UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K/A



Amendment No.
2



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



For the fiscal year ended December 31,
2019



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



Flat Rock Capital Corp.

(Exact Name of Registrant as Specified in
Its Charter)



|Maryland                                                       |  | 82-0894786                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer
Identification No.)



|1350 6th Avenue, 18th Floor, New York, NY |  | 10019     
|----------------------------------------- |  | ----------
|(Address of Principal Executive Offices)  |  | (Zip Code)



(212) 596-3413

(Registrant’s telephone number, including
area code)



Securities to be registered pursuant to
Section 12(b) of the Act:

None



Securities to be registered pursuant to
Section 12(g) of the Act:

Common Stock, par value $0.001 per share



Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒



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 ☒



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 past 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐



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



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 | ☐ | Accelerated filer ☐        
|----------------------- | - | ---------------------------
|Non-accelerated filer   | ☒ | Smaller reporting company ☐
|Emerging growth company | ☒ |                            



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



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



The aggregate market value of the common
stock held by non-affiliates of the issuer was $46,314,744 on June 30, 2019.



There were 2,991,093.773
issued and outstanding shares of the issuer’s common stock, $.001 par value per share, on September 23, 2020.



Documents Incorporated by Reference



None.














EXPLANATORY NOTE



Flat Rock
Capital Corp. (the “Company,” “we,” “our,” or “us”) is filing this Amendment
No. 2 (the “Amendment”) to its Annual Report on Form 10-K for the Company’s fiscal year ended December 31,
2019, as originally filed with the Securities and Exchange Commission (the “SEC”) on March 19, 2020 (the
“Original Report”), and amended on April 29, 2020. The purpose of this Amendment is to file re-issued audit
reports from Cohen & Company Ltd. (“Cohen”) concerning the Company’s audited financial statements for
the year ended December 31, 2019 and KPMG LLP (“KPMG”) concerning the Company’s audited financial
statements for the year ended December 31, 2018. Except for the audit reports of Cohen and KPMG, along with minor revisions
to the notes to the financial statements, no other changes have been made to the 10-K. Also, this Form 10-K/A has not been
updated to reflect events that occurred after the date of the Original Report. As such, this Form 10-K/A should be read in
conjunction with the Original Report.



Updated certifications
of our principal executive officer and principal financial officer are included as exhibits to this amendment.











TABLE OF CONTENTS



|           |  |                                               |  | Page
|---------- |  | --------------------------------------------- |  | ----
|           |  | PART II                                       |  |     
|Item 8.    |  | Financial Statements and Supplementary Data   |  | 1   
|           |  |                                               |  |     
|           |  | PART IV                                       |  |     
|Item 15.   |  | Exhibits, Financial Statements, and Schedules |  | 2   
|SIGNATURES |  | 4                                            



i







ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Index to Consolidated Financial Statements



|                                                                                                                                                                                            | Page
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                                                            |     
|Report of Independent Registered
    Public Accounting Firm as of and for the year ended December 31, 2019                                                                                  | F-1 
|Report of the Predecessor Independent
    Registered Public Accounting Firm as of and for the year ended December 31, 2018 and the period ended December 31, 2017.                          | F-2 
|Consolidated Statements of Assets and Liabilities as
    of December 31, 2019 and 2018                                                                                                      | F-3 
|Consolidated Statements of Operations
    for the Years ended December 31, 2019 and 2018 and for the Period of May 3, 2017 (commencement of operations) to December 31,
    2017            | F-4 
|Consolidated Statements of Changes
    in Net Assets for the Years ended December 31, 2019 and 2018 and for the Period of May 3, 2017 (commencement of operations)
    to December 31, 2017 | F-5 
|Consolidated Statements of Cash Flows
    for the Years ended December 31, 2019 and 2018 and for the Period of May 3, 2017 (commencement of operations) to December 31,
    2017            | F-6 
|Consolidated Schedules of Investments as of December 31,
    2019 and 2018                                                                                                                  | F-7 
|Notes to Consolidated Financial Statements                                                                                                                                                  | F-11



1







REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To
the Shareholders and Board of Directors of

Flat
Rock Capital Corp.



Opinion
on the Consolidated Financial Statements



We
have audited the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments,
of Flat Rock Capital Corp. (the “Company”) as of December 31, 2019, and the related consolidated statements of operations,
cash flows, and changes in net assets for the year then ended, including 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 as of December 31, 2019, and the results of its operations, cash flows, and changes in its
net assets for the year then ended, in conformity with accounting principles generally accepted in the United States of America.



Basis
for Opinion



These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on our audit. 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 audit 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 consolidated 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 audit, 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
audit included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements. Our procedures included confirmation
of securities owned as of December 31, 2019, by correspondence with the custodian, brokers and underlying investment managers,
or by other appropriate auditing procedures where replies from brokers or counterparties were not received. Our audit also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.



We
have served as the auditor of one or more of the investment companies advised by Flat Rock Global, LLC since 2018.



COHEN
& COMPANY, LTD.



Cleveland,
Ohio



October 2, 2020



F-1







Report
of Independent Registered Public Accounting Firm



To
the Stockholders and Board of Directors
Flat Rock Capital Corp.:



Opinion
on the Consolidated Financial Statements



We
have audited the accompanying consolidated statement of assets and liabilities of Flat Rock Capital Corp. and subsidiary
(the Company), including the consolidated schedule of investments, as of December 31, 2018, the related consolidated statements
of operations, changes in net assets, and cash flows for the year ended December 31, 2018, and for the period from May 3,
2017 (commencement of operations) through December 31, 2017, and the related notes (collectively, the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Company as of December 31, 2018, and the results of its operations and its cash flows for the year ended December 31,
2018, and for the period from May 3, 2017 (commencement of operations) through December 31, 2017, in conformity with U.S. generally
accepted accounting principles.



Basis
for Opinion



These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated 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 consolidated 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 consolidated 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 consolidated financial statements. Our procedures included confirmation
of investments owned as of December 31, 2018, by correspondence with third party agents. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.



/s/
KPMG LLP



We
served as the Company’s auditor from 2017 to 2019.



New
York, New York
March 13, 2019



F-2







Flat Rock Capital
Corp.

Consolidated
Statements of Assets and Liabilities



|                                                                                                                                                                                  |  | December 31,
     2019 |             |   | December 31,
    2018 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ----------- | - | --------------------- | -
|Assets:                                                                                                                                                                           |  |                        |             |   |                       |  
|Non-controlled/non-affiliated investments,
    at fair value (cost of $101,846,603 and $76,887,587, respectively)                                                                 |  | $                      | 101,537,724 |   |                       | $
|Cash and cash equivalents                                                                                                                                                         |  |                        | 3,359,446   |   |                       |  
|Foreign currency, at fair value (cost of $47,289)                                                                                                                                 |  |                        | 47,289      |   |                       |  
|Unrealized appreciation on open forward foreign currency exchange contracts                                                                                                       |  |                        | -           |   |                       |  
|Receivables:                                                                                                                                                                      |  |                        |             |   |                       |  
|Receivable for sales of investments                                                                                                                                               |  |                        | 1,771       |   |                       |  
|Receivable for paydowns of investments                                                                                                                                            |  |                        | 81,410      |   |                       |  
|Due from investment adviser                                                                                                                                                       |  |                        | 196,728     |   |                       |  
|Dividend receivable                                                                                                                                                               |  |                        | 64,524      |   |                       |  
|Interest receivable                                                                                                                                                               |  |                        | 265,314     |   |                       |  
|Prepaid expenses and other assets                                                                                                                                                 |  |                        | 75,000      |   |                       |  
|Total Assets                                                                                                                                                                      |  | $                      | 105,629,206 |   |                       | $
|                                                                                                                                                                                  |  |                        |             |   |                       |  
|Liabilities:                                                                                                                                                                      |  |                        |             |   |                       |  
|Credit facility, net (see note 6)                                                                                                                                                 |  | $                      | 29,796,235  |   |                       | $
|Payables:                                                                                                                                                                         |  |                        |             |   |                       |  
|Payable for investments purchased                                                                                                                                                 |  |                        | 18,996,667  |   |                       |  
|Distributions payable                                                                                                                                                             |  |                        | 257,614     |   |                       |  
|Management fee payable                                                                                                                                                            |  |                        | 368,452     |   |                       |  
|Incentive fee payable                                                                                                                                                             |  |                        | 155,491     |   |                       |  
|Accrued other general and administrative expenses                                                                                                                                 |  |                        | 84,877      |   |                       |  
|Total Liabilities                                                                                                                                                                 |  | $                      | 49,659,336  |   |                       | $
|                                                                                                                                                                                  |  |                        |             |   |                       |  
|Commitments and contingencies (Note 8)                                                                                                                                            |  |                        |             |   |                       |  
|                                                                                                                                                                                  |  |                        |             |   |                       |  
|Net Assets:                                                                                                                                                                       |  |                        |             |   |                       |  
|Preferred shares, $0.001 par value; 25,000,000 shares authorized;
    0 issued and outstanding as of December 31, 2019, and December 31, 2018                                     |  | $                      | -           |   |                       | $
|Common Shares, $0.001 par value; 125,000,000 shares authorized; 2,832,840
    as of December 31, 2019, and 1,867,420 as of December 31, 2018 issued and outstanding, respectively |  |                        | 2,833       |   |                       |  
|Additional paid-in capital                                                                                                                                                        |  |                        | 56,459,407  |   |                       |  
|Total distributable earnings (accumulated deficit)                                                                                                                                |  |                        | (492,370    | ) |                       |  
|Total Net Assets                                                                                                                                                                  |  | $                      | 55,969,870  |   |                       | $
|Total Liabilities and Net
    Assets                                                                                                                                              |  | $                      | 105,629,206 |   |                       | $
|Net Asset Value Per Common Share                                                                                                                                                  |  | $                      | 19.76       |   |                       | $



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



F-3







Flat Rock Capital
Corp.

Consolidated
Statements of Operations



|                                                                                            |  | For the Years Ended |           |   | For the Period May 3,  2017
    (commencement of operations) through |  
|------------------------------------------------------------------------------------------- |  | ------------------- | --------- | - | -------------------------------------------------------------------- | -
|                                                                                            |  | December 31, 2019   |           |   | December 31, 2018                                                    |  
|Income:                                                                                     |  |                     |           |   |                                                                      |  
|Investment income from non-controlled, non-affiliated investments:                          |  |                     |           |   |                                                                      |  
|Interest income                                                                             |  | $                   | 6,497,864 |   |                                                                      | $
|Dividend income                                                                             |  |                     | 121,483   |   |                                                                      |  
|Other income                                                                                |  |                     | 76,408    |   |                                                                      |  
|Total investment income from non-controlled, non-affiliated
    investments                 |  |                     | 6,695,755 |   |                                                                      |  
|Total Investment Income                                                                     |  |                     | 6,695,755 |   |                                                                      |  
|                                                                                            |  |                     |           |   |                                                                      |  
|Expenses:                                                                                   |  |                     |           |   |                                                                      |  
|Interest expense                                                                            |  |                     | 1,562,512 |   |                                                                      |  
|Management fees                                                                             |  |                     | 1,376,674 |   |                                                                      |  
|Incentive fees                                                                              |  |                     | 546,204   |   |                                                                      |  
|Professional fees                                                                           |  |                     | 259,986   |   |                                                                      |  
|Other general and administrative expenses                                                   |  |                     | 404,596   |   |                                                                      |  
|Total Expenses                                                                              |  |                     | 4,149,972 |   |                                                                      |  
|Less: Management fee waiver (Note 3)                                                        |  |                     | (265,221  | ) |                                                                      |  
|Less: Incentive fee waiver (Note 3)                                                         |  |                     | (408,149  | ) |                                                                      |  
|Less: Expense reimbursement (Note 3)                                                        |  |                     | -         |   |                                                                      |  
|Net expenses                                                                                |  |                     | 3,476,602 |   |                                                                      |  
|Net Investment Income (Loss)                                                                |  |                     | 3,219,153 |   |                                                                      |  
|                                                                                            |  |                     |           |   |                                                                      |  
|Realized and unrealized gains (losses)
    on investments and foreign currency transactions |  |                     |           |   |                                                                      |  
|Net realized gains (losses):                                                                |  |                     |           |   |                                                                      |  
|Non-controlled, non-affiliated investments                                                  |  |                     | (282,272  | ) |                                                                      |  
|Foreign currency transactions                                                               |  |                     | 47,937    |   |                                                                      |  
|Forward foreign currency exchange contracts (Note
    2)                                    |  |                     | 174,789   |   |                                                                      |  
|Total net realized gains (losses)                                                           |  |                     | (59,546   | ) |                                                                      |  
|Net change in unrealized gains (losses):                                                    |  |                     |           |   |                                                                      |  
|Non-controlled, non-affiliated investments                                                  |  |                     | 242,482   |   |                                                                      |  
|Foreign currency translation                                                                |  |                     | 137,371   |   |                                                                      |  
|Forward foreign currency exchange contracts (Note
    2)                                    |  |                     | (369,812  | ) |                                                                      |  
|Total net change in unrealized gains (losses)                                               |  |                     | 10,041    |   |                                                                      |  
|Total realized and unrealized gains (losses)                                                |  |                     | (49,505   | ) |                                                                      |  
|                                                                                            |  |                     |           |   |                                                                      |  
|Net Increase (Decrease) in Net Assets Resulting
    from Operations                         |  | $                   | 3,169,648 |   |                                                                      | $
|                                                                                            |  |                     |           |   |                                                                      |  
|Per Common Share Data:                                                                      |  |                     |           |   |                                                                      |  
|Basic and diluted net investment income per common
    share                                |  | $                   | 1.37      |   |                                                                      | $
|Basic and diluted net increase in net assets resulting
    from operations                  |  | $                   | 1.35      |   |                                                                      | $
|Weighted Average Common Shares Outstanding - Basic
    and Diluted                          |  |                     | 2,350,674 |   |                                                                      |  



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



F-4







Flat Rock Capital
Corp.

