $ ( 412 )

Net investment income

Net investment income (loss) — — — 4,143 4,143

Net realized gain (loss) from investment transactions — — — 618 618

Net change in unrealized appreciation (depreciation) on investments — — — 2,108 2,108

Issuance of common stock, net of issuance costs 15,208,778 15 231,004 — 231,019

Distributions to stockholders — — — ( 2,293 ) ( 2,293 )

Reinvested dividends 51,886 — 790 — 790

Tax adjustment — — ( 596 ) 596 —

Balance as of December 31, 2021 15,260,764 $ 15 $ 231,200 $ 4,758 $ 235,973

Net investment income (loss)

— — — 31,470 31,470

Net realized gain from investment transactions

Net realized gain (loss) from investment transactions

— — — 467 467

Net change in unrealized appreciation on investments

Net change in unrealized appreciation (depreciation) on investments

— — — ( 8,737 ) ( 8,737 )

Accretion to redemption value of Series A redeemable convertible preferred stock — — — ( 3 ) ( 3 )

Accrual of Series A redeemable convertible preferred stock distributions — — — ( 1,367 ) ( 1,367 )

Distributions to common stockholders — — — ( 27,309 ) ( 27,309 )

Issuance of common stock, net of issuance costs 8,821,043 10 133,844 — 133,854

Distributions to stockholders — — — (2,293) (2,293)

Reinvested dividends 527,325 — 8,073 — 8,073

Tax adjustment — — 2,440 ( 2,440 ) —

Balance as of December 31, 2022 24,609,132 $ 25 $ 375,557 $ ( 3,161 ) $ 372,421

1 unchanged sentence

The Company has adopted a distribution reinvestment plan (the “DRIP”) pursuant to which all cash dividends or distributions (“Distributions”) declared by the Board of Directors are reinvested on behalf of investors who do not elect to receive their Distributions in cash (the “Participants”).

As a result, if the Board of Directors declares a Distribution, then stockholders who have not elected to “opt out” of the DRIP will have their Distributions automatically reinvested in additional shares of the Company's common stock at a price equal to NAV per share as estimated in good faith by the Company on the payment date.

As a result, if the Board of Directors declares a Distribution, then stockholders who have not elected to “opt out” of the DRIP will have their Distributions automatically reinvested in additional shares of the Company's Common Stock at a price equal to net asset value (“NAV”) per share as estimated in good faith by the Company on the payment date.

The timing and amount of Distributions to stockholders are subject to applicable legal restrictions and the sole discretion of our Board of Directors.

The following table reflects the Common Stock activity for the year ended December 31, 2021:

Shares Sold $ 15,208,778 $ 231,019

Shares Issued through DRIP 51,886 790

Share Repurchases — —

15,260,664 $ 231,809

FRANKLIN BSP CAPITAL CORPORATION

2 unchanged sentences

For the year ended December 31, 2022

The following table reflects the Common Stock activity for the year ended December 31, 2022:

Shares Sold 8,821,043 $ 133,854

Shares Issued through DRIP 527,325 8,073

9,348,368 $ 141,927

The following table reflects the Common Stock activity for the year ended December 31, 2021:

Shares Sold 15,208,778 $ 231,019

Shares Issued through DRIP 51,886 790

15,260,664 $ 231,809

Note 10 – Preferred Stock

On August 25, 2021, the Company filed with the Secretary of State of the State of Delaware the Certificate of Designation for the Series A Preferred Stock, which designates a total of 50.0 million shares of preferred stock as Series A Preferred Stock, par value $ 0.001 per share.

On the same day, the Company entered into subscription agreements (collectively, the “Preferred Subscription Agreements”) with certain investors (the “Investors,” and each, an “Investor”), pursuant to which the Investors made new capital commitments to purchase shares of the Company’s Series A Preferred Stock, in a total aggregate amount of $27.5 million.

