0001577791-18-000018.txt : 20181220 0001577791-18-000018.hdr.sgml : 20181220 20181219191119 ACCESSION NUMBER: 0001577791-18-000018 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181220 DATE AS OF CHANGE: 20181219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Oaktree Strategic Income Corp CENTRAL INDEX KEY: 0001577791 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 814-01013 FILM NUMBER: 181244421 BUSINESS ADDRESS: STREET 1: 333 SOUTH GRAND AVENUE STREET 2: 28TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90071 BUSINESS PHONE: 213-830-6300 MAIL ADDRESS: STREET 1: 333 SOUTH GRAND AVENUE STREET 2: 28TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90071 FORMER COMPANY: FORMER CONFORMED NAME: Fifth Street Senior Floating Rate Corp. DATE OF NAME CHANGE: 20130524 10-K/A 1 ocsi-093018x10xka.htm 10-K/A Document
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K/A
Amendment No. 1

(Mark One)
 
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the fiscal year ended September 30, 2018
OR
 
¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-35999
Oaktree Strategic Income Corporation
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
DELAWARE
(State or jurisdiction of
incorporation or organization)
 
61-1713295
(I.R.S. Employer
Identification No.)
 
 
 
333 South Grand Avenue, 28th Floor
Los Angeles, CA
(Address of principal executive office)
 
90071
(Zip Code)
REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE:
(213) 830-6300
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class
 
Name of Each Exchange
on Which Registered
Common Stock, par value $0.01 per share
 
The Nasdaq Global Select Market
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨        No  þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨        No  þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ        No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ¨        No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer  o
 
Accelerated filer  þ
 
Non-accelerated filer  o
 
Smaller reporting company  o
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company  o

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

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



The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of March 31, 2018 was $165,997,158. For the purposes of calculating the aggregate market value of common stock held by non-affiliates, the registrant has excluded (1) shares held by its current directors and officers and (2) those reported to be held by Fifth Street Holdings L.P. and Leonard M. Tannenbaum and his other affiliates. The registrant had 29,466,768 shares of common stock outstanding as of December 19, 2018.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement relating to the registrant’s 2019 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission (the "SEC"), within 120 days following the end of the Company’s fiscal year, are incorporated by reference in Part III of this Annual Report on Form 10-K as indicated herein.

EXPLANATORY NOTE

Oaktree Strategic Income Corporation, a Delaware corporation, or together with its subsidiaries, where applicable, the Company, which may also be referred to as "we", "us" or "our", is filing this Amendment No. 1 (the “Amendment”) to our Annual Report on Form 10-K for the fiscal year ended September 30, 2018, which was filed with the SEC on November 28, 2018 (the “Form 10-K”), to provide stand-alone audited financial statements for our investment in an unconsolidated controlled portfolio company, OCSI Glick JV LLC (“OCSI Glick JV”), for the year ended September 30, 2018. The OCSI Glick JV consolidated financial statements for the fiscal years ended September 30, 2018, 2017 and 2016 (Exhibit 99.1) are included in Part IV, Item 15 of this filing.

We have determined that this unconsolidated controlled portfolio company has met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X for which we are required, pursuant to Rule 3-09 of Regulation S-X, to attach separate financial statements as exhibits to the Form 10-K. In accordance with Rule 3-09(b), the separate financial statements of OCSI Glick JV are being filed as an amendment to the Form 10-K, within 90 days after the end of OCSI Glick JV’s fiscal year.

This Amendment also updates, amends and supplements Part IV, Item 15 of the Form 10-K to include the filing of new Exhibits 31.1, 31.2, 32.1 and 32.2, certifications of our Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a-14(a) and (b) of the Securities Exchange Act of 1934, as amended.

No other changes have been made to the Form 10-K. This Amendment does not reflect subsequent events that may have occurred after the original filing date of the Form 10-K or modify or update in any way disclosures made in the Form 10-K. Among other things, forward-looking statements made in the Form 10-K have not been revised to reflect events that occurred or facts that became known to us after filing of the Form 10-K, and such forward-looking statements should be read in their historical context. Furthermore, this Amendment should be read in conjunction with the Form 10-K and with our subsequent filings with the SEC.

PART IV

Item 15. Exhibits and Financial Statement Schedules
The following documents are filed or incorporated by reference as part of this Annual Report:

1. Financial Statements
 
Consolidated Statements of Assets and Liabilities as of September 30, 2018 and September 30, 2017
Consolidated Statements of Operations for the years ended September 30, 2018, 2017 and 2016
Consolidated Statements of Changes in Net Assets for the years ended September 30, 2018, 2017 and 2016
Consolidated Statements of Cash Flows for the years ended September 30, 2018, 2017 and 2016
Consolidated Schedule of Investments as of September 30, 2018
Consolidated Schedule of Investments as of September 30, 2017
Notes to Consolidated Financial Statements

2. Financial Statement Schedule
The following financial statement schedule is filed herewith:
 
Schedule 12-14 — Investments in and advances to affiliates






3. Exhibits required to be filed by Item 601 of Regulation S-K
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:
  
Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit a filed with the Registrant’s Registration Statement on Form N-2 (File No. 333-188904) filed on July 8, 2013).
  
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant, dated as of October 17, 2017 (Incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on October 17, 2017).
  
Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on January 29, 2018).
  
Form of Common Stock Certificate (Incorporated by reference to Exhibit d filed with the Registrant’s Registration Statement on Form N-2 (File No. 333-188904) filed on July 8, 2013).
  
Dividend Reinvestment Plan (Incorporated by reference to Exhibit e filed with the Registrant’s Registration Statement on Form N-2 (File No. 333-188904) filed on July 8, 2013).
  
Investment Advisory Agreement, dated as of October 17, 2017, between the Registrant and Oaktree Capital Management, L.P. (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on October 17, 2017).
  
Form of Custody Agreement (Incorporated by reference to Exhibit j filed with the Registrant’s Registration Statement on Form N-2 (File No. 333-188904) filed on July 8, 2013).
  
Administration Agreement, dated as of October 17, 2017, between the Registrant and Oaktree Fund Administration, LLC (Incorporated by reference to Exhibit 10.2 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on October 17, 2017).
 
Loan Financing and Servicing Agreement, dated as of September 24, 2018, by and among OCSI Senior Funding Ltd., as borrower, Registrant, as equityholder and as servicer, the lenders from time to time party thereto, Deutsche Bank AG, New York Branch, as facility agent, the other agents parties thereto and Wells Fargo Bank, National Association, as collateral agent and as collateral custodian (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on September 25, 2018).
 
Sale and Contribution Agreement, dated as of September 24, 2018, by and between Registrant, as seller, and OCSI Senior Funding Ltd., as purchaser (Incorporated by reference to Exhibit 10.2 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on September 25, 2018).
 
Loan Sale Agreement by and between Registrant and FS Senior Funding II LLC, dated as of January 15, 2015 (Incorporated by reference to Exhibit 10.2 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on January 21, 2015).
 
Loan and Security Agreement by and between the Registrant and East West Bank, dated as of January 6, 2016 (Incorporated by reference to Exhibit 10.1 filed with Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on January 12, 2016).
 