Consolidated
Statements of Changes in Net Assets



|                                                                                                                                   |  | For the Years Ended   |            |   | For the Period May 3,
                                                                                2017
                                                                                (commencement of operations) through |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | ---------- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -
|                                                                                                                                   |  | December 31,
    2019 |            |   | December 31,
     2018                                                                                                                                                                                                          |  
|Increase (Decrease) in Net Assets
    Resulting from Operations:                                                                   |  |                       |            |   |                                                                                                                                                                                                                                 |  
|Net investment income (loss)                                                                                                       |  | $                     | 3,219,153  |   |                                                                                                                                                                                                                                 | $
|Net realized gains (losses) on investments and foreign
    currency transactions                                                   |  |                       | (59,546    | ) |                                                                                                                                                                                                                                 |  
|Net change in unrealized gains
    (losses) on investments, foreign currency translations, and foreign currency exchange contracts |  |                       | 10,041     |   |                                                                                                                                                                                                                                 |  
|Net Increase
    (Decrease) in Net Assets Resulting from Operations                                                                |  |                       | 3,169,648  |   |                                                                                                                                                                                                                                 |  
|                                                                                                                                   |  |                       |            |   |                                                                                                                                                                                                                                 |  
|Decrease in Net Assets Resulting
    from Stockholder Distributions                                                                |  |                       |            |   |                                                                                                                                                                                                                                 |  
|Dividends and distributions to stockholders                                                                                        |  |                       | (3,147,725 | ) |                                                                                                                                                                                                                                 |  
|Return of capital                                                                                                                  |  |                       | -          |   |                                                                                                                                                                                                                                 |  
|Net Decrease
    in Net Assets Resulting from Stockholder Distributions                                                            |  |                       | (3,147,725 | ) |                                                                                                                                                                                                                                 |  
|                                                                                                                                   |  |                       |            |   |                                                                                                                                                                                                                                 |  
|Increase in Net Assets Resulting
    from Capital Share Transactions                                                               |  |                       |            |   |                                                                                                                                                                                                                                 |  
|Issuance of common shares                                                                                                          |  |                       | 20,210,850 |   |                                                                                                                                                                                                                                 |  
|Reinvestment of stockholder distributions                                                                                          |  |                       | 398,064    |   |                                                                                                                                                                                                                                 |  
|Repurchase of common shares                                                                                                        |  |                       | (1,516,074 | ) |                                                                                                                                                                                                                                 |  
|Net Increase
    in Net Assets Resulting from Capital Share Transactions                                                           |  |                       | 19,092,840 |   |                                                                                                                                                                                                                                 |  
|Total Increase (Decrease) in Net
    Assets                                                                                        |  |                       | 19,114,763 |   |                                                                                                                                                                                                                                 |  
|Net Assets, Beginning of Period                                                                                                    |  |                       | 36,855,107 |   |                                                                                                                                                                                                                                 |  
|Net Assets, End of Period                                                                                                          |  | $                     | 55,969,870 |   |                                                                                                                                                                                                                                 | $
|Net Asset Value per Common Share                                                                                                   |  | $                     | 19.76      |   |                                                                                                                                                                                                                                 | $
|Common shares
    outstanding at the end of the period                                                                             |  |                       | 2,832,840  |   |                                                                                                                                                                                                                                 |  



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



F-5







Flat Rock Capital
Corp.

Consolidated
Statements of Cash Flows



|                                                                                                                                    |  | For the Year Ended     |              |   | For the Period May 3,
                                                                                2017
                                                                                (commencement of operations) through |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------------ | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -
|                                                                                                                                    |  | December 31,
     2019 |              |   | December 31,
    2018                                                                                                                                                                                                           |  
|                                                                                                                                    |  |                        |              |   |                                                                                                                                                                                                                                 |  
|Cash Flows from Operating Activities:                                                                                               |  |                        |              |   |                                                                                                                                                                                                                                 |  
|Net increase in net assets resulting from operations                                                                                |  | $                      | 3,169,648    |   |                                                                                                                                                                                                                                 | $
|Adjustments to reconcile net increase in net assets
    resulting from operations to net cash used in operating activities:         |  |                        |              |   |                                                                                                                                                                                                                                 |  
|Net realized (gains)/losses on investments                                                                                          |  |                        | 282,272      |   |                                                                                                                                                                                                                                 |  
|Net change in unrealized (gains)/losses on investments                                                                              |  |                        | (242,482     | ) |                                                                                                                                                                                                                                 |  
|Net change in unrealized (gains)/losses on foreign currency translations                                                            |  |                        | (137,371     | ) |                                                                                                                                                                                                                                 |  
|Net change in unrealized (appreciation)/depreciation on forward foreign
    currency contracts                                      |  |                        | 369,812      |   |                                                                                                                                                                                                                                 |  
|Net accretion of discount on investments                                                                                            |  |                        | (60,003      | ) |                                                                                                                                                                                                                                 |  
|Purchases of investments                                                                                                            |  |                        | (170,787,006 | ) |                                                                                                                                                                                                                                 |  
|Proceeds from sale of investments                                                                                                   |  |                        | 145,605,721  |   |                                                                                                                                                                                                                                 |  
|Amortization of debt issuance costs                                                                                                 |  |                        | 125,899      |   |                                                                                                                                                                                                                                 |  
|Changes in operating assets and liabilities:                                                                                        |  |                        |              |   |                                                                                                                                                                                                                                 |  
|Receivable for sales of investments                                                                                                 |  |                        | (1,771       | ) |                                                                                                                                                                                                                                 |  
|Interest and dividend receivable                                                                                                    |  |                        | 91,217       |   |                                                                                                                                                                                                                                 |  
|Due from investment adviser                                                                                                         |  |                        | (106,879     | ) |                                                                                                                                                                                                                                 |  
|Receivable for paydowns of investments                                                                                              |  |                        | 124,421      |   |                                                                                                                                                                                                                                 |  
|Prepaid expenses and other assets                                                                                                   |  |                        | -            |   |                                                                                                                                                                                                                                 |  
|Payable for investments purchased                                                                                                   |  |                        | 1,050,060    |   |                                                                                                                                                                                                                                 |  
|Management fees payable                                                                                                             |  |                        | 368,452      |   |                                                                                                                                                                                                                                 |  
|Incentive fee payable                                                                                                               |  |                        | 155,491      |   |                                                                                                                                                                                                                                 |  
|Accrued other general and administrative expenses                                                                                   |  |                        | (220,151     | ) |                                                                                                                                                                                                                                 |  
|Net cash used in operating activities                                                                                               |  |                        | (20,212,670  | ) |                                                                                                                                                                                                                                 |  
|Cash Flows from Financing Activities:                                                                                               |  |                        |              |   |                                                                                                                                                                                                                                 |  
|Borrowings on credit facility                                                                                                       |  |                        | 45,094,606   |   |                                                                                                                                                                                                                                 |  
|Payments on credit facility                                                                                                         |  |                        | (38,611,271  | ) |                                                                                                                                                                                                                                 |  
|Payments of debt issuance costs                                                                                                     |  |                        | (46,010      | ) |                                                                                                                                                                                                                                 |  
|Distributions paid in cash                                                                                                          |  |                        | (2,692,213   | ) |                                                                                                                                                                                                                                 |  
|Proceeds from issuance of common shares, net of
    change in subscriptions receivable of $0, $100,000 and ($100,000), respectively |  |                        | 20,210,850   |   |                                                                                                                                                                                                                                 |  
|Repurchase of common shares                                                                                                         |  |                        | (1,516,074   | ) |                                                                                                                                                                                                                                 |  
|Net cash provided by financing activities                                                                                           |  |                        | 22,439,887   |   |                                                                                                                                                                                                                                 |  
|Net increase (decrease) in cash and cash equivalents                                                                                |  |                        | 2,227,217    |   |                                                                                                                                                                                                                                 |  
|Cash, cash equivalents and foreign currency, beginning of period                                                                    |  |                        | 1,179,518    |   |                                                                                                                                                                                                                                 |  
|Cash,
    cash equivalents and foreign currency, end of period(1)                                                                   |  | $                      | 3,406,735    |   |                                                                                                                                                                                                                                 | $
|                                                                                                                                    |  |                        |              |   |                                                                                                                                                                                                                                 |  
|Supplemental and Non-Cash Information:                                                                                              |  |                        |              |   |                                                                                                                                                                                                                                 |  
|Interest paid during the period                                                                                                     |  | $                      | 1,562,512    |   |                                                                                                                                                                                                                                 | $
|Distributions declared during the period                                                                                            |  | $                      | 3,147,725    |   |                                                                                                                                                                                                                                 | $
|Reinvestment of distributions during the period                                                                                     |  | $                      | 398,064      |   |                                                                                                                                                                                                                                 | $
|Distributions payable                                                                                                               |  | $                      | 257,614      |   |                                                                                                                                                                                                                                 | $



| | (1) | Agrees
                                         to the total of “Cash and cash equivalents” and “Foreign currency,
                                         at fair value” balances on the Consolidated Statements of Assets and Liabilities
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



F-6







Flat Rock Capital
Corp.

Consolidated
Schedule of Investments

As of December 31,
2019



|Portfolio
    Company(3)                             |  | Industry                                     |  | Interest Rate                |  | Acquisition Date |  | Maturity Date |            |  | Principal / Par |   |            | Cost |  |   | Fair Value |  |  | Percentage of Net Assets |           
|---------------------------------------------------- |  | -------------------------------------------- |  | ---------------------------- |  | ---------------- |  | ------------- | ---------- |  | --------------- | - | ---------- | ---- |  | - | ---------- |  |  | ------------------------ | ----------
|Debt Investments                                     |  |                                              |  |                              |  |                  |  |               |            |  |                 |   |            |      |  |   |            |  |  |                          |           
|First
    Lien Senior Secured Debt(1)(2)(6)          |  |                                              |  |                              |  |                  |  |               |            |  |                 |   |            |      |  |   |            |  |  |                          |           
|AIS HoldCo, LLC(7)                                   |  | Insurance Services                           |  | 3M USD L + 5.00% (0% Floor)  |  | 8/15/2018        |  |               | 8/15/2025  |  |                 | $ | 3,875,000  |      |  | $ | 3,875,108  |  |  | $                        | 3,826,562 
|ALM Media, Inc.(7)                                   |  | Media: Advertising, Printing, and Publishing |  | 3M USD L + 6.50% (1% Floor)  |  | 11/25/2019       |  |               | 11/25/2024 |  |                 |   | 5,000,000  |      |  |   | 4,901,774  |  |  |                          | 4,900,000 
|Broder Bros Co.(7)                                   |  | Wholesale                                    |  | 3M USD L + 8.50% (1% Floor)  |  | 1/30/2019        |  |               | 12/2/2022  |  |                 |   | 1,932,883  |      |  |   | 1,932,883  |  |  |                          | 1,932,883 
|Diversified Risk Holdings, LLC                       |  | Insurance Services                           |  | 3M USD L + 8.00% (1% Floor)  |  | 11/28/2018       |  |               | 11/28/2023 |  |                 |   | 14,850,000 |      |  |   | 14,732,774 |  |  |                          | 14,998,500
|Ceva Logistics Finance B.V.(4)                       |  | Transportation: Cargo                        |  | 3M USD L + 5.00% (0% Floor)  |  | 2/22/2019        |  |               | 8/4/2025   |  |                 |   | 2,985,000  |      |  |   | 2,901,303  |  |  |                          | 2,567,100 
|Coastal Construction Products(7)(10)                 |  | Construction & Building                      |  | 1M USD L + 5.125% (1% Floor) |  | 10/10/2018       |  |               | 9/4/2024   |  |                 |   | 3,805,021  |      |  |   | 3,765,373  |  |  |                          | 3,805,021 
|Hill International, Inc.(7)                          |  | Business Services                            |  | 3M USD L + 5.75% (1% Floor)  |  | 9/22/2017        |  |               | 6/21/2023  |  |                 |   | 1,462,500  |      |  |   | 1,457,080  |  |  |                          | 1,458,844 
|Isagenix International LLC(7)                        |  | Direct Selling                               |  | 3M USD L + 5.75% (1% Floor)  |  | 4/26/2018        |  |               | 4/25/2025  |  |                 |   | 2,773,173  |      |  |   | 2,781,173  |  |  |                          | 2,495,856 
|Mills Fleet Farms(7)                                 |  | Consumer Goods                               |  | 1M USD L + 6.25% (1% Floor)  |  | 10/19/2018       |  |               | 10/19/2024 |  |                 |   | 4,961,078  |      |  |   | 4,876,119  |  |  |                          | 4,712,031 
|NM Z Parent Inc (Zep Inc)(7)                         |  | Chemicals & Allied Products                  |  | 3M USD L+ 4.00% (1% Floor)   |  | 5/25/2018        |  |               | 8/9/2024   |  |                 |   | 982,412    |      |  |   | 972,631    |  |  |                          | 808,820   
|North Pole US LLC(4)                                 |  | Aerospace & Defense                          |  | 3M USD L + 7.00% (0% Floor)  |  | 4/10/2019        |  |               | 4/10/2025  |  |                 |   | 1,925,000  |      |  |   | 1,745,737  |  |  |                          | 1,750,595 
|Potpourri Group,  Inc.(7)                            |  | Direct Selling                               |  | 1M USD L + 8.25% (0% Floor)  |  | 7/3/2019         |  |               | 7/3/2024   |  |                 |   | 9,875,000  |      |  |   | 9,781,895  |  |  |                          | 9,776,250 
|Specialist Resources Global Inc.(5)(7)(10)           |  | Healthcare Services                          |  | 1M USD L + 5.25% (0% Floor)  |  | 9/23/2019        |  |               | 9/23/2025  |  |                 |   | 3,325,000  |      |  |   | 3,284,781  |  |  |                          | 3,283,417 
|Spencer Gifts LLC(7)                                 |  | Retail                                       |  | 1M USD L + 6.00% (0% Floor)  |  | 6/14/2019        |  |               | 6/12/2026  |  |                 |   | 4,987,500  |      |  |   | 4,891,998  |  |  |                          | 4,889,246 
|ThreeBridge Solutions Delayed Draw(7)                |  | IT Implementation                            |  | -                            |  | 12/1/2017        |  |               | 12/1/2022  |  |                 |   | 277,916    |      |  |   | 275,688    |  |  |                          | 277,916   
|ThreeBridge Solutions Term Loan(5)(7)                |  | IT Implementation                            |  | 1M USD L+ 9.00% (1% Floor)   |  | 12/1/2017        |  |               | 12/1/2022  |  |                 |   | 5,164,392  |      |  |   | 5,115,830  |  |  |                          | 5,164,392 
|World Insurance Associates, LLC Delayed Draw(7)      |  | Banking, Finance, Insurance & Real Estate    |  | 1M USD L + 4.50% (1% Floor)  |  | 7/2/2018         |  |               | 7/18/2024  |  |                 |   | 1,692,930  |      |  |   | 1,686,765  |  |  |                          | 1,676,001 
|World Insurance Associates, LLC(7)                   |  | Banking, Finance, Insurance & Real Estate    |  | 1M USD L + 4.50% (1% Floor)  |  | 7/2/2018         |  |               | 7/18/2024  |  |                 |   | 3,182,458  |      |  |   | 3,155,653  |  |  |                          | 3,150,633 
|Total First Lien Senior Secured
    Debt             |  |                                              |  |                              |  |                  |  |               |            |  |                 | $ | 73,057,263 |      |  | $ | 72,134,565 |  |  | $                        | 71,474,067
|                                                     |  |                                              |  |                              |  |                  |  |               |            |  |                 |   |            |      |  |   |            |  |  |                          |           
|Collateralized Loan Obligations(1)(6)                |  |                                              |  |                              |  |                  |  |               |            |  |                 |   |            |      |  |   |            |  |  |                          |           
|Churchill Middle Market CLO IV Ltd., Class
    E2(4) |  | Investment Vehicle                           |  | 3M USD L + 10.20% (0% Floor) |  | 12/12/2019       |  |               | 1/23/2032  |  |                 |   | 4,000,000  |      |  |   | 3,800,904  |  |  |                          | 4,060,800 
|Total Collateralized Loan Obligations                |  |                                              |  |                              |  |                  |  |               |            |  |                 |   | 4,000,000  |      |  |   | 3,800,904  |  |  |                          | 4,060,800 
|Total Debt Investments                               |  |                                              |  |                              |  |                  |  |               |            |  |                 | $ | 77,057,263 |      |  | $ | 75,935,469 |  |  | $                        | 75,534,867
|                                                     |  |                                              |  |                              |  |                  |  |               |            |  |                 |   |            |      |  |   |            |  |  |                          |           
|Private Fund Investments                             |  |                                              |  |                              |  |                  |  |               |            |  |                 |   |            |      |  |   |            |  |  |                          |           
|BCP Great Lakes Fund LP(4)(8)(9)                     |  | Investment Vehicle                           |  | -                            |  | 8/9/2019         |  |               | -          |  |                 |   |            |      |  |   | 6,914,467  |  |  |                          | 7,006,429 
|Total Private Fund Investments                       |  |                                              |  |                              |  |                  |  |               |            |  |                 |   |            |      |  | $ | 6,914,467  |  |  | $                        | 7,006,429 

F-7







Flat Rock Capital
Corp.

