Franklin BSP Capital Corp 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were (a) designed to ensure that the information we are required to disclose in our reports under the Exchange Act is recorded, processed, and reported in an accurate manner and on a timely basis and the information that we are required to disclose in our Exchange Act reports is accumulated and communicated to management to permit timely decisions with respect to required disclosure and (b) operating in an effective manner. Management's Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that: 1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and our dispositions of assets; 2. Provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and 3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In connection with the preparation of our Form 10-K, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making that assessment, management used the criteria based on the framework set forth in Internal Control-Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on its assessment, our management concluded that, as of December 31, 2023, our internal control over financial reporting was effective. The rules of the SEC do not require, and this Annual Report does not include, an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. 82 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 year ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION Rule 10b5-1 Trading Plans During the fiscal quarter ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the 1940 Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” (as such terms are defined in Item 408(a) of Regulation S-K of the Securities Act). ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 83 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by Item 10 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days following the end of our fiscal year. We have adopted a Code of Business Conduct and Ethics which contains a Statement on the Prohibition of Insider Trading that applies to directors, officers, and employees. The Code of Business Conduct and Ethics is attached as an exhibit to this Annual Report on Form 10-K. We will report any amendments to or waivers of a required provision of the Code of Business Conduct and Ethics in a Form 8-K. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days following the end of our fiscal year. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by Item 12 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days following the end of our fiscal year. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by Item 13 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days following the end of our fiscal year. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by Item 14 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days following the end of our fiscal year. 84 PART IV ITEM 15. 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, 2023 (and are numbered in accordance with Item 601 of Regulation S-K). a. Financial Statements See the Index to the Financial Statements at page F-1 of this report. b. Exhibits Exhibit No. Description 2.1 Agreement and Plan of Merger among Franklin BSP Capital Corporation, Franklin BSP Lending Corporation, Franklin BSP Merger Sub, Inc. and Franklin BSP Capital Adviser, L.L.C. (for the limited purposes set forth therein), dated as of October 2, 2023 (previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K (File No. 814-01360) filed on October 6, 2023 and incorporated herein by reference). 3.1 Form of Certificate of Incorporation (previously filed as Exhibit 3.1 to the Company’s Registration Statement on Form 10 (File No. 000-56205) filed on September 23, 2020 and incorporated herein by reference). 3.2 Certificate of Designation of Series A Convertible Preferred Stock (previously filed as Exhibit 3.1 to the Company's Current Report on Form 8-K (File No. 814-01360) filed on August 25, 2021 and incorporated herein by reference). 3.3 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). 4.1 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). 4.2 Fourth Supplemental Indenture, dated as of January 24, 2024, relating to the 4.85% Notes due 2024, by and between the Company, as successor to Franklin BSP Lending Corporation, and U.S. Bank Trust Company, National Association, as trustee (filed herewith). 4.3 Second Supplemental Indenture, dated as of January 24, 2024, relating to the 3.25% Notes due 2026, by and between the Company, as successor to Franklin BSP Lending Corporation, and U.S. Bank Trust Company, National Association, as trustee (filed herewith). 10.1 Form of Investment Advisory Agreement (previously filed as Exhibit 10.1 to the Company’s Registration Statement on Form 10 (File No. 000-56205) filed on September 23, 2020 and incorporated herein by reference). 10.2 Form of Waiver Letter Agreement to the Investment Advisory Agreement (previously filed as Exhibit 10.2 the Company’s Pre-Effective Amendment No. 1 to Registration Statement on Form 10 (File No. 000-56205) filed on November 18, 2020 and incorporated herein by reference). 10.3 Form of Amended and Restated Investment Advisory Agreement, dated as of January 24, 2024 (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 814-01360) filed on January 24, 2024 and incorporated herein by reference). 10.4 Form of Administration Agreement (previously filed as Exhibit 10.3 to the Company’s Registration Statement on Form 10 (File No. 000-56205) filed on September 23, 2020 and incorporated herein by reference). 10.5 Form of Custody Agreement (previously filed as Exhibit 10.4 to the Company’s Registration Statement on Form 10 (File No. 000-56205) filed on September 23, 2020 and incorporated herein by reference). 10.6 Form of Indemnification Agreement (previously filed as Exhibit 10.5 to the Company’s Registration Statement on Form 10 (File No. 000-56205) filed on September 23, 2020 and incorporated herein by reference). 85 10.7 Form of Distribution Reinvestment Plan (previously filed as Exhibit 10.6 the Company’s Pre-Effective Amendment No. 1 to Registration Statement on Form 10 (File No. 000-56205) filed on November 18, 2020 and incorporated herein by reference). 10.8 Form of Subscription Agreement (previously filed as Exhibit 10.7 to the Company’s Registration Statement on Form 10 (File No. 000-56205) filed on September 23, 2020 and incorporated herein by reference). 10. 9 Form of Subscription Agreement for Series A Preferred Stock (previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 814-01360) filed on August 25, 2021 and incorporated herein by reference). 10.10 Amendment No. 3 to Loan and Servicing Agreement and Consent, dated August 25, 2023, by and among the Company, as successor to Franklin BSP Lending Corporation, FBLC Funding I, LLC, each of the lenders form time to time party thereto, Wells Fargo Bank, National Association, U.S. Bank Trust Company, National Association, and U.S. Bank National Association (filed as Exhibit 10.1 to FBLC's Quarterly Report on Form 10-Q, filed on November 13, 2023 and incorporated herein by reference). 10.1 1 Second Amendment to Amended and Restated Loan and Security Agreement, dated September 15, 2023, by and among the Company, as successor to Franklin BSP Lending Corporation, FBLC 57th Street Funding, LLC, JPMorgan Chase Bank, National Association, U.S. Bank Trust Company, National Association and U.S. Bank National Association (filed as Exhibit 10.2 to FBLC's Quarterly Report on Form 10-Q, filed on November 13, 2023 and incorporated herein by reference). 10.12 Loan and Security Agreement dated as of October 4, 2023 by and among FBCC Jupiter Funding, LLC, the lenders party thereto, JPMorgan Chase Bank, National Association as administrative agent, the collateral administrator, collateral agent and securities intermediary party thereto, and Franklin BSP Capital Adviser, LLC as portfolio manager (filed herewith). 10.13 Amended and Restated Senior Secured Credit Agreement, dated as of December 8, 2023, among the Company, as successor to Franklin BSP Lending Corporation, JPMorgan Chase Bank, N.A., as Administrative Agent, Wells Fargo Bank, National Association, Sumitomo Mitsui Banking Corporation, and MUFG Bank, Ltd. as syndication agents, and JPMorgan Chase Bank, N.A., Wells Fargo Bank, National Association, Sumitomo Mitsui Banking Corporation, and MUFG Bank, Ltd. as Joint Bookrunner and Joint Lead Arrangers (filed herewith). 14.1 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). 21 Subsidiaries of the Registrant (filed herewith). 31.1 Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14 (a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 31.2 Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14 (a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 32 Certification of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). 99.1 99.1 Audited Financial Statements of Franklin BSP Lending Corporation. 101.INS XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the XBRL document (filed herewith). 101.SCH Inline XBRL Taxonomy Extension Schema Document (filed herewith). 101.CAL Inline XBRL Taxonomy Calculation Linkbase Document (filed herewith). 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith). 101.LAB Inline XBRL Taxonomy Label Linkbase Document (filed herewith). 86 101.PRE Inline XBRL Taxonomy Presentation Linkbase Document (filed herewith). 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) (filed herewith). ITEM 16. FORM 10-K SUMMARY None. 87 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 15th day of March 2024 . FRANKLIN BSP CAPITAL CORPORATION By: /s/ Richard J. Byrne Name: Richard J. Byrne Title: Chief Executive Officer and Chairman of the Board of Directors * * * * * Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Signature Title Date /s/ Richard J. Byrne Richard J. Byrne Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) March 15, 2024 /s/ Nina Kang Baryski Nina Kang Baryski Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) March 15, 2024 /s/ Lee S. Hillman Lee S. Hillman Independent Director March 15, 2024 /s/ Ronald J. Kramer Ronald J. Kramer Independent Director March 15, 2024 /s/ Leslie D. Michelson Leslie D. Michelson Independent Director March 15, 2024 /s/ Edward G. Rendell Edward G. Rendell Independent Director March 15, 2024 /s/ Dennis M. Schaney Dennis M. Schaney Independent Director March 15, 2024 88 Franklin BSP Capital Corporation INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) F-2 Audited Consolidated Financial Statements: Consolidated Statements of Assets and Liabilities as of December 31, 202 3 and 202 2 F-3 Consolidated Statements of Operations for the years ended December 31, 202 3 , 202 2 , and 202 1 F-4 Consolidated Statements of Changes in Net Assets for the years ended December 31, 202 3 , 202 2 , and 202 1 F- 6 Consolidated Statements of Cash Flows for the years ended December 31, 202 3 , 2022 and 202 1 F- 7 Consolidated Schedules of Investments as of December 31, 202 3 and 202 2 F- 9 Notes to Consolidated Financial Statements F- 22 F - 1 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Franklin BSP Capital Corporation Opinion on the Financial Statements 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, 2023 and 2022, the related consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations, changes in its net assets, and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. 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, 2023 and 2022, by correspondence with the custodian and brokers . 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. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2020. New York, NY March 15, 2024 F - 2 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (dollars in thousands, except share and per share data) December 31, 2023 2022 Assets: Investments, at fair value: Control Investments, at fair value (amortized cost of $ 68,050 and $ 62,113 , respectively) $ 68,100 $ 62,156 Non-Affiliate Investments, at fair value (amortized cost of $ 700,985 and $ 726,116 , respectively) 688,045 720,224 Investments, at fair value (amortized cost of $ 769,035 and $ 788,229 , respectively) 756,145 782,380 Cash and cash equivalents 48,541 26,239 Restricted cash 6,681 — Deferred offering costs — 100 Interest and dividends receivable 8,166 6,444 Receivable for unsettled trades 422 713 Capital call receivable — 235 Prepaid expenses and other assets 3,396 72 Due from broker 8,336 — Total assets $ 831,687 $ 816,183 Liabilities: Debt (net of deferred financing costs of $ 2,082 and $ 2,320 , respectively) $ 319,918 $ 379,580 Short-term borrowings — 20,792 Secured borrowings 33,344 — Stockholder distributions payable 13 33 Management fees payable 1,066 1,007 Accounts payable and accrued expenses 4,167 2,583 Interest and debt fees payable 6,936 1,407 Directors' fees payable 175 17 Other liabilities 551 2,250 Total liabilities 366,170 407,669 Commitments and Contingencies (Note 6) Redeemable convertible preferred stock Series A, $ 0.001 par value, 50,000,000 shares authorized; 77,500 issued and outstanding at December 31, 2023 and 36,147 issued and outstanding at December 31, 2022 77,398 36,093 Net Assets attributable to common stock: Common stock, $ 0.001 par value, 450,000,000 shares authorized; 26,080,389 issued and outstanding at December 31, 2023, and 24,609,132 issued and outstanding at December 31, 2022 26 25 Additional paid in capital 400,332 375,557 Total distributable earnings (loss) ( 12,239 ) ( 3,161 ) Total net assets attributable to common stock 388,119 372,421 Total liabilities, redeemable convertible preferred stock, and net assets attributable to common stock $ 831,687 $ 816,183 Net asset value per share attributable to common stock $ 14.88 $ 15.13 The accompanying notes are an integral part of these consolidated financial statements. F- 3 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except share and per share data) For the year ended December 31, 2023 2022 2021 Investment income: From control investments: Interest income $ 4,435 $ 2,899 $ 12 Dividend income 2,700 2,698 — Fee and other income 7 3 — Total investment income from control investments 7,142 5,600 12 From affiliate investments: Interest income — 4 61 Total investment income from affiliate investments — 4 61 From non-affiliate investments: Interest income 83,898 49,324 11,864 Dividend income 134 67 — Fee and other income 1,782 1,561 307 Total investment income from non-affiliate investments 85,814 50,952 12,171 Interest from cash and cash equivalents 1,729 188 1 Total investment income 94,685 56,744 12,245 Operating expenses: Management fees 4,187 3,378 1,109 Incentive fee on income 7,704 4,720 711 Incentive fee on capital gains — ( 409 ) 409 Interest and debt fees 31,149 17,467 3,539 Professional fees 2,050 1,738 1,281 Other general and administrative 2,073 1,205 979 Amortization of common stock offering costs — 16 596 Administrative services 302 226 113 Directors' fees 1,015 573 386 