On the same day, the Company entered into subscription agreements (collectively, the “Preferred Subscription Agreements”) with certain investors, pursuant to which the investors made new capital commitments (the “Preferred Capital Commitments”) to purchase shares of the Company’s Series A Preferred Stock.

As of December 31, 2022, the Company has received total Preferred Capital Commitments of $ 77.5 million, which has and will continue to call from time to time.

Pursuant to their respective Preferred Subscription Agreements, each investor is required to fund drawdowns to purchase shares of the Series A Preferred Stock up to the amount of their respective capital commitments on an as-needed basis, upon a minimum of 10 business days prior notice at a per-share price equal to the liquidation preference (the “Liquidation Preference”).

1 unchanged sentence

The Company shall rely, in part, upon representations from the Investors in the relevant Preferred Subscription Agreements that each Investor is an “accredited investor,” as defined in Regulation D under the Securities Act.

On December 27, 2021, the Company issued 5,000 shares of Series A Preferred Stock.

The Company received approximately $5.0 million in total net proceeds from the sale of the Series A Preferred Stock and incurred approximately $0.01 million in stock offering costs as part of the sale.

As of December 31, 2022, there were 50.0 million shares of preferred stock authorized, par value $ 0.001 per share, of which 36,147 shares of Series A Preferred Stock were issued and outstanding.

As of December 31, 2021, there were 50.0 million shares of preferred stock authorized, par value $ 0.001 per share, of which 5,000 shares of Series A Preferred Stock were issued and outstanding.

No shares outstanding of Series A Preferred Stock are redeemable before December 31, 2026.

2 unchanged sentences

Dividends are payable on each outstanding share of Series A Preferred Stock quarterly in arrears at a rate equal to (1) for each fiscal quarter ending on or before September 30, 2022 (the “Initial Dividend Period”), the dividends that would have been paid in respect of each share of Series A Preferred Stock if it had been converted into a share of the Company’s Common Stock, on the first day of such quarter (or the date of issuance in the case of shares of Series A Preferred Stock issued after the first day of such quarter) at the applicable Conversion Rate (as defined below) and (2) for each quarter after the Initial Dividend Period, the greater of (i) an amount equal to $ 10.00 per share, subject to proration if such share is not outstanding for the full quarter, and (ii) the dividends that would have been paid in respect of such share of Series A Preferred Stock if it had been converted into a share of Common Stock on the first day of such quarter (or the date of issuance in the case of shares of Series A Preferred Stock issued after the first day of such quarter) at the applicable Conversion Rate.

During the year ended December 31, 2021, no dividends were declared.

The Series A Preferred Stock is convertible (a) by the Company, in its sole discretion, at any time commencing on the closing date of a Liquidity Event, as defined by the Confidential Private Placement Memorandum of Franklin BSP Capital Corporation, dated September 2020, or (b) by the holders thereof at any time commencing six months following the closing date of a Liquidity Event, in each case, into the number of shares of Common Stock equal to (1) the Liquidation Preference divided by (2) the price paid by investors for shares of Common Stock at the time of the purchase of such share of Series A Preferred Stock or if the purchase of such share of Series A Preferred Stock did not occur concurrent with a sale of Common Stock by the Company at the net asset value per share of Common Stock determined within 48 hours (excluding Sundays and holidays) of the purchase of such share of Series A Preferred Stock (the “Conversion Rate”).

The Company has the right to redeem the Series A Preferred Stock at any time, and from time to time, on or after August 23, 2029 upon 90 days prior notice to holders of Series A Preferred Stock.

As of December 31, 2021, a Liquidity Event had not commenced.

The holders of the Preferred Stock are generally entitled to vote with the holders of the shares of Common Stock on all matters submitted for a vote to the common stockholders (voting together with the holders of shares of Common Stock as one class) on an as-converted basis, subject to certain limitations.