Consolidated
Schedule of Investments

As of December 31,
2019



|Security(3)                               |  | Yield to Maturity |      |   | Maturity Date |          | Acquisition Date |            | Number of Shares |  |            | Principal / Par |  |   | Amortized
    Cost(6) |  |  | Fair Value |             |  | Percentage of Net Assets |  
|----------------------------------------- |  | ----------------- | ---- | - | ------------- | -------- | ---------------- | ---------- | ---------------- |  | ---------- | --------------- |  | - | --------------------- |  |  | ---------- | ----------- |  | ------------------------ | -
|U.S.
    Government Securities(1)(6)      |  |                   |      |   |               |          |                  |            |                  |  |            |                 |  |   |                       |  |  |            |             |  |                          |  
|U.S.
    Treasury Bill(5)                 |  |                   | 1.05 | % |               | 1/7/2020 |                  | 12/31/2019 |                  |  | 19,000,000 |                 |  | $ | 19,000,000            |  |  | $          | 18,996,667  |  |                          | $
|Total
    U.S. Government Securities      |  |                   |      |   |               |          |                  |            |                  |  |            |                 |  |   | 19,000,000            |  |  |            | 18,996,667  |  |                          |  
|                                          |  |                   |      |   |               |          |                  |            |                  |  |            |                 |  |   |                       |  |  |            |             |  |                          |  
|Total
    Investments                     |  |                   |      |   |               |          |                  |            |                  |  |            |                 |  | $ | 96,057,263            |  |  | $          | 101,846,603 |  |                          | $
|Liabilities
    in Excess of Other Assets |  |                   |      |   |               |          |                  |            |                  |  |            |                 |  |   |                       |  |  |            |             |  |                          |  
|Net
    assets                            |  |                   |      |   |               |          |                  |            |                  |  |            |                 |  |   |                       |  |  |            |             |  |                          | $



(1) The amortized cost represents the original
cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest
method.

(2) Loan contains a variable rate structure,
subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the
London Interbank Offered Rate (“LIBOR” or “L”) (which can include one-, two-, three- or six-month LIBOR)
or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option,
and which reset periodically based on the terms of the loan agreement. For each such loan, the Company has provided the interest
rate in effect on the date presented. As of December 31, 2019, the 1 month (1M), 2 month (2M), and 3 month (3M) USD LIBOR
rates were 1.76%, 1.83%, and 1.91%, respectively.

(3) As of December 31, 2019, all investments
are non-controlled, non-affiliated investments. Non-controlled, non-affiliated investments are defined as investments in
which the Company owns less than 5% of the portfolio company’s outstanding voting securities and does not have the power
to exercise control over the management or policies of such portfolio company.

(4) Non-qualifying investment as defined
by Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time
of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2019, 14.6%
of the Company’s total assets were in non-qualifying investments.

(5) Investments or a portion of investments
are unsettled as of December 31, 2019.

(6) As of December 31, 2019, the tax
cost of the Company’s investments approximates their amortized cost.

(7) Security or portion thereof held within
FRC Funding I, LLC, a special purpose wholly-owned subsidiary of the Company, and is pledged as collateral supporting the amounts
outstanding under a revolving credit facility (see Note 6 to the consolidated financial statements).

(8) Security exempt from registration under
the Securities Act of 1933 (the “Securities Act”), and may be deemed to be a “restricted security” under
the Securities Act. As of December 31, 2019, the aggregate fair value of restricted securities held by the Company was $7,006,429
or 12.5% of net assets.

(9) The BCP Great Lakes Fund LP (the “Private
Fund”) is a limited partnership commitment, and has a three year reinvestment period expiring November 27, 2021, and is
subject to two (2) one year extensions thereof with the consent of BMO Harris Bank and BC Partners Advisors, L.P. The Private
Fund’s investment strategy is to invest in middle market sponsor backed uni-tranche term loans. The reinvestment period
is 3 years from the close date. The Private Fund does not permit withdrawal from the Private Fund or the withdrawal of any portion
of the Company’s capital account until the termination of the Private Fund or as provided in the Private Fund’s limited
partnership agreement. Of the $7,300,000 commitment to the Private Fund, $385,533 was unfunded as of December 31, 2019 (See Note
8 to the Consolidated Financial Statements).

(10) The Company had unfunded loan commitments
to the portfolio company as of December 31, 2019. See Note 8 to the Consolidated Financial Statements.



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



F-8







Flat Rock Capital
Corp.

Consolidated
Schedule of Investments

As of December
31, 2018



|                                                   |  |                             |  |                              |  | Acquisition |  | Maturity   |  | Principal / |            |  | Amortized  |   |            | Fair  |  |   | Percentage
of Net | 
|-------------------------------------------------- |  | --------------------------- |  | ---------------------------- |  | ----------- |  | ---------- |  | ----------- | ---------- |  | ---------- | - | ---------- | ----- |  | - | ----------------- | 
|Company(3)                                         |  | Industry                    |  | Interest                     |  | Date        |  | Date       |  | Par         |            |  | Cost(1)(6) |   |            | Value |  |   | Assets            | 
|Debt Investments                                   |  |                             |  |                              |  |             |  |            |  |             |            |  |            |   |            |       |  |   |                   | 
|First
    Lien Senior Secured(2)                   |  |                             |  |                              |  |             |  |            |  |             |            |  |            |   |            |       |  |   |                   | 
|AIS HoldCo, LLC(5)                                 |  | Insurance Services          |  | 3M USD L + 5.00% (1% Floor)  |  | 8/15/2018   |  | 8/15/2025  |  | $           | 3,975,000  |  |            | $ | 3,975,330  |       |  | $ | 3,955,125         | 
|American Dental Partners, Inc.                     |  | Healthcare Services         |  | 3M USD L + 4.25% (1% Floor)  |  | 11/14/2018  |  | 8/30/2021  |  |             | 1,000,000  |  |            |   | 997,564    |       |  |   | 985,000           | 
|Bomgar Corporation                                 |  | Computers & Electronics     |  | 3M USD L + 4.00% (1% Floor)  |  | 4/17/2018   |  | 4/17/2025  |  |             | 2,736,250  |  |            |   | 2,744,413  |       |  |   | 2,619,959         | 
|Canngen Insurance Services, LLC                    |  | Insurance Services          |  | 3M USD L + 8.00% (1% Floor)  |  | 11/28/2018  |  | 11/28/2023 |  |             | 15,000,000 |  |            |   | 14,854,433 |       |  |   | 14,850,000        | 
|Coastal Construction Products                      |  | Construction & Building     |  | 2M USD L + 5.375% (1% Floor) |  | 10/10/2018  |  | 9/4/2024   |  |             | 3,995,882  |  |            |   | 3,947,388  |       |  |   | 3,955,924         | 
|Deliver Buyer, Inc.                                |  | Capital Equipment           |  | 3M USD L + 5.00% (1% Floor)  |  | 6/14/2018   |  | 5/1/2024   |  |             | 497,475    |  |            |   | 496,315    |       |  |   | 486,928           | 
|Elo Touch Solutions(5)                             |  | High Tech Industries        |  | 3M USD L + 6.50% (1% Floor)  |  | 12/7/2018   |  | 12/5/2025  |  |             | 1,000,000  |  |            |   | 950,000    |       |  |   | 950,000           | 
|Envision Healthcare, Inc.                          |  | Healthcare Services         |  | 1M USD L + 3.75% (1% Floor)  |  | 9/28/2018   |  | 10/10/2025 |  |             | 2,000,000  |  |            |   | 1,995,040  |       |  |   | 1,860,000         | 
|GI Revelation Acquisition LLC                      |  | Business Services           |  | 1M USD L + 5.00% (1% Floor)  |  | 4/11/2018   |  | 4/11/2025  |  |             | 746,873    |  |            |   | 743,357    |       |  |   | 743,139           | 
|Hill International, Inc.                           |  | Business Services           |  | 3M USD L + 5.75% (1% Floor)  |  | 9/22/2017   |  | 6/21/2023  |  |             | 1,477,500  |  |            |   | 1,471,084  |       |  |   | 1,473,806         | 
|Idera, Inc.                                        |  | Computers & Electronics     |  | 1M USD L + 4.50% (1% Floor)  |  | 6/29/2017   |  | 6/28/2024  |  |             | 1,331,507  |  |            |   | 1,329,303  |       |  |   | 1,338,164         | 
|Isagenix International LLC                         |  | Direct Selling              |  | 3M USD L + 5.75% (1% Floor)  |  | 4/26/2018   |  | 6/14/2025  |  |             | 2,925,000  |  |            |   | 2,935,223  |       |  |   | 2,827,598         | 
|JP Intermediate Term Loan                          |  | Direct Selling              |  | 3M USD L + 5.50% (1% Floor)  |  | 10/19/2018  |  | 11/15/2025 |  |             | 500,000    |  |            |   | 495,073    |       |  |   | 495,000           | 
|Logibec Inc.(4)                                    |  | Healthcare IT               |  | 1M CDOR + 6.00% (1% Floor)   |  | 6/14/2017   |  | 1/15/2020  |  |             | 4,563,960  |  |            |   | 4,686,491  |       |  |   | 4,518,321         | 
|MHVC Acquisition Corp (Magnolia/Peraton)           |  | Aerospace and Defense       |  | 3M USD L + 5.25% (1% Floor)  |  | 9/21/2018   |  | 4/28/2024  |  |             | 994,949    |  |            |   | 989,975    |       |  |   | 962,614           | 
|Mills Fleet Farms                                  |  | Consumer Goods              |  | 1M USD L + 6.25% (1% Floor)  |  | 10/19/2018  |  | 10/19/2024 |  |             | 5,000,000  |  |            |   | 4,902,388  |       |  |   | 4,900,000         | 
|MRO Holdings, Inc.                                 |  | Transportation              |  | 3M USD L + 5.25% (1% Floor)  |  | 10/20/2017  |  | 10/25/2023 |  |             | 990,000    |  |            |   | 981,904    |       |  |   | 990,000           | 
|Next Level Apparel, Inc.                           |  | Consumer Goods              |  | 1M USD L + 6.00% (1% Floor)  |  | 7/27/2018   |  | 7/26/2024  |  |             | 1,987,500  |  |            |   | 1,968,004  |       |  |   | 1,967,625         | 
|NM Z Parent Inc (Zep Inc)                          |  | Chemicals & Allied Products |  | 3M USD L+ 4.00% (1% Floor)   |  | 5/25/2018   |  | 8/9/2024   |  |             | 992,462    |  |            |   | 981,013    |       |  |   | 876,642           | 
|Octave Music Group, Inc.                           |  | Broadcasting & Subscription |  | 1M USD L + 4.75% (1% Floor)  |  | 10/17/2017  |  | 5/28/2021  |  |             | 987,212    |  |            |   | 992,027    |       |  |   | 987,212           | 
|ScribeAmerica (HealthChannels)                     |  | Healthcare Services         |  | 1M USD L + 4.50% (1% Floor)  |  | 10/31/2018  |  | 4/3/2025   |  |             | 997,487    |  |            |   | 987,561    |       |  |   | 987,513           | 
|ThreeBridge Solutions Delayed Draw(7)              |  | IT Implementation           |  | -                            |  | 12/1/2017   |  | 12/1/2022  |  |             | 277,916    |  |            |   | 275,232    |       |  |   | 275,136           | 
|ThreeBridge Solutions Term Loan                    |  | IT Implementation           |  | 1M USD L+ 9.00% (1% Floor)   |  | 12/1/2017   |  | 12/1/2022  |  |             | 5,456,700  |  |            |   | 5,394,248  |       |  |   | 5,402,133         | 
|World Insurance Associates, LLC Delayed Draw(5)(7) |  | Insurance Brokerage         |  | 1M USD L + 4.75% (1% Floor)  |  | 7/2/2018    |  | 7/18/2024  |  |             | 332,446    |  |            |   | 325,366    |       |  |   | 317,447           | 
|World Insurance Associates, LLC(5)                 |  | Insurance Brokerage         |  | 1M USD L + 4.75% (1% Floor)  |  | 7/2/2018    |  | 7/18/2024  |  |             | 2,493,750  |  |            |   | 2,469,748  |       |  |   | 2,468,813         | 
|Total First Lien Senior Secured                    |  |                             |  |                              |  |             |  |            |  | $           | 62,259,869 |  |            | $ | 61,888,480 |       |  | $ | 61,194,099        | 
|                                                   |  |                             |  |                              |  |             |  |            |  |             |            |  |            |   |            |       |  |   |                   | 
|Total Debt Investments                             |  |                             |  |                              |  |             |  |            |  | $           | 62,259,869 |  |            | $ | 61,888,480 |       |  | $ | 61,194,099        | 



|                                          |  | Yield to |      |   | Maturity |          | Acquisition |            | Number of |  |            | Principal / |  |   | Amortized  |  |  | Fair  |            |  | Percentage    |  
|----------------------------------------- |  | -------- | ---- | - | -------- | -------- | ----------- | ---------- | --------- |  | ---------- | ----------- |  | - | ---------- |  |  | ----- | ---------- |  | ------------- | -
|Company(3)                                |  | Maturity |      |   | Date     |          | Date        |            | Shares    |  |            | Par         |  |   | Cost(6)    |  |  | Value |            |  | of Net Assets |  
|U.S.
    Government Securities            |  |          |      |   |          |          |             |            |           |  |            |             |  |   |            |  |  |       |            |  |               |  
|U.S.
    Treasury Bill(5)                 |  |          | 0.00 | % |          | 1/3/2019 |             | 12/31/2018 |           |  | 15,000,000 |             |  | $ | 15,000,000 |  |  | $     | 14,999,107 |  |               | $
|Total
    U.S. Government Securities      |  |          |      |   |          |          |             |            |           |  |            |             |  |   | 15,000,000 |  |  |       | 14,999,107 |  |               |  
|                                          |  |          |      |   |          |          |             |            |           |  |            |             |  |   |            |  |  |       |            |  |               |  
|Total
    Investments                     |  |          |      |   |          |          |             |            |           |  |            |             |  | $ | 77,259,869 |  |  | $     | 76,887,587 |  |               | $
|Liabilities
    in Excess of Other Assets |  |          |      |   |          |          |             |            |           |  |            |             |  |   |            |  |  |       |            |  |               |  
|Net
    assets                            |  |          |      |   |          |          |             |            |           |  |            |             |  |   |            |  |  |       |            |  |               | $



F-9







Flat Rock Capital
Corp.