Total expenses before incentive fee waiver 48,480 28,914 9,123 Incentive fee waiver ( 7,704 ) ( 4,311 ) ( 1,120 ) Expenses, net of incentive fee waiver 40,776 24,603 8,003 Net investment income (loss) before income taxes 53,909 32,141 4,242 Income tax expense, including excise tax 334 671 99 Net investment income (loss) 53,575 31,470 4,143 Realized and unrealized gain (loss): Net realized gain (loss) Affiliate investments — — 567 Non-affiliate investments 496 467 51 Net realized loss on extinguishment of debt ( 1,483 ) — — Total net realized gain (loss) ( 987 ) 467 618 Net change in unrealized appreciation (depreciation) on investments Control investments 8 43 — Affiliate investments — — 103 The accompanying notes are an integral part of these consolidated financial statements. F - 4 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except share and per share data) For the year ended December 31, 2023 2022 2021 Non-affiliate investments ( 7,049 ) ( 8,000 ) 2,005 Net change in deferred taxes ( 768 ) ( 780 ) — Total net change in unrealized appreciation (depreciation) on investments ( 7,809 ) ( 8,737 ) 2,108 Net realized and unrealized gain (loss) ( 8,796 ) ( 8,270 ) 2,726 Net increase (decrease) in net assets resulting from operations attributable to participating securities $ 44,779 $ 23,200 $ 6,869 Accretion to redemption value of Series A redeemable convertible preferred stock ( 17 ) ( 3 ) — Accrual of Series A redeemable convertible preferred stock distributions ( 7,615 ) ( 1,367 ) — Net increase (decrease) in net assets resulting from operations attributable to common stockholders $ 37,147 $ 21,830 $ 6,869 Per share information Net investment income (loss) $ 2.11 $ 1.68 $ 0.78 Net increase (decrease) in net assets resulting from operations attributable to participating securities $ 1.77 $ 1.24 $ 1.30 Basic and diluted earnings (loss) per share $ 1.41 $ 1.12 $ 1.30 Weighted average common shares outstanding 25,464,652 18,679,387 5,301,096 The accompanying notes are an integral part of these consolidated financial statements. F- 5 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (dollars in thousands, except share and per share data) For the year ended December 31, 2023 2022 2021 Operations: Net investment income (loss) $ 53,575 $ 31,470 $ 4,143 Net realized gain (loss) from investments ( 987 ) 467 618 Net change in unrealized appreciation (depreciation) on investments ( 7,041 ) ( 7,957 ) 2,108 Net change in deferred taxes ( 768 ) ( 780 ) — Accretion to redemption value of Series A redeemable convertible preferred stock ( 17 ) ( 3 ) — Accrual of Series A redeemable convertible preferred stock distributions ( 7,615 ) ( 1,367 ) — Net increase (decrease) in net assets resulting from operations attributable to common stockholders 37,147 21,830 6,869 Stockholder distributions: Common stockholder distributions ( 43,574 ) ( 27,309 ) ( 2,293 ) Net decrease in net assets attributable to common stock from stockholder distributions ( 43,574 ) ( 27,309 ) ( 2,293 ) Capital share transactions: Issuance of common stock, net of issuance costs 9,686 133,854 231,019 Reinvestment of common stockholder distributions 12,439 8,073 790 Net increase in net assets attributable to common stock from capital share transactions 22,125 141,927 231,809 Total increase (decrease) in net assets attributable to common stock 15,698 136,448 236,385 Net assets at beginning of year attributable to common stock 372,421 235,973 ( 412 ) Net assets at end of year attributable to common stock $ 388,119 $ 372,421 $ 235,973 Net asset value per share attributable to common stock $ 14.88 $ 15.13 $ 15.46 Common shares outstanding at end of year 26,080,389 24,609,132 15,260,764 The accompanying notes are an integral part of these consolidated financial statements. F- 6 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands, except share and per share data) For the year ended December 31, 2023 2022 2021 Operating activities Net increase (decrease) in net assets resulting from operations attributable to participating securities $ 44,779 $ 23,200 $ 6,869 Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: Payment-in-kind interest income ( 3,202 ) ( 2,042 ) ( 120 ) Net accretion of discount on investments ( 1,760 ) ( 1,199 ) ( 356 ) Amortization of deferred financing costs 1,031 1,189 647 Amortization of deferred offering costs — 27 476 Accretion of redemption value of Series A redeemable convertible preferred stock — ( 3 ) — Sales and repayments of investments 101,707 58,562 8,723 Purchases of investments ( 77,021 ) ( 327,891 ) ( 522,821 ) Net realized (gain) loss from investments ( 496 ) ( 467 ) ( 618 ) Extinguishment of debt 1,483 — — Net change in unrealized (appreciation) depreciation on investments 7,041 7,957 ( 2,108 ) (Increase) decrease in operating assets: Interest receivable ( 1,722 ) ( 4,120 ) ( 2,324 ) Receivable for unsettled trades 291 ( 547 ) ( 166 ) Prepaid expenses and other assets ( 3,324 ) 2 ( 74 ) Due from broker ( 8,336 ) — — (Increase) decrease in operating liabilities: Management fees payable 59 481 526 Accounts payable and accrued expenses 1,584 322 2,261 Payable for unsettled trades — ( 15,226 ) 15,226 Interest and debt fees payable 5,529 933 474 Directors' fees payable 158 17 — Other liabilities ( 1,699 ) ( 708 ) 1,942 Net cash provided by (used in) operating activities 66,102 ( 259,513 ) ( 491,443 ) Financing activities Proceeds from secured borrowings 33,344 — — Proceeds from issuance of shares of common stock 9,922 142,020 222,617 Proceeds from issuance of shares of preferred stock 41,353 31,101 4,992 Proceeds from debt 384,000 242,500 269,900 Payments on debt ( 443,900 ) ( 100,500 ) ( 30,000 ) Proceeds from short-term borrowings 68,583 189,060 60,902 Repayments on short-term borrowings ( 89,375 ) ( 209,570 ) ( 19,600 ) Payments of financing costs ( 2,276 ) ( 1,149 ) ( 3,007 ) Common stockholder distributions ( 31,155 ) ( 19,203 ) ( 1,503 ) Preferred stockholder distributions ( 7,615 ) ( 1,367 ) — Net cash provided by (used in) financing activities ( 37,119 ) 272,892 504,301 The accompanying notes are an integral part of these consolidated financial statements. F- 7 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands, except share and per share data) For the year ended December 31, 2023 2022 2021 Net increase in cash, cash equivalents and restricted cash 28,983 13,379 12,858 Cash, cash equivalents and restricted cash, beginning of year 26,239 12,860 2 Cash, cash equivalents and restricted cash, end of year $ 55,222 $ 26,239 $ 12,860 Supplemental information: Interest and non-usage fees paid during the year $ 17,889 $ 15,139 $ 2,348 Taxes, including excise tax, paid during the year $ 325 $ 476 $ 99 Distributions reinvested during the year $ 12,439 $ 8,073 $ 790 As of December 31, 2023 2022 2021 Cash and cash equivalents $ 48,541 $ 26,239 $ 12,860 Restricted cash 6,681 — — Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 55,222 $ 26,239 $ 12,860 The accompanying notes are an integral part of these consolidated financial statements. F- 8 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except share and per share data) December 31, 2023 Portfolio Company (g) Industry Acquisition Date Investment Coupon Rate/ Maturity (j) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b) Senior Secured First Lien Debt - 162.9 % (b) 1236904 BC, Ltd. (c) (h) Software/Services S+ 7.50 % ( 12.97 %), 3/4/2027 4,183 $ 4,132 $ 4,247 1.1 % ADCS Clinics Intermediate Holdings, LLC (c) Healthcare S+ 6.25 % ( 11.75 %), 5/7/2027 37 37 37 0.0 % ADCS Clinics Intermediate Holdings, LLC (c) (h) Healthcare S+ 6.25 % ( 11.79 %), 5/7/2027 5,698 5,630 5,620 1.4 % ADCS Clinics Intermediate Holdings, LLC (c) (h) Healthcare S+ 6.25 % ( 11.53 %), 5/7/2027 1,168 1,154 1,152 0.3 % ADCS Clinics Intermediate Holdings, LLC (c) (f) Healthcare S+ 6.25 %, 5/7/2026 — ( 6 ) ( 7 ) 0.0 % Alera Group Intermediate Holdings, Inc. (c) (h) Financials S+ 6.50 % ( 11.95 %), 10/2/2028 2,866 2,818 2,866 0.7 % Alera Group Intermediate Holdings, Inc. (c) (f) (h) Financials S+ 6.50 % ( 11.96 %). 10/2/2028 5,006 4,908 5,006 1.3 % Alera Group Intermediate Holdings, Inc. (c) (f) Financials S+ 5.75 %, 10/2/2028 — — — — % American Rock Salt Company, LLC (h) Chemicals S+ 4.00 % ( 9.47 %), 6/9/2028 2,018 2,013 1,900 0.5 % Armada Parent, Inc. (c) (h) Industrials S+ 5.75 % ( 11.24 %), 10/29/2027 19,959 19,669 19,637 5.1 % Armada Parent, Inc. (c) (f) (h) Industrials S+ 5.75 % ( 11.24 %), 10/29/2027 1,006 985 973 0.3 % Armada Parent, Inc. (c) (f) Industrials S+ 5.75 %, 10/29/2027 — ( 31 ) ( 39 ) 0.0 % Avalara, Inc. (c) (h) Software/Services S+ 7.25 % ( 12.60 %), 10/19/2028 19,896 19,472 19,526 5.0 % Avalara, Inc. (c) (f) Software/Services S+ 7.25 %, 10/19/2028 — ( 40 ) ( 37 ) 0.0 % Aventine Holdings, LLC (c) (h) Media/Entertainment S+ 6.00 % ( 11.47 %) 4.00 % PIK, 6/18/2027 4,908 4,849 4,844 1.2 % Aventine Holdings, LLC (c) (h) Media/Entertainment 10.25 % PIK, 6/18/2027 12,455 12,278 12,263 3.2 % Aventine Holdings, LLC (c) (h) Media/Entertainment S+ 6.00 % ( 11.47 %) 4.00 % PIK, 6/18/2027 12,397 12,238 12,234 3.2 % BCPE Oceandrive Buyer, Inc. (c) Healthcare S+ 6.00 % ( 11.46 %), 12/29/2028 1,559 1,538 1,486 0.4 % BCPE Oceandrive Buyer, Inc. (c) (h) Healthcare S+ 6.25 % ( 11.73 %) 3.00 % PIK, 12/29/2028 802 802 765 0.2 % BCPE Oceandrive Buyer, Inc. (c) (h) Healthcare S+ 6.25 % ( 11.73 %) 3.00 % PIK, 12/29/2028 1,579 1,553 1,505 0.4 % BCPE Oceandrive Buyer, Inc. (c) (h) Healthcare S+ 6.25 % ( 11.73 %) 3.00 % PIK, 12/29/2028 9,475 9,315 9,033 2.3 % Center Phase Energy, LLC (c) (h) Utilities S+ 7.00 % ( 12.46 %), 6/23/2027 10,305 10,159 10,131 2.6 % Center Phase Energy, LLC (c) (f) Utilities S+ 7.00 %, 6/23/2027 — ( 91 ) ( 111 ) 0.0 % Communication Technology Intermediate, LLC (c) (h) Business Services S+ 5.50 % ( 10.96 %), 5/5/2027 7,478 7,345 7,478 1.9 % Communication Technology Intermediate, LLC (c) (h) Business Services S+ 5.50 % ( 10.96 %), 5/5/2027 2,601 2,570 2,601 0.7 % Communication Technology Intermediate, LLC (c) (f) Business Services S+ 5.50 % ( 10.96 %), 5/5/2027 86 75 86 0.0 % Community Brands ParentCo, LLC (c) (h) Software/Services S+ 5.50 % ( 10.96 %), 2/24/2028 9,060 8,920 8,897 2.3 % Community Brands ParentCo, LLC (c) (f) Software/Services S+ 5.50 %, 2/24/2028 — ( 16 ) ( 20 ) 0.0 % The accompanying notes are an integral part of these consolidated financial statements. F- 9 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except share and per share data) December 31, 2023 Portfolio Company (g) Industry Acquisition Date Investment Coupon Rate/ Maturity (j) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b) Community Brands ParentCo, LLC (c) (f) Software/Services S+ 5.50 %, 2/24/2028 — $ — $ ( 10 ) 0.0 % Coronis Health, LLC (c) Healthcare S+ 6.25 % ( 11.63 %), 7/12/2028 1,968 1,928 1,614 0.4 % Coronis Health, LLC (c) (h) Healthcare S+ 6.25 % ( 11.63 %), 7/27/2029 24,056 23,602 19,701 5.1 % Demakes Borrower, LLC (c) (h) Food & Beverage S+ 6.25 % ( 11.62 %), 12/12/2029 4,703 4,586 4,586 1.2 % Demakes Borrower, LLC (c) (f) Food & Beverage S+ 6.25 %, 12/12/2029 — ( 16 ) ( 33 ) 0.0 % Division Holding Corp. (h) Business Services S+ 4.75 % ( 10.22 %), 5/26/2028 3,704 3,673 3,667 0.9 % Eliassen Group, LLC (c) (h) Business Services S+ 5.50 % ( 10.85 %), 4/14/2028 5,680 5,635 5,630 1.5 % Eliassen Group, LLC (c) (f) (h) Business Services S+ 5.50 % ( 10.88 %), 4/14/2028 454 449 442 0.1 % Faraday Buyer, LLC (c) (h) Utilities S+ 6.00 % ( 11.35 %), 10/11/2028 16,714 16,610 16,379 4.2 % Faraday Buyer, LLC (c) (f) Utilities S+ 6.00 %, 10/11/2028 — ( 18 ) ( 37 ) 0.0 % FGT Purchaser, LLC (c) (h) Consumer S+ 5.50 % ( 10.95 %), 9/13/2027 9,561 9,417 9,561 2.5 % FGT Purchaser, LLC (c) (f) Consumer S+ 5.50 % ( 10.98 %), 9/13/2027 342 330 342 0.1 % Florida Food Products, LLC (c) (h) Food & Beverage S+ 5.00 % ( 10.47 %), 10/18/2028 12,505 12,317 11,630 3.0 % FR Flow Control Luxco 1 SARL (c) (h) Industrials S+ 5.50 % ( 11.11 %), 6/28/2026 4,417 4,386 4,417 1.1 % Galway Borrower, LLC (c) (h) Financials S+ 5.25 % ( 10.70 %), 9/29/2028 13,529 13,345 13,529 3.5 % Galway Borrower, LLC (c) (f) Financials S+ 5.25 %, 9/30/2027 — ( 12 ) — — % Geosyntec Consultants, Inc. (c) (h) Business Services S+ 5.25 % ( 10.61 %), 5/18/2029 11,407 11,238 11,240 2.9 % Geosyntec Consultants, Inc. (c) (f) (h) Business Services S+ 5.25 % ( 10.61 %), 5/18/2029 2,743 2,685 2,663 0.7 % Geosyntec Consultants, Inc. (c) (f) Business Services S+ 5.25 %, 5/18/2027 — ( 27 ) ( 30 ) 0.0 % Gogo Intermediate Holdings, LLC (a) (f) Telecom S+ 3.75 %, 4/30/2026 — — ( 3 ) 0.0 % Gordian Medical, Inc. (c) (h) Healthcare S+ 6.25 % ( 12.15 %), 1/31/2027 4,361 4,288 2,769 0.7 % Green Energy Partners/Stonewall, LLC (c) (h) Utilities S+ 6.00 % ( 11.61 %), 11/12/2026 4,572 4,513 4,572 1.2 % IG Investments Holdings, LLC (c) (h) Business Services S+ 6.00 % ( 11.48 %), 9/22/2028 7,936 7,815 7,864 2.0 % IG Investments Holdings, LLC (c) (h) Business Services S+ 6.00 % ( 11.48 %), 9/22/2028 143 142 142 0.0 % IG Investments Holdings, LLC (c) (f) Business Services S+ 6.00 %, 9/22/2027 — ( 9 ) ( 6 ) 0.0 % Indigo Buyer, Inc. (c) (h) Paper & Packaging S+ 6.25 % ( 11.73 %), 5/23/2028 8,891 8,752 8,738 2.3 % Indigo Buyer, Inc. (c) (h) Paper & Packaging S+ 6.25 % ( 11.73 %), 5/23/2028 3,802 3,743 3,737 1.0 % Indigo Buyer, Inc. (c) (f) Paper & Packaging S+ 6.25 % ( 11.72 %), 5/23/2028 614 594 588 0.2 % IQN Holding Corp. (c) (h) Software/Services S+ 5.25 % ( 10.64 %), 5/2/2029 5,750 5,707 5,703 1.5 % IQN Holding Corp. (c) (f) Software/Services S+ 5.25 %, 5/2/2029 — ( 6 ) ( 5 ) 0.0 % IQN Holding Corp. (c) (f) Software/Services S+ 5.25 %, 5/2/2028 — ( 4 ) ( 4 ) 0.0 % The accompanying notes are an integral part of these consolidated financial statements. F- 10 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except share and per share data) December 31, 2023 Portfolio Company (g) Industry Acquisition Date Investment Coupon Rate/ Maturity (j) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b) J&K Ingredients, LLC (c) (h) Food & Beverage S+ 6.50 % ( 11.85 %), 11/16/2028 3,269 $ 3,189 $ 3,189 0.8 % Kissner Milling Co., Ltd. (h) (l) Industrials 4/16/2021 4.88 %, 5/1/2028 2,275 2,275 2,142 0.6 % Knowledge Pro Buyer, Inc. (c) (h) Business Services S+ 5.75 % ( 11.21 %), 12/10/2027 11,008 10,854 11,008 2.8 % Knowledge Pro Buyer, Inc. (c) (f) Business Services S+ 5.75 % ( 11.19 %), 12/10/2027 1,042 1,018 1,042 0.3 % Knowledge Pro Buyer, Inc. (c) (f) Business Services S+ 5.75 % ( 11.21 %), 12/10/2027 275 260 275 0.1 % Liquid Tech Solutions Holdings, LLC (c) (h) Industrials S+ 4.75 % ( 10.22 %), 3/20/2028 5,397 5,379 5,397 1.4 % LSF12 Donnelly Bidco, LLC (c) (h) Industrials S+ 6.50 % ( 11.86 %), 10/2/2029 4,983 4,863 4,864 1.3 % Mckissock Investment Holdings, LLC (h) Education S+ 5.00 % ( 10.38 %), 3/12/2029 1,306 1,274 1,302 0.3 % Medical Management Resource Group, LLC (c) (h) Healthcare S+ 6.00 % ( 11.45 %), 9/30/2027 2,971 2,931 2,931 0.8 % Medical Management Resource Group, LLC (c) (h) Healthcare S+ 6.00 % ( 11.45 %), 9/30/2027 7,193 7,094 7,096 1.8 % Medical Management Resource Group, LLC (c) (f) Healthcare S+ 6.00 % ( 11.45 %), 9/30/2026 338 330 329 0.1 % Mirra-Primeaccess Holdings, LLC (c) (h) Healthcare S+ 6.50 % ( 11.97 %), 7/29/2026 21,178 20,917 21,178 5.5 % Mirra-Primeaccess Holdings, LLC (c) (f) Healthcare S+ 6.50 % ( 11.97 %), 7/29/2026 857 819 857 0.2 % Odessa Technologies, Inc. (c) (h) Software/Services S+ 5.75 % ( 11.21 %), 10/19/2027 6,458 6,367 6,458 1.7 % Odessa Technologies, Inc. (c) (f) Software/Services S+ 5.75 %, 10/19/2027 — ( 22 ) — — % PetVet Care Centers, LLC (c) (h) Healthcare S+ 6.00 % ( 11.36 %), 11/15/2030 8,107 7,945 7,948 2.0 % PetVet Care Centers, LLC (c) (f) Healthcare S+ 6.00 %, 11/15/2030 — ( 10 ) ( 21 ) 0.0 % PetVet Care Centers, LLC (c) (f) Healthcare S+ 6.00 %, 11/15/2029 — ( 21 ) ( 21 ) 0.0 % Pie Buyer, Inc. (c) (h) Food & Beverage S+ 5.50 % ( 10.93 %), 4/5/2027 11,178 10,972 11,178 2.9 % Pie Buyer, Inc. (c) (h) Food & Beverage S+ 5.50 % ( 10.93 %), 4/5/2027 2,419 2,378 2,419 0.6 % Pie Buyer, Inc. (c) (h) Food & Beverage S+ 5.50 % ( 11.20 %), 4/5/2027 828 816 828 0.2 % Pie Buyer, Inc. (c) (f) (h) Food & Beverage S+ 5.50 % ( 11.03 %), 4/5/2027 634 615 634 0.2 % Pie Buyer, Inc. (c) (f) Food & Beverage S+ 5.50 % ( 10.93 %), 4/6/2026 346 336 346 0.1 % Pluralsight, LLC (c) (h) Software/Services S+ 8.00 % ( 13.56 %), 4/6/2027 7,499 7,404 7,059 1.8 % Pluralsight, LLC (c) (h) Software/Services S+ 8.00 % ( 13.56 %), 4/6/2027 2,680 2,642 2,523 0.7 % Pluralsight, LLC (c) (f) Software/Services S+ 8.00 % ( 13.56 %), 4/6/2027 496 489 458 0.1 % Point Broadband Acquisition, LLC (c) (h) Telecom S+ 6.00 % ( 11.47 %), 10/2/2028 3,633 3,567 3,633 0.9 % Point Broadband Acquisition, LLC (c) (h) Telecom S+ 6.00 % ( 11.51 %), 10/2/2028 8,619 8,443 8,619 2.2 % Relativity Oda, LLC (c) (h) Software/Services S+ 6.50 % ( 11.96 %), 5/12/2027 2,291 2,259 2,291 0.6 % Relativity Oda, LLC (c) (f) Software/Services S+ 6.50 %, 5/12/2027 — ( 3 ) — — % Roadsafe Holdings, Inc. (c) (h) Industrials S+ 5.75 % ( 11.22 %), 10/19/2027 3,296 3,252 3,296 0.8 % The accompanying notes are an integral part of these consolidated financial statements. F- 11 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except share and per share data) December 31, 2023 Portfolio Company (g) Industry Acquisition Date Investment Coupon Rate/ Maturity (j) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b) Roadsafe Holdings, Inc. (c) (h) Industrials S+ 5.75 % ( 11.14 %), 10/19/2027 4,315 $ 4,270 $ 4,315 1.1 % RSC Acquisition, Inc. (c) (h) Financials S+ 5.50 % ( 11.04 %), 11/1/2029 2,161 2,161 2,161 0.6 % RSC Acquisition, Inc. (c) (h) Financials S+ 5.50 % ( 11.00 %), 11/1/2029 6,780 6,751 6,780 1.7 % Safe Fleet Holdings, LLC (h) Industrials S+ 5.00 % ( 10.46 %), 2/23/2029 5,977 5,825 5,999 1.5 % Saturn SHC Buyer Holdings, Inc. (c) (h) Healthcare S+ 5.50 % ( 10.97 %), 11/18/2027 7,598 7,479 7,598 2.0 % Saturn SHC Buyer Holdings, Inc. (c) (h) Healthcare S+ 5.50 % ( 10.97 %), 11/18/2027 14,742 14,517 14,742 3.8 % Saturn SHC Buyer Holdings, Inc. (c) (f) Healthcare S+ 6.00 %, 11/18/2027 — ( 52 ) — — % SCIH Salt Holdings, Inc. (h) Industrials S+ 4.00 % ( 9.47 %), 3/16/2027 1,086 1,081 1,086 0.3 % Sherlock Buyer Corp. (c) (h) Business Services S+ 5.75 % ( 11.20 %), 12/8/2028 4,951 4,869 4,951 1.3 % Sherlock Buyer Corp. (c) (f) Business Services S+ 5.75 %, 12/8/2028 — ( 10 ) — — % Sherlock Buyer Corp. (c) (f) Business Services S+ 5.75 %, 12/8/2027 — ( 8 ) — — % Simplifi Holdings, Inc. (c) (h) Media/Entertainment S+ 5.50 % ( 10.96 %), 10/1/2027 15,805 15,557 15,568 4.0 % Simplifi Holdings, Inc. (c) (f) Media/Entertainment S+ 5.50 % ( 10.96 %), 10/1/2026 322 304 297 0.1 % SitusAMC Holdings Corp. (c) (h) Financials S+ 5.50 % ( 10.95 %), 12/22/2027 6,341 6,298 6,341 1.6 % Skillsoft Corp. (h) Technology S+ 5.25 % ( 10.72 %), 7/14/2028 585 578 546 0.1 % Striper Buyer, LLC (c) (h) Paper & Packaging S+ 5.50 % ( 10.95 %), 12/30/2026 4,860 4,818 4,860 1.3 % SunMed Group Holdings, LLC (c) (h) Healthcare S+ 5.50 % ( 10.96 %), 6/16/2028 3,825 3,778 3,768 1.0 % SunMed Group Holdings, LLC (c) (f) Healthcare S+ 5.50 %, 6/16/2027 — ( 3 ) ( 4 ) 0.0 % The NPD Group, LP (c) (h) Business Services S+ 6.25 % ( 11.61 %) 2.75 % PIK, 12/1/2028 17,102 16,825 16,846 4.3 % The NPD Group, LP (c) (f) Business Services S+ 5.75 % ( 11.11 %), 12/1/2027 170 155 156 0.0 % Therapy Brands Holdings, LLC (c) (h) Healthcare S+ 4.00 % ( 9.47 %), 5/18/2028 1,792 1,786 1,792 0.5 % Tivity Health, Inc. (c) (h) Healthcare S+ 6.00 % ( 11.35 %), 6/28/2029 31,780 31,107 31,243 8.0 % Trinity Air Consultants Holdings Corp. (c) (h) Business Services S+ 5.75 % ( 11.03 %), 6/29/2027 1,768 1,737 1,768 0.4 % Trinity Air Consultants Holdings Corp. (c) (h) Business Services S+ 5.75 % ( 11.03 %), 6/29/2027 8,788 8,678 8,788 2.3 % Trinity Air Consultants Holdings Corp. (c) (f) (h) Business Services S+ 5.75 % ( 11.03 %), 6/29/2027 557 553 557 0.1 % Trinity Air Consultants Holdings Corp. (c) (f) Business Services S+ 5.25 %, 6/29/2027 — ( 10 ) — — % Triple Lift, Inc. (c) (h) Software/Services S+ 5.75 % ( 11.27 %), 5/5/2028 11,813 11,647 11,341 2.9 % Triple Lift, Inc. (c) (f) Software/Services S+ 5.75 % ( 11.31 %), 5/5/2028 534 513 478 0.1 % US Oral Surgery Management Holdco, LLC (c) (h) Healthcare S+ 6.00 % ( 11.45 %), 11/18/2027 2,176 2,147 2,154 0.5 % US Oral Surgery Management Holdco, LLC (c) (h) Healthcare S+ 6.50 % ( 11.95 %), 11/18/2027 1,896 1,896 1,877 0.5 % US Oral Surgery Management Holdco, LLC (c) (h) Healthcare S+ 6.00 % ( 11.47 %), 11/18/2027 5,495 5,385 5,440 1.4 % The accompanying notes are an integral part of these consolidated financial statements. F- 12 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except share and per share data) December 31, 2023 Portfolio Company (g) Industry Acquisition Date Investment Coupon Rate/ Maturity (j) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b) US Oral Surgery Management Holdco, LLC (c) (f) Healthcare S+ 6.00 %, 11/18/2027 — $ ( 7 ) $ ( 5 ) 0.0 % US Salt Investors, LLC (c) (h) Chemicals S+ 5.50 % ( 11.00 %), 7/19/2028 8,489 8,362 8,330 2.1 % US Salt Investors, LLC (c) (f) Chemicals S+ 5.50 %, 7/20/2026 — $ ( 11 ) $ ( 17 ) 0.0 % Vensure Employer Services, Inc. (c) (h) Business Services S+ 4.75 % ( 10.12 %), 4/1/2027 4,736 4,715 4,736 1.2 % Vensure Employer Services, Inc. (c) (f) Business Services S+ 5.25 % ( 10.64 %), 3/29/2027 460 451 460 0.1 % Victors CCC Buyer, LLC (c) (h) Business Services S+ 5.75 % ( 11.21 %), 6/1/2029 7,165 7,040 7,044 1.8 % Victors CCC Buyer, LLC (c) (f) Business Services S+ 5.75 %, 6/1/2029 — ( 15 ) ( 32 ) 0.0 % Victors CCC Buyer, LLC (c) (f) Business Services S+ 5.75 %, 6/1/2029 — ( 21 ) ( 23 ) 0.0 % West Coast Dental Services, Inc. (c) (h) Healthcare S+ 5.75 % ( 11.18 %), 7/1/2028 498 485 487 0.1 % West Coast Dental Services, Inc. (c) (h) Healthcare S+ 5.75 % ( 11.28 %), 7/1/2028 8,355 8,235 8,175 2.1 % West Coast Dental Services, Inc. (c) (f) Healthcare S+ 5.75 % ( 11.27 %), 7/1/2028 941 926 917 0.2 % Westwood Professional Services, Inc. (c) (h) Business Services S+ 6.00 % ( 11.46 %), 5/26/2026 1,159 1,147 1,159 0.3 % Westwood Professional Services, Inc. (c) (h) Business Services S+ 6.00 % ( 11.46 %), 5/26/2026 3,642 3,601 3,642 0.9 % Westwood Professional Services, Inc. (c) (f) Business Services S+ 6.00 %, 5/26/2026 — ( 2 ) — — % WHCG Purchaser III, Inc. (c) (h) Healthcare S+ 5.75 % ( 11.36 %), 6/22/2028 12,426 12,248 8,160 2.1 % WHCG Purchaser III, Inc. (c) (h) Healthcare S+ 5.75 % ( 11.36 %), 6/22/2028 3,020 3,020 1,982 0.5 % WHCG Purchaser III, Inc. (c) (f) Healthcare S+ 5.75 % ( 11.36 %), 6/22/2026 1,816 1,796 1,385 0.4 % WIN Holdings III Corp. (c) (h) Consumer S+ 5.25 % ( 10.71 %), 7/16/2028 12,513 12,335 12,513 3.2 % WIN Holdings III Corp. (c) (f) Consumer S+ 5.25 %, 7/16/2026 — ( 25 ) — — % Zendesk, Inc. (c) (m) (n) Software/Services S+ 6.25 % ( 11.61 %) 3.25 % PIK, 11/22/2028 21,769 21,572 21,394 5.5 % Zendesk, Inc. (c) (f) Software/Services S+ 6.75 %, 11/22/2028 — ( 43 ) ( 91 ) 0.0 % Zendesk, Inc. (c) (f) Software/Services S+ 6.75 %, 11/22/2028 — ( 36 ) ( 38 ) 0.0 % Subtotal Senior Secured First Lien Debt $ 642,976 $ 632,343 162.9 % Senior Secured Second Lien Debt - 13.4 % (b) American Rock Salt Company, LLC (c) (h) Chemicals S+ 7.25 % ( 12.72 %), 6/11/2029 6,010 $ 5,950 $ 5,411 1.4 % ASP LS Acquisition Corp. (c) (h) Transportation S+ 7.50 % ( 13.40 %), 5/7/2029 4,275 4,264 3,533 0.9 % Corelogic, Inc. (h) Business Services S+ 6.50 % ( 11.96 %), 6/4/2029 4,645 4,605 4,137 1.1 % Mercury Merger Sub, Inc. (c) (h) Business Services S+ 6.50 % ( 12.18 %), 8/2/2029 6,080 6,044 5,885 1.5 % Proofpoint, Inc. (h) Software/Services S+ 6.25 % ( 11.72 %), 8/31/2029 3,380 3,367 3,405 0.9 % RealPage, Inc. (h) Software/Services S+ 6.50 % ( 11.97 %), 4/23/2029 5,445 5,383 5,431 1.4 % Therapy Brands Holdings, LLC (c) (h) Healthcare S+ 6.75 % ( 12.22 %), 5/18/2029 1,947 1,930 1,947 0.5 % The accompanying notes are an integral part of these consolidated financial statements. F- 13 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except share and per share data) December 31, 2023 Portfolio Company (g) Industry Acquisition Date Investment Coupon Rate/ Maturity (j) Principal/ Numbers of Shares Amortized Cost Fair Value % of Net Assets (b) TRC Cos, Inc. (c) (h) Industrials S+ 6.75 % ( 12.21 %), 12/7/2029 7,045 $ 6,988 $ 6,742 1.7 % USIC Holdings, Inc. (c) (h) Business Services S+ 6.50 % ( 12.11 %), 5/14/2029 2,449 2,426 2,361 0.6 % Victory Buyer, LLC (c) (h) Industrials S+ 7.00 % ( 12.64 %), 11/19/2029 14,304 14,188 13,274 3.4 % Subtotal Senior Secured Second Lien Debt $ 55,145 $ 52,126 13.4 % Subordinated Debt - 9.2 % (b) Post Road Equipment Finance, LLC (c) (k) (m) (n) Financials S+ 7.75 % ( 13.14 %), 12/31/2028 11,000 $ 10,956 $ 11,000 2.8 % Post Road Equipment Finance, LLC (c) (k) (m) (n) Financials S+ 7.75 % ( 13.14 %), 12/31/2028 24,500 24,433 24,500 6.4 % Subtotal Subordinated Debt $ 35,389 $ 35,500 9.2 % Equity/Other - 9.3 % (b) (d) Center Phase Energy, LLC (c) (i) (l) Utilities 6/23/2022 1,680 $ 1,680 $ 1,742 0.5 % Jakks Pacific, Inc. (a) (c) (l) Consumer 1/11/2021 783 24 117 0.0 % Point Broadband Acquisition, LLC (c) (e) (i) (l) Telecom 10/1/2021 1,159,828 1,160 1,717 0.4 % Post Road Equipment Finance, LLC (c) (i) (k) (l) Financials 12/30/2021 29,908,561 32,661 32,600 8.4 % Subtotal Equity/Other $ 35,525 $ 36,176 9.3 % Total Investments - 194.8 % (b) $ 769,035 $ 756,145 194.8 % (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, 2023, qualifying assets represent 100.0 % of the Company's total assets. The significant majority of all investments held are deemed to be illiquid. (b) Percentages are based on net assets attributable to common stock as of December 31, 2023. (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, 2023. (f) Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The investment may be subject to an unused/letter of credit facility fee. The negative fair value, if applicable, is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. The negative amortized cost, if applicable, is the result of the capitalized discount being greater than the principal amount outstanding on the loan. Please refer to Note 6 - Commitments and Contingencies for additional details. (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 JPM 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 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, 2023. 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. The accompanying notes are an integral part of these consolidated financial statements. F- 14 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except share and per share data) December 31, 2023 (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 outstanding 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 outstanding 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) Securities exempt from registration under the Securities Act of 1933, (as defined below), and may be deemed to be “restricted securities”. As of December 31, 2023, the aggregate fair value of these securities is $ 38.3 million or 9.9 % of the Company’s net assets. The initial acquisition dates have been included for such securities. (m) The Company’s investment or a portion thereof is held through a total return swap agreement with Nomura Global Finanical Products Inc. (“Nomura”). (n) 40 % of the Company’s investment is pledged as collateral under the total return swap agreement with Nomura. The following table shows the portfolio composition by industry grouping based on fair value at December 31, 2023: At December 31, 2023 Investments at Fair Value Percentage of Total Portfolio Healthcare $ 175,630 23.2 % Business Services 116,537 15.4 % Financials 104,783 13.9 % Software/Services 99,006 13.1 % Industrials 72,103 9.4 % Media/Entertainment 45,206 6.0 % Food & Beverage 34,777 4.6 % Utilities 32,676 4.3 % Consumer 22,533 3.0 % Paper & Packaging 17,923 2.4 % Chemicals 15,624 2.1 % Telecom 13,966 1.8 % Transportation 3,533 0.5 % Education 1,302 0.2 % Technology 546 0.1 % Total $ 756,145 100.0 % The accompanying notes are an integral part of these consolidated financial statements. F- 15 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except 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. (c) (h) Software/Services L+ 7.50 % ( 11.85 %), 3/4/2027 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. (c) Financials S+ 6.50 % ( 10.92 %), 10/2/2028 3,240 3,240 3,179 0.9 % Alera Group Intermediate Holdings, Inc. (c) (h) Financials S+ 6.50 % ( 10.92 %), 10/2/2028 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. (c) (h) Industrials L+ 5.75 % ( 10.13 %), 10/29/2027 1,016 1,016 1,000 0.3 % Armada Parent, Inc. (c) (h) Industrials L+ 5.75 % ( 10.13 %), 10/29/2027 20,162 19,818 19,838 5.3 % Avalara, Inc. (c) (h) Software/Services S+ 7.25 % ( 11.83 %), 10/19/2028 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. (c) Healthcare L+ 6.25 % ( 10.67 %), 12/29/2028 786 786 759 0.2 % BCPE Oceandrive Buyer, Inc. (c) (h) Healthcare L+ 6.25 % ( 10.67 %), 12/29/2028 1,547 1,547 1,495 0.4 % BCPE Oceandrive Buyer, Inc. (c) (h) Healthcare L+ 6.25 % ( 10.67 %), 12/29/2028 9,286 9,100 8,969 2.4 % BCPE Oceandrive Buyer, Inc. (c) Healthcare L+ 6.25 % ( 10.99 %), 12/30/2026 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 % Faraday Buyer, LLC (c) (h) Utilities S+ 7.00 % ( 11.32 %), 10/11/2028 12,902 12,521 12,529 3.4 % The accompanying notes are an integral part of these consolidated financial statements. F- 16 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except 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) 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. (c) (h) Financials S+ 6.50 % ( 10.73 %), 3/1/2027 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. (c) (h) Business Services S+ 5.25 % ( 9.57 %), 5/18/2029 11,523 11,332 11,340 3.0 % Gordian Medical, Inc. (c) (h) Healthcare L+ 6.25 % ( 10.98 %), 1/31/2027 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. (c) (h) Paper & Packaging S+ 5.75 % ( 10.17 %), 5/23/2028 8,981 8,814 8,819 2.4 % Indigo Buyer, Inc. (c) Paper & Packaging S+ 5.75 % ( 10.17 %), 5/23/2028 256 256 251 0.1 % IQN Holding Corp. (c) Software/Services S+ 5.50 % ( 9.68 %), 5/2/2029 95 95 94 0.0 % IQN Holding Corp. (c) (h) Software/Services P+ 4.50 % ( 12.00 %), 5/2/2029 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. (c) Business Services L+ 5.75 % ( 10.04 %), 12/10/2027 1,052 1,052 1,034 0.3 % Knowledge Pro Buyer, Inc. (c) (h) Business Services L+ 5.75 % ( 10.04 %), 12/10/2027 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. (c) (h) Software/Services L+ 5.75 % ( 10.09 %), 10/19/2027 6,524 6,414 6,408 1.7 % Pie Buyer, Inc. (c) (h) Food & Beverage L+ 5.50 % ( 8.38 %), 4/5/2027 11,293 11,029 11,293 3.0 % Pie Buyer, Inc. (c) (h) Food & Beverage L+ 5.50 % ( 9.67 %), 4/5/2027 2,443 2,443 2,443 0.7 % Pie Buyer, Inc. (c) Food & Beverage L+ 5.50 % ( 10.67 %), 4/6/2026 185 185 185 0.0 % Pie Buyer, Inc. (c) (h) Food & Beverage S+ 5.50 % ( 8.69 %), 4/5/2027 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 % Pluralsight, LLC (c) (h) Software/Services L+ 8.00 % ( 12.75 %), 4/6/2027 2,680 2,635 2,636 0.7 % The accompanying notes are an integral part of these consolidated financial statements. F- 17 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except 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) 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. (c) (h) Industrials L+ 5.75 % ( 10.87 %), 10/19/2027 3,330 3,277 3,276 0.9 % Roadsafe Holdings, Inc. (c) Industrials P+ 4.75 % ( 12.25 %), 10/19/2027 2,921 2,921 2,873 0.8 % RSC Acquisition, Inc. (c) Financials S+ 5.50 % ( 10.23 %), 10/30/2026 638 638 638 0.2 % RSC Acquisition, Inc. (c) (h) Financials S+ 5.50 % ( 10.23 %), 10/30/2026 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. (c) (h) Healthcare L+ 6.00 % ( 9.29 %), 11/18/2027 16,715 16,405 16,715 4.5 % Saturn SHC Buyer Holdings, Inc. (c) (h) Healthcare L+ 6.00 % ( 10.77 %), 11/18/2027 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. (c) (h) Business Services L+ 5.75 % ( 10.48 %), 12/8/2028 5,001 4,906 4,914 1.3 % Simplifi Holdings, Inc. (c) (h) Media/Entertainment L+ 5.50 % ( 9.25 %), 10/1/2027 15,967 15,694 15,700 4.2 % SitusAMC Holdings Corp. (c) (h) Financials L+ 5.75 % ( 9.42 %), 12/22/2027 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. (c) (h) Healthcare S+ 6.00 % ( 10.58 %), 6/28/2029 32,102 31,346 31,357 8.4 % Trinity Air Consultants Holdings Corp. (c) (h) Business Services L+ 5.25 % ( 10.40 %), 6/29/2027 1,651 1,651 1,626 0.5 % Trinity Air Consultants Holdings Corp. (c) (h) Business Services L+ 5.25 % ( 10.18 %), 6/29/2027 8,788 8,653 8,656 2.3 % Triple Lift, Inc. (c) (h) Software/Services S+ 5.50 % ( 10.45 %), 5/5/2028 11,934 11,734 11,731 3.1 % Triple Lift, Inc. (c) Software/Services S+ 5.25 % ( 9.58 %), 5/5/2028 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 % 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 % The accompanying notes are an integral part of these consolidated financial statements. F- 18 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except 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 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. (c) (h) Business Services S+ 4.75 % ( 8.71 %), 4/1/2027 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. (c) Healthcare S+ 5.75 % ( 9.99 %), 7/1/2028 109 109 107 0.0 % West Coast Dental Services, Inc. (c) (h) Healthcare S+ 5.75 % ( 9.99 %), 7/1/2028 8,440 8,300 8,305 2.2 % Westwood Professional Services, Inc. (c) Business Services L+ 6.00 % ( 9.75 %), 5/26/2026 433 433 433 0.1 % Westwood Professional Services, Inc. (c) (h) Business Services L+ 6.00 % ( 9.75 %), 5/26/2026 3,679 3,624 3,679 1.0 % WHCG Purchaser III, Inc. (c) (h) Healthcare L+ 5.75 % ( 9.42 %), 6/22/2028 12,554 12,340 11,181 3.0 % WHCG Purchaser III, Inc. (c) Healthcare L+ 5.75 % ( 9.42 %), 6/22/2028 3,051 3,051 2,717 0.7 % WHCG Purchaser III, Inc. (c) Healthcare L+ 5.75 % ( 10.48 %), 6/22/2026 715 715 654 0.2 % WIN Holdings III Corp. (c) (h) Consumer L+ 5.25 % ( 10.40 %), 7/16/2028 13,430 13,204 13,218 3.6 % Zendesk, Inc. (c) (l) Software/Services S+ 6.50 % ( 11.04 %) 3.50 % PIK, 11/22/2028 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. (c) (h) Transportation L+ 7.50 % ( 12.23 %), 5/7/2029 4,275 4,263 3,533 0.9 % Corelogic, Inc. (c) (h) Business Services L+ 6.50 % ( 10.94 %), 6/4/2029 4,645 4,603 3,976 1.1 % Mercury Merger Sub, Inc. (c) (h) Business Services L+ 6.50 % ( 10.25 %), 8/2/2029 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. (c) (h) Industrials S+ 8.50 % ( 12.94 %), 4/9/2029 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. (c) (h) Industrials L+ 6.75 % ( 11.13 %), 12/7/2029 7,045 6,980 6,742 1.8 % USIC Holdings, Inc. (c) (h) Business Services L+ 6.50 % ( 10.57 %), 5/14/2029 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) Post Road Equipment Finance, LLC (c) (k) Financials L+ 7.75 % ( 11.94 %), 12/31/2028 6,914 $ 6,914 $ 6,914 1.9 % Post Road 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. F- 19 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except 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 % Jakks Pacific, Inc. (c) Consumer 783 18 116 0.0 % Point Broadband Acquisition, LLC (c) (e) (i) Telecom 1,159,828 1,160 1,369 0.4 % Post Road Equipment Finance, LLC (c) (i) (k) Financials 29,908,561 30,777 30,742 8.2 % 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 outstanding 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 outstanding 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. F- 20 FRANKLIN BSP CAPITAL CORPORATION CONSOLIDATED SCHEDULES OF INVESTMENTS (dollars in thousands, except 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. F- 21 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, 2023 Note 1 - Organization Franklin BSP Capital Corporation (the “Company”) is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (a “BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”) and has elected to be treated for U.S. federal income tax purposes, and to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company was formed as a Delaware limited liability company on January 29, 2020 and converted to a Delaware corporation on September 23, 2020 pursuant to which Franklin BSP Capital Corporation succeeded to the business of Franklin BSP Capital L.L.C. The Company commenced investment operations on January 7, 2021. The Company is managed by Franklin BSP Capital Adviser L.L.C. (the “Adviser”), a Delaware limited liability company and an affiliate of Benefit Street Partners L.L.C. (“Benefit Street Partners” or “BSP”) pursuant to an investment advisory agreement (the “Investment Advisory Agreement”). The Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. The Adviser oversees the management of the Company’s activities and is responsible for making investment decisions with respect to the Company’s portfolio. The Company’s investment objective is to generate both current income capital and capital appreciation through debt and equity investments. The Company invests primarily in first and second lien senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S. middle market 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. The Company is conducting a private placement of shares of its common stock, par value $ 0.001 per share (the “Common Stock”), to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). Each investor in the private placement will make a capital commitment (the “Capital Commitments”) to purchase shares of Common Stock pursuant to a subscription agreement (a “Subscription Agreement”). Investors will be required to make capital contributions to purchase shares of Common Stock (the “Drawdown Purchase Price”) each time the Company delivers a drawdown notice (the “Drawdown Notice”), which will be delivered at least ten business days prior to the required funding date, in an aggregate amount not to exceed their respective Capital Commitments. The Company is also conducting a private placement of shares of its preferred stock designated as series A convertible preferred stock (the “Series A Preferred Stock”) in reliance on exemption from the registration requirements of the Securities Act. See Note 10 - Preferred Stock for the terms of such preferred stock, including liquidation preference, distributions, and rights regarding conversion to shares of Common Stock. On October 2, 2023, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Franklin BSP Lending Corporation, a Maryland corporation ("FBLC"), Franklin BSP Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of the Company ("Merger Sub"), and, solely for the limited purposes set forth therein, the Adviser. The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the "Effective Time"), Merger Sub will be merged with and into FBLC (the "Merger"), with FBLC continuing as the surviving company and as a wholly-owned subsidiary of the Company. Immediately after the Effective Time, FBLC will merge with and into the Company (together with the Merger, the "Mergers"), with the Company continuing as the surviving company. See Note 16 - Subsequent Events for additional information about the Mergers. F- 22 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, 2023 Note 2 - Summary of Significant Accounting Policies Basis of Presentation The following is a summary of significant accounting policies followed by the Company in the preparation of its consolidated financial statements. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements reflect all adjustments, both normal and recurring which, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition for the periods presented. The Company is an investment company and accordingly applies specific accounting and financial reporting requirements under Financial Accounting Standards Codification (“ASC”) Topic 946, Financial Services-Investment Companies . We have also formed and expect to continue to form consolidated subsidiaries (the "Consolidated Holding Companies"). The Company consolidates the following subsidiaries for accounting purposes: FBCC Lending I, LLC, FBCC EEF Holdings LLC and FBCC Jupiter Funding, LLC. 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 The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these consolidated financial statements. Actual results could differ from those estimates. Consolidation As provided under ASC 946, the Company will generally not consolidate its investment in a company other than a substantially or wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company's substantially wholly-owned subsidiaries in its consolidated financial statements. Valuation of Portfolio Investments Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. 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 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 Valuation Designee uses the quote obtained. F- 23 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, 2023 Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that the 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. 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; and • The independent valuation firm(s) conduct independent appraisals and make an independent assessment of the value of each investment; and • 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. Additionally, the fair value of the Company's investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded it. Investment Classification The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Control” is defined as the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. In addition, in accordance with Section 2(a)(9) of the 1940 Act, any person who owns beneficially, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of a company shall be presumed to control such company. Any person who does not so own more than 25% of the outstanding voting securities of any company shall be presumed not to control such company. Any person who does not so own more than 25% of the outstanding voting securities of any company and/or does not have the power to exercise control over the management or policies of such portfolio company shall be presumed not to control such company. Consistent with the 1940 Act, “Affiliated Investments” are defined as those investments in companies in which the Company owns 5% or more of the outstanding voting securities. Consistent with the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments nor Affiliated Investments. F- 24 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, 2023 Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include cash held in banks and short-term, liquid investments in a money market deposit account. Restricted cash is collected and held by the trustee who has been appointed as custodian of the assets securing certain of the Company's financing transactions. Restricted cash is held by the trustees for payment of interest expense and principal on the outstanding borrowings or reinvestment into new assets. Cash, cash equivalents and restricted cash are carried at cost which approximates fair value. Organization and Offering Costs Organization costs consist of costs incurred to establish the Company and enable it legally to do business. Organization costs are expensed as incurred. Offering costs consist of costs incurred in connection with the offering of common shares of the Company. 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. 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. In addition, the Company will reimburse the Adviser for the organization and offering costs it incurs on the Company’s behalf. If actual organization and offering costs incurred exceed the greater of $ 1 million or 0.10 % of the Company’s total capital commitments, the Adviser or its affiliate will bear the excess costs. 