FRANKLIN BSP CAPITAL CORPORATION

2 unchanged sentences

For the year ended December 31, 2022

The following table presents the activity in the Company’s Series A Preferred Stock for the period ended December 31, 2021:

The Series A Preferred Stock is convertible (a) by the Company, in its sole discretion, at any time commencing on the closing date of a liquidity event, as defined by the Confidential Private Placement Memorandum of Franklin BSP Capital Corporation, dated September 2020, or (b) by the holders thereof at any time commencing six months following the closing date of a liquidity event, in each case, into the number of shares of Common Stock equal to (1) the Liquidation Preference divided by (2) the price paid by investors for shares of Common Stock at the time of the purchase of such share of Series A Preferred Stock or if the purchase of such share of Series A Preferred Stock did not occur concurrent with a sale of Common Stock by the Company at the net asset value per share of Common Stock determined within 48 hours (excluding Sundays and holidays) of the purchase of such share of Series A Preferred Stock (the “Conversion Rate”).

The Company has the right to redeem the Series A Preferred Stock at any time, and from time to time, on or after August 23, 2029 upon 90 days prior notice to holders of Series A Preferred Stock.

As of December 31, 2022 and 2021, a liquidity event had not commenced.

The following table presents the activity in the Company’s Series A Preferred Stock for the year ended December 31, 2022:

Series A Preferred Stock Shares Amount

1 unchanged sentence

Issuance of Preferred Stock 31,147 31,147

Dividends paid in Preferred Stock — —

Offering costs — ( 49 )

1 unchanged sentence

Ending Balance, December 31, 2022 36,147 $ 36,093

The following table presents the activity in the Company’s Series A Preferred Stock for the year ended December 31, 2021:

Series A Preferred Stock Shares Amount

Beginning Balance, December 31, 2020 — $ —

Issuance of Preferred Stock 5,000 5,000

Offering costs — ( 8 )

Amortization of offering costs — 0 (1)

Ending Balance, December 31, 2021 5,000 $ 4,992

(1) Less than $ 1 .

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

Note 11 - Earnings Per Share

Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period.

Basic and diluted earnings per share (“EPS”) are computed using the two-class method, which considers participating securities as a separate class of shares.

The two-class method is an earnings allocation formula that determines EPS for common stock according to dividends distributed and participation rights in undistributed earnings.

The Company’s participating securities consist of its Series A Preferred Stock.

Basic earnings per share is computed by dividing earnings available to common stockholders, adjusted to exclude earnings allocated to participating securities, 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 December 31, 2021.

The following information sets forth the computation of the weighted average basic net increase in net assets per share resulting from operations for the year ended December 31, 2021.

Year Ended December 31,

The following information sets forth the computation of the weighted average basic and diluted net increase in net assets per share resulting from operations for the years ended December 31, 2022 and 2021.

For the year ended December 31,

Numerator 2022 2021

Net increase in net assets resulting from operations attributable to common stockholders $ 6,869

Distributed Earnings to Series A Redeemable Preferred Stock Dividends in current period —

Undistributed profit attributable to shares of common stock $ 6,869

Net increase (decrease) in net assets resulting from operations $ 23,200 $ 6,869

cumulative preferred stock dividends ( 2,297 ) —

changes in carrying value of redeemable securities ( 3 ) —

Numerator for EPS - income available to common stockholders $ 20,900 $ 6,869

Weighted average common shares outstanding 18,679,387 5,301,096

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Note 12 — Distributions

The following table reflects the distributions declared on shares of the Company’s Common Stock:

The following table reflects the distributions declared on shares of the Company’s Common Stock during the year ended December 31, 2022:

Date Declared Record Date Payment Date Amount Per Share

For the Year Ended December 31, 2022

February 4, 2022 January 31, 2022 February 22, 2022 $ 0.30

May 11, 2022 May 11, 2022 May 24, 2022 $ 0.39

July 28, 2022 July 28, 2022 August 5, 2022 $ 0.39

October 26, 2022 October 26, 2022 November 7, 2022 $ 0.39

The following table reflects the distributions declared on shares of the Company’s Common Stock during the year ended December 31, 2021:

Date Declared Record Date Payment Date Amount Per Share

For the Year Ended December 31, 2021

October 28, 2021 October 28, 2021 November 15, 2021 $ 0.30

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

The following table reflects the distributions declared on shares of the Company’s Series A Preferred Stock during the year ended December 31, 2022:

Date Declared Record Date Payment Date Amount Per Share

For the Year Ended December 31, 2022

February 4, 2022 January 31, 2022 February 22, 2022 $ 19.49

May 11, 2022 May 11, 2022 May 24, 2022 $ 25.28

July 28, 2022 July 28, 2022 August 5, 2022 $ 25.42

October 26, 2022 October 26, 2022 November 7, 2022 $ 25.42

There were no distributions declared on shares of Series A Preferred Stock during the year ended December 31, 2021.

Note 13 — Income Tax Information and Distributions to Stockholders

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The Company may also be subject to federal excise taxes of 4%.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2021

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).

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In the event the Company realizes net capital gains from such transactions, the Company may make a larger capital gain distribution than it would have made in the absence of such transactions.

The tax character of distributions for the fiscal year ended December 31, 2021 was as follows:

Depending on the level of taxable income earned in a tax year, for excise tax purposes the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year and incur a 4% U.S.

federal excise tax on such income, as required.

To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned.

The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes (“ASC Topic 740”), nor did the Company have any unrecognized tax benefits as of the periods presented herein.

The Company’s current tax year, 2021 and 2020 federal and state tax returns remain subject to examination by the Internal Revenue Service and state departments of revenue.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

The tax character of distributions for the fiscal years ended December 31, 2022 and 2021 was as follows:

For the year ended December 31,

Ordinary income distributions* $ 28,676 100.0 % $ 2,293 100.0 %

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Total distributions $ 28,676 100.0 % $ 2,293 100.0 %

*(Unaudited) Includes 92.62% interest-related dividends.

* Includes 91.10 % interest-related dividends.

Interest-related dividends received by nonresident aliens and foreign corporations are generally eligible for exemption from U.S.

withholding tax in accordance with Sections 871(k) of the Code.

For the year ended December 31, 2021 the components of accumulated gain and losses on a tax basis were as follows:

For the years ended December 31, 2022 and 2021, the reconciliation of net increase in net assets resulting from operations to taxable income is as follows:

Book income (loss) from operating activities $ 21,830 $ 6,869

Net unrealized (gain)/loss on investments 7,957 ( 2,108 )

Nondeductible expenses 313 —

Temporary differences ( 1,101 ) ( 50 )

Taxable income before deductions for distributions paid $ 28,999 $ 4,711

For the years ended December 31, 2022 and 2021, the components of accumulated gain and losses on a tax basis were as follows:

For the year ended December 31,

Undistributed ordinary income $ 3,586 $ 3,036

Undistributed long term gain (loss) 271 —

Undistributed capital loss carryforward — —

Total undistributed net earnings 3,036

Net unrealized gain on investments 2,108

Other accumulated loss on investments (386)

Total undistributed taxable income $ 4,758

As of December 31, 2021, the Company did not have any short-term or long-term capital loss carryforwards.

At December 31, 2021, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes are as follows:

December 31, 2021

Total undistributed net earnings (loss) 3,856 3,036

Net unrealized gain (loss) on investments ( 4,604 ) 2,108

Other accumulated gain (loss) on investments ( 388 ) ( 386 )

Total undistributed taxable income (loss) $ ( 1,136 ) $ 4,758

As of December 31, 2022 and 2021, the Company did not have any short-term or long-term capital loss carryforwards.