First Amendment to Loan and Security Agreement, dated as of March 17, 2018, by and between the Registrant and East West Bank (Incorporated by reference to Exhibit 10.2 filed with the Registrant’s Quarterly Report on Form 10-Q (File No. 814-01013) filed on May 8, 2018).
 
Pledge Agreement, dated as of October 17, 2017, between the Registrant and FSH (Incorporated by reference to Exhibit 10.3 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on October 17, 2017).
 
Amended and Restated Loan and Security Agreement, dated as of January 31, 2018, by and among Registrant, OCSI Senior Funding II LLC, the lenders referred to therein, Citibank, N.A., and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on February 1, 2018).
  
First Amendment to the Amended and Restated Loan and Security Agreement by and among the Registrant, as collateral manager, OCSI Senior Funding II LLC, as borrower, and Citibank, N.A., as administrative agent and sole lender, dated as of May 14, 2018 (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on May 16, 2018).
  
Second Amendment to Loan and Security Agreement by and between the Registrant and East West Bank, dated as of May 21, 2018 (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on May 23, 2018).
 
Second Amendment to the Amended and Restated Loan and Security Agreement by and among Registrant, as collateral manager, OCSI Senior Funding II LLC, as borrower, and Citibank, N.A., as administrative agent and sole lender, dated as of July 18, 2018 (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-01013) filed on July 19, 2018).

3


 
Third Amendment to the Amended and Restated Loan and Security Agreement by and among Registrant, as collateral manager, OCSI Senior Funding II LLC, as borrower, and Citibank, N.A., as administrative agent and sole lender, dated as of September 17, 2018 (Incorporated by reference to Exhibit 10.15 filed with the Registrant’s Annual Report on Form 10-K (File No. 814-01013) filed on November 28, 2018).
  
Joint Code of Ethics of the Registrant and Oaktree Specialty Lending Corporation (Incorporated by reference to Exhibit 14.1 filed with the Registrant's Annual Report on Form 10-K (File No. 814-01013) filed on December 8, 2017).
 
Code of Ethics of Oaktree Capital Management, L.P. (Incorporated by reference to Exhibit 14.2 filed with the Registrant's Annual Report on Form 10-K (File No. 814-01013) filed on December 8, 2017).
21
 
Subsidiaries of Registrant and jurisdiction of incorporation/organizations:
OCSI Senior Funding II LLC - Delaware
OCSI Senior Funding Ltd. - Cayman Islands
24
 
Power of Attorney (Incorporated by reference to the signature page to the Registrant’s Annual Report on Form 10-K (File No. 814-01013) filed on November 28, 2018).
 
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
 
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
 
Audited Financial Statements of OCSI Glick JV LLC as of September 30, 2018 and 2017 and for the years ended September 30, 2018, 2017 and 2016.

*    Filed herewith.


















 





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.
 
 
 
OAKTREE STRATEGIC INCOME CORPORATION
 
 
By:
 
/s/   Edgar Lee
 
 
Edgar Lee
 
 
Chief Executive Officer
 
 
By:
 
/s/    Mel Carlisle
 
 
Mel Carlisle
 
 
Chief Financial Officer and Treasurer
Date: December 19, 2018


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/    EDGAR LEE
  
Chief Executive Officer
 
December 19, 2018
 
Edgar Lee
 
(principal executive officer)
 
 
 
 
 
 
 
 
/s/    MEL CARLISLE
  
Chief Financial Officer and Treasurer
 
December 19, 2018
 
Mel Carlisle
 
(principal financial officer and
principal accounting officer)
 
 
 
 
 
 
 
 
*
 
Director
 
December 19, 2018
 
Richard W. Cohen
 
 
 
 
 
 
 
 
 
 
 
 
*
  
Director
 
December 19, 2018
 
John B. Frank
 
 
 
 
 
 
 
 
 
 
*
  
Director
 
December 19, 2018
 
Craig Jacobson
 
 
 
 
 
 
 
 
 
 
 
 
*
  
Director
 
December 19, 2018
 
Richard G. Ruben
 
 
 
 
 
 
 
 
 
 
*
  
Director
 
December 19, 2018
 
Bruce Zimmerman
 
 
 
 
 
 
 
 
 
 
 
 
* By:
 /s/    Mel Carlisle
 
 
 
 
 
 
Name: Mel Carlisle
Title: Attorney-in-fact
 
 
 
 


EX-31.1 2 ocsi-ex311_2018093010xka.htm EXHIBIT 31.1 Exhibit


Exhibit 31.1

I, Edgar Lee, Chief Executive Officer of Oaktree Strategic Income Corporation, certify that:
1. I have reviewed this annual report on Form 10-K/A for the year ended September 30, 2018 of Oaktree Strategic Income Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated this 19th day of December, 2018.

 
 
 
By:
 
/s/    Edgar Lee
 
 
Edgar Lee
Chief Executive Officer




EX-31.2 3 ocsi-ex312_2018093010xka.htm EXHIBIT 31.2 Exhibit


Exhibit 31.2

I, Mel Carlisle, Chief Financial Officer of Oaktree Strategic Income Corporation, certify that:

1. I have reviewed this annual report on Form 10-K/A for the year ended September 30, 2018 of Oaktree Strategic Income Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this 19th day of December, 2018.
 
 
 
 
By:
 
/s/    Mel Carlisle
 
 
Mel Carlisle
Chief Financial Officer




EX-32.1 4 ocsi-ex321_2018093010xka.htm EXHIBIT 32.1 Exhibit


Exhibit 32.1
Certification of Chief Executive Officer
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
In connection with the annual report on Form 10-K/A for the year ended September 30, 2018 (the “Report”) of Oaktree Strategic Income Corporation (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Edgar Lee, the Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
 
 
/s/    Edgar Lee
Name:    Edgar Lee
 
Date: December 19, 2018




EX-32.2 5 ocsi-ex322_2018093010xka.htm EXHIBIT 32.2 Exhibit


Exhibit 32.2
Certification of Chief Financial Officer
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
In connection with the annual report on Form 10-K/A for the year ended September 30, 2018 (the “Report”) of Oaktree Strategic Income Corporation (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Mel Carlisle, the Chief Financial Officer of the Registrant, hereby certify, to the best of my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
 
 
/s/    Mel Carlisle
Name:    Mel Carlisle
 
Date: December 19, 2018




EX-99.1 6 ocsi-ex991_glickjvllc2018fs.htm EXHIBIT 99.1 Exhibit

Exhibit 99.1

        






OCSI Glick JV LLC
(a limited liability company)

Consolidated Financial Statements
 
For the Fiscal Years Ended September 30, 2018, 2017 and 2016




        


OCSI Glick JV LLC
Table of Contents


























        


Report of Independent Auditors


To the Board of Directors of OCSI Glick JV LLC

We have audited the accompanying consolidated financial statements of OCSI Glick JV LLC, which comprise the consolidated statement of assets, liabilities and members’ capital, including the consolidated schedule of investments, as of September 30, 2018, and the related consolidated statements of operations, changes in members’ capital and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of OCSI Glick JV LLC at September 30, 2018, and the consolidated results of its operations, changes in its members’ capital and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.


/s/ Ernst & Young LLP
December 19, 2018















1


Report of Independent Auditors


To the Board of Directors of OCSI Glick JV LLC

We have audited the accompanying consolidated financial statements of OCSI Glick JV LLC (formerly known as FSFR Glick JV LLC) and its subsidiary (the “Fund”), which comprise the consolidated statements of operations, of changes in member’s capital and of cash flows for the year ended September 30, 2016.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Fund’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects the results of operations, changes in members’ capital, and cash flows of OCSI Glick JV LLC (formerly known as FSFR Glick JV LLC) and its subsidiary for the year ended September 30, 2016, in accordance with accounting principles generally accepted in the United States of America.

Other Matter

The accompanying consolidated statement of assets, liabilities and members' capital of OCSI Glick JV LLC (formerly known as FSFR Glick JV LLC), including the consolidated schedule of investments, as of September 30, 2017, and the related consolidated statements of operations, changes in members’ capital and cash flows for the year then ended are presented for purposes of complying with Rule 3-09 of SEC Regulation S-X; however, Rule 3-09 does not require the 2017 financial statements to be audited and they are therefore not covered by this report.


/s/ PricewaterhouseCoopers LLP

New York, New York
December 23, 2016




2

OCSI Glick JV LLC
Consolidated Statements of Assets, Liabilities and Members' Capital



 
 
September 30,
2018
 
September 30, 2017*
 
ASSETS
 
 
 
 
Investments at fair value (cost September 30, 2018: $159,310,299; cost September 30, 2017: $116,978,489)
$
160,260,951

 
$
108,737,459

 
Cash and cash equivalents
2,055,935

 
13,891,899

 
Restricted cash
2,036,487

 
2,249,575

 
Due from portfolio companies
53,006

 
7,653

 
Interest receivable
654,108

 
234,006

 
Deferred financing costs
1,127,394

 
1,557,071

Total assets
$
166,187,881

 
$
126,677,663

 
 
 
 
LIABILITIES AND MEMBERS' CAPITAL
 
 
 
Liabilities:
 
 
 
 
Accounts payable, accrued expenses and other liabilities
$
65,273

 
$
160,601

 
Due to affiliate
36,655

 

 
Interest payable
2,578,380

 
2,440,588

 
Payables from unsettled transactions
996,244

 

 
Distribution payable
1,358,336

 
1,358,336

 
Senior credit facility payable
94,281,939

 
56,881,939

 
Subordinated notes payable at fair value (proceeds September 30, 2018: $75,874,536; proceeds September 30, 2017: $73,404,435)
66,871,054

 
65,836,199

Total liabilities
166,187,881

 
126,677,663

Members’ capital

 

Total liabilities and members’ capital
$
166,187,881

 
$
126,677,663


*Not covered by the predecessor auditor's report


















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

3

OCSI Glick JV LLC
Consolidated Statements of Operations



 
 
Year ended
September 30, 2018
 
Year ended
September 30, 2017*
 
Year ended
September 30, 2016
Investment income:
 
 
 
 
 
 
Interest income
$
9,823,972

 
$
11,148,203

 
$
14,109,946

 
PIK interest income

 
53,620

 
33,170

 
Fee income
77,999

 
160,984

 
95,756

 
Total investment income
9,901,971

 
11,362,807

 
14,238,872

Expenses:
 
 
 
 
 
 
Interest expense
11,433,877

 
11,055,880

 
10,780,919

 
Professional fees
171,759

 
175,353

 
152,534

 
General and administrative expenses
40,115

 
49,207

 
54,833

 
Total expenses
11,645,751

 
11,280,440

 
10,988,286

Net investment income (loss)
(1,743,780
)
 
82,367

 
3,250,586

Net realized and unrealized gain (loss):
 
 
 
 
 
 
Net unrealized appreciation (depreciation) on investments and receivable from secured financing arrangement
9,191,682

 
(2,324,377
)
 
(3,742,420
)
 
Net realized loss on investments
(8,883,148
)
 
(3,873,454
)
 
(3,119,735
)
 
Net unrealized (appreciation) depreciation on subordinated notes payable
1,435,246

 
(569,031
)
 
7,574,694

 
Total net realized and unrealized gain (loss)
1,743,780

 
(6,766,862
)
 
712,539

Net increase (decrease) in members’ capital resulting from operations
$

 
$
(6,684,495
)
 
$
3,963,125


*Not covered by the predecessor auditor's report





























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


4

OCSI Glick JV LLC
Consolidated Statements of Changes in Members’ Capital




 
 
Oaktree Strategic Income Corporation
 
GF Equity Funding 2014 LLC
 
Total Members’ Capital
Members’ capital, September 30, 2015
 
$
4,476,824

 
$
639,546

 
$
5,116,370

Capital contributions
 
1,229,375

 
175,625

 
1,405,000

Distributions
 
(2,712,500
)
 
(387,500
)
 
(3,100,000
)
Net increase in members' capital resulting from operations
 
3,467,734

 
495,391

 
3,963,125

Members’ capital, September 30, 2016
 
$
6,461,433

 
$
923,062

 
$
7,384,495

Distributions*
 
(612,500
)
 
(87,500
)
 
(700,000
)
Net decrease in members' capital resulting from operations*
 
(5,848,933
)
 
(835,562
)
 
(6,684,495
)
Members’ capital, September 30, 2017*
 
$

 
$

 
$

Net increase (decrease) in members' capital resulting from operations
 

 

 

Members’ capital, September 30, 2018
 
$

 
$

 
$

Remaining capital commitment, September 30, 2018
 
$
1,638,249

 
$
234,036

 
$
1,872,285


*Not covered by the predecessor auditor's report














    







  









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


5

OCSI Glick JV LLC
Consolidated Statements of Cash Flows



 
 
 
 
Year ended
September 30, 2018
 
Year ended
September 30, 2017*
 
Year ended
September 30, 2016
 
Cash flows from operating activities:
 
 
 
 
 
 
Net increase (decrease) in members' capital resulting from operations
 
$

 
$
(6,684,495
)
 
$
3,963,125

 
Adjustments to reconcile net increase (decrease) in members’ capital resulting from operations to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
Net unrealized (appreciation) depreciation on investments and receivable from secured financing arrangement
 
(9,191,682
)
 
2,324,377

 
3,742,420

 
Net realized loss on investments
 
8,883,148

 
3,873,454

 
3,119,735

 
 
Net unrealized appreciation (depreciation) on subordinated notes payable
 
(1,435,246
)
 
569,031

 
(7,574,694
)
 
 
PIK interest income
 

 
(53,620
)
 
(33,170
)
 
 
Accretion of original issue discount/premium on investments
 
(609,152
)
 
(841,047
)
 
(808,381
)
 
 
Recognition of fee income
 

 
(2,306
)
 
2,306

 
 
PIK interest expense
 
2,470,101

 
255,001

 

 
 
Amortization of deferred financing costs
 
435,927

 
283,103

 
283,104

 
 
Purchases of investments
 
(122,034,536
)
 
(9,056,696
)
 
(66,774,005
)
 
 
Principal payments received on investments
 
59,674,325

 
68,343,987

 
52,870,383

 
 
Proceeds from sale of investments
 
11,754,405

 
20,368,037

 
3,123,705

 
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
Increase in receivable from secured financing arrangement
 

 

 
(4,985,500
)
 
 
(Increase) decrease in restricted cash
 
213,088

 
1,093,728

 
(1,155,170
)
 
 
(Increase) decrease in receivable from unsettled transactions
 

 
952,591

 
(952,591
)
 
 
Increase in due from portfolio companies
 
(45,353
)
 
(7,653
)
 

 
 
(Increase) decrease in interest receivable
 
(420,102
)
 
88,762

 
(187,358
)
 
 
Decrease in other assets
 

 

 
4,375

 
 
Increase (decrease) in interest payable
 
137,792

 
(85,602
)
 
701,147

 
 
Increase (decrease) in accounts payable, accrued expenses and other liabilities
 
(95,328
)
 
30,582

 
100,019

 
 
Increase in due to affiliate
 
36,655

 

 

 
 
Increase in payables from unsettled transactions
 
996,244

 

 

 
Net cash provided by (used in) operating activities
 
(49,229,714
)
 
81,451,234

 
(14,560,550
)
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
Capital contributions received
 

 

 
1,282,500

 
 
Distributions paid
 

 
(806,243
)
 
(2,470,421
)
 
 
Issuance of subordinated notes
 

 

 
11,366,252

 
 
Borrowings under senior credit facility
 
51,900,000

 

 

 
 
Repayments under senior credit facility
 
(14,500,000
)
 
(67,733,697
)
 
2,235,000

 
 
Deferred financing costs paid
 
(6,250
)
 

 

 
Net cash provided by (used in) financing activities
 
37,393,750

 
(68,539,940
)
 
12,413,331

Net increase (decrease) in cash and cash equivalents
 
(11,835,964
)
 
12,911,294

 
(2,147,219
)
 
Cash and cash equivalents, beginning of period
 
13,891,899

 
980,605

 
3,127,824

Cash and cash equivalents, end of period
 
$
2,055,935

 
$
13,891,899

 
$
980,605

Supplemental information:
 
 
 
 
 
 
 
Cash paid for interest
 
$
8,390,056

 
$
10,603,378

 
$
9,796,668

Non-cash operating activities:
 
 
 
 
 
 
Non-cash exchange of investments
 
$

 
$

 
$
1,225,000

 
 
Non-cash investment restructuring
 
$

 
$

 
$
2,293,945

 
 
Non-cash purchases of investment
 
$

 
$
(4,985,500
)
 
$

 
 
Non-cash decrease in receivable from secured financing arrangement
 
$

 
$
4,985,500

 
$

Non-cash financing activities:
 
 
 
 
 
 
Non-cash capital contributions
 
$

 
$

 
$
122,500

 
 
Non-cash issuance of subordinated notes
 
$
2,470,101

 
$
255,001

 
$
1,102,500

*Not covered by the predecessor auditor's report

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

6

OCSI Glick JV LLC
Consolidated Schedule of Investments
September 30, 2018


 Portfolio Company /Type of Investment (1)(2)
 Region (3)
 Industry
 
 Cash Interest Rate (2)
 
 Principal (4)
 
 Cost
 
 Fair Value
AI Ladder (Luxembourg) Subco S.a.r.l
 International
 Electrical components & equipment
 
 
 
 
 
 
 
 
First Lien Term Loan B, LIBOR+4.5% cash due 7/9/2025
 
 
 
7.02
%
 
$
5,000,000

 
$
4,853,898

 
$
5,029,700

 
 
 
 
 
 
 
 
4,853,898

 
5,029,700

 Air Newco LLC
 International
 IT consulting & other services
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4.75% cash due 5/31/2024 (5)
 
 
 
7.03
%
 
7,500,000

 
7,481,250

 
7,575,000

 
 
 
 
 
 
 
 
7,481,250

 
7,575,000

 AL Midcoast Holdings LLC
 Southwest
 Oil & gas storage & transportation
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+5.5% cash due 8/1/2025
 
 
 
7.84
%
 
7,000,000

 
6,930,000

 
7,028,455

 
 
 
 
 
 
 
 
6,930,000

 
7,028,455

 Altice France S.A.
 International
 Integrated telecommunication services
 
 
 
 
 
 
 
 
 First Lien Term Loan B13, LIBOR+4% cash due 8/14/2026
 
 
 
6.16
%
 
3,000,000

 
2,925,338

 
2,982,855

 
 
 
 
 
 
 
 
2,925,338

 
2,982,855

 Alvogen Pharma US Inc.
 Northeast
 Pharmaceuticals
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4.75% (1% floor) cash due 4/1/2022
 
 
 
6.99
%
 
6,875,051

 
6,875,051

 
6,942,358

 
 
 
 
 
 
 
 
6,875,051

 
6,942,358

 Ancile Solutions, Inc.
 Northeast
 Application software
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 6/30/2021(5)
 
 
 
9.39
%
 
3,750,800

 
3,719,206

 
3,728,294

 
 
 
 
 
 
 
 
3,719,206

 
3,728,294

 Aptos, Inc.
 Southeast
 Computer & electronics retail
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5.5% cash due 7/23/2025
 
 
 
7.74
%
 
3,000,000

 
2,970,000

 
2,996,250

 
 
 
 
 
 
 
 
2,970,000

 
2,996,250

 Asset International, Inc.
 Northeast
 Research & consulting services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 12/30/2024 (5)
 
 
 
6.89
%
 
3,970,000

 
3,899,167

 
3,952,818

 
 
 
 
 
 
 
 
3,899,167

 
3,952,818

 Bison Midstream Holdings LLC
West
 Oil & gas equipment & services
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4% cash due 5/21/2025
 
 
 
6.17
%
 
4,987,500

 
4,963,823

 
4,971,914

 
 
 
 
 
 
 
 
4,963,823

 
4,971,914

 California Pizza Kitchen, Inc.
 Northeast
 Restaurants
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6% (1% floor) cash due 8/23/2022
 
 
 
8.39
%
 
4,900,000

 
4,888,197

 
4,777,500

 
 
 
 
 
 
 
 
4,888,197

 
4,777,500

 Chloe Ox Parent LLC
 Southwest
 Healthcare services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 12/23/2024
 
 
 
6.89
%
 
5,970,000

 
5,915,738

 
5,992,388

 
 
 
 
 
 
 
 
5,915,738

 
5,992,388

 CM Delaware LLC
International
 Interactive media & services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5.25% (1% floor) cash due 3/18/2021 (5)
 
 
 
7.64
%
 
2,053,658

 
2,052,561

 
2,002,316

 
 
 
 
 
 
 
 
2,052,561

 
2,002,316


7

OCSI Glick JV LLC
Consolidated Schedule of Investments
September 30, 2018


 Portfolio Company /Type of Investment (1)(2)
 Region (3)
 Industry
 
 Cash Interest Rate (2)
 
 Principal (4)
 
 Cost
 
 Fair Value
 Eton
 Southeast
 Research & consulting services
 
 
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.5% cash due 5/1/2026
 
 
 
9.74
%
 
$
5,000,000

 
$
4,976,145

 
$
5,025,000

 
 
 
 
 
 
 
 
4,976,145

 
5,025,000

 Falmouth Group Holdings Corp.
 West
 Specialty chemicals
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+6.75% (1% floor) cash due 12/13/2021 (5)
 
 
 
8.99
%
 
4,330,233

 
4,295,307

 
4,330,288

 
 
 
 
 
 
 
 
4,295,307

 
4,330,288

 Gigamon, Inc.
 West
 Systems software
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 12/27/2024
 
 
 
6.89
%
 
5,955,000

 
5,901,647

 
5,999,664

 
 
 
 
 
 
 
 
5,901,647

 
5,999,664

 IBC Capital Ltd.
 International
 Metal & glass containers
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+3.75% cash due 9/11/2023
 
 
 
6.09
%
 
4,975,000

 
4,962,562

 
5,015,421

 
 
 
 
 
 
 
 
4,962,562

 
5,015,421

 Indivior Finance S.a.r.l
 International
 Pharmaceuticals
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4.5% (1% floor) cash due 12/19/2022
 
 
 
6.85
%
 
4,732,907

 
4,712,773

 
4,718,117

 
 
 
 
 
 
 
 
4,712,773

 
4,718,117

 Integro Parent, Inc.
 Northeast
 Insurance brokers
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5.75% (1% floor) cash due 10/31/2022 (5)
 
 
 
8.07
%
 
4,863,924

 
4,767,629

 
4,876,084

 
 
 
 
 
 
 
 
4,767,629

 
4,876,084

 McDermott Technology (Americas) Inc.
 Southwest
 Oil & gas equipment & services
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+5% (1% floor) cash due 5/12/2025
 
 
 
7.24
%
 
7,960,000

 
7,808,276

 
8,077,728

 
 
 
 
 
 
 
 
7,808,276

 
8,077,728

 MHE Intermediate Holdings, LLC
 Midwest
 Diversified support services
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+5% (1% floor) cash due 3/8/2024 (5)
 
 
 
7.39
%
 
4,186,250

 
4,119,789

 
4,147,707

 Delayed Draw Term Loan, LIBOR+5% (1% floor) cash due 3/8/2024 (5)
 
 
 
7.39
%
 
845,676

 
835,249

 
837,883

 
 
 
 
 
 
 
 
4,955,038

 
4,985,590

 Morphe LLC
 Southwest
 Personal products
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6% (1% floor) cash due 2/10/2023 (5)
 
 
 
8.40
%
 
3,412,500

 
3,382,166

 
3,412,500

 
 
 
 
 
 
 
 
3,382,166

 
3,412,500

 Northern Star Industries Inc.
 Midwest
 Electrical components & equipment
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4.75% (1% floor) cash due 3/31/2025 (5)
 
 
 
7.08
%
 
5,472,500

 
5,447,047

 
5,479,341

 
 
 
 
 
 
 
 
5,447,047

 
5,479,341

 Novetta Solutions, LLC
 Southeast
 Application software
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash due 10/17/2022 (5)
 
 
 
7.25
%
 
5,929,606

 
5,878,236

 
5,759,129

 
 
 
 
 
 
 
 
5,878,236

 
5,759,129

 OCI Beaumont LLC
 Southwest
 Commodity chemicals
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+4.25% (1% floor) cash due 3/13/2025
 
 
 
6.39
%
 
6,965,000

 
6,956,910

 
7,078,288

 
 
 
 
 
 
 
 
6,956,910

 
7,078,288

 R1 RCM Inc.
 Midwest
 Healthcare services
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+5.25% cash due 5/8/2025 (5)
 
 
 
7.65
%
 
7,000,000

 
6,800,665

 
7,017,500

 
 
 
 
 
 
 
 
6,800,665

 
7,017,500


8

OCSI Glick JV LLC
Consolidated Schedule of Investments
September 30, 2018


 Portfolio Company /Type of Investment (1)(2)
 Region (3)
 Industry
 
 Cash Interest Rate (2)
 
 Principal (4)
 
 Cost
 
 Fair Value
 RSC Acquisition, Inc.
 Northeast
 Trading companies & distributors
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+4.25% (1% floor) cash due 11/30/2022 (5)
 
 
 
6.71
%
 
$
3,889,854

 
$
3,871,269

 
$
3,880,130

 
 
 
 
 
 
 
 
3,871,269

 
3,880,130

 SHO Holding I Corporation
 Southeast
 Footwear
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash due 11/18/2022
 
 
 
7.34
%
 
6,321,250

 
6,283,276

 
6,005,189

 
 
 
 
 
 
 
 
6,283,276

 
6,005,189

 Tribe Buyer LLC
 Midwest
 Human resource & employment services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 2/16/2024
 
 
 
6.74
%
 
5,939,699

 
5,926,444

 
5,984,248

 
 
 
 
 
 
 
 
5,926,444

 
5,984,248

 Unimin Corp.
 Southwest
 Oil & gas equipment & services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+3.75% (1.00% floor) cash due 5/17/2025
 
 
 
6.14
%
 
6,982,500

 
6,982,500

 
6,621,714

 
 
 
 
 
 
 
 
6,982,500

 
6,621,714

 Verra Mobility, Corp.
 Southwest
Data processing & outsourced services
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+3.75% (1% floor) cash due 2/28/2025
 
 
 
5.99
%
 
4,977,494

 
4,957,752

 
5,008,602

 
 
 
 
 
 
 
 
4,957,752

 
5,008,602

 WP CPP Holdings, LLC
 Midwest
 Aerospace & defense
 
 
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026
 
 
 
10.15
%
 
3,000,000

 
2,970,428

 
3,006,570

 
 
 
 
 
 
 
 
2,970,428

 
3,006,570

 Total Portfolio Investments
 
 
 
 
 
 
 
$
159,310,299

 
$
160,260,951

Cash and Cash Equivalents
 
 
 
 
 
 
 
$
2,055,935

 
$
2,055,935

Total Portfolio Investments, Cash and Cash Equivalents
 
 
 
 
 
 
 
$
161,366,234

 
$
162,316,886


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


(1) Each of the Fund's investments is pledged as collateral under its senior credit facility.
(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to the London Interbank Offered Rate ("LIBOR") and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Fund has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars. As of September 30, 2018, the reference rates for the Fund's variable rate loans were the 30-day LIBOR at 2.24%, the 60-day LIBOR at 2.29%, the 90-day LIBOR at 2.39%, the 180-day LIBOR at 2.59%, and the PRIME at 5.25%.
(3)
The region is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company's business.
(4)
Principal includes accumulated payment in kind ("PIK") interest and is net of repayments.
(5) As of September 30, 2018, these investments are categorized as Level 3 within the fair value hierarchy established by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), and were valued using significant unobservable inputs. All other investments are categorized as Level 2 as of September 30, 2018.