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 years ended December 31, 2023, 2022, and 2021, 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. The costs are not subject to reimbursement from the Adviser. Deferred Financing Costs Financing costs incurred in connection with the Company’s revolving credit facilities are capitalized and amortized into expense using the straight-line method, which approximates the effective yield method over the life of the respective facility. See Note 5 - Borrowings . Convertible Preferred Stock We record shares of convertible preferred stock based on proceeds received net of offering costs on the date of issuance. Redeemable preferred stock (including preferred stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity and is reported separately from liabilities and net assets attributable to common stock within the consolidated statements of assets and liabilities. Distributions The Company’s Board of Directors authorizes and declares cash distributions payable on a quarterly basis to stockholders of record on each record date. The amount of each such distribution is subject to the discretion of the Board of Directors and applicable legal restrictions related to the payment of distributions. The Company calculates each stockholder’s specific distribution amount for the quarter using record and declaration dates. From time to time, the Company may also pay interim distributions, including capital gains distributions, at the discretion of the Company’s Board of Directors. The Company’s distributions may exceed earnings, especially during the period before it has substantially invested the proceeds from the offering. As a result, a portion of the distributions made by the Company may represent a return of capital for U.S. federal income tax purposes. A return of capital is a return of each stockholder’s investment rather than earnings or gains derived from the Company’s investment activities. F- 25 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, 2023 The Company may fund cash distributions to stockholders from any sources of funds available to the Company, including advances from the Adviser that are subject to reimbursement, as well as offering proceeds, borrowings, net investment income from operations, capital gain proceeds from the sale of assets, and non-capital gain proceeds from the sale of assets. The Company has not established limits on the amount of funds it may use from available sources to make distributions. See Note 13 - Income Tax Information and Distributions to Stockholders for additional information. Revenue Recognition Interest Income Investment transactions are accounted for on the trade date. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discount and premium on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discount and amortization of premium on investments. 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 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. Upon the re-payment of a loan or debt security, any prepayment penalties and unamortized loan origination, structuring, closing, commitment, and other upfront fees are recorded as income. Payment-in-Kind Interest The Company may hold debt investments in its portfolio that contain payment-in-kind (“PIK”) interest and dividend provisions. PIK interest, which represents contractually deferred interest that add to the investment balance that is generally due at maturity, is recorded on the accrual basis to the extent such amounts are expected to be collected. Non-accrual Income Investments may be placed on non-accrual status when principal or interest payments are past due and/or when there is reasonable doubt that principal or interest will be collected. Accrued interest, which may include un-capitalized PIK interest is generally reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest is not reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current. Net Realized Gain or Loss and Net Change in Unrealized Appreciation or Depreciation Gain or loss on the sale of investments is calculated using the specific identification method. The Company measures realized gain or loss by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when a gain or loss is realized. F- 26 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, 2023 Income Taxes The Company has elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Code. Generally, a RIC is not subject to federal income taxes in respect of each taxable year if it distributes dividends for federal income tax purposes to stockholders of an amount generally equal to its “investment company taxable income”, as defined in the Code, and determined without regard to any deduction for dividends paid. Distributions declared prior to the filing of the previous year's tax return and paid up to twelve months after the previous tax year can be carried back to the prior tax year in determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its ability to be subject to be taxed as a RIC each year. The Company may be subject to federal excise tax imposed at a rate of 4% on certain undistributed amounts. 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. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Company did not record any tax provision in the current period. However, management’s conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, examination by tax authorities on-going analysis of and changes to tax laws, regulations and interpretations thereof. See Note 13 - Income Tax Information and Distributions to Stockholders for additional information. Note 3 - Fair Value of Financial Instruments The Company’s fair value measurements are classified into a fair value hierarchy in accordance with ASC Topic 820, Fair Value Measurement , based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, if any, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value: • Level 1—Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. • Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. • Level 3—Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques. The determination of where an asset or liability falls in the above hierarchy requires significant judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. For investments for which Level 1 inputs, such as quoted prices, were not available at December 31, 2023 and 2022, 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, 2023 and 2022 may differ materially from values that would have been used had a ready market for the securities existed. F- 27 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, 2023 In addition to using the above inputs in investment valuations, the Company continues to employ the valuation policy approved by the Board of Directors. Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. On a quarterly basis the Company performs an analysis of each investment to determine fair value as described below. Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. The Company may also obtain quotes with respect to certain of the Company's investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, the Company uses the quote obtained. Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that the 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. 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. Accordingly, the notes to the consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations on the consolidated financial statements. For discussion of the fair value measurement of the Company's borrowings, refer to Note 5 - Borrowings . The following table presents fair value measurements of investments, by major class, as of December 31, 2023, according to the fair value hierarchy: Fair Value Measurements Level 1 Level 2 Level 3 Total Senior Secured First Lien Debt $ — $ 16,639 $ 615,704 $ 632,343 Senior Secured Second Lien Debt — 12,973 39,153 52,126 Subordinated Debt — — 35,500 35,500 Equity/Other — — 36,176 36,176 Total $ — $ 29,612 $ 726,533 $ 756,145 F- 28 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, 2023 The following table presents fair value measurements of investments, by major class, as of December 31, 2022, according to the fair value hierarchy: Fair Value Measurements Level 1 Level 2 Level 3 Total Senior Secured First Lien Debt $ — $ 26,901 $ 636,074 $ 662,975 Senior Secured Second Lien Debt — 8,447 45,575 54,022 Subordinated Debt — — 31,414 31,414 Equity/Other — — 33,969 33,969 Total $ — $ 35,348 $ 747,032 $ 782,380 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, 2023: Senior Secured First Lien Debt Senior Secured Second Lien Debt Subordinated Debt Equity/Other Total Balance as of January 1, 2023 $ 636,074 $ 45,575 $ 31,414 $ 33,969 $ 747,032 Purchases and other adjustments to cost 73,738 29 5,040 1,890 80,697 Sales and repayments ( 84,943 ) ( 2,162 ) ( 987 ) — ( 88,092 ) Net realized gain (loss) 1,295 54 — — 1,349 Transfers in 5,153 — — — 5,153 Transfers out ( 5,857 ) ( 3,976 ) — — ( 9,833 ) Net change in unrealized appreciation (depreciation) on investments ( 9,756 ) ( 367 ) 33 317 ( 9,773 ) Balance as of December 31, 2023 $ 615,704 $ 39,153 $ 35,500 $ 36,176 $ 726,533 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: $ ( 9,606 ) $ ( 361 ) $ 33 $ 317 $ ( 9,617 ) For the year ended December 31, 2023, 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, 2023, transfers from Level 3 to Level 2 were due to an increase in the number of observable market inputs. F- 29 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, 2023 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: Senior Secured First Lien Debt Senior Secured Second Lien Debt Subordinated Debt Equity/Other Total Balance as of January 1, 2022 $ 358,083 $ 42,360 $ 24,412 $ 31,813 $ 456,668 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 composition of the Company’s investments as of December 31, 2023, 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 $ 642,976 $ 632,343 83.6 % Senior Secured Second Lien Debt 55,145 52,126 6.9 Subordinated Debt 35,389 35,500 4.7 Equity/Other 35,525 36,176 4.8 Total $ 769,035 $ 756,145 100.0 % The composition of the Company’s investments as of December 31, 2022, 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 $ 666,045 $ 662,975 84.8 % Senior Secured Second Lien Debt 57,213 54,022 6.9 Subordinated Debt 31,336 31,414 4.0 Equity/Other 33,635 33,969 4.3 Total $ 788,229 $ 782,380 100.0 % Significant Unobservable Inputs The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of December 31, 2023. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values. F- 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, 2023 Range Asset Category Fair Value Primary Valuation Technique Unobservable Inputs Minimum Maximum Weighted Average (a) Senior Secured First Lien Debt $ 597,286 Yield Analysis Market Yield 8.81 % 25.58 % 11.00 % Senior Secured First Lien Debt (c) 15,649 N/A N/A N/A N/A N/A Senior Secured First Lien Debt (b) 2,769 Waterfall Analysis EBITDA Multiple 6.00 x 6.00 x 6.00 x Senior Secured Second Lien Debt 39,153 Yield Analysis Market Yield 13.35 % 20.50 % 14.95 % Subordinated Debt 35,500 Waterfall Analysis Tangible Net Asset Value Multiple 1.75 x 1.75 x 1.75 x Equity/Other (b) 32,600 Waterfall Analysis Tangible Net Asset Value Multiple 1.75 x 1.75 x 1.75 x Equity/Other 3,459 Waterfall Analysis EBITDA Multiple 11.87 x 24.50 x 18.14 x Equity/Other (b) 117 Yield Analysis Market Yield 13.50 % 13.50 % 13.50 % Total $ 726,533 ______________ (a) Weighted averages are calculated based on fair value of investments. (b) This asset category contains one investment. (c) This instrument(s) was held at cost. The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of December 31, 2022. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values. Range Asset Category Fair Value Primary Valuation Technique Unobservable Inputs Minimum Maximum Weighted Average (a) Senior Secured First Lien Debt $ 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. Level 3 inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category include investments in privately held entities where the fair value is based on unobservable inputs. F- 31 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, 2023 The income and market approaches were used in the determination of fair value of certain Level 3 assets as of December 31, 2023 and 2022. 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. An increase in the discount rate or market yield would result in a decrease in the fair value. Included in the consideration and selection of discount rates is risk of default, rating of the investment, call provisions and comparable company investments. The significant unobservable inputs used in the market approach are based on market comparable transactions and market multiples of publicly traded comparable companies. Increases or decreases in market comparable transactions or market multiples would result in an increase or decrease, respectively, in the fair value. Valuations of loans, corporate debt, and other debt obligations are generally based on discounted cash flow techniques, for which the significant inputs are the amount and timing of expected future cash flows, market yields and recovery assumptions. The significant inputs are generally determined based on relative value analysis, which incorporate comparisons to other debt instruments for which observable prices or broker quotes are available. Other valuation methodologies are used as appropriate including market comparables, transactions in similar instruments and recovery/liquidation analysis. The Company also considers the use of EBITDA multiples, revenue multiples, tangible net asset value multiples, TBV multiples, and other relevant multiples on its debt and equity investments to determine any credit gains or losses in certain instances. 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, 2023 and 2022 , 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. Note 4 - Related Party Transactions Investment Advisory Agreement 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 an initial two year term on September 23, 2020. The Board of Directors most recently 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 The Management Fee is payable quarterly in arrears and is calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters, where gross assets includes the total assets of the Company, including any borrowings for investment purposes. Prior to a liquidity event, the Management Fee payable under the Investment Advisory Agreement was calculated at an annual rate of 0.5 % of the Company’s average gross assets. A “1iquidity event” is defined as any of: (1) a merger or another transaction approved by the Board of Directors in which the Company’s stockholders will receive cash or shares of a publicly traded company (or a company that becomes publicly traded concurrently with the closing of such transaction), which may include an entity advised by the Adviser or its affiliates, (2) an initial public offering (“IPO”) or a listing (an “Exchange Listing”) of the Common Stock on a national securities exchange, or (3) the sale of all or substantially all of the Company’s assets either on a complete portfolio basis or individually followed by a liquidation. After a liquidity event, the Management Fee payable under the Investment Advisory Agreement will be calculated at an annual rate of 1.50 % of the Company’s average gross assets, provided, that the Management Fee will be calculated at an annual rate of 1.00 % of the Company’s average gross assets purchased with borrowed funds above 1.0 x debt-to-equity (equivalent to $1 of debt outstanding for each $1 of equity), and provided further that for a period of 15 months commencing on the date of the closing of a liquidity event, the Adviser will irrevocably waive Management Fees in excess of 0.5 % of the Company’s average gross assets. Any fees waived under the Investment Advisory Agreement are not subject to reimbursement to the Adviser. F- 32 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, 2023 As of December 31, 2023 and 2022, $ 1.1 million and $ 1.0 million was payable to the Adviser for Management Fees, respectively. For the years ended December 31, 2023, 2022, and 2021, the Company incurred $ 4.2 million, $ 3.4 million, and $ 1.1 million, respectively, in Management Fees under the Investment Advisory Agreement. Incentive Fee The Company will also pay the Adviser an Incentive Fee consisting of two parts, which are described below. Notwithstanding anything herein to the contrary, the Adviser will waive all Incentive Fees for the first twelve calendar quarters of operations of the Company. The incentive fee consists of two parts. The first part is referred to as the “incentive fee on income” and it is calculated and payable quarterly in arrears based on the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter. “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees, other than fees for providing managerial assistance, such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the 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). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount debt instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. For purposes of computing the Company’s Pre-Incentive Fee Net Investment Income, the calculation methodology will look through total return swaps as if the Company owned the referenced assets directly. For periods ending on or prior to the date of the closing of a liquidity event, the incentive fee on income with respect to the Company’s Pre-Incentive Fee Net Investment Income will be calculated as follows: • No incentive fee on income in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the preferred return rate of 1.50 %, or 6.00 % annualized (the “Preferred Return”), on net assets; • 100 % of Pre-Incentive Fee Net Investment Income, if any, that exceeds the Preferred Return but is less than or equal to 1.765 % in any calendar quarter ( 7.06 % annualized). This 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 15 % on all of the Company’s Pre-Incentive Fee Net Investment Income when the Company’s Pre-Incentive Fee Net Investment Income reaches 1.765 % ( 7.06 % annualized) in any calendar quarter; and • For any quarter in which Pre-Incentive Fee Net Investment Income exceeds 1.765 % ( 7.06 % annualized), the incentive fee on income equals 15 % of the amount of Pre-Incentive Fee Net Investment Income, as the Preferred Return and catch-up will have been achieved. For any period ending after the closing of a liquidity event, the incentive fee on income for each quarter will be calculated as follows: • No incentive fee on income in any calendar quarter in which Pre-Incentive Fee Net Investment Income does not exceed the Preferred Return of 1.50 %, or 6.00 % annualized, on net assets; • 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; and F- 33 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, 2023 • 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, 2023, 2022, and 2021, the Company incurred $ 7.7 million, $ 4.7 million, and $ 0.7 million, 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). Prior to a liquidity event, this fee equals 15 % of the Company’s incentive fee capital gains, which equals realized capital gains of the Company on a cumulative basis from the date of the Company’s election to be regulated as a BDC, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fee on capital gains during operations. Following a liquidity event, the incentive fee on capital gains during operations equals 17.5 % of the Company’s incentive fee capital gains calculated as described above, on a cumulative basis from the date of the Company’s election to be regulated as a BDC. U.S. 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 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 U.S. GAAP, does not necessarily represent amounts that will be payable under the Investment Advisory Agreement. For the years ended December 31, 2023, 2022, and 2021, the Company accrued $ 0 , $( 0.4 ) million, and $ 0.4 million, 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. The Company reimburses BSP quarterly for all administrative costs and expenses incurred by the Adviser in performing its obligations and providing personnel and facilities under the Administration Agreement and annually for overhead expenses incurred in the course of performing its obligations under the Administration Agreement, including rent, travel, and the allocable portion of the cost of the Company’s Chief Compliance Officer and Chief Financial Officer and their respective staffs, including operations and tax professionals, and administrative staff providing support services in respect of the Company. As of December 31, 2023 and 2022, $ 1.2 million and $ 0.8 million was payable to BSP under the Administration Agreement, respectively. For the years ended December 31, 2023, 2022, and 2021, the Company incurred $ 1.2 million, $ 0.8 million, and $ 0.7 million, respectively, in administrative service fees under the Administration Agreement, which are included in the other general and administrative on the consolidated statements of operations. F- 34 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, 2023 Co-Investment Relief The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC. The SEC staff has granted the Company exemptive relief that allows it to enter into certain negotiated co-investment transactions alongside with other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with its investment objective, positions, policies, strategies, and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, the Company is permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of its eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to the Company and the Company’s stockholders and do not involve overreaching in respect of the Company or the Company’s stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objective and strategies. Note 5 - Borrowings In accordance with the 1940 Act, the Company is allowed to borrow amounts such that its asset coverage, calculated pursuant to the Investment Company Act, is at least 150 % after such borrowing, with certain limited exceptions. The Company’s asset coverage requirement applicable to senior securities was reduced from 200 % to 150 % effective September 23, 2020. As of December 31, 2023, the aggregate principal amount outstanding of the senior securities issued by the Company was $ 399.5 million and the Company’s asset coverage was 197 %. MS Credit Facility On March 15, 2021, the Company, FBCC Lending I, LLC, a wholly-owned, special purpose financing subsidiary of the Company (“FBCC Lending”), and the Adviser, as the servicer, entered into a loan and servicing agreement (together with the other documents executed in connection therewith, the “MS Credit Facility”) with Morgan Stanley Asset Funding, Inc. as administrative agent, Morgan Stanley Bank, N.A., as the lender, and U.S. Bank National Association as collateral agent, account bank and collateral custodian, that provides for borrowings of up to $ 100.0 million on a committed basis. Obligations under the MS Credit Facility are secured by a first priority security interest in substantially all of the assets of FBCC Lending, including its portfolio of investments and the Company’s equity interest in FBCC Lending. The obligations of FBCC Lending under the MS Credit Facility are nonrecourse to the Company. 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 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. F- 35 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, 2023 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 %. The MS Credit Facility was refinanced with the JPM Credit Facility (defined below) on October 4, 2023. As a result of the refinancing to the JPM Credit Facility, the Company incurred a realized loss on extinguishment of debt of $ 1.5 million. 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 %. The MS Subscription Facility was terminated on March 29, 2023. JPM Credit Facility On October 4, 2023, the Company refinanced the MS Credit Facility with a $ 400.0 million credit facility with FBCC Jupiter Funding, LLC, a wholly-owned, consolidated special purpose financing subsidiary of the Company, as borrower (“Jupiter Funding”), the Adviser, as portfolio manager, the lenders party thereto, U.S. Bank National Association, as securities intermediary, U.S. Bank Trust Company, National Association as collateral administrator and collateral agent, and JPMorgan Chase Bank, National Association, as administrative agent (the “JPM Credit Facility”). The JPM Credit Facility provides for borrowings through October 4, 2026, and any amounts borrowed under the JPM Credit Facility will mature on October 4, 2027. Borrowings under the JPM Credit Facility will bear interest at a benchmark rate, currently SOFR, plus a margin of 2.75 % per annum, which is inclusive of an administrative agent fee. Interest is payable quarterly in arrears. Jupiter Funding will be subject to a non-usage fee of 0.75 %, which is inclusive of the administrative agent fee, to the extent the commitments available under the JPM Credit Facility have not been borrowed. Jupiter Funding paid an upfront fee and incurred other customary costs and expenses in connection with the JPM Credit Facility. F- 36 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, 2023 The following table represents facility borrowings as of December 31, 2023: Maturity Date Total Aggregate Borrowing Capacity Total Principal Outstanding Less Deferred Financing Costs Amount per Consolidated Statements of Assets and Liabilities JPM Credit Facility 10/4/2027 $ 400,000 $ 322,000 $ ( 2,082 ) $ 319,918 Total $ 400,000 $ 322,000 $ ( 2,082 ) $ 319,918 The following table represents facility borrowings as of December 31, 2022: 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 $ 400,000 $ 356,500 $ ( 2,222 ) $ 354,278 MS Subscription Facility 4/21/2023 25,500 25,400 ( 98 ) 25,302 Total $ 425,500 $ 381,900 $ ( 2,320 ) $ 379,580 The weighted average annualized interest cost for all facility borrowings for the years ended December 31, 2023 and 2022 was 7.76 % and 4.14 %, respectively. The average daily debt outstanding for facility borrowings for the years ended December 31, 2023 and 2022 was $ 346.1 million and $ 324.3 million, respectively. The maximum debt outstanding for facility borrowings for the years ended December 31, 2023 and 2022 was $ 381.9 million and $ 426.9 million, respectively. Short-term Borrowings From time to time, the Company finances the purchase of certain investments through repurchase agreements. In the repurchase agreements, the Company enters into a trade to sell an investment and contemporaneously enter into a trade to buy the same investment back on a specified date in the future with the same counterparty. Investments sold under repurchase agreements are accounted for as collateralized borrowings as the sale of the investment does not qualify for sale accounting under ASC Topic 860—Transfers and Servicing and remains as an investment on the consolidated statements of assets and liabilities. The Company uses repurchase agreements as a short-term financing alternative. As of December 31, 2023 and 2022, the Company had short-term borrowings outstanding of $ 0 and $ 20.8 million, respectively. For the years ended December 31, 2023, 2022, and 2021, the Company recorded interest expense of $ 1.7 million, $ 2.2 million, and $ 0.1 million, respectively, in connection with short-term borrowings. For the period January 1, 2023 through August 14, 2023 (period for which the Company had short-term borrowings), the Company had an average outstanding balance of short-term borrowings of $ 32.7 million and bore interest at a weighted average rate of 0.02 %. 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 %. Secured Borrowings On August 21, 2023, the Company entered into a total return swap (“TRS”) with Nomura. A TRS is a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the assets underlying the TRS, which may include a specified security, basket of securities or securities indices during the specified period, in return for periodic payments based on a fixed or variable interest rate. The Company pays interest to Nomura for each loan at a rate equal to three-month SOFR plus 3.60 % per annum. Upon the termination or repayment of any loan under the TRS, the Company will either receive from Nomura the appreciation in the value of such loan or pay to Nomura any depreciation in the value of such loan. The scheduled termination date for the TRS is February 17, 2025. The Company may terminate the TRS prior to February 17, 2025 upon the occurrence of certain events but in certain circumstances may be required to pay certain termination fees. F- 37 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, 2023 As of December 31, 2023, all total return swaps on the Nomura TRS were entered into contemporaneously with the Company’s sale of their reference assets. Due to the Company’s continuing involvement in these assets, these assets are not derecognized under ASC Topic 860 -- Transfers and Servicing, and are presented on the consolidated schedule of investments. Financing amounts related to these assets are presented as secured borrowings on the consolidated statement of assets and liabilities. Any margin paid to the counterparty under the terms of the TRS agreement is included in the “Due from broker” on the Company’s consolidated statements of assets and liabilities. The TRS is subject to the SEC rule related to the use of derivatives, reverse repurchase agreements and certain other transactions by registered investment companies. The rule requires that the Company trade derivatives and other transactions that create future payment or delivery obligations subject to a value-at-risk leverage limit and certain derivatives risk management program and reporting requirements. Generally, these requirements apply unless the Company qualifies as a “limited derivatives user,” as defined in the rule, in which case certain exceptions to these conditions would apply. The Company may qualify as a limited derivatives user if it adopts and implements written policies and procedures reasonably designed to manage the Company's derivatives risk and the Company's derivatives exposure does not exceed 10 percent of the Company's net assets as calculated in accordance with the rule. As of December 31, 2023 and December 31, 2022, the Company had secured borrowings outstanding of $ 33.3 million and $ 0 , respectively. For the years ended December 31, 2023, 2022, and 2021 the Company recorded interest expense of $ 0.8 million, $ 0 , and $ 0 , respectively, in connection with secured borrowings. For the period August 21, 2023 through December 31, 2023, the Company had an average outstanding balance of secured borrowings of $ 30.5 million and bore interest at a weighted average rate of 8.98 %. The following table represents interest and debt fees for the year ended December 31, 2023: Year Ended December 31, 2023 Interest Rate Non-Usage Rate Interest Expense Deferred Financing Costs (1) Other Fees (2) MS Credit Facility (5) (3) 0.50 % $ 19,446 $ 763 $ 1,082 MS Subscription Facility (6) (4) 0.30 % 404 98 11 JPM Credit Facility S + 2.75 % 0.75 % 6,405 129 319 Short-term borrowings 1,692 — — Secured borrowings S + 3.60 % 759 41 — Total $ 28,706 $ 1,031 $ 1,412 (1) Amortization of deferred financing costs. (2) Includes non-usage fees, custody fees, and administrative agent fees. (3) From January 1, 2023 to October 4, 2023, the MS Credit Facility bore interest at a rate of Term SOFR, plus a spread of 2.25 % per annum. (4) From January 1, 2023 to March 29, 2023, the MS Subscription Facility bore interest at a rate of Term SOFR with a one-month Interest Period, plus a spread of 2.10 % per annum. (5) Amount presented represents activity prior to refinancing on October 4, 2023. (6) Amount presented represents activity prior to termination on March 29, 2023. F- 38 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, 2023 The following table represents interest and debt fees for the year ended December 31, 2022: Year Ended December 31, 2022 Interest Rate Non-Usage Rate Interest Expense Deferred Financing Costs (1) 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 bore 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 — — Total $ 2,538 $ 647 $ 354 (1) Amortization of deferred financing costs. (2) Includes non-usage fees and custody fees. The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate fair value. The fair value of short-term financial instruments such as cash and cash equivalents, due to affiliates, accounts payable, short-term borrowings, and secured borrowings approximate their carrying value on the accompanying consolidated statements of assets and liabilities due to their short-term nature. At December 31, 2023, the carrying amount of the Company's secured borrowings approximated their fair value. The fair values of the Company's debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of 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, 2023 and 2022, the Company's borrowings would be deemed to be Level 3, as defined in Note 3 - Fair Value of Financial Instruments . F- 39 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, 2023 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: Level Carrying Amount as of December 31, 2023 Fair Value as of December 31, 2023 JPM Credit Facility 3 $ 322,000 $ 322,000 Total $ 322,000 $ 322,000 Level Carrying Amount as of December 31, 2022 Fair Value as of December 31, 2022 MS Credit Facility 3 $ 356,500 $ 356,500 MS Subscription Facility 3 25,400 25,400 Total $ 381,900 $ 381,900 Note 6 - Commitments and Contingencies Commitments In the ordinary course of business, the Company may enter into future funding commitments. As of December 31, 2023, the Company had unfunded commitments on delayed draw term loans of $ 34.3 million, and unfunded commitments on revolver term loans of $ 42.2 million. 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. The Company maintains sufficient cash on hand, unfunded Capital Commitments, and available borrowings to fund such unfunded commitments. As of December 31, 2023, 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 Revolver $ 533 $ 533 Alera Group Intermediate Holdings, Inc. Senior Secured First Lien Debt Delayed Draw 1,637 1,637 Alera Group Intermediate Holdings, Inc. Senior Secured First Lien Debt Delayed Draw 5,745 740 Armada Parent, Inc. Senior Secured First Lien Debt Delayed Draw 2,024 1,019 Armada Parent, Inc. Senior Secured First Lien Debt Revolver 2,444 2,444 Avalara, Inc. Senior Secured First Lien Debt Revolver 1,990 1,990 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 Demakes Borrower, LLC Senior Secured First Lien Debt Delayed Draw 1,323 1,323 Eliassen Group, LLC Senior Secured First Lien Debt Delayed Draw 1,450 995 Faraday Buyer, LLC Senior Secured First Lien Debt Delayed Draw 1,851 1,851 FGT Purchaser, LLC Senior Secured First Lien Debt Revolver 976 634 Galway Borrower, LLC Senior Secured First Lien Debt Revolver 861 861 Geosyntec Consultants, Inc. Senior Secured First Lien Debt Delayed Draw 5,480 2,737 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 632 632 Indigo Buyer, Inc. Senior Secured First Lien Debt Revolver 1,536 922 IQN Holding Corp. Senior Secured First Lien Debt Delayed Draw 660 660 F- 40 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, 2023 Portfolio Company Name Investment Type Commitment Type Total Commitment Remaining Commitment IQN Holding Corp. Senior Secured First Lien Debt Revolver $ 503 $ 503 Knowledge Pro Buyer, Inc. Senior Secured First Lien Debt Delayed Draw 7,323 6,281 Knowledge Pro Buyer, Inc. Senior Secured First Lien Debt Revolver 1,147 872 Medical Management Resource Group, LLC Senior Secured First Lien Debt Revolver 603 265 Mirra-Primeaccess Holdings, LLC Senior Secured First Lien Debt Revolver 3,429 2,572 Odessa Technologies, Inc. Senior Secured First Lien Debt Revolver 1,704 1,704 PetVet Care Centers, LLC Senior Secured First Lien Debt Delayed Draw 1,057 1,057 PetVet Care Centers, LLC Senior Secured First Lien Debt Revolver 1,057 1,057 Pie Buyer, Inc. Senior Secured First Lien Debt Delayed Draw 2,902 2,267 Pie Buyer, Inc. Senior Secured First Lien Debt Revolver 741 395 Pluralsight, LLC Senior Secured First Lien Debt Revolver 638 142 Relativity Oda, LLC Senior Secured First Lien Debt Revolver 196 196 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 1,398 SunMed Group Holdings, LLC Senior Secured First Lien Debt Revolver 259 259 The NPD Group, LP Senior Secured First Lien Debt Revolver 943 773 Trinity Air Consultants Holdings Corp. Senior Secured First Lien Debt Delayed Draw 1,232 675 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 Revolver 527 527 US Salt Investors, LLC Senior Secured First Lien Debt Revolver 934 934 Vensure Employer Services, Inc. Senior Secured First Lien Debt Delayed Draw 3,771 3,311 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 Revolver 1,087 145 Westwood Professional Services, Inc. Senior Secured First Lien Debt Revolver 162 162 WHCG Purchaser III, Inc. Senior Secured First Lien Debt Revolver 1,821 5 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 $ 95,511 $ 76,471 As of December 31, 2022, 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 $ 1,513 $ 333 ADCS Clinics Intermediate Holdings, LLC Senior Secured First Lien Debt Delayed Draw 1,246 1,246 F- 41 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, 2023 Portfolio Company Name Investment Type Commitment Type Total Commitment Remaining Commitment 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. Senior Secured First Lien Debt Delayed Draw 2,034 1,019 Armada Parent, Inc. Senior Secured First Lien Debt Revolver 2,444 2,444 Avalara, Inc. Senior Secured First Lien Debt Revolver 1,990 1,990 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 F- 42 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, 2023 Portfolio Company Name Investment Type Commitment Type Total Commitment Remaining Commitment 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 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 Litigation and Regulatory Matters In the ordinary course of business, the Company may become subject to litigation, claims, and regulatory matters. The Company has no knowledge of material legal or regulatory proceedings pending or known to be contemplated against the Company at this time. Indemnifications In the ordinary course of its business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote. Note 7 - Economic Dependency Under various agreements, the Company has engaged or will engage the Adviser and its affiliates to provide certain services that are essential to the Company, including asset management services, asset acquisition and disposition decisions, the sale of shares of the Company’s common stock available for issuance, as well as other administrative responsibilities for the Company including accounting services and investor relations. F- 43 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, 2023 As a result of these relationships, the Company is dependent upon the Adviser and its affiliates. In the event that these companies were unable to provide the Company with the respective services, the Company would be required to find alternative providers of these services. Note 8 - Capital Investor Commitments The following table summarizes the total capital commitments and unfunded capital commitments of Common Stock and Series A Preferred Stock as of December 31, 2023 and as of December 31, 2022: As of December 31, 2023 As of December 31, 2022 Capital Commitments Unfunded Capital Commitments Capital Commitments Unfunded Capital Commitments Common Stock $ 375,461 $ 900 $ 586,156 $ 221,281 Series A Preferred Stock 77,500 — 77,500 41,354 Total $ 452,961 $ 900 $ 663,656 $ 262,635 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, 2023: Share Issue Date Shares Issued Net Proceeds Received For the year ended December 31, 2023 March 27, 2023 532,871 $ 8,073 July 31, 2023 111,905 1,645 Total Capital Drawdowns 644,776 $ 9,718 The following tables summarizes the total shares issued and proceeds related to capital drawdowns of Common Stock for the year ended December 31, 2022: 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 issuances of Common Stock described above were exempt from the registration requirements of 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. F- 44 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, 2023 The following table summarizes the total shares issued and proceeds, net of offering costs related to capital drawdowns of Series A Preferred Stock year ended December 31, 2023: Share Issue Date Shares Issued Net Proceeds Received For the year ended December 31, 2023 March 27, 2023 41,353 $ 41,291 Total Capital Drawdowns 41,353 $ 41,291 The following table summarizes the total shares issued and proceeds, net of offering 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 F- 45 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, 2023 Note 9 - Common Stock The following table reflects the net assets attributable to Common Stock activity for the years ended December 31, 2023, 2022, and 2021: Common stock - shares Common stock - par Additional paid in capital Total distributable earnings (loss) Total net assets attributable to common stock Balance as of December 31, 2020 100 $ — (1) $ 2 $ ( 414 ) $ ( 412 ) 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 (loss) from investment transactions — — — 467 467 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 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 Net investment income (loss) — — — 53,575 53,575 Net realized gain (loss) from investment transactions — — — ( 987 ) ( 987 ) Net change in unrealized appreciation (depreciation) on investments — — — ( 7,809 ) ( 7,809 ) Accretion to redemption value of Series A redeemable convertible preferred stock — — — ( 17 ) ( 17 ) Accrual of Series A redeemable convertible preferred stock distributions — — — ( 7,615 ) ( 7,615 ) Distributions to common stockholders — — — ( 43,574 ) ( 43,574 ) Issuance of common stock, net of issuance costs 642,732 1 9,685 — 9,686 Reinvested dividends 828,525 0 (1) 12,439 — 12,439 Tax adjustment — — 2,651 ( 2,651 ) — Balance as of December 31, 2023 26,080,389 $ 26 $ 400,332 $ ( 12,239 ) $ 388,119 (1) Less than $ 1 . F- 46 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, 2023 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 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 the Board of Directors. The following table reflects the Common Stock activity for the year ended December 31, 2023: Shares Value Shares Sold 642,732 $ 9,686 Shares Issued through DRIP 828,525 12,439 1,471,257 $ 22,125 The following table reflects the Common Stock activity for the year ended December 31, 2022: Shares Value Shares Sold 8,821,043 $ 133,854 Shares Issued through DRIP 527,325 8,073 9,348,368 $ 141,927 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, 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, 2023, the Company has received total Preferred Capital Commitments of $ 77.5 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 “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. 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. As of December 31, 2023, there were 50.0 million shares of preferred stock authorized, par value $ 0.001 per share, of which 77,500 shares of Series A Preferred Stock were issued and outstanding. 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. No shares outstanding of Series A Preferred Stock are redeemable before December 31, 2026. Each holder of Series A Preferred Stock is entitled to a Liquidation Preference of $ 1,000.00 per share plus all dividends accrued and unpaid thereon. With respect to distributions, including the payment of dividends and distribution of the Company’s assets upon liquidation, dissolution, or winding-up, whether voluntary or involuntary, the Series A Preferred Stock will be senior to shares of Common Stock, will rank on parity with any other class or series of preferred stock that the Company is authorized to issue pursuant to its certificate of incorporation, whether such class or series is now existing or is created in the future, to the extent of the aggregate Liquidation Preference, which amount includes all accrued but unpaid dividends and will be subordinate to the rights of holders of our senior indebtedness. F- 47 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, 2023 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. 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, 2023 and 2022, 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. The following table presents the activity in the Company’s Series A Preferred Stock for the year ended December 31, 2023: Series A Preferred Stock Shares Amount Beginning Balance, December 31, 2022 36,147 $ 36,093 Issuance of Preferred Stock 41,353 41,353 Offering costs — ( 65 ) Amortization of offering costs — 17 Ending Balance, December 31, 2023 77,500 $ 77,398 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 Beginning Balance, December 31, 2021 5,000 $ 4,992 Issuance of Preferred Stock 31,147 31,147 Offering costs — ( 49 ) Amortization of offering costs — 3 Ending Balance, December 31, 2022 36,147 $ 36,093 F- 48 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, 2023 Note 11 - Earnings Per Share 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 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, 2023, 2022, and 2021. For the year ended December 31, Numerator 2023 2022 2021 Net increase (decrease) in net assets resulting from operations $ 44,779 $ 23,200 $ 6,869 Less: cumulative preferred stock dividends ( 8,789 ) ( 2,297 ) — Less: changes in carrying value of redeemable securities ( 17 ) ( 3 ) — Numerator for EPS - income available to common stockholders $ 35,973 $ 20,900 $ 6,869 Denominator Weighted average common shares outstanding 25,464,652 18,679,387 5,301,096 Basic and diluted earnings per share $ 1.41 $ 1.12 $ 1.30 F- 49 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, 2023 Note 12 — Distributions The following table reflects the distributions declared on shares of the Company’s Common Stock during the year ended December 31, 2023: Date Declared Record Date Payment Date Amount Per Share For the Year Ended December 31, 2023 February 24, 2023 February 24, 2023 March 24, 2023 $ 0.43 April 27, 2023 April 27, 2023 May 5, 2023 $ 0.43 July 28, 2023 July 28, 2023 August 7, 2023 $ 0.43 November 8, 2023 November 8, 2023 November 16, 2023 $ 0.43 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 Series A Preferred Stock during the year ended December 31, 2023: Date Declared Record Date Payment Date Amount Per Share For the Year Ended December 31, 2023 February 24, 2023 February 24, 2023 March 24, 2023 $ 28.31 April 27, 2023 April 27, 2023 May 5, 2023 $ 28.35 July 28, 2023 July 28, 2023 August 7, 2023 $ 28.35 November 8, 2023 November 8, 2023 November 16, 2023 $ 28.35 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 F- 50 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, 2023 Note 13 — Income Tax Information and Distributions to Stockholders The Company has elected to be treated for federal income tax purposes as a RIC under the Code. Generally, a RIC is exempt from federal income taxes if it meets, certain quarterly asset diversification requirements, annual income tests, and distributes to stockholders its ‘‘investment company taxable income,’’ as defined in the Code, each taxable year. Distributions declared prior to the filing of the previous year's tax return and paid up to one year after the previous tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its RIC status each year. The Company may also be subject to federal excise taxes of 4%. A RIC is limited in its ability to deduct expenses in excess of its “investment company taxable income” (which is, generally, ordinary income plus net realized short-term capital gains in excess of net realized long-term capital losses). If the Company's expenses in a given taxable year exceed gross taxable income (e.g., as the result of large amounts of equity-based compensation), it would incur a net operating loss for that year. However, a RIC is not permitted to carry forward net operating losses to subsequent taxable years and such net operating losses do not pass through to the RIC’s stockholders. In addition, deductible expenses can be used only to offset investment company taxable income, not net capital gain. A RIC may not use any net capital losses (that is, realized capital losses in excess of realized capital gains) to offset the RIC’s investment company taxable income, but may carry forward such net capital losses, and use them to offset capital gains indefinitely. Due to these limits on the deductibility of expenses and net capital losses, the Company may for tax purposes have aggregate taxable income for several taxable years that it is required to distribute and that is taxable to stockholders even if such taxable income is greater than the aggregate net income the Company actually earned during those taxable years. Such required distributions may be made from the Company cash assets or by liquidation of investments, if necessary. The Company may realize gains or losses from such liquidations. In the event the Company realizes net capital gains from such transactions, the Company may make a larger capital gain distribution than it would have made in the absence of such transactions. 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, 2022, 2021, and 2020 federal and state tax returns remain subject to examination by the Internal Revenue Service and state departments of revenue. The tax character of distributions for the fiscal years ended December 31, 2023, 2022, and 2021 was as follows: For the year ended December 31, 2023* 2022 2021 Ordinary income distributions $ 50,918 99.5 % $ 28,676 100.0 % $ 2,293 100.0 % Capital gains distributions 271 0.5 — — — — Return of capital — — — — — — Total distributions $ 51,189 100.0 % $ 28,676 100.0 % $ 2,293 100.0 % * Includes 94.47 % 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. F- 51 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, 2023 For the years ended December 31, 2023, 2022, and 2021, the reconciliation of net increase in net assets resulting from operations to taxable income is as follows: 2023 2022 2021 Book income (loss) from operating activities $ 37,147 $ 21,830 $ 6,869 Net unrealized (gain)/loss on investments 7,041 7,957 ( 2,108 ) Nondeductible expenses 131 313 — Temporary differences 5,077 ( 1,101 ) ( 50 ) Taxable income before deductions for distributions paid $ 49,396 $ 28,999 $ 4,711 For the years ended December 31, 2023, 2022, and 2021, the components of accumulated gain and losses on a tax basis were as follows: For the year ended December 31, 2023 2022 2021 Undistributed ordinary income $ 2,174 $ 3,586 $ 3,036 Undistributed long term gain (loss) 369 271 — Undistributed capital loss carryforward — — — Total undistributed net earnings (loss) 2,543 3,856 3,036 Net unrealized gain (loss) on investments ( 12,414 ) ( 4,604 ) 2,108 Other accumulated gain (loss) on investments ( 2,368 ) ( 388 ) ( 386 ) Total undistributed taxable income (loss) $ ( 12,239 ) $ ( 1,136 ) $ 4,758 As of December 31, 2023 and 2022, the Company did not have any short-term or long-term capital loss carryforwards. At December 31, 2023 and 2022, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows: December 31, 2023 December 31, 2022 Tax cost 767,011 786,984 Gross unrealized appreciation 6,733 5,071 Gross unrealized depreciation ( 19,147 ) ( 9,675 ) During the years ended December 31, 2023 and 2022, 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 2023 $ ( 2,651 ) $ 2,651 2022 $ ( 2,440 ) $ 2,440 These differences primarily relate to non-deductible offering costs, nondeductible excise tax expenses and U.S. GAAP blocker income. Aggregate stockholders’ equity was not affected by this reclassification. Tax information for the fiscal year ended December 31, 2023 is an estimate and will not be finally determined until the Company files its 2023 tax return. F- 52 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, 2023 As of December 31, 2023, 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 $ 6.0 million and a deferred tax liability of $( 7.6 ) 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, 2023. As a result, no valuation allowance for the deferred tax assets is necessary. As of December 31, 2022, the Company’s domestic subsidiary had a net operating loss and unrealized gain. As a result, the Company had 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. 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, 2023, 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, 2022, the Company had differences between book basis and tax basis cost of $( 2.0 ) million from investments in a domestic subsidiary. F- 53 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, 2023 Note 14 - Financial Highlights The Company commenced investing operations on January 7, 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 years ended December 31, 2023 and 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, 2023 2022 2021 Per share data: Net asset value attributable to common stock, beginning of period $ 15.13 $ 15.46 $ 15.00 Results of operations (1) Net investment income (loss) 2.11 1.68 0.78 Net realized and unrealized gain (loss) on investments, net of change in deferred taxes ( 0.28 ) ( 0.44 ) 0.52 Net realized loss on extinguishment of debt ( 0.06 ) — — Net increase (decrease) in net assets resulting from operations attributable to common stockholders and participating securities 1.77 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) ( 0.30 ) ( 0.07 ) — Net increase (decrease) in net assets resulting from operations attributable to common stockholders 1.47 1.17 1.30 Stockholder distributions (2) Common stockholder distributions from net investment income ( 1.71 ) ( 1.47 ) ( 0.30 ) Common stockholder distributions from capital gains ( 0.01 ) — — Net decrease in net assets resulting from stockholder distributions ( 1.72 ) ( 1.47 ) ( 0.30 ) Other (3) — ( 0.03 ) ( 0.54 ) Net asset value attributable to common stock, end of period $ 14.88 $ 15.13 $ 15.46 Common shares outstanding at end of period 26,080,389 24,609,132 15,260,764 Total return (4) 10.12 % 7.62 % 3.08 % Ratio/Supplemental data attributable to common stock: Total net assets attributable to common stock, end of period $ 388,119 $ 372,421 $ 235,973 Ratio of net investment income to average net assets attributable to common stock 13.97 % 10.80 % 3.49 % Ratio of total expenses to average net assets attributable to common stock (5) 12.73 % 10.15 % 7.76 % Ratio of incentive fees to average net assets attributable to common stock (6) 2.01 % 1.48 % 0.93 % Ratio of net expenses to average net assets attributable to common stock (7) 10.72 % 8.67 % 6.83 % Ratio of debt related expenses to average net assets attributable to common stock 8.12 % 5.99 % 2.98 % Portfolio turnover rate (8) 9.93 % 9.03 % 3.46 % F- 54 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, 2023 (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 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 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 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. (8) Portfolio turnover rate is calculated using the lesser of year-to-date purchases or sales over the average of the invested assets at fair value. (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 for the year ended December 31, 2023: Portfolio Company (1) Type of Asset Amount of dividends and interest included in income Beginning Fair Value at December 31, 2022 Gross additions* Gross reductions** Realized Gain/(Loss) Change in Unrealized Gain (Loss) Fair Value at December 31, 2023 Control Investments Post Road Equipment Finance, LLC (2) Equity/Other $ 2,700 $ 30,742 $ 1,883 $ — $ — $ ( 25 ) $ 32,600 Post Road Equipment Finance, LLC (2) Subordinated Debt 1,237 6,914 5,029 ( 987 ) — 44 11,000 Post Road Equipment Finance, LLC (2) Subordinated Debt 3,205 24,500 11 — — ( 11 ) 24,500 Total Control Investments $ 7,142 $ 62,156 $ 6,923 $ ( 987 ) $ — $ 8 $ 68,100 —–—–—–—–—– * 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). F- 55 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, 2023 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 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 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. (2) (3) 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. For purposes of the control designation, the Company has aggregated ownership held by other funds managed by Benefit Street Partners. F- 56 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, 2023 Note 16 - Subsequent Events 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. Distribution Declarations On January 9, 2024, the Board of Directors declared a distribution of $ 0.43 per share of Common Stock, which was paid on January 11, 2024 to stockholders of record as of January 10, 2024. On January 9, 2024, the Board of Directors declared a distribution of $ 28.35 per share of Series A Preferred Stock, which was paid on January 11, 2024 to stockholders of record as of January 10, 2024. Merger On January 24, 2024, the Company completed its previously announced acquisition of FBLC. Pursuant to the Merger Agreement, Merger Sub was first merged with and into FBLC, with FBLC continuing as the surviving company, and, immediately following the Merger, FBLC was then merged with and into the Company, with the Company continuing as the surviving company. In accordance with the terms of the Merger Agreement, at the Effective Time, each outstanding share of FBLC's common stock was converted into the right to receive 0.4647 shares of the Company's common stock. As a result of the Mergers, the Company issued an aggregate of 110.0 million shares of its common stock to FBLC stockholders. The Mergers will be accounted for as an asset acquisition of FBLC by the Company in accordance with the asset acquisition method of accounting as detailed in ASC 805-50, Business Combinations – Related Issues, with the fair value of total consideration paid in conjunction with the Mergers allocated to the assets acquired and liabilities assumed based on their relative fair values as of the date of the Mergers. Generally, under asset acquisition accounting, acquiring assets in groups not only requires ascertaining the cost of the asset (or net assets), but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. The cost of the group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on their relative fair values of net identifiable assets acquired other than certain “non-qualifying” assets (for example cash) and does not give rise to goodwill. The Company will be the accounting survivor of the Mergers. Amended and Restated Investment Advisory Agreement On October 2, 2023, the Company's Board of Directors approved an amendment and restatement (the “Amended and Restated Investment Advisory Agreement”) of the Investment Advisory Agreement, which went into effect on January 24, 2024 in connection with the consummation of the Mergers. Under the Amended and Restated Advisory Agreement, effective upon the closing of the Mergers, (i) the base management fee will increase to an annual rate of 1.50 % of the Company’s average gross assets, provided, that the base management fee will be calculated at an annual rate of 1.00 % of the Company’s average gross assets purchased with borrowed funds above 1.0 x debt-to-equity (equivalent to $1.0 of debt outstanding for each $1.0 of equity), (ii) the incentive fee on income will increase to a catch-up of 1.8175 % ( 7.27 % annualized), 17.5 % of the amount of the Company’s pre-incentive fee net investment income, if any, that exceeds the catch-up, with the preferred return to investors each quarter remaining the same as under the Investment Advisory Agreement, and (iii) the incentive fee on capital gains will increase to 17.5 % of the Company’s incentive fee capital gains calculated as under the Investment Advisory Agreement for periods ending after the date of the Amended and Restated Advisory Agreement, on a cumulative basis from the date of the Company’s election to be regulated as a BDC. The fees payable under the Amended and Restated Advisory Agreement are calculated in the same manner as the post-Liquidity Event (as defined in the Investment Advisory Agreement) calculation of the base management fee payable under the Investment Advisory Agreement. None of the other material terms will change in the Amended and Restated Advisory Agreement as compared to the Investment Advisory Agreement, including the services to be provided. F- 57