At December 31, 2022 and 2021, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

December 31, 2022 December 31, 2021

Tax cost 786,984 515,192

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For the year ended December 31, 2022

During the year ended December 31, 2021, as a result of permanent book-to-tax differences, the Company made reclassifications among components of net assets as follows:

Total distributable earnings Paid in capital

During the years ended December 31, 2022 and 2021, as a result of permanent book-to-tax differences, the Company made reclassifications among components of net assets as follows:

Total distributable earnings (loss) Paid in capital

2022 $ ( 2,440 ) $ 2,440

These differences primarily relate to non-deductible offering costs.

2021 $ 596 $ ( 596 )

These differences primarily relate to non-deductible offering costs, nondeductible excise tax expenses and GAAP blocker income.

Aggregate stockholders’ equity was not affected by this reclassification.

1 unchanged sentence

Company files its 2022 tax return.

The Company's current tax year and 2020 federal tax return remain subject to examination by the Internal Revenue Service.

As of December 31, 2022, the Company’s domestic subsidiary is expected to have a net operating loss and unrealized gain.

As a result, the Company has a deferred tax asset of $ 2.9 million and a deferred tax liability of $( 3.7 ) million.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized.

The future realization of the tax benefits of existing deductible temporary differences or carryforwards ultimately depend on the existence of sufficient taxable income in the carryback (if permitted under the tax law) and carryforward periods.

The Company has concluded future reversal of existing taxable temporary differences is sufficient to support a conclusion that a valuation allowance is not necessary as of December 31, 2022.

As a result, no valuation allowance for the deferred tax assets is necessary.

As of December 31, 2021, the Company did no t have any deferred tax assets or deferred tax liabilities.

The deferred tax asset valuation allowance, if applicable, 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.

As of December 31, 2022, the Company had differences between book basis and tax basis cost of $( 2.0 ) million from investments in a domestic subsidiary.

As of December 31, 2021, the Company had no differences between book basis and tax cost basis.

FRANKLIN BSP CAPITAL CORPORATION

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The Company commenced investing operations on January 7, 2021.

Net asset value attributable to common stock, at the beginning of the period represents the initial price per share issued on that date.

The following is a schedule of financial highlights for the period from January 7, 2021 to December 31, 2021:

For the period from January 7, 2021 to December 31, 2021

Net asset value attributable to common stock, at the beginning of the period from January 7, 2021 to December 31, 2021 represents the initial price per share issued on that date.

The following is a schedule of financial highlights for the year ended December 31, 2022 and for the period from January 7, 2021 to December 31, 2021:

For the year ended December 31, For the period from January 7, 2021 to December 31,

Per share data:

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Results of operations (1)

Net investment income 0.78

Net realized and unrealized gain on investments 0.52

Net increase in net assets resulting from operations attributable to common stock 1.30

Common Stockholder distributions (2)

Net investment income (loss) 1.68 0.78

Net realized and unrealized gain (loss) on investments, net of change in deferred taxes ( 0.44 ) 0.52

Net increase (decrease) in net assets resulting from operations attributable to common stockholders and participating securities 1.24 1.30

Accretion to redemption value of Series A redeemable convertible preferred stock (1)(9)

Accrual of Series A redeemable convertible preferred stock distributions (1)

Net increase (decrease) in net assets resulting from operations attributable to common stockholders 1.17 1.30

Stockholder distributions (2)

Common stockholder distributions from net investment income ( 1.47 ) ( 0.30 )

Net decrease in net assets resulting from common stockholder distributions (0.30)

Capital share transactions

Issuance of common stock (3)

Net increase (decrease) in net assets resulting from capital share transactions —

Net decrease in net assets resulting from stockholder distributions ( 1.47 ) ( 0.30 )

( 0.03 ) ( 0.54 )

Net asset value attributable to common stock, end of period $ 15.13 $ 15.46

Common stock shares outstanding at end of period 15,260,764

Common shares outstanding at end of period 24,609,132 15,260,764

Total return (4)

7.62 % 3.08 %

Ratio/Supplemental data attributable to common stock:

Total net assets attributable to common stock, end of year $ 235,973

Total net assets attributable to common stock, end of period $ 372,421 $ 235,973

Ratio of net investment income to average net assets attributable to common stock 10.80 % 3.49 %