9

OCSI Glick JV LLC
Consolidated Schedule of Investments
September 30, 2017 (not covered by auditor's report)

 Portfolio Company /Type of Investment (1)(2)
 Region (3)
 Industry
 
 Cash Interest Rate (2)
 
 Principal (4)
 
 Cost
 
 Fair Value
 Air Newco LLC
 International
 IT consulting & other services
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+5.5% (1% floor) cash due 3/20/2022
 
 
 
6.82
%
 
$
8,160,622

 
$
8,141,224

 
$
8,099,417

 
 
 
 
 
 
 
 
8,141,224

 
8,099,417

 Ameritox Ltd. (5)
 Northeast
 Healthcare services
 
 
 
 
 
 
 
 
First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021
 
 
 
6.33
%
 
2,287,177

 
2,243,202

 
265,211

119,910.76 Class B Preferred Units in Ameritox Holdings II, LLC
 
 
 
 
 
 
 
119,911

 

368.96 Class A Common Units in Ameritox Holdings II, LLC
 
 
 
 
 
 
 
2,174,034

 

 
 
 
 
 
 
 
 
4,537,147

 
265,211

 Ancile Solutions, Inc.
 Northeast
 Internet software & services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 6/30/2021
 
 
 
8.33
%
 
4,042,355

 
3,995,621

 
4,010,198

 
 
 
 
 
 
 
 
3,995,621

 
4,010,198

 Aptos, Inc.
 West
 Data processing & outsourced services
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+6.75% (1% floor) cash due 9/1/2022
 
 
 
8.08
%
 
7,920,000

 
7,790,262

 
7,840,800

 
 
 
 
 
 
 
 
7,790,262

 
7,840,800

 Beyond Trust Software, Inc.
 Southwest
 Application software
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 9/25/2019
 
 
 
8.33
%
 
11,267,524

 
11,220,478

 
11,267,116

 
 
 
 
 
 
 
 
11,220,478

 
11,267,116

 California Pizza Kitchen, Inc.
 Northeast
 Restaurants
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6% (1% floor) cash due 8/23/2022
 
 
 
7.24
%
 
4,950,000

 
4,938,077

 
4,917,008

 
 
 
 
 
 
 
 
4,938,077

 
4,917,008

 Central Security Group, Inc.
 Southwest
 Specialized consumer services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5.625% (1% floor) cash due 10/6/2021
 
 
 
6.86
%
 
3,876,067

 
3,880,408

 
3,892,211

 
 
 
 
 
 
 
 
3,880,408

 
3,892,211

 CM Delaware LLC
International
 Advertising
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5.25% (1% floor) cash due 3/18/2021
 
 
 
6.58
%
 
2,075,162

 
2,073,617

 
2,064,786

 
 
 
 
 
 
 
 
2,073,617

 
2,064,786

 Compuware Corporation
 Midwest
 Internet software & services
 
 
 
 
 
 
 
 
 First Lien Term Loan B3, LIBOR+4.25% (1% floor) cash due 12/15/2021
 
 
 
5.49
%
 
6,279,920

 
6,225,992

 
6,358,419

 
 
 
 
 
 
 
 
6,225,992

 
6,358,419

 Falmouth Group Holdings Corp.
 West
 Specialty chemicals
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6.75% (1% floor) cash due 12/13/2021
 
 
 
8.08
%
 
4,610,174

 
4,572,990

 
4,610,400

 
 
 
 
 
 
 
 
4,572,990

 
4,610,400

 Integro Parent Inc.
 Northeast
 Insurance brokers
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5.75% (1% floor) cash due 10/31/2022
 
 
 
7.06
%
 
4,913,924

 
4,790,511

 
4,901,639

 
 
 
 
 
 
 
 
4,790,511

 
4,901,639

 Metamorph US 3, LLC (5)
 Northeast
 Internet software & services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5.5% (1% floor) 2% PIK cash due 12/1/2020
 
 
 
6.74
%
 
6,825,900

 
6,477,372

 
2,592,115

 
 
 
 
 
 
 
 
6,477,372

 
2,592,115


10

OCSI Glick JV LLC
Consolidated Schedule of Investments
September 30, 2017 (not covered by auditor's report)

 Portfolio Company /Type of Investment (1)(2)
 Region (3)
 Industry
 
 Cash Interest Rate (2)
 
 Principal (4)
 
 Cost
 
 Fair Value
 MHE Intermediate Holdings, LLC
 Midwest
 Diversified support services
 
 
 
 
 
 
 
 
 First Lien Term Loan B LIBOR+5% (1% floor) cash due 3/11/2024
 
 
 
6.33
%
 
$
4,228,750

 
$
4,150,304

 
$
4,228,752

 Delayed Draw Term Loan LIBOR+5% (1% floor) cash due 3/11/2024
 
 
 
6.33
%
 
667,510

 
635,208

 
667,510

 
 
 
 
 
 
 
 
4,785,512

 
4,896,262

 Motion Recruitment Partners LLC
 Northeast
 Human resources & employment services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6% (1% floor) cash due 2/13/2020
 
 
 
7.24
%
 
8,659,650

 
8,659,646

 
8,659,223

 
 
 
 
 
 
 
 
8,659,646

 
8,659,223

 NAVEX Global, Inc.
 West
 Internet software & services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+4.25% (1% floor) cash due 11/19/2021
 
 
 
5.49
%
 
2,977,041

 
2,967,620

 
2,988,205

 
 
 
 
 
 
 
 
2,967,620

 
2,988,205

 New Trident Holdcorp, Inc.
 Northeast
 Healthcare services
 
 
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+5.75% (1.25% floor) cash due 7/31/2019
 
 
 
7.08
%
 
2,018,206

 
2,000,877

 
1,453,109

 
 
 
 
 
 
 
 
2,000,877

 
1,453,109

 Novetta Solutions, LLC
 Southeast
 Diversified support services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash due 10/16/2022
 
 
 
6.34
%
 
5,990,978

 
5,932,073

 
5,826,226

 
 
 
 
 
 
 
 
5,932,073

 
5,826,226

 Poseidon Merger Sub, Inc.
 Northeast
 Advertising
 
 
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 8/15/2023
 
 
 
9.81
%
 
3,000,000

 
2,933,633

 
3,030,000

 
 
 
 
 
 
 
 
2,933,633

 
3,030,000

 RSC Acquisition, Inc.
 Northeast
 Insurance brokers
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5.25% (1% floor) cash due 11/30/2022
 
 
 
6.58
%
 
3,930,134

 
3,912,198

 
3,890,832

 
 
 
 
 
 
 
 
3,912,198

 
3,890,832

 SHO Holding I Corporation
 Southeast
 Footwear
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash due 10/27/2022
 
 
 
6.24
%
 
6,386,250

 
6,338,479

 
6,306,422

 
 
 
 
 
 
 
 
6,338,479

 
6,306,422

 TruckPro, LLC
 Southeast
 Auto parts & equipment
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash due 8/6/2018
 
 
 
6.24
%
 
1,823,268

 
1,821,822

 
1,825,054

 
 
 
 
 
 
 
 
1,821,822

 
1,825,054

 Valet Merger Sub, Inc.
 Southeast
 Environmental & facilities services
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 9/24/2021
 
 
 
8.24
%
 
3,920,000

 
3,877,655

 
3,919,865

 Incremental Term Loan, LIBOR+7% (1% floor) cash due 9/24/2021
 
 
 
8.24
%
 
1,027,425

 
1,006,080

 
1,027,390

 
 
 
 
 
 
 
 
4,883,735

 
4,947,255

 Vubiquity, Inc.
 West
 Application software
 
 
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5.5% (1% floor) cash due 8/12/2021
 
 
 
6.83
%
 
4,126,500

 
4,099,195

 
4,095,551

 
 
 
 
 
 
 
 
4,099,195

 
4,095,551

 Total Portfolio Investments
 
 
 
 
 
 
 
$
116,978,489

 
$
108,737,459

Cash and Cash Equivalents
 
 
 
 
 
 
 
 
 
 
Wells Fargo Bank Institutional Money Market Fund
 
 
 
 
 
 
 
$
9,351,820

 
$
9,351,820

Other cash accounts
 
 
 
 
 
 
 
$
4,540,079

 
$
4,540,079

 Total Cash and Cash Equivalents
 
 
 
 
 
 
 
$
13,891,899

 
$
13,891,899

Total Portfolio Investments, Cash and Cash Equivalents
 
 
 
 
 
 
 
$
130,870,388

 
$
122,629,358


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

11

OCSI Glick JV LLC
Consolidated Schedule of Investments
September 30, 2017 (not covered by auditor's report)


(1) Each of the Fund's investments is pledged as collateral under its senior credit facility.
(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g. prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Fund has provided the applicable margin over LIBOR or the alternate rate based on each respective credit agreement. The interest rate shown is the current interest rate as of September 30, 2017.
(3)
The region is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company's business.
(4)
Principal includes accumulated PIK interest and is net of repayments.
(5)
This investment was on cash non-accrual status as of September 30, 2017. Cash non-accrual status is inclusive of other non-cash income.


12

OCSI Glick JV LLC
Notes to Consolidated Financial Statements
September 30, 2018, 2017 (not covered by the auditor's report) and 2016

1. ORGANIZATION AND BUSINESS PURPOSE

OCSI Glick JV LLC (together with its consolidated subsidiary, “OCSI Glick JV” or the "Fund” and formerly known as FSFR Glick JV LLC), a Delaware limited liability company ("LLC"), commenced operations on April 21, 2015 to primarily invest in senior secured loans of middle-market companies. The Fund is governed by an LLC agreement dated October 20, 2014 (as amended, the "LLC Agreement"). OCSI Glick JV Funding LLC (“Funding”), a consolidated, wholly-owned bankruptcy remote special purpose subsidiary of the Fund, was formed in connection with the closing of a senior secured credit facility, which facility was assigned to Deutsche Bank AG, New York branch on June 29, 2017 (the "Deutsche Bank Facility"). Funding was organized as an LLC under the laws of the State of Delaware.

The Fund has two members (collectively, the "Members"), Oaktree Strategic Income Corporation (“OCSI”) and GF Equity Funding 2014 LLC ("GF Equity Funding"). OCSI is a publicly traded business development company that is currently advised by Oaktree Capital Management, L.P., a registered investment adviser. The Fund is managed by a four person board of directors, two of whom are selected by OCSI and two of whom are selected by GF Equity Funding. OCSI Glick JV is capitalized as transactions are completed by the Members in exchange for LLC equity interests and by OCSI and GF Debt Funding 2014 LLC ("GF Debt Funding"), an entity advised by affiliates of GF Equity Funding, in exchange for funding under subordinated notes. All portfolio decisions and investment decisions in respect of the Fund must be approved by the OCSI Glick JV investment committee, which consists of one representative selected by OCSI and one representative selected by GF Equity Funding (with approval from a representative of each required).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Fund’s Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Fund is considered an investment company under FASB ASC Topic 946, Financial Services - Investment Companies ("ASC 946").

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make certain estimates and assumptions affecting amounts reported in the financial statements and accompanying notes. These estimates are based on the information that is currently available to the Fund and on various other assumptions that the Fund believes to be reasonable under the circumstances. Changes in the economic and political environments, financial markets and any other parameters used in determining these estimates could cause actual results to differ and such differences could be material. Significant estimates include the valuation of investments and revenue recognition.

Fair Value Measurements

The Fund values its investments in accordance with ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund is required to report its investments for which current market values are not readily available at fair value. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. ASC 820 prioritizes the use of observable market prices over entity-specific inputs. Where observable prices or inputs are not available or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments' complexity.
Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:
Level 1 — Unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date.
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

13

OCSI Glick JV LLC
Notes to Consolidated Financial Statements
September 30, 2018, 2017 (not covered by the auditor's report) and 2016

If inputs used to measure fair value fall into different levels of the fair value hierarchy, an investment's level is based on the lowest level of input that is significant to the fair value measurement. The Fund's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. This includes investment securities that are valued using "bid" and "ask" prices obtained from independent third party pricing services or directly from brokers. These investments may be classified as Level 3 because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities or may require adjustments for investment-specific factors or restrictions.

Financial instruments with readily available quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value. As such, the Fund obtains and analyzes readily available market quotations provided by pricing vendors and brokers for all of the Fund's investments for which quotations are available. In determining the fair value of a particular investment, pricing vendors and brokers use observable market information, including both binding and non-binding indicative quotations.

The Fund seeks to obtain at least two quotations for the subject or similar securities, typically from pricing vendors. If the Fund is unable to obtain two quotes from pricing vendors, or if the prices obtained from pricing vendors are not within the Fund's set threshold, the Fund seeks to obtain a quote directly from a broker making a market for the asset. The Fund evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. The Fund also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, the Fund performs due diligence procedures over pricing vendors to understand their methodology and controls to support their use in the valuation process. Generally, the Fund does not adjust any of the prices received from these sources.

If the quotations obtained from pricing vendors or brokers are determined to not be reliable or are not readily available, the
Fund values such investments using any of three different valuation techniques. The first valuation technique is the transaction precedent technique, which utilizes recent or expected future transactions of the investment to determine fair value, to the extent applicable. The second valuation technique is an analysis of the enterprise value ("EV") of the portfolio company. EV means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The EV analysis is typically performed to determine (i) the value of equity investments (ii) whether there is credit impairment for debt investments and (iii) the value for debt investments that the Fund is deemed to control. To estimate the EV of a portfolio company, the Fund analyzes various factors, including the portfolio company’s historical and projected financial results, macroeconomic impacts on the company, and competitive dynamics in the company’s industry. The Fund also utilizes some or all of the following information based on the individual circumstances of the portfolio company: (i) valuations of comparable public companies, (ii) recent sales of private and public comparable companies in similar industries or having similar business or earnings characteristics, (iii) purchase price multiples as a multiple of their earnings or cash flow, (iv) the portfolio company’s ability to meet its forecasts and its business prospects, (v) a discounted cash flow analysis, (vi) estimated liquidation or collateral value of the portfolio company's assets and (vii) offers from third parties to buy the portfolio company. The Fund may probability weight potential sale outcomes with respect to a portfolio company when uncertainty exists as of the valuation date. The third valuation technique is a market yield technique, which is typically performed for non-credit impaired debt investments. In the market yield technique, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk, and the Fund considers the current contractual interest rate, the capital structure and other terms of the investment relative to risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the EV of the portfolio company. As debt investments held by the Fund are substantially illiquid with no active transaction market, the Fund depends on primary market data, including newly funded transactions and industry specific market movements, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.
In addition, the Fund has utilized independent valuation firms to provide valuation assistance for certain of the Fund's portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment.

Investment Transactions

Purchases and sales of investments, and the related realized gains and losses, are recorded on a trade-date basis, with the gains and losses reflected in the Fund's Consolidated Statements of Operations. The cost of an investment may include costs incurred by the Fund as part of the purchase of such investment.





14

OCSI Glick JV LLC
Notes to Consolidated Financial Statements
September 30, 2018, 2017 (not covered by the auditor's report) and 2016

Investment Income

Interest income, adjusted for accretion of original issue discount ("OID"), is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Fund stops accruing interest on investments when it is determined that interest is no longer collectible. Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when there is reasonable doubt that principal or interest cash payments will be collected. Cash interest payments received on investments may be recognized as income or a return of capital depending upon management’s judgment. A non-accrual investment is restored to accrual status if past due principal and interest are paid in cash, and the portfolio company, in management’s judgment, is likely to continue timely payment of its remaining obligations.

The Fund's investments in debt securities may contain PIK interest provisions. PIK interest, which represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. The Fund generally ceases accruing PIK interest if there is insufficient value to support the accrual or if the Fund does not expect the portfolio company to be able to pay all principal and interest due. The Fund's decision to cease accruing PIK interest involves subjective judgments and determinations based on available information about a particular portfolio company, including whether the portfolio company is current with respect to its payment of principal and interest on its loans and debt securities; financial statements and financial projections for the portfolio company; the Fund's assessment of the portfolio company's business development success; information obtained by the Fund in connection with periodic formal update interviews with the portfolio company's management and, if appropriate, the private equity sponsor; and information about the general economic and market conditions in which the portfolio company operates. Based on this and other information, the Fund determines whether to cease accruing PIK interest on a loan or debt security. The Fund's determination to cease accruing PIK interest is generally made well before the Fund's full write-down of a loan or debt security. In addition, if it is subsequently determined that the Fund will not be able to collect any previously accrued PIK interest, the fair value of the loans or debt securities would be reduced by the amount of such previously accrued, but uncollectible, PIK interest. The accrual of PIK interest on the Fund’s debt investments increases the recorded cost bases of these investments in the Consolidated Financial Statements.
 
The Fund receives a variety of fees in the ordinary course of business, including amendment fees and prepayment fees that the Fund receives in connection with its debt investments. These fees are classified as fee income and recognized as earned.

Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents and restricted cash consist of demand deposits and highly liquid investments with maturities of three months or less, when acquired. The Fund places its cash, cash equivalents and restricted cash with financial institutions and, at times, cash held in bank accounts may exceed the Federal Deposit Insurance Corporation insurance limit. Cash and cash equivalents are classified as Level 1 assets and are included on the Fund's Consolidated Schedule of Investments.

As of September 30, 2018 and September 30, 2017, included in restricted cash was $2.0 million and $2.2 million, respectively, that was held at Wells Fargo Bank, National Association, in connection with the Deutsche Bank Facility. The Fund is restricted in terms of access to this cash until the occurrence of the periodic distributions dates and, in connection therewith, the Fund’s submittal of its required periodic reporting schedules and verifications of the Fund’s compliance with the terms of the credit agreement.

Due from Portfolio Companies:

Due from portfolio companies consists of amounts payable to the Fund from its portfolio companies, excluding those amounts attributable to interest receivable. These amounts are recognized as they become payable to the Fund (e.g., principal payments on the scheduled amortization payment date).

Interest Receivable

Interest receivable consists of interest due from the Fund’s portfolio companies as of the balance sheet date.

Deferred Financing Costs

Deferred financing costs consist of fees and expenses paid in connection with the closing or amending of credit facilities and debt offerings. Deferred financing costs in connection with credit facilities are capitalized as an asset at the time of payment. Deferred financing costs in connection with all other debt arrangements are a direct deduction from the related debt liability at the time of payment. Deferred financing costs are amortized using the effective interest method over the terms of the respective debt arrangement. This amortization

15

OCSI Glick JV LLC
Notes to Consolidated Financial Statements
September 30, 2018, 2017 (not covered by the auditor's report) and 2016

expense is included in interest expense in the Fund's Consolidated Statements of Operations. Upon early termination or modification of a credit facility, all or a portion of unamortized fees related to such facility may be accelerated into interest expense.

Payables From Unsettled Transactions

Payables from unsettled transactions consist of amounts payable by the Fund for transactions that have not settled at the reporting date.

Principles of Consolidation

The accompanying consolidated financial statements include all assets, liabilities, revenues, and expenses of OCSI Glick JV and Funding. OCSI Glick JV owns 100% of Funding. All intercompany balances and transactions have been eliminated in consolidation in conformity with GAAP.

Fair Value Option

The Fund elected the fair value option in accordance with FASB ASC Topic 825-10-25-1, Financial Instruments - Fair Value Option, for its subordinated notes payable which have aggregate proceeds of $75.9 million and a fair value of $66.9 million as of September 30, 2018 and have aggregate proceeds of $73.4 million and a fair value of $65.8 million as of September 30, 2017. The Fund believes that by electing the fair value option for these financial instruments, it provides consistent measurement of the Fund's investments which are carried at fair value. The Fund utilizes the enterprise value technique as discussed above to determine the fair value of the subordinated notes payable.

Income Taxes

The Fund is treated as a partnership for federal income tax purposes and is not subject to federal income tax, but may be subject to certain state taxes. Each Member is individually liable for taxes on its share of the Fund's ordinary income and capital gains. FASB ASC Topic 740, Accounting for Uncertainty in Income Taxes (“ASC 740”), provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the Fund’s Consolidated Financial Statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund's tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current period. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an ongoing analysis of tax laws, regulations and interpretations thereof.  The Fund recognizes tax benefit of uncertain tax positions only where the position is "more-likely-than-not" to be sustained assuming examination by tax authorities. Management has analyzed the Fund's tax positions, and has concluded that no liability should be recorded related to uncertain tax positions for the 2018 tax year and does not expect this to change in the next 12 months. As of September 30, 2018, the 2017, 2016 and 2015 tax years remain subject to examination by major tax jurisdiction under the statute of limitations. The Fund identifies its major tax jurisdictions as U.S. Federal and California.

Allocations of Profits and Losses

Allocations of profit and loss will be allocated to each Member’s capital account on a pro rata basis in a manner consistent with the procedures outlined in the LLC Agreement.

Indemnifi