Consolidated
Schedule of Investments

As of December
31, 2018



Forward foreign currency contracts outstanding
as of December 31, 2018 were as follows:



|              |  |               |  |                               |  |            |           |  | Unrealized     | 
|------------- |  | ------------- |  | ----------------------------- |  | ---------- | --------- |  | -------------- | 
|Currency      |  | Currency      |  |                               |  | Expiration |           |  | Appreciation   | 
|Purchased     |  | Sold          |  | Counterparty                  |  | Date       |           |  | (Depreciation) | 
|              |  |               |  |                               |  |            |           |  |                | 
|USD 5,090,981 |  | CAD 6,435,000 |  | Bannockburn Global Forex, LLC |  |            | 1/31/2019 |  |                | 



CAD Canadian Dollar

USD United States Dollar



| | (1) | The
                                         amortized cost represents the original cost adjusted for the amortization of discounts
                                         and premiums, as applicable, on debt investments using the effective interest method.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Loan
                                         contains a variable rate structure, subject to an interest rate floor. Variable rate
                                         loans bear interest at a rate that may be determined by reference to either the London
                                         Interbank Offered Rate (“LIBOR” or “L”) (which can include one-,
                                         two-, three- or six-month LIBOR), Canadian Dollar Offered Rate (“CDOR”),
                                         or an alternate base rate (which can include the Federal Funds Effective Rate or the
                                         Prime Rate), at the borrower’s option, and which reset periodically based on the
                                         terms of the loan agreement. As of December 31, 2018, the 1 month (1M), 2 month (2M),
                                         and 3 month (3M) USD LIBOR rates were 2.50%, 2.61%, and 2.81%, respectively. As of December
                                         31, 2018, CDOR was 2.25%.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | As
                                         of December 31, 2018, all investments are non-controlled, non-affiliated investments. Non-controlled,
                                         non-affiliated investments are defined as investments in which the Company owns less
                                         than 5% of the portfolio company’s outstanding voting securities and does not have
                                         the power to exercise control over the management or policies of such portfolio company.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Non-qualifying
                                         investment as defined by Section 55(a) of the Investment Company Act of 1940. As of December
                                         31, 2018, 5.60% of the Company’s total assets were in non-qualifying investments.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Investments
                                         or a portion of investments are unsettled as of December 31, 2018.
| | --- | -----------------------------------------------------------------------------------------------------------------------



| | (6) | As
                                         of December 31, 2018, the tax cost of the Company’s investments approximates their
                                         amortized cost.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | Of
                                         the entire $1,499,837 commitment to World Insurance Associates, LLC Delayed Draw, $1,167,391
                                         was unfunded as of December 31, 2018. As such, no interest is being earned on this investment.
                                         The investment is subject to a 0.50% commitment fee (see Note 8 to the consolidated financial
                                         statements).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | Security
                                         or portion thereof held within FRC Funding I, LLC and is pledged as collateral supporting
                                         the amounts outstanding under a revolving credit facility with State Bank and Trust Company
                                         (see Note 6 to the consolidated financial statements).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



F-10







Flat Rock Capital Corp.

Notes to Consolidated Financial Statements



Note 1. Organization



Flat Rock Capital Corp. (the “Company”)
is a Maryland corporation formed on March 20, 2017 that commenced operations on May 3, 2017. The Company was formed to primarily
make debt investments in senior secured loans of U.S. middle-market companies (“Senior Loans”). The Company is an
externally managed, non-diversified, closed-end investment company that has elected to be regulated as a business development
company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for
tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of
the Internal Revenue Code of 1986, as amended (the “Code”). Because the Company has elected to be regulated as a BDC
and has elected to be treated as a RIC under the Code, the Company’s portfolio is subject to diversification and other requirements.
The Company’s investment objective is the preservation of capital while generating current income from its debt investments
and seeking to maximize the portfolio’s total return.



Flat Rock Global, LLC (the “Adviser”
or “Flat Rock Global”), a Delaware limited liability company, serves as the Company’s investment adviser. The
Adviser is registered with the Securities and Exchange Commission (“SEC”) as an investment adviser under the Investment
Advisers Act of 1940 (the “Advisers Act”). The Adviser oversees the management of the Company’s activities and
is responsible for making investment decisions with respect to, and providing day-to-day management and administration of, the
Company’s investment portfolio under the terms of an investment advisory agreement between the Company and the Adviser (the
“Investment Advisory Agreement”), subject to the supervision of the Company’s Board of Directors (the “Board”).
The Board consists of three directors, two of whom are not “interested persons,” as such term is defined in Section
2(a)(19) of the 1940 Act, of the Company of Flat Rock Global.



The Company is conducting a continuous
private offering of shares of its common stock (“Shares”) to investors in reliance on exemptions from the registration
requirements of the Securities Act of 1933, as amended (the “Securities Act”). Shares are offered solely to investors
that are “accredited investors” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. The
Company offers Shares through its agents and employees without sales commission or other remuneration on a “best efforts”
basis. The Company believes that each of its employees and agents qualifies as an “associated person not deemed to be broker”
within the meaning of Rule 3a4-1 promulgated pursuant to the Securities Exchange Act of 1934, as amended.



Note 2. Significant Accounting Policies



Basis of Presentation



The accompanying audited consolidated
financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United
States of America (“U.S. GAAP”). The accompanying consolidated financial statements of the Company and related financial
information have been prepared pursuant to the requirements for reporting on Form 10-K and Articles 6 or 10 of Regulation S-X.
The Company is an investment company, and, therefore, applies the specialized accounting and reporting guidance in Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services -
Investment Companies.



Basis of Consolidation



As provided under Regulation S-X and
ASC Topic 946, the Company will generally not consolidate its investment in a company other than a wholly-owned investment company
subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company
consolidated the results of the Company’s special purpose wholly-owned subsidiary, FRC Funding I, LLC, which was formed
on August 31, 2018, in its consolidated financial statements. All intercompany transactions and balances have been eliminated
in consolidation.



Revenue Recognition



Security transactions are accounted
for on the trade date. Distributions received from limited liability company and limited partnership investments are evaluated
to determine if the distribution should be recorded as dividend income or a return of capital. The Company does not accrue as
a receivable interest or dividends on loans and securities if it has reason to doubt its ability to collect such income.



Loan origination fees, original issue
discount and market discount are capitalized and the Company amortizes such amounts as interest income over the respective term
of the loan or security using the effective interest method. Upon the prepayment of a loan or security, any unamortized loan origination
fees and original issue discount are recorded as interest income. Structuring and other non-recurring upfront fees are recorded
as fee income when earned.



F-11







Interest and Dividend Income Recognition



Interest income is recorded on the accrual
basis and includes amortization of premiums or accretion of discounts. Discounts and premiums to par value on securities purchased
are accreted and amortized, respectively, into interest income over the contractual life of the respective security using the
effective interest method. The amortized cost of investments represents the original cost adjusted for the amortization of premiums
or accretion of discounts, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan
origination fees and unamortized discounts are recorded as interest income in the current period.



Loans are generally placed on non-accrual
status when there is reasonable doubt that principal or interest will be collected in full. The Company considers many factors
relevant to an investment when placing it on or removing it from non-accrual status including, but not limited to, the delinquency
status of the investment, economic and business conditions, the overall financial condition of the underlying investment, the
value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment.
Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual
loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability.
Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s
judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on
non-accrual status if the loan has sufficient collateral value and is in the process of collection.



Dividend income on preferred equity
securities is recorded on the 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 securities is recorded on the record date for private portfolio companies or
on the ex-dividend date for publicly-traded portfolio companies.



Other Income



From time to time, the Company may receive
fees for services provided to portfolio companies. These fees are generally only available to the Company as a result of closing
investments, are normally paid at the closing of the investments, are generally non-recurring and are recognized as revenue when
earned upon closing of the investment. The services that the Adviser provides vary by investment, but can include closing, work,
diligence or other similar fees and fees for providing managerial assistance to the Company’s portfolio companies. In addition,
the Company may generate revenue in the form of commitment, origination, structuring or diligence fees, monitoring fees and possibly
consulting and performance- based fees.



Use of Estimates



U.S. GAAP requires management to make
estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during
the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these
estimates could cause actual results to differ materially.



F-12







Cash and Cash Equivalents



Cash and cash equivalents (e.g. U.S.
Treasury bills) may include demand deposits and highly liquid investments with original maturities of three months or less. Cash
and cash equivalents are carried at cost, which approximates fair value. The Company deposits its cash and cash equivalents with
highly-rated banking corporations and, at times, may exceed the insured limits under applicable law.



Income Taxes



The Company has elected to be treated
for U.S. federal income tax purposes as a RIC under the Code. So long as the Company maintains its status as a RIC, it generally
will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually
to its stockholders as dividends. Rather, any tax liability related to income earned by the Company represents obligations of
the Company’s investors and will not be reflected in the financial statements of the Company. To qualify as a RIC under
Subchapter M of the Code, the Company must, among other things, meet certain source-of-income and asset diversification requirements.
In addition, to qualify for RIC tax treatment, the Company must distribute to its stockholders, for each taxable year, at least
90% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess
of its realized net short-term capital gains over its realized net long-term capital losses.



In order for the Company not to be subject
to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income
(taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital
losses for the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years
that were not distributed during such years. The Company, at its discretion, may carry forward taxable income in excess of calendar
year dividends and pay a 4% nondeductible U.S. federal excise tax on this income.



The Company evaluates tax positions
taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-not”
to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than- not” threshold
are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes
are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date
based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.



Although the Company files federal and
state tax returns, its major tax jurisdiction is federal. The Company’s inception-to-date federal tax years remain subject
to examination by the Internal Revenue Service and the State of Maryland Department of Assessments and Taxation.



Valuation of Portfolio Investments



The Company has adopted FASB ASC Topic
820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value
in accordance with U.S. GAAP and expands disclosures about fair value measurements.



ASC Topic 820 clarifies that fair value
is defined as the price that the Company would receive upon selling an investment or paying to transfer a liability to a market
participant in the principal or most advantageous market for the investment. The transaction to sell the asset or transfer the
liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that
holds the asset or owes the liability. ASC Topic 820 provides a consistent definition of fair value that focuses on exit price
and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. In addition,
ASC Topic 820 provides a framework for measuring fair value and establishes a three-level hierarchy for fair value measurements
based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date as discussed in Note
5.



The Board has established procedures
for the valuation of the Company’s investment portfolio. The valuation committee, which is comprised of the independent
members of the Board, is responsible for executing the valuation policy, with assistance from Flat Rock Global and one or more
independent valuation firms. These procedures are detailed below.



Investments for which market quotations
are readily available are valued at such market quotations.



Most of the Company’s investments
are not traded on a national securities exchange and do not have the benefit of market quotations or other pricing data from such
an exchange. With respect to investments for which pricing data is not readily available or when such pricing data is deemed not
to represent fair value, the Board has approved a multi-step valuation process each quarter, as described below:



| | 1. | each
    portfolio company or investment is valued by Flat Rock Global, potentially with information received from one or more independent
    valuation firms engaged by the Company;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | an
    independent valuation firm conducts independent valuations and makes an independent assessment of the value of each investment
    on a rotating basis so that each investment is valued at least twice annually;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | the
    valuation committee of the Board reviews and discusses the preliminary valuations prepared by Flat Rock Global and that of
    the independent valuation firm; and
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | the
    Board discusses the valuations and determines the fair value of each investment in the Company’s portfolio in good faith
    based on the input of Flat Rock Global, an independent valuation firm and the valuation committee.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-13







Investments are valued utilizing 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 value amount (discounted)
calculated based on an appropriate discount rate. The measurement is based on the net present value indicated by current market
expectations about those future amounts. In following these approaches, the types of factors that may be taken 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, the principal market and enterprise values, among other factors.



Investments in private investment companies
are measured based upon NAV as a practical expedient to determine fair value. The Company applies the practical expedient to private
investment companies on an investment-by-investment basis, and consistently with the Company’s entire position in a particular
investment, unless it is probable that the Company will sell a portion of an investment at an amount different from the NAV of
the investment. Each of these investments has certain restrictions with respect to rights of withdrawal by the Company as specified
in the respective agreements. Generally, the Company is required to provide notice of its intent to withdraw after the investment
has been maintained for a certain period of time. The management agreements of the private investment companies provide for compensation
to the managers in the form of fees ranging from 0% to 2% annually of the net assets and performance incentive allocations or
fees ranging from 0% to 20% on net profits earned.



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



The Company measures realized gains
or losses by the difference between the net proceeds from the repayment or sale and the cost basis of the investment, without
regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment
penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the
reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses
are realized. The Company utilizes specific identification on a First-In, First-Out (“FIFO”) basis as their tax-lot
relief method.



Debt Issuance Costs



The
Company records origination and other expenses related to its debt obligations as debt issuance costs. These expenses are deferred
and amortized over the life of the related debt instrument. Debt issuance costs are presented on the consolidated statement of
assets and liabilities as a direct deduction from the debt liability. As of December 31, 2019, the balance of debt issuance
costs was $372,544, included in Credit Facility, net of $29,796,235 on the consolidated statements of assets and liabilities.
As of December 31, 2018, the balance of debt issuance costs was  $435,543, included
in Credit Facility, net of $23,233,011 on the consolidated statements of assets and liabilities.



Distributions to Common Stockholders



Distributions to common stockholders
are recorded on the record date. The amount to be distributed is determined by the Board and is generally based upon current and
estimated net earnings. Net realized long-term capital gains, if any, would be generally distributed at least annually, although
the Company may decide to retain such capital gains for investment.



F-14







Derivatives
and Hedging Activities



Derivative
instruments are defined as financial instruments whose value and performance are based on the value and performance of another
security or financial instrument. During the year ended December 31, 2019, the Company utilized forward foreign currency
contracts to hedge its foreign currency exposure.



The
following table provides quantitative disclosures about fair values of, and unrealized appreciation (depreciation) on, the Company’s
derivative instruments as of December 31, 2019 and 2018, grouped by contract type and risk exposure category.



|Derivatives                                                                                        
|---------------------------------------------------------------------------------------------------
|                                                                                                   
|Unrealized appreciation (depreciation) per the Consolidated
    Statement of Assets and Liabilities
|Forward foreign currency exchange contracts                                                        
|Derivative Assets (Liabilities)                                                                    



The
following table lists the amount of change in unrealized appreciation (depreciation) included in net increase (decrease) in net
assets resulting from operations during the years ended December 31, 2019 and 2018, and the period ended December 31, 2017,
grouped by contract type and risk exposure. There were no realized gains/(losses) generated on forward contracts during the year
ended December 31, 2018 and the period ended December 31, 2017.



|Fiscal Year Ended December 31,
    2019    
|-------------------------------------------
|Derivative Type                            
|                                           
|Forward foreign currency exchange contracts
|                                           



|Fiscal
    Year Ended December 31, 2018        
|-----------------------------------------------
|Derivative
    Type                            
|                                               
|Forward
    foreign currency exchange contracts



|For
    the Period May 3, 2017 (commencement of operations) through December 31, 2017
|-------------------------------------------------------------------------------------
|Derivative
    Type                                                                  
|                                                                                     
|Forward
    foreign currency exchange contracts                                      



F-15







During
the years ended December 31, 2019 and 2018, and the period ended December 31, 2017, the Company’s quarterly average
volume of derivatives is as follows:



|                                            |  | For the Years Ended    |           |  | For the Period May 3,
                                                                                2017
                                                                                (commencement of operations) through |  
|------------------------------------------- |  | ---------------------- | --------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -
|Notional Amount                             |  | December 31, 
    2019 |           |  | December 31, 
    2018                                                                                                                                                                                                          |  
|                                            |  |                        |           |  |                                                                                                                                                                                                                                 |  
|Forward Foreign Currency Exchange Contracts |  | $                      | 4,810,461 |  |                                                                                                                                                                                                                                 | $



Foreign
Currency Translation



The
Company’s books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars
on the following basis:



| | 1. | Fair
    value of investment securities, other assets and liabilities — at the exchange rates prevailing at the end of the applicable
    period; and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Purchases
    and sales of investment securities, income and expenses — at the exchange rates prevailing on the respective dates of
    such transactions.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



Although
net assets and fair values are presented based on the applicable foreign exchange rates described above, the Company does not
isolate that portion of the results of operations due to changes in foreign exchange rates on investments, other assets and debt
from the fluctuations arising from changes in fair values of investments and liabilities held. Such fluctuations are included
with the net realized gain (loss) and net change in unrealized gain (loss) from investments and liabilities.



Foreign
security and currency translations may involve certain considerations and risks not typically associated with investing in U.S.
companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations
and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid
and prices to be more volatile than those of comparable U.S. companies or U.S. government securities. During the year ended December
31, 2019, all foreign security and currency translations were closed out as a result of the sale of the Company’s investment
in a first lien senior secured loan to Logibec, Inc., which was denominated in Canadian currency.



Recently
Issued Accounting Pronouncements



In
August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure
Framework - Changes to the Disclosure Requirements for Fair Value Measurement(“ASU 2018-13”). The primary focus
of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect
all companies that are required to include fair value measurement disclosures. In general, the amendments in ASU 2018-13 are effective
for all entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. An entity
is permitted to early adopt the removed or modified disclosures upon the issuance of ASU 2018-13 and may delay adoption of the
additional disclosures, which are required for public companies only, until their effective date. Management has adopted certain
disclosures of ASU 2018-13 and delayed adoption of additional disclosures as permitted by the standard.



F-16







Note
3. Agreements and Related Party Transactions



Investment
Advisory Agreement



On
May 16, 2017, the Company entered into the Investment Advisory Agreement with Flat Rock Global. Pursuant to the Investment Advisory
Agreement, the Company pays Flat Rock Global a fee for its services consisting of two components — a management fee and
an incentive fee. The management fee is calculated at an annual rate of 1.375% of the Company’s average gross assets as
of the end of the two most recently completed quarters and is payable quarterly in arrears. The management fee for any partial
month or quarter will be appropriately pro-rated. In order to meet the diversification tests required to qualify as a RIC, the
Company, on December 31, 2019, acquired $19,000,000 in face value of short-term U.S. Treasury Bills. This transaction had
the effect of increasing management fees payable to Flat Rock Global by $76,236 for a total gross management fee payable of $368,452;
however, Flat Rock Global waived the portion relating to the acquisition of short-term U.S. Treasury Bills. For the year ended
December 31, 2019, the Company incurred management fees of $1,376,674, $265,221 of which was waived by Flat Rock Global.
In addition, there are no recoupment agreements in place, and waived fees will not be recouped by Flat Rock Global.



The
incentive fee consists of two parts. The first part, which is referred to as the subordinated incentive fee on income, is calculated
and payable quarterly in arrears based on 15% of the Company’s pre-incentive fee net investment income for the immediately
preceding quarter. The payment of the incentive fee on income is subject to payment of a preferred return to investors each quarter,
expressed as a quarterly rate of return on adjusted capital at the beginning of the most recently completed calendar quarter,
of 1.5% (6.0% annualized), subject to a “catch up” feature. The foregoing incentive fee is subject to a total return
requirement, which provides that no incentive fee in respect of the Company’s pre- incentive fee net investment income is
payable except to the extent that 15.0% of the cumulative net increase in net assets resulting from operations for the prior twelve
quarters exceeds the cumulative incentive fees accrued and/or paid for the prior twelve quarters. In other words, any incentive
fee on income that is payable in a calendar quarter is limited to the lesser of (i) 15.0% of the amount by which the Company’s
pre- incentive fee net investment income for such calendar quarter that exceeds the 1.5% hurdle, subject to the “catch-up”
provision and (ii) (x) 15.0% of the cumulative net increase in net assets resulting from operations for the prior twelve quarters
minus (y) the cumulative incentive fees accrued and/or paid for the prior twelve quarters. For the foregoing purpose, the “cumulative
net increase in net assets resulting from operations” is the sum of the Company’s pre-incentive fee net investment
income, realized gains and losses and unrealized gains and losses since inception.



The
total return requirement described above is designed to measure the performance of Flat Rock Global over a longer time horizon
than on a quarterly basis and to ensure that Flat Rock Global does not earn fees for exceeding the hurdle rate in selected quarters
while under-performing on a longer- term basis. The total return requirement is likewise designed to incentivize Flat Rock Global
to not focus solely on quarterly performance, but to seek investments that exhibit strong performance on a long-term basis. The
Company believes that the total return requirement is beneficial to investors and has the potential to reduce the fees payable
to Flat Rock Global in the event of under-performance on a long-term basis.



F-17







Under
the capital gains component of the incentive fee, the Company pays Flat Rock Global at the end of each calendar year 15.0% of
its aggregate cumulative realized capital gains from inception through the end of that year, computed net of the Company’s
aggregate cumulative realized capital losses and the Company’s aggregate cumulative unrealized losses through the end of
such year, less the aggregate amount of any previously paid capital gain incentive fees. For the foregoing purpose, the Company’s
“aggregate cumulative realized capital gains” does not include any unrealized gains. It should be noted that the Company
accrues an incentive fee for accounting purposes taking into account any unrealized gains in accordance with U.S. GAAP. The capital
gains component of the incentive fee is not subject to any minimum return to stockholders. If such amount is negative, then no
capital gains incentive fee is payable for such year. Additionally, if the Investment Advisory Agreement is terminated as of a
date that is not a calendar year end, the termination date is treated as though it were a calendar year end for purposes of calculating
and paying the capital gains incentive fee.



For
the year ended December 31, 2019, the Company incurred incentive fees on income of $546,204 of which $408,149 was waived
by Flat Rock Global. In addition, there are no recoupment agreements in place, and waived incentive fees will not be recouped
by Flat Rock Global.



For
the year ended December 31, 2018, the Company did not incur incentive fees on income. For the period May 3, 2017 (commencement
of operations) through December 31, 2017, the Company incurred subordinated incentive fees on income and capital gain incentive
fees of $0 and $12,368, respectively, all of which were waived by Flat Rock Global.



The
Company includes unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains
incentive fee. This accrual reflects the incentive fees that would be payable to Flat Rock Global if the Company’s entire
portfolio was liquidated at its fair value as of the balance sheet date even though Flat Rock Global is not entitled to an incentive
fee with respect to unrealized gains unless and until such gains are actually realized. For the years ended December 31,
2019 and 2018, and the period ended December 31, 2017, the Company did not accrue capital gains incentive fees. On a quarterly
basis, the Company accrues for the capital gains incentive fee by calculating such fee as if it were due and payable as of the
end of such period.



Administration
Agreement



The
Company entered into an administration agreement with Flat Rock Global to serve as its Administrator. Pursuant to the administration
agreement, Flat Rock Global provides the Company with services such as accounting, financial reporting, legal and compliance support
and investor relations support necessary for the Company to operate or has engaged a third-party firm to perform some or all of
these functions. The Company does not pay Flat Rock Global any fees pursuant to the Administration Agreement. The Company reimburses
Flat Rock Global for administrative expenses it incurs as a result of providing these services. Beginning on May 3, 2017, Flat
Rock Global agreed to reimburse the Company for certain operating expenses. Flat Rock Global has no obligation to reimburse any
portion of the Company’s expenses but has indicated that it expects to continue such reimbursements until it deems that
the Company has achieved economies of scale sufficient to ensure that the Company bears a reasonable level of expenses in relation
to its income. The specific amount of expenses reimbursed by Flat Rock Global, if any, will be determined at the end of each quarter.
For the year ended December 31, 2019, there was no reimbursement for audit, fund accounting, fund administration, insurance,
legal, valuation and other fees. For the year ended December 31, 2018, the reimbursement totaled $101,939. For the fiscal period
May 3, 2017 (commencement of operations) through December 31, 2017, the reimbursement totaled $520,033. To the extent reimbursements
may be needed in the future, there can be no assurance that Flat Rock Global will provide any such reimbursements. In addition,
there are no recoupment agreements in place and the aforementioned expenses will not be recouped by Flat Rock Global.



Note
4. Investments



The
following table presents the composition of the Company’s investment portfolio at cost and fair value as of December 31,
2019 and 2018:



|                                            |  | December 31, 2019 |             |  | December 31, 2018 |  
|------------------------------------------- |  | ----------------- | ----------- |  | ----------------- | -
|                                            |  |                   |             |  | Fair              |  
|                                            |  | Cost              |             |  | Value             |  
|First-lien senior secured debt              |  | $                 | 72,134,565  |  |                   | $
|Private Fund Investments                    |  |                   | 6,914,467   |  |                   |  
|Collateralized Loan Obligations             |  |                   | 3,800,904   |  |                   |  
|U.S. Government Securities                  |  |                   | 18,996,667  |  |                   |  
|                                            |  |                   | 101,846,603 |  |                   |  
|Forward foreign currency exchange contracts |  |                   | -           |  |                   |  
|Total Investments                           |  | $                 | 101,846,603 |  |                   | $



As
of December 31, 2019, 14.6% of the investment portfolio at amortized cost and 14.6% of the investment portfolio measured
at fair value, respectively, were invested in portfolio companies with foreign domiciles, specifically Luxembourg and
Switzerland, or non-controlled investment companies. Such investments are not qualifying assets as defined by Section 55(a)
of the 1940 Act. As
of December 31, 2018, approximately 6.10% of the investment portfolio at amortized cost and 5.93% of the investment portfolio
measured at fair value, respectively, were invested in portfolio companies with foreign domiciles, specifically Canada. Such investments
are not qualifying assets as defined by Section 55(a) of the Investment Company Act of 1940.



F-18







The
industry composition of investments based on fair value as of December 31, 2019 and 2018 was as follows:



|                                             |  | December 31, 
    2019 |       |   | December 31, 
    2018 | 
|-------------------------------------------- |  | ---------------------- | ----- | - | ---------------------- | 
|                                             |  |                        |       |   |                        | 
|U.S. Government Securities                   |  |                        | 18.8  | % |                        | 
|Insurance Services                           |  |                        | 18.6  | % |                        | 
|Direct Selling                               |  |                        | 12.1  | % |                        | 
|Investment Vehicle                           |  |                        | 10.9  | % |                        | 
|IT Implementation                            |  |                        | 5.3   | % |                        | 
|Retail                                       |  |                        | 4.8   | % |                        | 
|Banking, Finance, Insurance & Real Estate    |  |                        | 4.8   | % |                        | 
|Media: Advertising, Printing, and Publishing |  |                        | 4.8   | % |                        | 
|Consumer Goods                               |  |                        | 4.6   | % |                        | 
|Construction & Building                      |  |                        | 3.8   | % |                        | 
|Healthcare Services                          |  |                        | 3.2   | % |                        | 
|Transportation: Cargo                        |  |                        | 2.5   | % |                        | 
|Wholesale                                    |  |                        | 1.9   | % |                        | 
|Aerospace & Defense                          |  |                        | 1.7   | % |                        | 
|Business Services                            |  |                        | 1.4   | % |                        | 
|Chemicals & Allied Products                  |  |                        | 0.8   | % |                        | 
|Healthcare IT                                |  |                        | 0.0   | % |                        | 
|Computers & Electronics                      |  |                        | 0.0   | % |                        | 
|Transportation                               |  |                        | 0.0   | % |                        | 
|High Tech Industries                         |  |                        | 0.0   | % |                        | 
|Broadcasting & Subscription                  |  |                        | 0.0   | % |                        | 
|Capital Equipment                            |  |                        | 0.0   | % |                        | 
|Insurance Brokerage                          |  |                        | 0.0   | % |                        | 
|Forward Foreign Currency Exchange Contracts  |  |                        | 0.0   | % |                        | 
|Total                                        |  |                        | 100.0 | % |                        | 



The
geographic composition of investments based on fair value as of December 31, 2019 and 2018 was as follows:



|                           |  | December 31, 
    2019 |       |   | December 31, 2018 | 
|-------------------------- |  | ---------------------- | ----- | - | ----------------- | 
|                           |  |                        |       |   |                   | 
|United States:             |  |                        |       |   |                   | 
|Northeast                  |  |                        | 42.1  | % |                   | 
|U.S. Government Securities |  |                        | 18.8  | % |                   | 
|West                       |  |                        | 17.1  | % |                   | 
|Midwest                    |  |                        | 10.0  | % |                   | 
|Southeast                  |  |                        | 7.0   | % |                   | 
|South                      |  |                        | 0.8   | % |                   | 
|Switzerland                |  |                        | 2.5   | % |                   | 
|Luxembourg                 |  |                        | 1.7   | % |                   | 
|Canada                     |  |                        | 0.0   | % |                   | 
|Total                      |  |                        | 100.0 | % |                   | 



F-19







Note
5. Fair Value of Investments



Fair
value is defined as the price that the Company would receive upon selling an investment or paying to transfer a liability in an
orderly transaction to a market participant in the principal or most advantageous market for the investment. Accounting guidance
emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs.



Inputs
refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about
risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants
would use in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable
inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based
on the best information available in the circumstances. The valuation hierarchical levels are based upon the transparency of the
inputs to the valuation of the investment as of the measurement date. The three levels are defined as follows:



| | Level
    1 — Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Level
    2 — Valuations based on inputs other than quoted prices in active markets included in Level 1, which are either directly
    or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in
    active markets, quoted prices for identical or similar assets or liabilities in non-active markets including actionable bids
    from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield
    curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or
    other assets or liabilities.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Level
    3 — Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement
    date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



Investments
in private investment companies measured based upon NAV as a practical expedient to determine fair value are not required to be
categorized in the fair value hierarchy.



The
inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s
assessment of the assumptions that market participants would use in pricing the assets or liabilities. These investments include
debt and equity investments in private companies or assets valued using the market or income approach and may involve pricing
models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for
identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount
rates, beta and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) multiples. The information
may also include pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a
price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result
in classification as Level 3 information, assuming no additional corroborating evidence.



Pricing
inputs and weightings applied to determine fair value require subjective determination. Accordingly, valuations do not necessarily
represent the amounts that may eventually be realized from sales or other dispositions of investments.



A
financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant
to the fair value measurement.



F-20







The
following table presents the fair value hierarchy of investments as of December 31, 2019 and December 31, 2018. Assets
valued using NAV as a practical expedient, an indicator of fair value, are listed in a separate column to permit reconciliation
to totals in the Consolidated Statement of Assets and Liabilities:



|                                |  | Fair Value Hierarchy as
    of December 31, 2019 |  
|------------------------------- |  | ------------------------------------------------ | -
|Investments:                    |  | Level 1                                          |  
|First-lien senior secured debt  |  | $                                                | -
|Private Fund Investments        |  |                                                  | -
|Collateralized Loan Obligations |  |                                                  | -
|U.S. Government Securities      |  |                                                  | -
|Total Investments               |  | $                                                | -



|                                            |  | Fair Value Hierarchy as
    of December 31, 2018 |  
|------------------------------------------- |  | ------------------------------------------------ | -
|Investments:                                |  | Level 1                                          |  
|First-lien senior secured debt              |  | $                                                | -
|U.S. Government Securities                  |  |                                                  | -
|Forward foreign currency exchange contracts |  |                                                  | -
|Total Investments                           |  | $                                                | -



The
following table presents changes in the fair value of investments for which Level 3 inputs were used to determine the fair value
as of and for the years ended December 31, 2019 and 2018:



|                                                          |  | For the Years Ended |            
|--------------------------------------------------------- |  | ------------------- | -----------
|First-lien senior secured debt                            |  | December 31, 2019   |            
|Fair value, beginning of period                           |  | $                   | 61,194,099 
|Purchases of investments                                  |  |                     | 80,447,699 
|Proceeds from principal payments and sales of investments |  |                     | (70,252,423
|Net change in unrealized gain (loss)                      |  |                     | 25,593     
|Net accretion of discount on investments                  |  |                     | 59,099     
|Transfers into (out of) Level 3                           |  |                     | -          
|Fair value, end of period                                 |  | $                   | 71,474,067 



|                                                          |  | For the Years Ended |          
|--------------------------------------------------------- |  | ------------------- | ---------
|Collateralized loan obligations                           |  | December 31, 2019   |          
|Fair value, beginning of period                           |  | $                   | -        
|Purchases of investments                                  |  |                     | 3,800,000
|Proceeds from principal payments and sales of investments |  |                     | -        
|Net change in unrealized gain (loss)                      |  |                     | 259,896  
|Net accretion of discount on investments                  |  |                     | 904      
|Transfers into (out of) Level 3                           |  |                     | -        
|Fair value, end of period                                 |  | $                   | 4,060,800



The
following table presents the net change in unrealized gains/(losses) for the period relating to these Level 3 assets that were
still held by the Company at the end of the years ended December 31, 2019 and 2018 and the period ended December 31, 2017:



|                                     |  | For the Years Ended    |         |   | For the Period May 3,
                                                                                2017 (commencement of operations) through |  
|------------------------------------ |  | ---------------------- | ------- | - | ----------------------------------------------------------------------------------------------------------------------------------------------- | -
|Net Change in Unrealized Gain (Loss) |  | December 31, 
    2019 |         |   | December 31, 
    2018                                                                                                                          |  
|                                     |  |                        |         |   |                                                                                                                                                 |  
|First-lien senior secured debt       |  | $                      | (87,939 | ) |                                                                                                                                                 | $
|Collateralized loan obligations      |  |                        | 259,896 |   |                                                                                                                                                 |  
|                                     |  | $                      | 171,957 |   |                                                                                                                                                 | $

F-21







Market
Based Approach:The Company may estimate the total enterprise value of each portfolio company by utilizing market value
cash flow (EBITDA) multiples of publicly traded comparable companies and comparable transactions. The Company considers numerous
factors when selecting the appropriate companies whose trading multiples are used to value its portfolio companies. These factors
include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors,
as well as size, profitability and growth expectations. The Company may apply an average of various relevant comparable company
EBITDA multiples to the portfolio company’s latest twelve–month EBITDA or projected EBITDA to calculate the enterprise
value of the portfolio company. Significant increases or decreases in the EBITDA multiple will result in an increase or decrease
in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment. In applying the
market-based approach as of December 31, 2019 and December 31, 2018, the Company used the relevant EBITDA and revenue
multiple ranges set forth in the table below to determine the enterprise value of its portfolio companies.



The
Company believes these were reasonable ranges in light of current comparable company trading levels and the specific portfolio
companies involved.



Income
Based Approach:The Company also may use a discounted cash flow analysis to estimate the fair value of an investment.
Projected cash flows represent the relevant security’s contractual interest, fee and principal payments plus the assumption
of full principal recovery at the investment’s expected maturity date. These cash flows are discounted at a rate established
utilizing a yield calibration approach, which incorporates changes in the credit quality (as measured by relevant statistics)
of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between
the date of origination and the valuation date. Significant increases or decreases in the discount rate would result in a decrease
or increase in the fair value measurement. In applying the income-based approach as of December 31, 2019 and December 31,
2018, the Company used the discount ranges set forth in the table below to value investments in its portfolio companies.



Fair
value was also determined in some cases based on transaction pricing or recent acquisition or sale as the best measure of fair
value with no material changes in operations of the related portfolio company since the transaction date.



The
following table presents quantitative information about the significant unobservable inputs of the Company’s Level 3 investments
as of December 31, 2019 and 2018. The table is not intended to be all-inclusive but instead captures the significant unobservable
inputs relevant to the Company’s determination of fair value.



|                                    |  | As
    of December 31, 2019 |           
|----------------------------------- |  | --------------------------- | ----------
|                                    |  | Fair
    Value              |           
|Collateralized
    loan obligations |  | $                           | 4,060,800 
|First-lien
    senior secured debt  |  |                             | 4,900,000 
|First-lien
    senior secured debt  |  |                             | 66,574,067
|                                    |  | $                           | 75,534,867
|                                    |  |                             |           



|                                   |  | As
    of December 31, 2018 |           
|---------------------------------- |  | --------------------------- | ----------
|                                   |  | Fair
    Value              |           
|First-lien
    senior secured debt |  | $                           | 37,072,165
|First-lien
    senior secured debt |  |                             | 24,121,934
|                                   |  | $                           | 61,194,099



Note
6. Borrowings



In
accordance with the 1940 Act, with certain limitations, BDCs are allowed to borrow amounts such that their asset coverage ratios,
as defined in the 1940 Act, are at least 200% after such borrowing. As of May 30, 2019, as a result of complying with the requirements
set forth in the Small Business Credit Availability Act (“SBCAA”), the Company is able to borrow amounts such that
its asset coverage ratio is at least 150%, rather than 200%. As of December 31, 2019 and 2018, the Company’s asset coverage
ratio was 287% and 250%, respectively.



On
October 12, 2018, the Company, through a special purpose wholly-owned subsidiary, FRC Funding I, LLC (“FRC Funding”
and together with the Company, the “Borrowers”) entered into a Loan and Security Agreement (the “Loan Agreement”)
with certain financial institutions as lenders (“Lenders”), State Bank and Trust Company as the administrative agent
(“State Bank”) and Alostar Capital Finance (“Alostar”), as Lead Arranger and Bookrunner, pursuant to which
the Lenders agreed to provide the Company with a revolving line of credit (the “Credit Facility”). The Loan Agreement
was effective as of October 12, 2018. Per the second amendment of the Loan Agreement, Cadence Bank, N.A. is the successor by merger
to State Bank and Trust Company. The termination date for the Loan Agreement is October 12, 2022.



F-22







The
Loan Agreement provides for an initial $20.0 million in Revolver Commitments (as defined in the Loan Agreement) to be available
at closing that the Company can draw down and repay for three years, subject to borrowing base eligibility. The Loan Agreement
matures at the earliest of (a) the date that is four (4) years from closing, (b) the date on which FRC Funding terminates the
Revolver Commitments pursuant to the Loan Agreement; or (c) the date on which the Revolver Commitments are terminated pursuant
to certain events of default under the Loan Agreement; and the Scheduled Revolving Period End Date (as defined in the Loan Agreement)
is three years from closing. On December 10, 2018, the Loan Agreement was amended to add Hitachi Capital America Corp. to the
definition of “Lenders” and to amend the definition of “Revolver Commitments” to increase the aggregate
amount available to the Borrowers under the Revolver Commitments to $30 million, beginning with the effective date of the amendment.
On May 31, 2019, the Loan Agreement was further amended to revise the definitions for “Asset Coverage Ratio” and “Service
Termination Event,” and increase the aggregate amount available to Borrowers under the Revolver Commitments to $35 million,
beginning with the effective date of the amendment.



Debt
obligations consisted of the following as of December 31, 2019 and December 31, 2018:



|                |  | December 31, 2019                       |           
|--------------- |  | --------------------------------------- | ----------
|                |  | Aggregate 
    Principal 
    Committed |           
|Credit Facility |  | $                                       | 35,000,000
|Total debt      |  | $                                       | 35,000,000



| | (1) | The
    amount available reflects any limitations related to the Credit Facility’s borrowing base.
| | --- | --------------------------------------------------------------------------------------------------



| | (2) | The
    carrying value of the Credit Facility is presented net of deferred financing costs and loan servicing fees of approximately
    $0.4 million.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------



|                    |  | December 31,
    2018                       |           
|------------------- |  | ------------------------------------------- | ----------
|                    |  | Aggregate
    
    Principal 
    Committed |           
|Credit
    Facility |  | $                                           | 30,000,000
|Total
    debt      |  | $                                           | 30,000,000



| | (1) | The
    amount available reflects any limitations related to the Credit Facility’s borrowing base.
| | --- | --------------------------------------------------------------------------------------------------



| | (2) | The
    carrying value of the Credit Facility is presented net of deferred financing costs and loan servicing fees of approximately
    $0.4 million.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------



Average
debt outstanding during the years ended December 31, 2019 and 2018 was $25,684,091 and $12,654,577, respectively.



The
Loan Agreement accrues interest at the Daily LIBOR Rate, plus a 2.88% margin, and principal is repayable in full at maturity.
Interest is generally required to be paid monthly in arrears. The Loan Agreement requires the payment of an unused line fee of
between 0.50% and 1.0%, commencing on the date that is two months from closing, based on the amount by which the Revolver Commitments
exceed the average daily balance of the Revolver Loans (as defined in the Loan Agreement) during any month. Such fee is payable
monthly in arrears. The Loan Agreement has an advance rate against FRC Funding’s Eligible Portfolio Investments (as defined
in the Loan Agreement). The advance rate, as to any Eligible Portfolio Investment, is 75.0% when the Company’s asset coverage
ratio is equal or greater than 200.0% or 70.0% when the Company’s asset coverage ratio is less than 200.0%, subject to certain
eligibility requirements.



For
the years ended December 31, 2019 and 2018, the components of interest expense relating to the credit facility were as follows:



|                                                                    |  | For the Years Ended    |          
|------------------------------------------------------------------- |  | ---------------------- | ---------
|                                                                    |  | December 31, 
    2019 |          
|                                                                    |  |                        |          
|Interest expense                                                    |  | $                      | 1,350,669
|Amortization of debt issuance costs                                 |  |                        | 125,899  
|Total interest expense                                              |  | $                      | 1,476,568
|Average interest rate                                               |  |                        | 5.06     
|Unamortized deferred financing costs, revolving
    credit facility |  | $                      | 372,544  



Pursuant
to the terms of the Loan Agreement, the Borrowers granted to State Bank for the benefit of State Bank and Hitachi, Lenders, Alostar
and its affiliates, a security interest and a lien in substantially all of FRC Funding’s assets. The Loan Agreement contains
certain affirmative and negative covenants, including a minimum Company asset coverage ratio, a minimum fixed charge ratio, and
a minimum Company tangible net worth. Under the Loan Agreement, the Borrowers are required to make certain customary representations
and warranties and are required to comply with various covenants, reporting requirements and other requirements that are customary
for similar credit facilities. The obligations under the Loan Agreement may be accelerated upon the occurrence of an event of
default under the Loan Agreement or in the event of a change of control of the Company or FRC Funding.



F-23







Note
7. Share Transactions



Offering
Proceeds



During
the year ended December 31, 2019, the Company issued and sold 1,021,942 shares of its common stock at an aggregate purchase
price of $20.2 million. During the year ended December 31, 2018, the Company issued and sold 854,788 shares of its common stock
at an aggregate purchase price of $17,121,000. For the period May 3, 2017 (commencement of operations) through December 31, 2017,
the Company issued and sold 1,032,445 shares of its common stock at an aggregate purchase price of $20,649,000.



Distributions



The
following table reflects the distributions declared on shares of the Company’s common stock during the years ended December 31,
2019 and 2018, and the period from May 3, 2017 (commencement of operations) through December 31, 2017:



The
following table reflects the distributions declared on shares during the fiscal year ended December 31, 2019:



|            |            |  |        |  |            |       |  |   |         |  |  | Total         |          
|----------- | ---------- |  | ------ |  | ---------- | ----- |  | - | ------- |  |  | ------------- | ---------
|Declaration |            |  | Record |  |            | Per   |  |   | Payment |  |  | Distributions |          
|Date        |            |  | Date   |  |            | Share |  |   | Date    |  |  | Declared      |          
|            | 11/13/2018 |  |        |  | 1/26/2019  |       |  | $ | 0.108   |  |  |               | 2/6/2019 
|            | 11/13/2018 |  |        |  | 2/26/2019  |       |  |   | 0.108   |  |  |               | 3/6/2019 
|            | 2/28/2019  |  |        |  | 3/26/2019  |       |  |   | 0.108   |  |  |               | 4/8/2019 
|            | 3/28/2019  |  |        |  | 4/26/2019  |       |  |   | 0.111   |  |  |               | 5/6/2019 
|            | 3/28/2019  |  |        |  | 5/26/2019  |       |  |   | 0.111   |  |  |               | 6/6/2019 
|            | 5/14/2019  |  |        |  | 6/26/2019  |       |  |   | 0.111   |  |  |               | 7/6/2019 
|            | 5/14/2019  |  |        |  | 7/26/2019  |       |  |   | 0.114   |  |  |               | 8/6/2019 
|            | 5/14/2019  |  |        |  | 8/26/2019  |       |  |   | 0.114   |  |  |               | 9/6/2019 
|            | 8/12/2019  |  |        |  | 9/26/2019  |       |  |   | 0.114   |  |  |               | 10/7/2019
|            | 8/12/2019  |  |        |  | 10/24/2019 |       |  |   | 0.114   |  |  |               | 11/6/2019
|            | 8/12/2019  |  |        |  | 11/25/2019 |       |  |   | 0.114   |  |  |               | 12/6/2019
|            | 11/12/2019 |  |        |  | 12/23/2019 |       |  |   | 0.114   |  |  |               | 1/6/2020 
|            |            |  |        |  |            |       |  |   |         |  |  |               |          



| | (1) | As
    of December 31, 2019, this distribution had not been paid, which consisted of a cash dividend of $257,614 and dividends
    reinvested of $52,845. See disclosure of payment noted in Note 11 to the consolidated financial statements.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
following table reflects the distrubtions declared on shares during the fiscal year ended December 31, 2018:



|            |            |  |        |  |            |       |  |   |         |  |  | Total         |          
|----------- | ---------- |  | ------ |  | ---------- | ----- |  | - | ------- |  |  | ------------- | ---------
|Declaration |            |  | Record |  |            | Per   |  |   | Payment |  |  | Distributions |          
|Date        |            |  | Date   |  |            | Share |  |   | Date    |  |  | Declared      |          
|            | 1/26/2018  |  |        |  | 1/26/2018  |       |  | $ | 0.108   |  |  |               | 2/6/2018 
|            | 2/26/2018  |  |        |  | 2/26/2018  |       |  |   | 0.108   |  |  |               | 3/6/2018 
|            | 3/26/2018  |  |        |  | 3/26/2018  |       |  |   | 0.108   |  |  |               | 4/6/2018 
|            | 4/26/2018  |  |        |  | 4/26/2018  |       |  |   | 0.108   |  |  |               | 5/6/2018 
|            | 5/26/2018  |  |        |  | 5/26/2018  |       |  |   | 0.108   |  |  |               | 6/6/2018 
|            | 6/26/2018  |  |        |  | 6/26/2018  |       |  |   | 0.108   |  |  |               | 7/6/2018 
|            | 7/26/2018  |  |        |  | 7/26/2018  |       |  |   | 0.108   |  |  |               | 8/6/2018 
|            | 8/26/2018  |  |        |  | 8/26/2018  |       |  |   | 0.108   |  |  |               | 9/6/2018 
|            | 9/26/2018  |  |        |  | 9/26/2018  |       |  |   | 0.108   |  |  |               | 10/6/2018
|            | 10/26/2018 |  |        |  | 10/26/2018 |       |  |   | 0.108   |  |  |               | 11/6/2018
|            | 11/13/2018 |  |        |  | 11/26/2018 |       |  |   | 0.108   |  |  |               | 12/6/2018
|            | 11/13/2018 |  |        |  | 12/26/2018 |       |  |   | 0.108   |  |  |               | 1/7/2019 
|            |            |  |        |  |            |       |  |   |         |  |  |               |          



| | (1) | As
    of December 31, 2018, this distribution had not been paid, which consisted of a cash dividend of $200,145 and no dividends
    reinvested. See balance payable on the Consolidated Statements of Assets and Liabilities, as well as disclosure of payment
    noted in Note 11 to the consolidated financial statements.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-24







The
following table reflects the distrubtions declared on shares during the fiscal year ended December 31, 2017:



|            |            |  |        |  |            |       |  |   |         |  |  | Total         |          
|----------- | ---------- |  | ------ |  | ---------- | ----- |  | - | ------- |  |  | ------------- | ---------
|Declaration |            |  | Record |  |            | Per   |  |   | Payment |  |  | Distributions |          
|Date        |            |  | Date   |  |            | Share |  |   | Date    |  |  | Declared      |          
|            | 8/25/2017  |  |        |  | 8/25/2017  |       |  | $ | 0.108   |  |  |               | 9/6/2017 
|            | 9/26/2017  |  |        |  | 9/26/2017  |       |  |   | 0.108   |  |  |               | 10/6/2017
|            | 10/26/2017 |  |        |  | 10/26/2017 |       |  |   | 0.108   |  |  |               | 11/6/2017
|            | 11/26/2017 |  |        |  | 11/26/2017 |       |  |   | 0.108   |  |  |               | 12/6/2017
|            | 12/26/2017 |  |        |  | 12/26/2017 |       |  |   | 0.108   |  |  |               | 1/6/2018 
|            |            |  |        |  |            |       |  |   |         |  |  |               |          



| | (1) | As
    of December 31, 2017, this distribution had not been paid, which consisted of a cash dividend of $110,964 and no dividends
    reinvested. See balance payable on the Consolidated Statements of Assets and Liabilities, as well as disclosure of payment
    noted in Note 11 to the consolidated financial statements.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Distribution
Reinvestment Plan



On
March 28, 2019, the Board approved the establishment of a distribution reinvestment plan (the “DRIP”). The DRIP was
effective as of, and was first applied to the reinvestment of cash distributions paid on or after, May 1, 2019.



Under
the DRIP, cash distributions paid to participating stockholders are reinvested in Shares at a price equal to the net asset value
per share of the Shares as of such date. New stockholders of the Company on or after May 1, 2019 became participating stockholders
in the DRIP unless they affirmatively declined participation in the DRIP. Existing stockholders of the Company prior to May 1,
2019 were given the opportunity to participate in the DRIP.



The
following table reflects the common stock issued pursuant to the DRIP during the period May 1, 2019 to December 31, 2019:



|Declaration |  | Record     |  | Payment   |     |        |       
|----------- |  | ---------- |  | --------- | --- | ------ | ------
|Date        |  | Date       |  | Date      |     | Shares |       
|3/28/2019   |  | 5/26/2019  |  | 6/6/2019  |     |        | 2,208 
|5/14/2019   |  | 6/26/2019  |  | 7/6/2019  |     |        | 2,220 
|5/14/2019   |  | 7/26/2019  |  | 8/6/2019  |     |        | 2,503 
|5/14/2019   |  | 8/26/2019  |  | 9/6/2019  |     |        | 2,605 
|8/12/2019   |  | 9/26/2019  |  | 10/7/2019 |     |        | 2,605 
|8/12/2019   |  | 10/24/2019 |  | 11/6/2019 |     |        | 2,642 
|8/12/2019   |  | 11/25/2019 |  | 12/6/2019 |     |        | 2,660 
|11/12/2019  |  | 12/23/2019 |  | 1/6/2020  | (1) |        | 2,676 
|            |  |            |  |           |     |        | 20,119



| | (1) | As
    of December 31, 2019, this distribution had not been paid, which consisted of a reinvestment of 2,676 shares at a value of
    $52,845. See balance payable on the Consolidated Statements of Assets and Liabilities, as well as disclosure of payment noted
    in Note 11 to the consolidated financial statements.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Repurchases
of Shares



As
a result of the Company’s compliance with the requirements set forth in the SBCAA, the asset coverage ratio test applicable
to the Company was decreased from 200% to 150%, effective May 30, 2019. In order to comply with the requirement that the Company
extend, within twelve months from May 30, 2018, to each of the Company’s stockholders as of May 30, 2018, the opportunity
to sell the securities held by that stockholder as of that date, the Company filed four tender offers on June 27, 2018, August
7, 2018, September 12, 2018, and October 24, 2018, each representing 25% of the total issued and outstanding shares as of May
30, 2018, July 31, 2018, September 11, 2018 and October 23, 2018, respectively. The tender offer filed on June 27, 2018 resulted
in the Company purchasing all 20,000 shares validly tendered and not withdrawn at a price equal to $20.03 per share for an aggregate
purchase price of approximately $400,600. The remaining tender offers did not result in the Company purchasing any Shares pursuant
to the offers.



Following
the closing of the final tender offer above in order to comply with the provisions of the SBCAA, the Company commenced its share
repurchase program, whereby it intends to offer to repurchase up to 5% if its issued and outstanding shares on a quarterly basis
through registered tender offers. The table below shows the effects of the quarterly repurchase offers made by the Company during
the year ended December 31, 2019:



|Repurchase  Offer Date |  | Repurchase Date  |  | Number of Shares  Repurchased |        |  | Percentage of  Shares
     Repurchased |  |     | Repurchase Price  Per
    Share |  |   | Aggregate  Consideration
     for Repurchased  Shares | 
|---------------------- |  | ---------------- |  | ----------------------------- | ------ |  | -------------------------------------- |  | --- | ------------------------------- |  | - | ----------------------------------------------------- | 
|April 1, 2019          |  | April 29, 2019   |  |                               | 18,750 |  |                                        |  | 100 | %                               |  | $ | 19.80                                                 | 
|July 16, 2019          |  | August 14, 2019  |  |                               | 19,996 |  |                                        |  | 100 | %                               |  | $ | 19.77                                                 | 
|October 1, 2019        |  | November 6, 2019 |  |                               | 37,911 |  |                                        |  | 100 | %                               |  | $ | 19.77                                                 | 
|TOTAL                  |  |                  |  |                               | 76,657 |  |                                        |  |     |                                 |  |   |                                                       | 



F-25







Note
8. Commitments and Contingencies



The
Company had an aggregate of $3,052,200 of unfunded commitments to provide debt financing to its portfolio companies or to fund
limited partnership interests as of December 31, 2019. As of December 31, 2019, there were no capital calls or draw requests
made by the portfolio companies to fund these commitments. Such commitments are generally up to the Company’s discretion
to approve or are subject to the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the Company’s consolidated statement of assets and liabilities
and are not reflected in the Company’s consolidated statement of assets and liabilities.



A
summary of the composition of the unfunded commitments as of December 31, 2019 is shown in the table below:



|                                 |  |                              |  | As of             |          
|-------------------------------- |  | ---------------------------- |  | ----------------- | ---------
|                                 |  | Expiration
    
    Date (1) |  | December 31, 2019 |          
|                                 |  |                              |  |                   |          
|Coastal Construction Products    |  | 9/4/2020                     |  | $                 | 1,000,000
|Specialist Resources Global Inc. |  | 9/26/2021                    |  |                   | 1,666,667
|BCP Great Lakes Fund LP          |  | 11/27/2021                   |  |                   | 385,533  
|Total unfunded commitments       |  |                              |  | $                 | 3,052,200



| | (1) | Commitments
    are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics.
    These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than
    its maturity.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A
summary of the composition of the unfunded commitments as of December 31, 2018 is shown in the table below:



|                                |  |                              |  | As of             |          
|------------------------------- |  | ---------------------------- |  | ----------------- | ---------
|                                |  | Expiration
    
    Date (1) |  | December 31, 2018 |          
|                                |  |                              |  |                   |          
|World Insurance Associates, LLC |  | 7/18/2024                    |  | $                 | 1,167,391
|Total unfunded commitments      |  |                              |  | $                 | 1,167,391



| | (1) | Commitments
    are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics.
    These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than
    its maturity.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



From
time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. As
of December 31, 2019, management is not aware of any pending or threatened litigation.



F-26







Note
9. Earnings Per Share



In
accordance with the provisions of ASC Topic 260, Earnings per Share, basic earnings per share is computed by dividing earnings
available to common shareholders by the weighted average number of shares outstanding during the period. Other potentially dilutive
common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. As of
December 31, 2019 and 2018, there were no dilutive shares.



The
following table sets forth the computation of basic and diluted earnings per common share for the years ended December 31,
2019 and 2018, and the period from May 3, 2017 (commencement of operations) through December 31, 2017:



|                                                                               |  |                     |           |  |                                                      |   |           | For the Period    | 
|------------------------------------------------------------------------------ |  | ------------------- | --------- |  | ---------------------------------------------------- | - | --------- | ----------------- | 
|                                                                               |  | For the Years Ended |           |  | May 3, 2017 (commencement
    of operations) through |  
|                                                                               |  | December 31, 2019   |           |  | December 31, 2018                                    |   |           | December 31, 2017 | 
|                                                                               |  |                     |           |  |                                                      |   |           |                   | 
|Net increase in net assets resulting from operations                           |  | $                   | 3,169,648 |  |                                                      | $ | 1,164,513 |                   | 
|Weighted average common shares of common stock outstanding - basic and diluted |  |                     | 2,350,674 |  |                                                      |   | 1,317,698 |                   | 
|Earnings per common share - basic and diluted                                  |  | $                   | 1.35      |  |                                                      | $ | 0.88      |                   | 



Note
10. Income Taxes



The
Company has elected to be treated as a RIC under the Code beginning with the taxable year end December 31, 2017. As a RIC,
the Company is not subject to federal income tax on the portion of its taxable income and gains distributed currently to its stockholders
as dividends. As a RIC, the Company is also subject to a federal excise tax based on distributive requirements of its taxable
income on a calendar year basis. Depending on the level of taxable income earned in a tax year, the Company may choose to carry
forward taxable income in excess of current year distributions into the next tax year and pay a 4% excise tax on such income,
to the extent required.



The
permanent differences for tax purposes from distributable earnings to additional paid in capital were reclassified for tax purposes
for the tax year ended December 31, 2019. These reclassifications have no impact on net assets.



|                                                      |  |   | Year
                                         Ended  December 31, 2019 | 
|----------------------------------------------------- |  | - | ---------------------------------------------------------------------- | 
|                                                      |  |   |                                                                        | 
|Increase (decrease) in distributable earnings         |  |   | -                                                                      | 
|                                                      |  |   |                                                                        | 
|Increase (decrease) in capital in excess of par value |  | $ | -                                                                      | 



F-27







The
following reconciles net increase in net assets resulting from operations to taxable income for the years ended December 31,
2019 and December 31, 2018, and the period ended December 31, 2017:



|                                                                          |  | Year Ended December
    31, 2019 |           |   | Year Ended December 31,
    2018 |   |           | For the Period May 3,
    2017 (commencement of operations) through December 31, 2017 | 
|------------------------------------------------------------------------- |  | -------------------------------- | --------- | - | -------------------------------- | - | --------- | ------------------------------------------------------------------------------------- | 
|Net increase (decrease) in net assets resulting
    from operations       |  | $                                | 3,169,648 |   |                                  | $ | 1,164,513 |                                                                                       | 
|Net change in unrealized appreciation (depreciation)
    from investments |  |                                  | (10,041   | ) |                                  |   | 590,623   |                                                                                       | 
|Net realized losses                                                       |  |                                  | 318,751   |   |                                  |   | -         |                                                                                       | 
|Other book tax differences                                                |  |                                  | (369,812  | ) |                                  |   | 149,467   |                                                                                       | 
|Taxable income before deductions
    for distributions                    |  | $                                | 3,108,546 |   |                                  | $ | 1,904,603 |                                                                                       | 



|                         |  | Year Ended December 31,
    2019 |           |  | Year Ended December 31,
    2018 |   |           | For the Period May 3,
    2017 (commencement of operations) through December 31, 2017 | 
|------------------------ |  | -------------------------------- | --------- |  | -------------------------------- | - | --------- | ------------------------------------------------------------------------------------- | 
|Distributions paid from: |  |                                  |           |  |                                  |   |           |                                                                                       | 
|                         |  |                                  |           |  |                                  |   |           |                                                                                       | 
|Ordinary income          |  | $                                | 3,147,725 |  |                                  | $ | 1,699,455 |                                                                                       | 
|Capital gains            |  |                                  | —         |  |                                  |   | —         |                                                                                       | 
|Return of Capital        |  |                                  | —         |  |                                  |   | —         |                                                                                       | 
|Total                    |  | $                                | 3,147,725 |  |                                  | $ | 1,699,455 |                                                                                       | 



For
the years ended December 31, 2019 and 2018, and the period ended December 31, 2017, the components of accumulated earnings
on a tax basis were as follows:



|                                                |  | Year Ended   |          |   | Year Ended   |   |          | For the Period May 3,
                                                                  2017 (commencement of operations) through | 
|----------------------------------------------- |  | ------------ | -------- | - | ------------ | - | -------- | --------------------------------------------------------------------------------------------------------------------------------- | 
|                                                |  | December 31, |          |   | December 31, |   |          | December 31,                                                                                                                      | 
|                                                |  | 2019         |          |   | 2018         |   |          | 2017                                                                                                                              | 
|Undistributed net investment income (loss)      |  | $            | 401,162  |   |              | $ | 136,522  |                                                                                                                                   | 
|Undistributed capital gains                     |  |              | —        |   |              |   | 246,350  |                                                                                                                                   | 
|Capital loss carryforward                       |  |              | (318,751 | ) |              |   | —        |                                                                                                                                   | 
|Other accumulated gain (loss)/dividends payable |  |              | (265,902 | ) |              |   | (200,145 | )                                                                                                                                 | 
|Net unrealized appreciation                     |  |              | (308,879 | ) |              |   | (697,020 | )                                                                                                                                 | 
|Total                                           |  | $            | (492,370 | ) |              | $ | (514,293 | )                                                                                                                                 | 



Capital
losses can be carried forward indefinitely to offset future capital gains. As of December 31, 2019, the Company had short
term loss carryforwards of $314,489 and long term loss carryforwards of $4,262.



As
of December 31, 2019, the Company’s aggregate unrealized appreciation and depreciation on investments based on cost
for U.S. federal income tax purposes was as follows:



|                                                              |  | December 31, 2019 |            
|------------------------------------------------------------- |  | ----------------- | -----------
|Tax cost                                                      |  |                   | 101,846,603
|Gross unrealized appreciation                                 |  |                   | 794,415    
|Gross unrealized depreciation                                 |  |                   | (1,103,294 
|Net unrealized appreciation/(depreciation)
    on investments |  | $                 | (308,879   



F-28







The
Company adopted FASB ASC Topic 740, Accounting for Uncertainty in Income Taxes (“ASC 740”) as of December 31,
2018. ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the
consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course
of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of
being sustained by the applicable tax authority. The Company recognizes the tax benefits of uncertain tax positions only where
the position is “more likely than not” to be sustained assuming examination by tax authorities. As of December 31,
2019, management has analyzed the Company’s tax positions, and has concluded that no liability for unrecognized tax benefits
should be recorded related to uncertain tax positions taken in the Company’s current year tax return. The Company identifies
its major tax jurisdictions as U.S. Federal, New York State, and New York City. The Company is not aware of any tax positions
for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12
months. 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.



Note
11. Financial Highlights



The
following per common share data has been derived from information provided in the audited financial statements. The following
is a schedule of financial highlights for the years ended December 31, 2019 and 2018, and the period from May 3, 2017 (commencement
of operations) through December 31, 2017:



|                                                                                                       |  |                     |            |   |                                                                                                                                  |   |            | For the Period    | 
|------------------------------------------------------------------------------------------------------ |  | ------------------- | ---------- | - | -------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | ----------------- | 
|                                                                                                       |  | For the Years Ended |            |   | May 3,
                                                                                2017 (commencement of operations) through |  
|                                                                                                       |  | December 31, 2019   |            |   | December 31, 
    2018                                                                                                           |   |            | December 31, 2017 | 
|Per Common Share Operating Performance                                                                 |  |                     |            |   |                                                                                                                                  |   |            |                   | 
|Net Asset Value, Beginning of Period                                                                   |  | $                   | 19.74      |   |                                                                                                                                  | $ | 20.02      |                   | 
|                                                                                                       |  |                     |            |   |                                                                                                                                  |   |            |                   | 
|Results of Operations:                                                                                 |  |                     |            |   |                                                                                                                                  |   |            |                   | 
|Net
    Investment Income(1)                                                                           |  |                     | 1.37       |   |                                                                                                                                  |   | 1.15       |                   | 
|Net
    Realized and Unrealized Gain (Loss) on Investments(1)(5)                                       |  |                     | (0.01      | ) |                                                                                                                                  |   | (0.13      | )                 | 
|Net Increase (Decrease) in Net
    Assets Resulting from Operations                                    |  |                     | 1.36       |   |                                                                                                                                  |   | 1.02       |                   | 
|                                                                                                       |  |                     |            |   |                                                                                                                                  |   |            |                   | 
|Distributions to Common Stockholders                                                                   |  |                     |            |   |                                                                                                                                  |   |            |                   | 
|Distributions from Net Investment Income                                                               |  |                     | (1.34      | ) |                                                                                                                                  |   | (1.30      | )                 | 
|Return of Capital                                                                                      |  |                     | -          |   |                                                                                                                                  |   | -          |                   | 
|Net Decrease in Net Assets Resulting from Distributions                                                |  |                     | (1.34      | ) |                                                                                                                                  |   | (1.30      | )                 | 
|                                                                                                       |  |                     |            |   |                                                                                                                                  |   |            |                   | 
|Capital Share Transactions                                                                             |  |                     |            |   |                                                                                                                                  |   |            |                   | 
|Issuance of Common Stock                                                                               |  |                     | -          |   |                                                                                                                                  |   | -          |                   | 
|Net Increase (Decrease) Resulting
    from Capital Share Transactions                                  |  |                     | -          |   |                                                                                                                                  |   | -          |                   | 
|Net Asset Value, End of Period                                                                         |  | $                   | 19.76      |   |                                                                                                                                  | $ | 19.74      |                   | 
|                                                                                                       |  |                     |            |   |                                                                                                                                  |   |            |                   | 
|Shares Outstanding, End of Period                                                                      |  |                     | 2,832,840  |   |                                                                                                                                  |   | 1,867,420  |                   | 
|                                                                                                       |  |                     |            |   |                                                                                                                                  |   |            |                   | 
|Ratio/Supplemental Data                                                                                |  |                     |            |   |                                                                                                                                  |   |            |                   | 
|Net assets, end of period                                                                              |  | $                   | 55,969,870 |   |                                                                                                                                  | $ | 36,855,107 |                   | 
|Weighted-average shares outstanding                                                                    |  |                     | 2,350,674  |   |                                                                                                                                  |   | 1,317,698  |                   | 
|Total Return(3)                                                                                        |  |                     | 7.13       | % |                                                                                                                                  |   | 5.07       | %                 | 
|Portfolio turnover                                                                                     |  |                     | 84.6       | % |                                                                                                                                  |   | 136.5      | %                 | 
|Ratio
    of operating expenses to average net assets without waiver and reimbursement(2)(4)           |  |                     | 8.83       | % |                                                                                                                                  |   | 6.15       | %                 | 
|Ratio
    of operating expenses to average net assets with waiver and reimbursement(2)(4)              |  |                     | 7.39       | % |                                                                                                                                  |   | 3.52       | %                 | 
|Ratio
    of net investment income (loss) to average net assets without waiver and reimbursement(2)(4) |  |                     | 5.41       | % |                                                                                                                                  |   | 2.84       | %                 | 
|Ratio
    of net investment income (loss) to average net assets with waiver and reimbursement(2)(4)    |  |                     | 6.85       | % |                                                                                                                                  |   | 5.47       | %                 | 



| | (1) | The
    per common share data was derived by using weighted average shares outstanding.
| | --- | ---------------------------------------------------------------------------------------



| | (2) | The
    ratios reflect an annualized amount.
| | --- | --------------------------------------------



| | (3) | Total
    return is calculated as the change in net asset value (“NAV”) per share during the period, plus distributions
    per share (if any), divided by the beginning NAV per share. Total return is not annualized.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Includes
    interest expense of 2.92%, 0.53%, 0.23%, respectively, which is not subject to reimbursement by Flat Rock Global.
| | --- | ------------------------------------------------------------------------------------------------------------------------------



| | (5) | Realized
    and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset
    value per share for the period, and may not reconcile with the aggregate gains and losses in the Consolidated Statement of
    Operations due to share transactions during the period.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-29







Note
12. Selected Quarterly Financial Data (Unaudited)



|                                                                                                             |  | For the Three Months Ended |          
|------------------------------------------------------------------------------------------------------------ |  | -------------------------- | ---------
|                                                                                                             |  | March 31, 2019             |          
|                                                                                                             |  |                            |          
|Investment income                                                                                            |  | $                          | 1,562,580
|Net expenses                                                                                                 |  |                            | 816,583  
|Net investment income (loss)                                                                                 |  |                            | 745,997  
|Net realized gain (loss) on investments, and foreign
    currency transactions                               |  |                            | 407,483  
|Net unrealized gain (loss) on
    investments, foreign currency translations, and foreign currency contracts |  |                            | (464,240 
|Increase (decrease) in net assets
    resulting from operations                                              |  | $                          | 689,240  
|Net asset value per share as of the end of the quarter                                                       |  | $                          | 19.77    



|                                                                                                             |  | For the Three Months Ended |        
|------------------------------------------------------------------------------------------------------------ |  | -------------------------- | -------
|                                                                                                             |  | March 31, 2018             |        
|                                                                                                             |  |                            |        
|Investment income                                                                                            |  | $                          | 415,523
|Net expenses                                                                                                 |  |                            | 145,498
|Net investment income (loss)                                                                                 |  |                            | 270,025
|Net realized gain (loss) on investments, and foreign
    currency transactions                               |  |                            | 36,834 
|Net unrealized gain (loss) on
    investments, foreign currency translations, and foreign currency contracts |  |                            | 41,998 
|Increase (decrease) in net assets
    resulting from operations                                              |  | $                          | 348,857
|Net asset value per share as of the end of the quarter                                                       |  | $                          | 20.03  



|                                                                                                             |  | For the Three Months Ended |      
|------------------------------------------------------------------------------------------------------------ |  | -------------------------- | -----
|                                                                                                             |  | June 30, 2017*             |      
|                                                                                                             |  |                            |      
|Investment income                                                                                            |  | $                          | 685  
|Net expenses                                                                                                 |  |                            | 480  
|Net investment income (loss)                                                                                 |  |                            | 205  
|Net realized gain (loss) on investments, and foreign
    currency transactions                               |  |                            | -    
|Net unrealized gain (loss) on
    investments, foreign currency translations, and foreign currency contracts |  |                            | 362  
|Increase (decrease) in net assets
    resulting from operations                                              |  | $                          | 567  
|Net asset value per share as of the end of the quarter                                                       |  | $                          | 20.00



*
Commenced operations on May 3, 2017



F-30







Note
13. Subsequent Events



The
Company’s management has evaluated subsequent events through the date of issuance of the financial statements included herein.
There have been no subsequent events that require recognition or disclosure in these financial statements except for the following:



Issuance
of Common Stock



On
January 29, 2020, the Company issued and sold approximately 7,606 shares of its common stock at an aggregate purchase price of
$150,000. The issuance of the shares of common stock was exempt from the registration requirements of the Securities Act, pursuant
to Section 4(a)(2) and Rule 506(b) of Regulation D thereof.



On
March 2, 2020, the Company issued and sold 34,862 shares of its common stock at an aggregate purchase price of $689,925. The issuance
of the shares of common stock was exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2)
and Rule 506(b) of Regulation D thereof.



Distributions



On
November 12, 2019, the Company declared a distribution of $0.114 per share, or $322,943, for holders of record as of January 24,
2020, which was paid on February 6, 2020.



On
November 12, 2019, the Company declared a distribution of $0.114 per share, or $322,863, for holders of record as of February
24, 2020, which was paid on March 6, 2020.



On
January 8, 2020, following approval from the Board, the Company filed a tender offer to repurchase up to 141,245 Shares of the
Company’s issued and outstanding common stock, which represented 5% of the issued and outstanding shares as of January 6,
2020. The tender offer expired at 11:59 P.M., Central Time, on February 7, 2020 (the “Offer Expiration Date”). As
of the Offer Expiration Date, 11,009 Shares for a total of $217,583 were validly tendered and withdrawn pursuant to the tender
offer.



F-31







ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



(a)
DOCUMENTS FILED AS PART OF THIS REPORT



The
following is a list of our financial statements included in this Annual Report on Form 10-K/A under Item 8 of Part II hereof:



1.
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA



Index
to Financial Statements



|                                                                                                                                                                                    | Page
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                                                    |     
|Report of Independent Registered Public Accounting Firm as of and for the year ended December 31, 2019                                                                              | F-1 
|Report of the Predecessor Independent Registered Public Accounting Firm as of and for the year ended December 31, 2018 and the period ended December 31, 2017.                      | F-2 
|Consolidated Statements of Assets and Liabilities as of December 31, 2019 and 2018                                                                                                  | F-3 
|Consolidated Statements of Operations for the Years ended December 31, 2019 and 2018 and for the Period of May 3, 2017 (commencement of operations) to December 31, 2017            | F-4 
|Consolidated Statements of Changes in Net Assets for the Years ended December 31, 2019 and 2018 and for the Period of May 3, 2017 (commencement of operations) to December 31, 2017 | F-5 
|Consolidated Statements of Cash Flows for the Years ended December 31, 2019 and 2018 and for the Period of May 3, 2017 (commencement of operations) to December 31, 2017            | F-6 
|Consolidated Schedules of Investments as of December 31, 2019 and 2018                                                                                                              | F-7 
|Notes to Consolidated Financial Statements                                                                                                                                          | F-11





2







(b)
EXHIBITS





|3.1   |  | Articles
    of Incorporation of Flat Rock Capital Corp. (Incorporated by reference to the initial filing of the Registration Statement
    on Form 10 (SEC File No. 000-55767) filed with the SEC on March 24, 2017.)                                                                                                                                                                                                                   
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3.2   |  | Amended
    and Restated Articles of Incorporation (Incorporated by reference to Amendment No. 2 to the Registration Statement on Form
    10 (SEC File No. 000-55767) filed with the SEC on May 19, 2017.)                                                                                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3.3   |  | Bylaws
    (Incorporated by reference to Amendment No. 1 to the Registration Statement on Form 10 (SEC File No. 000- 55767) filed with
    the SEC on May 1, 2017.)                                                                                                                                                                                                                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.1   |  | Form
    of Subscription Agreement (Incorporated by reference to Amendment No. 2 to the Registration Statement on Form 10 (SEC File
    No. 000-55767) filed with the SEC on May 19, 2017.)                                                                                                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.2   |  | Distribution
    Reinvestment Plan (Incorporated by reference to Form 8-K Exhibit 4.1 (SEC File No. 000-55767) filed with the SEC on April
    5, 2019.)                                                                                                                                                                                                                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.1  |  | Investment
    Advisory Agreement by and between Flat Rock Capital Corp. and Flat Rock Global, LLC, dated May 16, 2017 (Incorporated by reference
    to Amendment No. 2 to the Registration Statement on Form 10 (SEC File No. 000- 55767) filed with the SEC on May 19, 2017.)                                                                                                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.2  |  | Amendment
    No. 1 to Investment Advisory Agreement (Incorporated by reference to Amendment No. 3 to the Registration Statement on Form
    10 (SEC File No. 000-55767) filed with the SEC on May 23, 2017.)                                                                                                                                                                                                                            
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.3  |  | Administration
    Agreement (Incorporated by reference to Amendment No. 2 to the Registration Statement on Form 10 (SEC File No. 000-55767)
    filed with the SEC on May 19, 2017.)                                                                                                                                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.4  |  | Custody
    Agreement (Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the period ended September
    30, 2017, filed with the SEC on November 14, 2017.)                                                                                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.5  |  | Loan
    and Security Agreement among FRC Funding I, LLC as borrower, Flat Rock Capital Corp. as servicer, the Lenders party thereto,
    and State Bank and Trust Company as agent for the Lenders, dated October 12, 2018 (Incorporated by reference to the Registrant’s
    Current Report on Form 8-K, filed with the SEC on October 18, 2018.)                                                                                      
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.6  |  | First
    Amendment to Loan and Security Agreement by and among FRC Funding I, LLC as borrower, Flat Rock Capital Corp. as servicer,
    the Existing Lender party thereto, State Bank and Trust Company as agent for the Lenders and Hitachi Capital America Corp.
    as a New Lender, dated December 10, 2018 (Incorporated by reference to the Registrant’s Current Report on Form 8-K,
    filed with the SEC on December 17, 2018.)
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.7  |  | Second Amendment
    to Loan and Security Agreement (Incorporated by reference to Form 8-K (SEC File No. 000-55767) filed with the SEC on July
    3, 2019.)                                                                                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|14.1  |  | Code of Business Conduct and Ethics (Incorporated by reference to Form 10-K filed with the SEC on March 19, 2020.                                                                                                                                                                                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|21.1  |  | Subsidiaries of the Registrant (Incorporated by reference to Form 10-K filed with the SEC on March 19, 2020.                                                                                                                                                                                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|31.1* |  | Certification
    of Principal Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 and Section 302 of the
    Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|31.2* |  | Certification
    of Principal Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 and Section 302 of the
    Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|32.1* |  | Certification
    of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18
    U.S.C. 1350)                                                                                                                                                                                                                                                                          



| | * | Filed
herewith
| | - | --------------



3







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.



|                           | FLAT
    ROCK CAPITAL CORP.
|-------------------------- | ---------------------------
|                           |                            
|Dated:
    October 2, 2020 | By:                        
|                           |                            
|                           |                            
|                           |                            



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.



|Dated:
    October 2, 2020 | By: | /s/
    Robert K. Grunewald                     
|-------------------------- | --- | ------------------------------------------------
|                           |     | Robert
    K. Grunewald                         
|                           |     | President
    and Chief Executive Officer       
|                           |     | (Principal
    Executive Officer)               
|                           |     |                                                 
|Dated:
    October 2, 2020 | By: | /s/
    Richard A. Petrocelli                   
|                           |     | Richard
    A. Petrocelli                       
|                           |     | Chief
    Financial Officer and                 
|                           |     | Chief
    Operating Officer                     
|                           |     | (Principal
    Financial and Accounting Officer)
|                           |     |                                                 
|Dated: October 2, 2020     | By: | /s/
    R. Scott Coolidge                       
|                           |     | R.
    Scott Coolidge                           
|                           |     | Director                                        
|                           |     |                                                 
|Dated: October 2, 2020     | By: | /s/
    Marshall H. Durston                     
|                           |     | Marshall
    H. Durston                         
|                           |     | Director                                        





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