Ratio of total expenses to average net assets attributable to common stock (5)

10.15 % 7.76 %

Ratio of incentive fees to average net assets attributable to common stock (6)

1.48 % 0.93 %

Ratio of net expenses to average net assets attributable to common stock (7)

8.67 % 6.83 %

Ratio of debt related expenses to average net assets attributable to common stock 5.99 % 2.98 %

Portfolio turnover rate (8)

9.03 % 3.46 %

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

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

(3) The issuance of Common Stock on a per share basis reflects the incremental net asset value attributable to Common Stock changes as a result of the issuance of shares of Common Stock.

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

(3) Represents the impact of calculating certain per share amounts based on weighted average common shares outstanding during

the period and certain per share amounts based on common shares outstanding as of year end.

(5) Total return is calculated assuming a purchase of shares of Common Stock at the current net asset value attributable to Common Stock on the first day and a sale at the current net asset value attributable to Common Stock on the last day of the periods reported.

Common Stock distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the DRIP.

(6) Ratio of total expenses to average net assets attributable to Common Stock is calculated using total operating expenses, including income tax expense over average net assets attributable to Common Stock.

(7) Represents gross incentive fees, prior to any incentive fee waivers.

Incentive fees for the first twelve calendar quarters are waived, refer to Note 4 - Related Party Transactions for additional details.

the period and certain per share amounts based on common shares outstanding as of period end.

(4) Total return is calculated assuming a purchase of shares of Common Stock at the current net asset value attributable to Common Stock on the first day and a sale at the current net asset value attributable to Common Stock on the last day of the

FRANKLIN BSP CAPITAL CORPORATION

2 unchanged sentences

For the year ended December 31, 2022

periods reported.

Common Stock distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the DRIP.

Total return is not annualized.

(5) Ratio of total expenses to average net assets attributable to common stock is calculated using total operating expenses, including income tax expense over average net assets attributable to common stock.

(6) Represents gross incentive fees, prior to any incentive fee waivers.

Incentive fees for the first twelve calendar quarters are waived, refer to Note 4 - Related Party Transactions for additional details.

(7) Ratio of net expenses to average net assets attributable to common stock is calculated using total operating expenses, including income tax expense, less applicable waivers over average net assets attributable to common stock.

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assets at fair value.

(9) Rounds to less than $ 0.01 per share.

Note 15 - Schedules of Investments and Advances to Affiliates

The following table presents the Schedule of Investments and Advances to Affiliates as of December 31, 2021:

The following table presents the Schedule of Investments and Advances to Affiliates for the year ended December 31, 2022:

Portfolio Company (1)

Type of Asset Industry Amount of dividends and interest included in income Beginning Fair Value at December 31, 2020

Type of Asset Amount of dividends and interest included in income Beginning Fair Value at December 31, 2021

Gross additions* Gross reductions** Realized Gain/(Loss) Change in Unrealized Gain (Loss) Fair Value at December 31, 2022

Control Investments

Encina Equipment Finance, LLC (2)

Equity/Other $ 2,698 $ 30,742 $ — $ 35 $ — $ ( 35 ) $ 30,742

Encina Equipment Finance, LLC (2)

Subordinated Debt 409 — 6,914 — — — 6,914

Encina Equipment Finance, LLC (2)

Subordinated Debt 2,493 24,412 10 — — 78 24,500

Total Control Investments $ 5,600 $ 55,154 $ 6,924 $ 35 $ — $ 43 $ 62,156

Affiliate Investments

Jakks Pacific, Inc.

Equity/Other $ 4 $ 116 $ 5 $ ( 121 ) $ — $ — $ —

Total Affiliate Investments $ 4 $ 116 $ 5 $ ( 121 ) $ — $ — $ —

* 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/share amount and ownership detail are shown in the consolidated schedules of investments.

(2) The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's Board of Directors as required by the 1940 Act.

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

(3) Includes $ 4 of interest income from Jakks Pacific, Inc.

subordinated debt.

FRANKLIN BSP CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For the year ended December 31, 2022

The following table presents the Schedule of Investments and Advances to Affiliates for the year ended December 31, 2021:

Portfolio Company (1)

Type of Asset Amount of dividends and interest included in income Beginning Fair Value at December 31, 2020

Gross additions* Gross reductions** Realized Gain/(Loss) Change in Unrealized Gain Fair Value at December 31, 2021

Control Investments

Luna Sub 2, LLC (2)

Equity/Other Financials $ — $ — $ 30,742 $ — $ — $ — $ 30,742

Luna Sub 2, LLC (2)

Subordinated Debt Financials 12 — 24,412 — — — 24,412

Encina Equipment Finance, LLC (2)

Equity/Other $ — $ — $ 30,742 $ — $ — $ — $ 30,742

Encina Equipment Finance, LLC (2)

Subordinated Debt 12 — 24,412 — — — 24,412

Total Control Investments $ 12 $ — $ 55,154 $ — $ — $ — $ 55,154

1 unchanged sentence

Jakks Pacific, Inc.

Equity/Other Consumer $ 12 $ — $ 13 $ — $ — $ 103 $ 116

Equity/Other $ 12 $ — $ 13 $ — $ — $ 103 $ 116

Jakks Pacific, Inc.

Senior Secured First Lien Debt Consumer 27 — 464 (489) 24 — —

Senior Secured First Lien Debt 27 — 464 ( 489 ) 24 — —

Jakks Pacific, Inc.

Subordinated Debt Consumer 22 — 605 (1,147) 543 — —

Subordinated Debt 22 — 605 ( 1,147 ) 543 — —

Total Affiliate Investments $ 61 $ — $ 1,082 $ ( 1,636 ) $ 567 $ 103 $ 116

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In preparing these financial statements, the Company’s management has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

On January 31, 2022, the Company entered into a third amendment to the MS Credit Facility to, among other things, increase the maximum permissible borrowings from $250.0 million to $300.0 million on a committed basis, transition the benchmark rate to Adjusted Term SOFR and included the Canadian Imperial Bank of Commerce (“CIBC”) as a lender.

On February 4, 2022, the Company’s Board of Directors declared a distribution of $0.30 per share of Common Stock, which is payable on February 22, 2022 to stockholders of record as of January 31, 2022.

On February 4, 2022, the Company’s Board of Directors declared a distribution of $19.49 per share of Series A Preferred Stock, which is payable on February 22, 2022 to stockholders of record as of January 31, 2022.

On March 8, 2022, the Company entered into Preferred Subscription Agreements with certain Investors, pursuant to which the Investors made new capital commitments to purchase shares of the Company’s Series A Preferred Stock, in a total aggregate amount of approximately $50.0 million.

Pursuant to their respective Preferred Subscription Agreements, each Investor is required to fund drawdowns to purchase shares of the Series A Preferred Stock up to the amount of their respective capital commitments on an as-needed basis, upon a minimum of 10 business days’ prior notice at a per-share price equal to the Liquidation Preference.

The sale and issuance of shares of Series A Preferred Stock is exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereof and Regulation D thereunder.

On February 24, 2023, the Board of Directors declared a distribution of $ 0.43 per share of Common Stock, which is payable on March 24, 2023 to stockholders of record as of February 24, 2023.

On February 24, 2023, the Board of Directors declared a distribution of $ 28.31 per share of Series A Preferred Stock, which is payable on March 24, 2023 to stockholders of record as of February 24, 2023.

On March 14, 2023, the Company delivered drawdown notices to the Company’s Common Stock investors for an aggregate offering price of approximately $ 8.1 million.

On March 14, 2023, the Company delivered drawdown notices to the Company’s Series A Preferred Stock investors for an aggregate offering price of approximately $ 41.4 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures