UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
 
x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2018June 30, 2022
OR
 
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 000-55975
Oaktree Strategic Income II, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
DELAWARE
(State or jurisdiction of
incorporation or organization)
 
83-0566439
(I.R.S. Employer
Identification No.)
333 South Grand Avenue, 28th Floor
Los Angeles, CA
(Address of principal executive office)
 
90071
(Zip Code)
REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE:
(213) 830-6300

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x     NO  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    YES  ¨   NO  ¨
Indicate by check mark 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. (Check one):
Large accelerated filer  o
 
Accelerated filer  o
Non-accelerated filer  x
Smaller reporting company  o
Emerging growth company  x

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 x

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


Securities registered pursuant to Section 12(b) of the Act
Title of Each ClassTrading Symbol(s)Name of Exchange on Which Registered
N/AN/AN/A
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

ClassOutstanding at February 11, 2019August 5, 2022
Common stock, $0.001 par value3,391,90017,401,121




OAKTREE STRATEGIC INCOME II, INC.

FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2018JUNE 30, 2022


TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
Item 1.
Consolidated Financial Statements:
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Item 4.
Controls and Procedures
PART II — OTHER INFORMATION
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 4.6.
Mine Safety DisclosuresExhibits
Item 5.
Other Information
41
Item 6.Signatures
42
Signatures
43





 












PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.
Item 1.
Consolidated Financial Statements.


Oaktree Strategic Income II, Inc.
Consolidated Statements of Assets and Liabilities
 
December 31, 2018
(unaudited)
 September 30,
2018		June 30, 2022 (unaudited)September 30, 2021
ASSETSASSETS  ASSETS
Assets:    Assets:
Investments – Non-control/Non-affiliate, at fair value (cost December 31, 2018: $59,207,088; cost September 30, 2018: $25,009,879) $58,419,573
 $25,232,606
Investments – Non-control/Non-affiliate, at fair value (cost June 30, 2022: $580,967,818; cost September 30, 2021: $568,303,425)Investments – Non-control/Non-affiliate, at fair value (cost June 30, 2022: $580,967,818; cost September 30, 2021: $568,303,425)$566,675,653 $575,429,432 
Cash and cash equivalents 25,340,638
 10,131,268
Cash and cash equivalents21,175,177 19,255,047 
Restricted cashRestricted cash9,815,519 4,317,968 
Interest receivable 254,090
 87,979
Interest receivable2,673,301 3,196,194 
Receivables from unsettled transactionsReceivables from unsettled transactions1,833,059 11,349,581 
Deferred financing costsDeferred financing costs1,391,387 1,915,573 
Derivative asset at fair value 34,535
 —
Derivative asset at fair value352,041 618,004 
Deferred financing costs 474,923
 —
Deferred offering costs 447,781
 519,302
Receivable for shares sold —
 40,000
Other assets 230,279
 225,597
Other assets279,586 364,450 
Total assets $85,201,819
 $36,236,752
Total assets$604,195,723 $616,446,249 
LIABILITIES AND NET ASSETSLIABILITIES AND NET ASSETS  LIABILITIES AND NET ASSETS
Liabilities:    Liabilities:
Accounts payable, accrued expenses and other liabilities $433,831
 $307,213
Accounts payable, accrued expenses and other liabilities$401,252 $482,680 
Base management fee and incentive fee payable 120,929
 81,747
Base management fee and incentive fees payableBase management fee and incentive fees payable3,213,805 6,433,876 
Due to affiliates 327,093
 1,114,484
Due to affiliates576,181 1,055,391 
Interest payable 78,401
 —
Interest payable1,817,853 884,294 
Payables from unsettled transactions 10,820,061
 4,334,741
Payables from unsettled transactions3,035,689 — 
Director fees payable 26,250
 26,250
Director fees payable12,500 — 
Credit facility payable 7,000,000
 —
Deferred tax liabilityDeferred tax liability56,780 117,374 
Secured borrowingsSecured borrowings5,802,122 9,969,425 
Credit facilities payableCredit facilities payable264,000,000 251,000,000 
Total liabilities 18,806,565
 5,864,435
Total liabilities278,916,182 269,943,040 
Commitments and contingencies (Note 11)    Commitments and contingencies (Note 11)
Net assets:    Net assets:
Common stock, $0.001 par value per share, 250,000,000 shares authorized; 3,391,900 shares issued and outstanding at December 31, 2018; 1,541,738 shares issued and outstanding at September 30, 2018 3,392
 1,542
Preferred stock, $0.001 par value per share, 100,000,000 shares authorized; none issued and outstanding at December 31, 2018 and September 30, 2018 —
 —
Common stock, $0.001 par value per share, 250,000,000 shares authorized; 17,401,121 shares issued and outstanding at June 30, 2022 and September 30, 2021Common stock, $0.001 par value per share, 250,000,000 shares authorized; 17,401,121 shares issued and outstanding at June 30, 2022 and September 30, 202117,401 17,401 
Preferred stock, $0.001 par value per share, 100,000,000 shares authorized; none issued and outstanding at June 30, 2022 and September 30, 2021Preferred stock, $0.001 par value per share, 100,000,000 shares authorized; none issued and outstanding at June 30, 2022 and September 30, 2021— — 
Additional paid-in-capital 67,533,407
 30,833,227
Additional paid-in-capital337,337,998 337,337,998 
Accumulated net decrease in net assets resulting from operations (1,141,545) (462,452)
Total net assets (equivalent to $19.57 and $19.70 per common share at December 31, 2018 and September 30, 2018, respectively) (Note 10) 66,395,254
 30,372,317
Accumulated distributable earnings (loss)Accumulated distributable earnings (loss)(12,075,858)9,147,810 
Total net assets (equivalent to $18.69 and $19.91 per common share at June 30, 2022 and September 30, 2021, respectively) (Note 10)Total net assets (equivalent to $18.69 and $19.91 per common share at June 30, 2022 and September 30, 2021, respectively) (Note 10)325,279,541 346,503,209 
Total liabilities and net assets $85,201,819
 $36,236,752
Total liabilities and net assets$604,195,723 $616,446,249 
See notes to Consolidated Financial Statements.



3

Oaktree Strategic Income II, Inc.
Consolidated StatementStatements of Operations
(unaudited)

  For the three months ended December 31, 2018
Interest income:  
Non-control/Non-affiliate investments $819,219
Interest on cash and cash equivalents 23,489
Total interest income 842,708
PIK interest income:  
   Non-control/Non-affiliate investments 67,946
   Total PIK interest income 67,946
Fee income:  
   Non-control/Non-affiliate investments
 255,564
   Total fee income 255,564
Total investment income 1,166,218
Expenses:  
Base management fee 120,929
Capital gains incentive fee (42,021)
Offering costs 168,269
Organization expenses 56,211
Professional fees 192,840
Directors fees 26,250
Interest expense 133,883
Administrator expense 82,045
General and administrative expenses 143,932
Total expenses 882,338
Net investment income before taxes 283,880
Excise tax expense��9,357
Net investment income 274,523
Unrealized appreciation (depreciation):  
Non-control/Non-affiliate investments (997,620)
Foreign currency forward contracts 34,535
Net unrealized appreciation (depreciation) (963,085)
Realized gains (losses):  
Non-control/Non-affiliate investments 9,469
Net realized gains (losses) 9,469
Net realized and unrealized gains (losses) (953,616)
Net decrease in net assets resulting from operations $(679,093)
Net investment income per common share — basic and diluted $0.10
Loss per common share — basic and diluted (Note 5) $(0.25)
Weighted average common shares outstanding — basic and diluted 2,682,977

Three months ended
June 30, 2022		Three months ended
June 30, 2021		Nine months ended
June 30, 2022		Nine months ended
June 30, 2021
Interest income:
Non-control/Non-affiliate investments$11,924,554 $11,410,618 $37,157,203 $29,385,238 
Interest on cash and cash equivalents5,575 (17)5,363 (133)
Total interest income11,930,129 11,410,601 37,162,566 29,385,105 
PIK interest income:
   Non-control/Non-affiliate investments1,120,082 1,063,850 3,010,940 2,960,403 
   Total PIK interest income1,120,082 1,063,850 3,010,940 2,960,403 
Fee income:
   Non-control/Non-affiliate investments
558,320 1,927,862 1,271,325 4,031,867 
   Total fee income558,320 1,927,862 1,271,325 4,031,867 
Dividend income:
   Non-control/Non-affiliate investments
24,712 — 24,712 — 
   Total dividend income24,712 — 24,712 — 
Total investment income13,633,243 14,402,313 41,469,543 36,377,375 
Expenses:
Base management fee1,363,619 1,398,118 4,289,728 3,845,876 
Investment income incentive fee1,850,189 2,149,705 5,816,775 5,371,468 
Capital gains incentive fee(1,287,059)96,473 (1,988,557)1,920,041 
Professional fees252,017 257,669 801,637 741,431 
Director fees38,750 38,750 116,250 116,250 
Interest expense2,399,380 1,630,614 6,206,849 3,847,862 
Administrator expense108,141 105,792 342,356 313,934 
General and administrative expenses220,393 212,813 628,838 644,648 
Total expenses4,945,430 5,889,934 16,213,876 16,801,510 
Net investment income8,687,813 8,512,379 25,255,667 19,575,865 
Unrealized appreciation (depreciation):
Non-control/Non-affiliate investments(16,185,425)(492,162)(21,452,202)6,488,932 
Foreign currency forward contracts(503,166)394,129 (265,963)1,404,687 
Net unrealized appreciation (depreciation)(16,688,591)(98,033)(21,718,165)7,893,619 
Realized gains (losses):
Non-control/Non-affiliate investments49,005 963,603 495,035 3,630,619 
Foreign currency forward contracts2,681,434 (267,789)3,747,763 (1,809,120)
Net realized gains (losses)2,730,439 695,814 4,242,798 1,821,499 
Provision for income tax (expense) benefit43,831 (104,025)55,903 (117,259)
Net realized and unrealized gains (losses), net of taxes(13,914,321)493,756 (17,419,464)9,597,859 
Net increase (decrease) in net assets resulting from operations$(5,226,508)$9,006,135 $7,836,203 $29,173,724 
Net investment income per common share — basic and diluted$0.50 $0.49 $1.45 $1.12 
Earnings (loss) per common share — basic and diluted (Note 5)$(0.30)$0.52 $0.45 $1.68 
Weighted average common shares outstanding — basic and diluted17,401,121 17,401,121 17,401,121 17,401,121 
See notes to Consolidated Financial Statements.



4

Oaktree Strategic Income II, Inc.
Consolidated StatementStatements of Changes in Net Assets
(unaudited)

 For the three months ended December 31, 2018Three months ended
June 30, 2022		Three months ended
June 30, 2021		Nine months ended
June 30, 2022		Nine months ended
June 30, 2021
Operations:  Operations:
Net investment income $274,523
Net investment income$8,687,813 $8,512,379 $25,255,667 $19,575,865 
Net unrealized appreciation (depreciation) (963,085)Net unrealized appreciation (depreciation)(16,688,591)(98,033)(21,718,165)7,893,619 
Net realized gains (losses) 9,469
Net realized gains (losses)2,730,439 695,814 4,242,798 1,821,499 
Net decrease in net assets resulting from operations (679,093)
Provision for income tax (expense) benefitProvision for income tax (expense) benefit43,831 (104,025)55,903 (117,259)
Net increase (decrease) in net assets resulting from operationsNet increase (decrease) in net assets resulting from operations(5,226,508)9,006,135 7,836,203 29,173,724 
Capital share transactions:  Capital share transactions:
Issuance of common stock 36,702,030
Net increase in net assets from capital share transactions 36,702,030
Total increase in net assets 36,022,937
Distributions to stockholdersDistributions to stockholders(7,656,494)(6,960,449)(29,059,871)(29,929,931)
Net increase (decrease) in net assets from capital share transactionsNet increase (decrease) in net assets from capital share transactions(7,656,494)(6,960,449)(29,059,871)(29,929,931)
Total increase (decrease) in net assetsTotal increase (decrease) in net assets(12,883,002)2,045,686 (21,223,668)(756,207)
Net assets at beginning of period 30,372,317
Net assets at beginning of period338,162,543 344,199,874 346,503,209 347,001,767 
Net assets at end of period $66,395,254
Net assets at end of period$325,279,541 $346,245,560 $325,279,541 $346,245,560 
Net asset value per common share $19.57
Net asset value per common share$18.69 $19.90 $18.69 $19.90 
Common shares outstanding at end of period 3,391,900
Common shares outstanding at end of period17,401,121 17,401,121 17,401,121 17,401,121 








See notes to Consolidated Financial Statements.




5
Oaktree Strategic Income II, Inc.
Consolidated StatementStatements of Cash Flows
(unaudited)








 For the three months ended December 31, 2018Nine months ended
June 30, 2022		Nine months ended
June 30, 2021
Operating activities:  Operating activities:
Net decrease in net assets resulting from operations $(679,093)
Adjustments to reconcile net decrease in net assets resulting from operations to net cash used in operating activities:  
Net increase (decrease) in net assets resulting from operationsNet increase (decrease) in net assets resulting from operations$7,836,203 $29,173,724 
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net unrealized (appreciation) depreciation 963,085
Net unrealized (appreciation) depreciation21,718,165 (7,893,619)
Net realized (gains) losses (9,469)Net realized (gains) losses(4,242,798)(1,821,499)
PIK interest income (67,946)PIK interest income(3,010,940)(2,960,403)
Accretion of original issue discount on investments (83,866)Accretion of original issue discount on investments(3,999,618)(3,626,166)
Amortization of deferred financing costs 55,482
Amortization of deferred financing costs524,186 456,987 
Amortization of deferred offering costs 168,269
Deferred taxesDeferred taxes(60,594)104,706 
Purchases of investments (35,711,794)Purchases of investments(135,289,634)(278,278,107)
Proceeds from sales and repayments of investments 1,628,109
Proceeds from sales and repayments of investments134,529,728 180,298,197 
Changes in operating assets and liabilities:  Changes in operating assets and liabilities:
(Increase) decrease in interest receivable (137,219)(Increase) decrease in interest receivable128,022 (949,787)
(Increase) decrease in receivables from unsettled transactions(Increase) decrease in receivables from unsettled transactions9,516,522 (2,384,628)
(Increase) decrease in other assets (4,682)(Increase) decrease in other assets84,864 314,674 
Increase (decrease) in accounts payable, accrued expenses and other liabilities 126,618
Increase (decrease) in accounts payable, accrued expenses and other liabilities(81,428)(434,942)
Increase (decrease) in base management fee and incentive fee payable 39,182
increase (decrease) in due to affiliates (884,139)
Increase (decrease) in base management fee and incentive fees payableIncrease (decrease) in base management fee and incentive fees payable(3,220,071)2,189,637 
Increase (decrease) in due to affiliatesIncrease (decrease) in due to affiliates(479,210)364,803 
Increase (decrease) in interest payable 78,401
Increase (decrease) in interest payable933,559 560,802 
Increase (decrease) in payables from unsettled transactions 6,485,320
Increase (decrease) in payables from unsettled transactions3,035,689 778,680 
Net cash used in operating activities (28,033,742)
Increase (decrease) in director fees payableIncrease (decrease) in director fees payable12,500 — 
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities27,935,145 (84,106,941)
Financing activities:  Financing activities:
Borrowings under the credit facility 7,000,000
Proceeds from the issuance of common stock 36,742,030
Distributions paid in cashDistributions paid in cash(29,059,871)(29,929,931)
Borrowings under the credit facilitiesBorrowings under the credit facilities54,000,000 108,000,000 
Repayments of borrowings under the credit facilitiesRepayments of borrowings under the credit facilities(41,000,000)(10,000,000)
Proceeds from secured borrowingsProceeds from secured borrowings15,771,906 10,000,000 
Repayments of secured borrowingsRepayments of secured borrowings(19,939,209)— 
Deferred financing costs paid (530,405)Deferred financing costs paid— (805,202)
Net cash provided by financing activities 43,211,625
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(20,227,174)77,264,867 
Effect of exchange rate changes on foreign currency 31,487
Effect of exchange rate changes on foreign currency(290,290)(408,888)
Net increase in cash and cash equivalents 15,209,370
Cash and cash equivalents, beginning of period 10,131,268
Cash and cash equivalents, end of period $25,340,638
Net increase (decrease) in cash and cash equivalents and restricted cashNet increase (decrease) in cash and cash equivalents and restricted cash7,417,681 (7,250,962)
Cash and cash equivalents and restricted cash, beginning of periodCash and cash equivalents and restricted cash, beginning of period23,573,015 31,016,086 
Cash and cash equivalents and restricted cash, end of periodCash and cash equivalents and restricted cash, end of period$30,990,696 $23,765,124 
Supplemental information:  Supplemental information:
Cash paid for interest $—
Cash paid for interest$4,749,104 $2,830,073 
Non-cash financing activities:  Non-cash financing activities:
Deferred offering costs incurred $96,748
Accrued deferred financing costsAccrued deferred financing costs$— $73,487 
Reconciliation to the Consolidated Statement of Assets and LiabilitiesReconciliation to the Consolidated Statement of Assets and LiabilitiesJune 30, 2022September 30, 2021
Cash and cash equivalentsCash and cash equivalents$21,175,177 $19,255,047 
Restricted cashRestricted cash9,815,519 4,317,968 
Total cash and cash equivalents and restricted cashTotal cash and cash equivalents and restricted cash$30,990,696 $23,573,015 
See notes to Consolidated Financial Statements.



6
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
December 31, 2018June 30, 2022
(unaudited)







Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Non-Control/Non-Affiliate Investments(7)
109 Montgomery Owner LLCReal Estate Operating Companies
First Lien Term Loan, LIBOR+7.00% cash due 2/2/20238.33 %$527,084 $522,929 $558,106 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+7.00% cash due 2/2/2023— (12,807)7,309 (5)(8)(9)
510,122 565,415 
A.T. Holdings II SÀRLBiotechnology
First Lien Term Loan, 9.50% PIK due 12/22/202211,447,137 11,420,464 11,475,755 (8)(10)
11,420,464 11,475,755 
Accupac, Inc.Personal Products
First Lien Term Loan, SOFR+5.50% cash due 1/16/20267.59 %4,479,233 4,432,903 4,468,035 (5)(8)
First Lien Delayed Draw Term Loan, SOFR+5.50% cash due 1/16/2026— — (2,141)(5)(8)(9)
First Lien Revolver, SOFR+5.50% cash due 1/16/20267.59 %25,492 19,586 24,065 (5)(8)(9)
4,452,489 4,489,959 
Acquia Inc.Application Software
First Lien Term Loan, LIBOR+7.00% cash due 10/31/20258.12 %4,381,994 4,333,187 4,360,085 (5)(8)
First Lien Revolver, LIBOR+7.00% cash due 10/31/20259.08 %56,232 50,875 53,889 (5)(8)(9)
4,384,062 4,413,974 
ADB Companies, LLCConstruction & Engineering
First Lien Term Loan, LIBOR+6.25% cash due 12/18/20258.50 %8,362,365 8,223,688 8,224,386 (5)(8)
8,223,688 8,224,386 
AI Sirona (Luxembourg) Acquisition S.a.r.l.Pharmaceuticals
Second Lien Term Loan, EURIBOR+7.25% cash due 9/28/20267.25 %€5,147,000 5,644,386 4,923,552 (5)(8)(10)
5,644,386 4,923,552 
AIP RD Buyer Corp.Distributors
Second Lien Term Loan, SOFR+7.75% cash due 12/23/20299.35 %$3,459,000 3,394,321 3,331,017 (5)(8)
3,460 Common Units in RD Holding LP324,727 310,881 (8)
3,719,048 3,641,898 
Alvogen Pharma US, Inc.Pharmaceuticals
First Lien Term Loan, LIBOR+5.25% cash due 12/31/20237.50 %4,889,596 4,708,121 4,319,959 (5)
4,708,121 4,319,959 
Alvotech Holdings S.A.Biotechnology
Tranche A Fixed Rate Bond 10.00% cash due 6/24/20253,109,198 3,515,170 3,565,356 (8)(10)
Tranche B Fixed Rate Bond 10.00% cash due 6/24/20252,909,948 3,296,570 3,336,873 (8)(10)
79,437 Common Shares in Alvotech SA722,763 652,178 (10)(11)
16,860 Seller Earn Out Shares in Alvotech SA60,045 41,813 (8)(10)(11)
7,594,548 7,596,220 
American Auto Auction Group, LLCConsumer Finance
Second Lien Term Loan, SOFR+8.75% cash due 1/2/202910.80 %2,288,000 2,244,785 2,219,360 (5)(8)
2,244,785 2,219,360 
American Tire Distributors, Inc.Distributors
First Lien Term Loan, LIBOR+6.25% cash due 10/20/20287.00 %5,993,978 5,919,053 5,682,291 (5)
5,919,053 5,682,291 
Amplify Finco Pty Ltd.Movies & Entertainment
First Lien Term Loan, LIBOR+4.25% cash due 11/26/20265.92 %8,015,500 7,776,126 7,821,765 (5)(8)(10)
7,776,126 7,821,765 
Anastasia Parent, LLCPersonal Products
First Lien Term Loan, LIBOR+3.75% cash due 8/11/20256.00 %1,005,452 791,605 806,750 (5)
791,605 806,750 



7
Portfolio Company/Type of Investment (1)(2)(3)  Cash Interest Rate (4) Industry Principal (5)
 Cost Fair Value
Non-Control/Non-Affiliate Investments (6)          
Access CIG, LLC   Diversified support services      
 First Lien Delayed Draw Term Loan, LIBOR+3.75% cash due 2/27/2025 (4)(8)     $—
 $(2,443) $(5,049)
 First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025 (4) 6.46%   1,899,129
 1,880,493
 1,850,473
        1,878,050
 1,845,424
 AI Sirona (Luxembourg) Acquisition S.a.r.l.    Pharmaceuticals      
 Second Lien Term Loan, EURIBOR+7.25% (0% Floor) cash due 7/10/2026 (4)(9) 7.25%   €2,500,000
 2,862,090
 2,825,724
        2,862,090
 2,825,724
Air Medical Group Holdings, Inc.   Healthcare services      
 First Lien Term Loan B, LIBOR+4.25% (1% Floor) cash due 3/14/2025 (4) 6.75%   $1,098,227
 1,072,729
 1,026,057
        1,072,729
 1,026,057
Algeco Scotsman Global Finance Plc   Construction & engineering      
 Fixed Rate Callable Bond 8% cash due 2/15/2023 (9)     1,000,000
 1,024,083
 937,500
        1,024,083
 937,500
 Altice France S.A.    Integrated telecommunication services      
 Fixed Rate Callable Bond 7.75% cash due 5/15/2022 (9)     730,000
 702,210
 667,038
        702,210
 667,038
Alvotech Holdings S.A.   Biotechnology      
 Fixed Rate Bond 15% PIK note due 12/13/2023 (7)(9)     4,000,000
 3,920,504
 3,920,504
        3,920,504
 3,920,504
Assembled Brands Capital LLC   Specialized finance      
82,713.38 Class A Units (7)     —
 82,713
 82,713
63,107.22 Class B Units (7)     —
 —
 —
 First Lien Delayed Draw Term Loan, LIBOR+6% cash due 10/17/2023 (4)(7)(8) 8.80%   88,228
 88,228
 88,228
        170,941
 170,941
Avantor Inc.   Healthcare distributors      
 Fixed Rate Bond 9% cash due 10/1/2025     1,000,000
 1,017,195
 1,002,500
        1,017,195
 1,002,500
 Ball Metalpack Finco, LLC    Metal & glass containers      
 First Lien Term Loan, LIBOR+4.5% due 7/31/2025 (4)(7) 7.02%   1,496,250
 1,485,426
 1,458,919
        1,485,426
 1,458,919
Boxer Parent Company Inc.   Systems software      
 First Lien Term Loan B, LIBOR+4.25% cash due 10/2/2025 (4) 7.05%   1,995,000
 1,973,496
 1,929,235
        1,973,496
 1,929,235
CGG Holding US, Inc.   Oil & gas equipment & services      
 Fixed Rate Callable Bond 9% cash due 5/1/2023 (9)     1,000,000
 1,043,398
 990,000
        1,043,398
 990,000
DigiCert, Inc.   Internet services & infrastructure      
 First Lien Term Loan B, LIBOR+4% cash due 10/31/2024 (4) 6.52%   1,701,750
 1,671,231
 1,671,969
        1,671,231
 1,671,969
DKT Finance APS   Integrated telecommunication services      
 Fixed Rate Callable Bond 9.375% cash due 6/17/2023 (9)     1,000,000
 1,050,710
 1,027,500
        1,050,710
 1,027,500
 EHR Canada, LLC    Food retail      
 First Lien Term Loan, LIBOR+8% (1% Floor) cash due 9/28/2020 (4)(7) 10.80%   1,539,054
 1,512,994
 1,526,742
        1,512,994
 1,526,742
See notes to Consolidated Financial Statements.
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
December 31, 2018June 30, 2022
(unaudited)







Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Ankura Consulting Group LLCResearch & Consulting Services
Second Lien Term Loan, LIBOR+8.00% cash due 3/19/20299.18 %$1,707,376 $1,681,765 $1,536,638 (5)(8)
1,681,765 1,536,638 
Apptio, Inc.Application Software
First Lien Term Loan, LIBOR+6.00% cash due 1/10/20257.25 %7,129,297 7,068,270 6,968,175 (5)(8)
First Lien Revolver, LIBOR+6.00% cash due 1/10/20257.25 %184,615 180,724 174,184 (5)(8)(9)
7,248,994 7,142,359 
Ardonagh Midco 3 PLCInsurance Brokers
First Lien Term Loan, EURIBOR+7.00% cash due 7/14/20268.00 %€1,052,732 1,176,661 1,100,579 (5)(8)(10)
First Lien Term Loan, SONIA+7.00% cash due 7/14/20268.19 %£9,987,149 12,501,398 12,128,893 (5)(8)(10)
13,678,059 13,229,472 
ASP-R-PAC Acquisition Co LLCPaper Packaging
First Lien Term Loan, LIBOR+6.00% cash due 12/29/20277.67 %$3,317,728 3,256,946 3,238,102 (5)(8)(10)
First Lien Revolver, LIBOR+6.00% cash due 12/29/2027— (7,254)(9,503)(5)(8)(9)(10)
3,249,692 3,228,599 
Assembled Brands Capital LLCSpecialized Finance
First Lien Revolver, LIBOR+6.75% cash due 10/17/20239.00 %2,353,872 2,353,872 2,300,538 (5)(8)(9)
174,131 Class A Units82,713 60,946 (8)
100,285 Preferred Units, 6%110,285 130,136 (8)
7,621 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029— — (8)
2,546,870 2,491,620 
Associated Asphalt Partners, LLCConstruction Materials
First Lien Term Loan, LIBOR+5.25% cash due 4/5/20246.92 %904,942 833,056 646,065 (5)
833,056 646,065 
Astra Acquisition Corp.Application Software
First Lien Term Loan, LIBOR+5.25% cash due 10/25/20286.92 %4,326,462 4,215,252 3,782,041 (5)
4,215,252 3,782,041 
athenahealth Group Inc.Health Care Technology
2,888 Shares of Series A Preferred Stock in Minerva Holdco, Inc., 10.75%2,830,529 2,658,288 (8)
2,830,529 2,658,288 
Athenex, Inc.Pharmaceuticals
First Lien Term Loan, 11.00% cash due 6/19/20264,785,629 4,653,759 4,665,989 (8)(10)
First Lien Delayed Draw Term Loan, 11.00% cash due 6/19/2026— (86,693)(156,053)(8)(9)(10)
First Lien Revenue Interest Financing Term Loan due 5/31/20312,348,000 2,334,697 2,334,697 (5)(8)(10)
97,205 Common Stock Warrants (exercise price $0.4955) expiration date 6/19/2027334,386 12,636 (8)(10)
7,236,149 6,857,269 
Aurora Lux Finco S.À.R.L.Airport Services
First Lien Term Loan, LIBOR+6.00% cash due 12/24/20267.63 %7,331,250 7,213,913 6,957,356 (5)(8)(10)
7,213,913 6,957,356 
The AveryReal Estate Operating Companies
First Lien Term Loan in T8 Urban Condo Owner, LLC, LIBOR+7.30% cash due 2/17/20239.09 %4,006,593 3,993,721 4,048,392 (5)(8)
Subordinated Debt in T8 Senior Mezz LLC, LIBOR+12.50% cash due 2/17/202314.53 %967,734 964,812 975,527 (5)(8)
4,958,533 5,023,919 
BAART Programs, Inc.Health Care Services
First Lien Term Loan, LIBOR+5.00% cash due 6/11/20276.67 %1,277,325 1,265,445 1,258,165 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+5.00% cash due 6/11/20276.60 %653,606 643,200 634,851 (5)(8)(9)
Second Lien Term Loan, LIBOR+8.50% cash due 6/11/202810.17 %1,754,000 1,727,690 1,727,690 (5)(8)
Second Lien Delayed Draw Term Loan, LIBOR+8.50% cash due 6/11/202810.17 %868,095 829,767 827,955 (5)(8)(9)
4,466,102 4,448,661 



8
Portfolio Company/Type of Investment (1)(2)(3)  Cash Interest Rate (4) Industry Principal (5)
 Cost Fair Value
 GI Chill Acquisition LLC    Managed healthcare      
 First Lien Term Loan, LIBOR+4% cash due 8/6/2025 (4)(7) 6.80%   $1,995,000
 $1,985,025
 $1,995,000
 Second Lien Term Loan, LIBOR+7.5% cash due 8/6/2026 (4)(7) 10.30%   2,000,000
 1,980,968
 2,000,000
        3,965,993
 3,995,000
GoodRx, Inc.   Interactive media & services      
 Second Lien Term Loan, LIBOR+7.5% cash due 10/12/2026 (4)(7) 9.96%   1,333,333
 1,305,681
 1,326,666
        1,305,681
 1,326,666
 GTT Communications Inc.   Internet services & infrastructure      
 Fixed Rate Callable Bond 7.875% cash due 12/31/2024 (9)     160,000
 152,151
 139,200
        152,151
 139,200
Horizon Pharma, Inc.   Pharmaceuticals      
 Fixed Rate Callable Bond 8.75% cash due 11/1/2024 (9)     1,000,000
 1,058,404
 1,020,000
        1,058,404
 1,020,000
 iCIMs, Inc.   Application software      
 First Lien Term Loan, LIBOR+6.5% (1% Floor) cash due 9/12/2024 (4)(7) 8.94%   1,411,765
 1,384,972
 1,385,000
 First Lien Revolver, LIBOR+6.5% (1% Floor) cash due 9/12/2024 (4)(7)(8)     —
 (1,675) (1,673)
        1,383,297
 1,383,327
 LTI Holdings, Inc.    Auto parts & equipment      
 Second Lien Term Loan, LIBOR+6.75% cash due 9/6/2026 (4) 9.27%   1,000,000
 1,000,000
 933,750
        1,000,000
 933,750
 Maravai Intermediate Holdings, LLC    Biotechnology      
 First Lien Term Loan B, LIBOR+4.25% cash due 8/2/2025 (4)(7) 6.81%   1,296,750
 1,283,783
 1,251,364
        1,283,783
 1,251,364
McAfee, LLC   Systems software      
 First Lien Term Loan B, LIBOR+3.75% (1% Floor) cash due 9/30/2024 (4) 6.27%   881,230
 876,253
 860,300
        876,253
 860,300
 ProFrac Services, LLC    Industrial machinery      
 First Lien Term Loan B, LIBOR+5.75% (1% Floor) cash due 9/15/2023 (4)(7) 8.52%   1,496,250
 1,482,142
 1,466,325
        1,482,142
 1,466,325
 Recorded Books Inc.    Publishing      
 First Lien Term Loan, LIBOR+4.5% cash due 8/29/2025 (4)(7) 7.30%   1,995,000
 1,975,050
 1,972,556
        1,975,050
 1,972,556
Refinitiv Holdings, Inc.   Financial exchanges & data   

 

 First Lien Term Loan B, LIBOR+3.75% cash due 10/1/2025 (4) 6.27%   537,000
 516,863
 513,506
        516,863
 513,506
See notes to Consolidated Financial Statements.
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
December 31, 2018June 30, 2022
(unaudited)







Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Berner Food & Beverage, LLCSoft Drinks
First Lien Term Loan, LIBOR+6.50% cash due 7/30/20277.50 %$8,017,449 $7,898,660 $7,744,855 (5)(8)
First Lien Revolver, PRIME+5.50% cash due 7/30/202610.25 %478,698 468,017 455,511 (5)(8)(9)
8,366,677 8,200,366 
BioXcel Therapeutics, Inc.Pharmaceuticals
First Lien Term Loan, 10.25% cash due 4/19/20271,245,098 1,192,826 1,195,170 (8)(10)
First Lien Delayed Draw Term Loan, 10.25% cash due 4/19/2027— — — (8)(9)(10)
First Lien Revenue Interest Financing Delayed Draw Term Loan due 9/30/2032— — — (5)(8)(9)(10)
4,954 Common Stock Warrants (exercise price $20.04) expiration date 4/19/202929,278 28,188 (8)(10)
1,222,104 1,223,358 
Blumenthal Temecula, LLCAutomotive Retail
First Lien Term Loan, 9.00% cash due 9/24/20231,277,827 1,277,827 1,271,438 (8)
415,294 Preferred Units in Unstoppable Automotive AMV, LLC415,294 411,141 (8)
95,837 Preferred Units in Unstoppable Automotive VMV, LLC95,837 94,879 (8)
95,837 Common Units in Unstoppable Automotive AMV, LLC95,837 119,796 (8)
1,884,795 1,897,254 
Cadence Aerospace, LLCAerospace & Defense
First Lien Term Loan, LIBOR+6.50% cash 2.00% PIK due 11/14/20237.74 %3,180,774 3,151,234 2,921,223 (5)(8)
3,151,234 2,921,223 
CCO Holdings LLCCable & Satellite
Fixed Rate Bond, 4.50% cash due 5/1/2032400,000 334,649 325,234 (10)
334,649 325,234 
CITGO Holding, Inc.Oil & Gas Refining & Marketing
First Lien Term Loan, LIBOR+7.00% cash due 8/1/20238.67 %639,982 629,763 633,115 (5)
629,763 633,115 
CITGO Petroleum Corp.Oil & Gas Refining & Marketing
First Lien Term Loan, LIBOR+6.25% cash due 3/28/20247.92 %5,622,640 5,566,413 5,589,269 (5)
5,566,413 5,589,269 
Clear Channel Outdoor Holdings, Inc.Advertising
Fixed Rate Bond, 5.125% cash due 8/15/2027250,000 218,089 211,744 (10)
218,089 211,744 
Continental Intermodal Group LPOil & Gas Storage & Transportation
First Lien Term Loan, LIBOR+8.50% cash due 1/28/202510.17 %8,198,818 8,198,818 6,972,274 (5)(8)
Common Stock Warrants expiration date 7/28/2025— 171,409 (8)
8,198,818 7,143,683 
Convergeone Holdings, Inc.IT Consulting & Other Services
First Lien Term Loan, LIBOR+5.00% cash due 1/4/20266.67 %5,745,005 5,626,217 4,940,733 (5)
5,626,217 4,940,733 
CorEvitas, LLCHealth Care Technology
First Lien Term Loan, SOFR+5.75% cash due 12/13/20257.38 %5,018,968 4,960,891 4,971,790 (5)(8)
First Lien Revolver, PRIME+4.75% cash due 12/13/20259.50 %111,500 104,765 105,211 (5)(8)(9)
401 Class A2 Common Units in CorEvitas Group Holdings, L.P.251,644 853,635 (8)
5,317,300 5,930,636 
CPC Acquisition Corp.Specialty Chemicals
Second Lien Term Loan, LIBOR+7.75% cash due 12/29/202810.00 %727,000 716,095 648,848 (5)(8)
716,095 648,848 



9
Portfolio Company/Type of Investment (1)(2)(3)  Cash Interest Rate (4) Industry Principal (5)
 Cost Fair Value
Scilex Pharmaceuticals, Inc.   Pharmaceuticals      
 Fixed Rate Zero Coupon Bond cash due 8/15/2026 (7)     $2,400,000
 $1,555,567
 $1,560,000
        1,555,567
 1,560,000
 Sirva Worldwide, Inc.    Diversified support services      
 First Lien Term Loan, LIBOR+5.5% cash due 8/4/2025 (4) 8.06%   2,000,000
 1,970,000
 1,965,000
        1,970,000
 1,965,000
Sorrento Therapeutics, Inc.   Biotechnology      
 First Lien Term Loan, LIBOR+7% (1% Floor) cash due 11/7/2023 (4)(7)(9) 9.81%   8,000,000
 7,379,628
 7,379,628
 First Lien Delayed Draw Term Loan, LIBOR+7% (1% Floor) cash due 11/7/2023 (4)(7)(8)(9)     —
 (38,773) (38,795)
Stock Warrants (exercise price $3.28) expiration date 5/7/2029 (7)(9)       560,000
 447,776
        7,900,855
 7,788,609
 Tullow Oil PLC   Oil & gas exploration & production      
 Fixed Rate Callable Bond 6.25% cash due 04/15/2022 (9)     700,000
 689,047
 677,250
        689,047
 677,250
Uber Technologies, Inc.   Application software      
 First Lien Term Loan, LIBOR+4% (1% Floor) cash due 4/4/2025 (4) 6.39%   988,516
 981,055
 965,657
        981,055
 965,657
UOS, LLC   Trading companies & distributors      
 First Lien Term Loan B, LIBOR+5.5% (1% Floor) cash due 4/18/2023 (4) 8.02%   2,992,405
 3,018,441
 2,992,405
        3,018,441
 2,992,405
US Well Services, LLC   Oil & gas drilling      
Second Lien Delayed Draw Term Loan, LIBOR+7.75% (1% Floor) cash due 5/31/2020 (7) 10.27%   1,066,667
 1,022,946
 1,027,200
Second Lien Incremental Term Loan, LIBOR+7.75% (1% Floor) cash due 5/31/2020 (7)(8)     —
 —
 —
        1,022,946
 1,027,200
Veritas US Inc.   Application software      
 First Lien Term Loan B-1, LIBOR+4.5% (1% Floor) cash due 1/27/2023 (4) 7.09%   338,140
 307,318
 290,680
        307,318
 290,680
 Verscend Holding Corp.    Healthcare technology      
 First Lien Term Loan B, LIBOR+4.5% (1% Floor) cash due 8/27/2025 (4) 7.02%   2,407,965
 2,392,185
 2,335,725
        2,392,185
 2,335,725
WeddingWire, Inc.   Interactive media & services      
 First Lien Term Loan, LIBOR+4.5% cash due 12/19/2025 (4) 7.29%   3,000,000
 2,985,000
 2,955,000
        2,985,000
 2,955,000
 Total Non-Control/Non-Affiliate Investments (88.0% of net assets)       $59,207,088
 $58,419,573
Cash and Cash Equivalents          
Dreyfus Government Cash Management Fund 289, Institutional Shares       $16,000,000
 $16,000,000
Other Cash Accounts       9,340,638
 9,340,638
 Total Cash and Cash Equivalents (38.2% of net assets)       $25,340,638
 $25,340,638
Total Portfolio Investments, Cash and Cash Equivalents (126.2% of net assets)       $84,547,726
 $83,760,211
See notes to Consolidated Financial Statements.

Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
December 31, 2018June 30, 2022
(unaudited)







Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Dialyze Holdings, LLCHealth Care Equipment
First Lien Term Loan, LIBOR+9.00% cash 2.00% PIK due 8/4/202611.25 %$4,462,078 $4,204,743 $4,159,995 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+9.00% cash 2.00% PIK due 8/4/2026— (26,434)(32,231)(5)(8)(9)
993,431 Class A Warrants (exercise price $1.00) expiration date 8/4/2028258,292 248,358 (8)
4,436,601 4,376,122 
Digital.AI Software Holdings, Inc.Application Software
First Lien Term Loan, LIBOR+7.00% cash due 2/10/20278.40 %2,617,831 2,557,433 2,559,191 (5)(8)
First Lien Revolver, LIBOR+6.50% cash due 2/10/20277.90 %66,274 59,721 57,185 (5)(8)(9)
2,617,154 2,616,376 
DirecTV Financing, LLCCable & Satellite
First Lien Term Loan, LIBOR+5.00% cash due 8/2/20276.67 %8,392,500 8,308,575 7,750,851 (5)
8,308,575 7,750,851 
FINThrive Software Intermediate Holdings, Inc.Health Care Technology
Second Lien Term Loan, LIBOR+6.75% cash due 12/17/20298.42 %6,013,000 5,922,805 5,381,635 (5)
5,922,805 5,381,635 
Fortress Biotech, Inc.Biotechnology
First Lien Term Loan, 11.00% cash due 8/27/20252,452,500 2,358,180 2,360,531 (8)(10)(12)
85,811 Common Stock Warrants (exercise price $3.20) expiration date 8/27/203090,960 14,588 (8)(10)
2,449,140 2,375,119 
Gibson Brands, Inc.Leisure Products
First Lien Term Loan, LIBOR+5.00% cash due 8/11/20286.41 %2,487,500 2,467,600 2,126,813 (5)(8)
2,467,600 2,126,813 
Global Medical Response, Inc.Health Care Services
First Lien Term Loan, LIBOR+4.25% cash due 3/14/20255.92 %1,059,480 1,048,752 988,521 (5)
First Lien Term Loan, LIBOR+4.25% cash due 10/2/20255.25 %3,716,701 3,666,879 3,466,994 (5)
4,715,631 4,455,515 
Grove Hotel Parcel Owner, LLCHotels, Resorts & Cruise Lines
First Lien Term Loan, SOFR+8.00% cash due 6/21/20279.45 %3,309,767 3,243,934 3,243,572 (5)(8)
First Lien Delayed Draw Term Loan, SOFR+8.00% cash due 6/21/2027— (13,167)(13,239)(5)(8)(9)
First Lien Revolver, SOFR+8.00% cash due 6/21/2027— (6,583)(6,620)(5)(8)(9)
3,224,184 3,223,713 
Harbor Purchaser Inc.Education Services
First Lien Term Loan, SOFR+5.25% cash due 4/9/20296.88 %5,100,000 4,909,797 4,637,838 (5)
4,909,797 4,637,838 
iCIMs, Inc.Application Software
First Lien Term Loan, LIBOR+6.50% cash due 9/12/20247.72 %2,517,618 2,495,334 2,509,058 (5)(8)
First Lien Revolver, LIBOR+6.50% cash due 9/12/20247.72 %88,235 87,409 87,935 (5)(8)
2,582,743 2,596,993 
Immucor, Inc.Health Care Supplies
First Lien Term Loan, LIBOR+5.75% cash due 7/2/20258.00 %2,324,886 2,296,951 2,278,388 (5)(8)
Second Lien Term Loan, LIBOR+8.00% cash 3.50% PIK due 10/2/202510.25 %6,066,854 5,996,753 5,960,684 (5)(8)
8,293,704 8,239,072 
Impel Neuropharma, Inc.Health Care Technology
First Lien Revenue Interest Financing Term Loan due 2/15/2031948,500 948,500 948,500 (5)(8)
First Lien Term Loan, SOFR+8.75% cash due 3/17/202710.95 %948,500 930,631 931,427 (5)(8)
1,879,131 1,879,927 



10
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
June 30, 2022
(unaudited)






Derivative Instrument Notional Amount to be Purchased Notional Amount to be Sold Maturity Date Counterparty Cumulative Unrealized Appreciation (Depreciation)
Foreign currency forward contract $2,881,172
 €2,475,000
 3/14/2019 Bank of New York Mellon $34,535
Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Indivior Finance S.À.R.L.Pharmaceuticals
First Lien Term Loan, LIBOR+5.25% cash due 6/30/20267.57 %$1,980,000 $1,947,701 $1,933,807 (5)(8)(10)
1,947,701 1,933,807 
Innocoll Pharmaceuticals LimitedHealth Care Technology
First Lien Term Loan, 11.00% cash due 1/26/20271,635,588 1,568,674 1,533,364 (8)(10)
First Lien Delayed Draw Term Loan, 11.00% cash due 1/26/2027— — — (8)(9)(10)
13,676 Tranche A Warrant Shares (exercise price $4.23) expiration date 1/26/202932,275 30,087 (8)(10)
1,600,949 1,563,451 
Inventus Power, Inc.Electrical Components & Equipment
First Lien Term Loan, SOFR+5.00% cash due 3/29/20247.32 %4,525,713 4,499,409 4,378,627 (5)(8)
Second Lien Term Loan, LIBOR+8.50% cash due 9/29/202410.75 %2,750,000 2,714,723 2,633,125 (5)(8)
7,214,132 7,011,752 
INW Manufacturing, LLCPersonal Products
First Lien Term Loan, LIBOR+5.75% cash due 3/25/20278.00 %11,550,000 11,269,423 10,914,750 (5)(8)
11,269,423 10,914,750 
IPC Corp.Application Software
First Lien Term Loan, LIBOR+6.50% cash due 10/1/20267.50 %6,229,786 6,086,118 6,023,580 (5)(8)
6,086,118 6,023,580 
Itafos Inc.Fertilizers & Agricultural Chemicals
First Lien Term Loan, LIBOR+8.25% cash due 8/25/20249.82 %4,114,683 3,996,649 3,971,081 (5)(8)
3,996,649 3,971,081 
Ivanti Software, Inc.Application Software
Second Lien Term Loan, LIBOR+7.25% cash due 12/1/20288.85 %3,692,000 3,673,540 3,390,493 (5)
3,673,540 3,390,493 
Jazz Acquisition, Inc.Aerospace & Defense
First Lien Term Loan, LIBOR+7.50% cash due 1/29/20279.17 %9,437,325 9,227,953 9,459,372 (5)(8)
Second Lien Term Loan, LIBOR+8.00% cash due 6/18/202710.03 %137,300 123,570 125,424 (5)
9,351,523 9,584,796 
Kings Buyer, LLCEnvironmental & Facilities Services
First Lien Term Loan, LIBOR+6.50% cash due 10/29/20278.75 %3,277,071 3,244,301 3,195,145 (5)(8)
First Lien Revolver, LIBOR+6.50% cash due 10/29/20278.75 %158,090 153,611 146,892 (5)(8)(9)
3,397,912 3,342,037 
LaserShip, Inc.Air Freight & Logistics
Second Lien Term Loan, LIBOR+7.50% cash due 5/7/202910.38 %1,150,000 1,138,500 1,089,625 (5)(8)
1,138,500 1,089,625 
Lightbox Intermediate, L.P.Real Estate Services
First Lien Term Loan, LIBOR+5.00% cash due 5/9/20267.25 %8,730,000 8,657,515 8,511,750 (5)(8)
8,657,515 8,511,750 
Liquid Environmental Solutions CorporationEnvironmental & Facilities Services
Second Lien Term Loan, LIBOR+8.50% cash due 11/30/202610.17 %1,046,111 1,027,760 1,014,728 (5)(8)
Second Lien Delayed Draw Term Loan, LIBOR+8.50% cash due 11/30/202610.17 %278,963 273,384 253,856 (5)(8)(9)
1,301,144 1,268,584 
LSL Holdco, LLCHealth Care Distributors
First Lien Term Loan, LIBOR+6.00% cash due 1/31/20287.67 %4,615,633 4,529,682 4,477,164 (5)(8)
First Lien Revolver, LIBOR+6.00% cash due 1/31/20287.67 %205,139 195,589 189,754 (5)(8)(9)
4,725,271 4,666,918 
Marinus Pharmaceuticals, Inc.Pharmaceuticals
First Lien Term Loan, 11.50% cash due 5/11/20264,216,200 4,151,087 4,058,093 (8)(10)
First Lien Delayed Draw Term Loan, 11.50% cash due 5/11/2026— — — (8)(9)(10)
4,151,087 4,058,093 


(1)All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted.
(2)See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition by geographic region.
(3)Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents.
(4)The interest rate on the principal balance outstanding for all floating rate loans is indexed to the London Interbank Offered Rate ("LIBOR") and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate based rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars unless otherwise noted. As of December 31, 2018, the reference rates for our variable rate loans were the 30-day LIBOR at 2.52%, 60-day LIBOR at 2.62%, the 90-day LIBOR at 2.80%, the 180-day LIBOR at 2.88% and the 30-day EURIBOR at (0.41)%.
(5)"€" signifies the investment is denominated in Euros. All other investments are denominated in U.S. dollars.
(6)Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments. Control Investments generally are defined by the Investment Company Act of 1940, as amended ("Investment Company Act"), as investments in companies in which the Company owns more than 25% of the voting securities and/or has the power to exercise control over the management or policies of the company. Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities.
(7)
As of December 31, 2018, these investments are categorized as Level 3 within the fair value hierarchy established by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("ASC 820") and were valued using significant unobservable inputs.
(8)Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
(9)Investment is not a qualifying asset as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of December 31, 2018, qualifying assets represented 75.1% of the Company's total assets and non-qualifying assets represented 24.9% of the Company's total assets.



11
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
June 30, 2022
(unaudited)






Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Mesoblast, Inc.Biotechnology
First Lien Term Loan, 8.00% cash 1.75% PIK due 11/19/2026$1,723,588 $1,579,307 $1,525,375 (8)(10)
First Lien Delayed Draw Term Loan, 8.00% cash 1.75% PIK due 11/19/2026— 323 341 (8)(9)(10)
50,289 Warrant Shares (exercise price $7.26) expiration date 11/19/2028115,162 33,191 (8)(10)
1,694,792 1,558,907 
MHE Intermediate Holdings, LLCDiversified Support Services
First Lien Term Loan, LIBOR+6.00% cash due 7/21/20277.29 %4,609,168 4,532,323 4,494,860 (5)(8)
First Lien Revolver, LIBOR+6.00% cash due 7/21/2027— (6,018)(8,857)(5)(8)(9)
4,526,305 4,486,003 
Mindbody, Inc.Internet Services & Infrastructure
First Lien Term Loan, LIBOR+7.00% cash 1.50% PIK due 2/14/20258.38 %8,664,181 8,582,205 8,499,561 (5)(8)
First Lien Revolver, LIBOR+8.00% cash due 2/14/2025— (6,670)(14,476)(5)(8)(9)
8,575,535 8,485,085 
Mosaic Companies, LLCHome Improvement Retail
First Lien Term Loan, LIBOR+6.75% cash due 7/2/20268.36 %11,450,063 11,266,711 11,232,511 (5)(8)
11,266,711 11,232,511 
MRI Software LLCApplication Software
First Lien Term Loan, LIBOR+5.50% cash due 2/10/20267.75 %7,208,857 7,163,409 7,064,680 (5)(8)
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026— (4,612)(9,224)(5)(8)(9)
7,158,797 7,055,456 
Navisite, LLCData Processing & Outsourced Services
Second Lien Term Loan, LIBOR+8.50% cash due 12/30/202610.75 %7,779,000 7,662,333 7,390,050 (5)(8)
7,662,333 7,390,050 
NeuAG, LLCFertilizers & Agricultural Chemicals
First Lien Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/20247.75 %14,129,954 13,794,224 13,722,249 (5)(8)
13,794,224 13,722,249 
NN, Inc.Industrial Machinery
First Lien Term Loan, LIBOR+6.88% cash due 9/19/20268.54 %14,691,038 14,409,459 14,176,851 (5)(8)(10)
14,409,459 14,176,851 
OEConnection LLCApplication Software
First Lien Term Loan, LIBOR+4.00% cash due 9/25/20265.67 %6,279,551 6,250,789 5,855,682 (5)
Second Lien Term Loan, LIBOR+7.00% cash due 9/25/20278.60 %1,804,000 1,771,275 1,731,840 (5)(8)
8,022,064 7,587,522 
OTG Management, LLCAirport Services
First Lien Term Loan, LIBOR+2.00% cash 8.00% PIK due 9/1/20254.63 %3,403,395 3,352,580 3,335,327 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+2.00% cash 8.00% PIK due 9/1/2025— (4,839)(6,104)(5)(8)(9)
3,347,741 3,329,223 
Park Place Technologies, LLCInternet Services & Infrastructure
First Lien Term Loan, SOFR+5.00% cash due 11/10/20276.63 %4,937,500 4,785,851 4,760,565 (5)
4,785,851 4,760,565 
Performance Health Holdings, Inc.Health Care Distributors
First Lien Term Loan, LIBOR+6.00% cash due 7/12/20278.88 %4,398,925 4,325,161 4,291,591 (5)(8)
4,325,161 4,291,591 
PFNY Holdings, LLCLeisure Facilities
First Lien Term Loan, LIBOR+7.00% cash due 12/31/20268.00 %6,291,262 6,178,657 6,165,437 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+7.00% cash due 12/31/20269.25 %534,596 523,845 522,583 (5)(8)(9)
First Lien Revolver, LIBOR+7.00% cash due 12/31/2026— (5,376)(6,007)(5)(8)(9)
6,697,126 6,682,013 



12
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
June 30, 2022
(unaudited)






Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Planview Parent, Inc.Application Software
Second Lien Term Loan, LIBOR+7.25% cash due 12/18/20288.92 %$9,872,000 $9,723,920 $9,477,120 (5)(8)
9,723,920 9,477,120 
PLNTF Holdings, LLCLeisure Facilities
First Lien Term Loan, LIBOR+8.00% cash due 3/22/202610.10 %686,139 675,873 665,555 (5)(8)
675,873 665,555 
Pluralsight, LLCApplication Software
First Lien Term Loan, LIBOR+8.00% cash due 4/6/20279.00 %15,361,250 15,115,202 14,931,135 (5)(8)
First Lien Revolver, LIBOR+8.00% cash due 4/6/2027— (16,803)(29,622)(5)(8)(9)
15,098,399 14,901,513 
PRGX Global, Inc.Data Processing & Outsourced Services
First Lien Term Loan, LIBOR+6.75% cash due 3/3/20268.95 %8,194,427 8,074,069 8,034,636 (5)(8)
First Lien Revolver, LIBOR+6.75% cash due 3/3/2026— (8,951)(11,883)(5)(8)(9)
19,485 Class B Common Units19,485 21,502 (8)
8,084,603 8,044,255 
Profrac Holdings II, LLCIndustrial Machinery
First Lien Term Loan, SOFR+8.50% cash due 3/4/202510.01 %4,944,977 4,812,735 4,846,077 (5)(8)
4,812,735 4,846,077 
Project Boost Purchaser, LLCApplication Software
Second Lien Term Loan, LIBOR+8.00% cash due 5/31/20279.67 %1,500,000 1,500,000 1,451,250 (5)(8)
1,500,000 1,451,250 
Quantum Bidco LimitedFood Distributors
First Lien Term Loan, SONIA+6.00% cash due 1/29/20287.31 %£1,125,000 1,491,941 1,137,408 (5)(8)(10)
1,491,941 1,137,408 
Radiology Partners, Inc.Health Care Distributors
First Lien Term Loan, LIBOR+4.25% cash due 7/9/20255.89 %$2,100,000 1,975,875 1,893,675 (5)
1,975,875 1,893,675 
Relativity ODA LLCApplication Software
First Lien Term Loan, LIBOR+7.50% PIK due 5/12/20275,900,803 5,790,624 5,759,184 (5)(8)
First Lien Revolver, LIBOR+6.50% cash due 5/12/2027— (11,018)(13,049)(5)(8)(9)
5,779,606 5,746,135 
Renaissance Holding Corp.Diversified Banks
Second Lien Term Loan, LIBOR+7.00% cash due 5/29/20268.67 %1,138,000 1,129,465 1,063,558 (5)
1,129,465 1,063,558 
RP Escrow Issuer LLCHealth Care Distributors
Fixed Rate Bond, 5.25% cash due 12/15/2025306,000 279,653 264,950 
279,653 264,950 
RumbleOn, Inc.Automotive Retail
First Lien Term Loan, LIBOR+8.25% cash due 8/31/20269.25 %9,123,542 8,638,460 8,766,812 (5)(8)(10)
First Lien Delayed Draw Term Loan, LIBOR+8.25% cash due 8/31/20269.25 %2,760,290 2,551,565 2,606,793 (5)(8)(9)(10)
39,794 Class B Common Stock Warrants (exercise price $33.00) expiration date 2/28/2023290,496 18,703 (8)(10)
11,480,521 11,392,308 
Sabert CorporationMetal & Glass Containers
First Lien Term Loan, LIBOR+4.50% cash due 12/10/20266.19 %2,590,677 2,564,770 2,467,619 (5)
2,564,770 2,467,619 
Scilex Pharmaceuticals Inc.Pharmaceuticals
Fixed Rate Zero Coupon Bond due 8/15/2026444,040 399,929 437,379 (8)
399,929 437,379 



13
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
June 30, 2022
(unaudited)






Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
SiO2 Medical Products, Inc.Metal & Glass Containers
First Lien Term Loan, 5.50% cash 8.50% PIK due 12/21/2026$6,545,193 $6,430,125 $6,428,034 (8)(12)
Common Stock Warrants (exercise price $0.75) expiration date 7/31/2028123,557 123,557 (8)
6,553,682 6,551,591 
SM Wellness Holdings, Inc.Health Care Services
Second Lien Term Loan, LIBOR+8.00% cash due 4/16/20299.04 %2,925,000 2,881,125 2,866,500 (5)(8)
2,881,125 2,866,500 
Sorenson Communications, LLCCommunications Equipment
First Lien Term Loan, LIBOR+5.50% cash due 3/17/20267.75 %4,371,500 4,327,785 4,286,802 (5)
4,327,785 4,286,802 
Sorrento Therapeutics, Inc.Biotechnology
16,000 Common Stock Units63,040 32,160 (10)
63,040 32,160 
SPX Flow, Inc.Industrial Machinery
First Lien Term Loan, SOFR+4.50% cash due 4/5/20296.13 %1,490,683 1,420,360 1,393,043 (5)
1,420,360 1,393,043 
SumUp Holdings Luxembourg S.À.R.L.Other Diversified Financial Services
First Lien Term Loan, EURIBOR+8.50% cash due 3/10/202610.00 %€6,820,000 7,959,220 6,931,043 (5)(8)(10)
7,959,220 6,931,043 
Sunland Asphalt & Construction, LLCConstruction & Engineering
First Lien Term Loan, LIBOR+6.00% cash due 1/13/20268.88 %$11,632,389 11,467,695 11,376,476 (5)(8)
11,467,695 11,376,476 
Supermoose Borrower, LLCApplication Software
First Lien Term Loan, LIBOR+3.75% cash due 8/29/20256.00 %2,872,535 2,663,364 2,608,176 (5)
2,663,364 2,608,176 
SVP-Singer Holdings Inc.Home Furnishings
First Lien Term Loan, LIBOR+6.75% cash due 7/28/20289.00 %5,033,960 4,726,358 4,546,320 (5)(8)
4,726,358 4,546,320 
Tacala, LLCRestaurants
Second Lien Term Loan, LIBOR+7.50% cash due 2/4/20289.17 %3,394,977 3,353,116 3,185,626 (5)
3,353,116 3,185,626 
Tahoe Bidco B.V.Application Software
First Lien Term Loan, LIBOR+6.00% cash due 9/29/20287.12 %5,611,000 5,510,495 5,521,224 (5)(8)(10)
First Lien Revolver, LIBOR+6.00% cash due 10/1/2027— (7,391)(7,154)(5)(8)(9)(10)
5,503,104 5,514,070 
Tecta America Corp.Construction & Engineering
Second Lien Term Loan, LIBOR+8.50% cash due 4/9/202910.17 %1,671,000 1,645,935 1,637,580 (5)(8)
1,645,935 1,637,580 
Telestream Holdings CorporationApplication Software
First Lien Term Loan, SOFR+9.25% cash due 10/15/202510.59 %5,235,275 5,170,202 5,125,334 (5)(8)
First Lien Revolver, SOFR+9.25% cash due 10/15/202510.59 %200,400 193,726 189,879 (5)(8)(9)
5,363,928 5,315,213 



14
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
June 30, 2022
(unaudited)






Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
TerSera Therapeutics LLCPharmaceuticals
Second Lien Term Loan, LIBOR+10.00% cash due 3/30/202612.25 %$6,100,000 $5,976,617 $6,034,730 (5)(8)
5,976,617 6,034,730 
Thrasio, LLCInternet & Direct Marketing Retail
First Lien Term Loan, LIBOR+7.00% cash due 12/18/20269.25 %9,722,338 9,537,133 9,382,056 (5)(8)
2,182 Shares of Series C-3 Preferred Stock in Thrasio Holdings, Inc.26,665 32,163 (8)
73,648 Shares of Series C-2 Preferred Stock in Thrasio Holdings, Inc.600,000 1,085,575 (8)
12,510 Shares of Series D Preferred Stock in Thrasio Holdings, Inc.253,328 253,328 (8)
6,000 Shares of Series X Preferred Stock in Thrasio Holdings, Inc.6,000,300 6,849,942 (8)(9)
16,417,426 17,603,064 
Touchstone Acquisition, Inc.Health Care Supplies
First Lien Term Loan, LIBOR+6.00% cash due 12/29/20287.67 %5,788,493 5,680,377 5,614,838 (5)(8)
5,680,377 5,614,838 
Veritas US Inc.Application Software
First Lien Term Loan, LIBOR+5.00% cash due 9/1/20257.25 %7,344,642 7,250,715 6,065,426 (5)
7,250,715 6,065,426 
Virgin Pulse, Inc.Application Software
Second Lien Term Loan, LIBOR+7.25% cash due 4/6/20298.92 %1,540,000 1,524,600 1,328,250 (5)
1,524,600 1,328,250 
Win Brands Group LLCHousewares & Specialties
First Lien Term Loan, LIBOR+9.00% cash 5.00% PIK due 1/22/202612.00 %1,100,124 1,089,554 1,089,122 (5)(8)
62 Class F Warrants in Brand Value Growth LLC (exercise price $0.01) expiration date 1/25/2027— 67,400 (8)
1,089,554 1,156,522 
Windstream Services II, LLCIntegrated Telecommunication Services
First Lien Term Loan, LIBOR+6.25% cash due 9/21/20277.92 %9,945,414 9,647,987 9,343,717 (5)
9,647,987 9,343,717 
WP CPP Holdings, LLCAerospace & Defense
First Lien Term Loan, LIBOR+3.75% cash due 4/30/20254.99 %6,357,045 6,097,242 5,342,206 (5)
6,097,242 5,342,206 
WPEngine, Inc.Application Software
First Lien Term Loan, LIBOR+6.00% cash due 3/27/20267.50 %14,623,000 14,395,246 14,450,054 (5)(8)
14,395,246 14,450,054 
WWEX Uni Topco Holdings, LLCAir Freight & Logistics
First Lien Term Loan, LIBOR+4.00% cash due 7/26/20285.46 %997,494 936,397 911,360 (5)
936,397 911,360 
Zayo Group Holdings, Inc.Alternative Carriers
First Lien Term Loan, LIBOR+3.00% cash due 3/9/20274.67 %1,000,000 942,801 897,778 (5)
Fixed Rate Bond, 4.00% cash due 3/1/2027150,000 125,880 124,718 
1,068,681 1,022,496 
Zephyr Bidco LimitedSpecialized Finance
Second Lien Term Loan, SONIA+7.50% cash due 7/23/20268.72 %£2,000,000 2,592,781 2,171,837 (5)(8)(10)
2,592,781 2,171,837 
 Total Non-Control/Non-Affiliate Investments (174.2% of net assets)$580,967,818 $566,675,653 
 Cash and Cash Equivalents and Restricted Cash (9.5% of net assets)$30,990,696 $30,990,696 
Total Portfolio Investments, Cash and Cash Equivalents and Restricted Cash (183.7% of net assets)$611,958,514 $597,666,349 



15
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
June 30, 2022
(unaudited)






Derivative InstrumentNotional Amount to be PurchasedNotional Amount to be SoldMaturity DateCounterpartyCumulative Unrealized Appreciation (Depreciation)
Foreign currency forward contract$13,453,877 €12,710,431 8/11/2022Bank of New York Mellon$129,570 
Foreign currency forward contract$15,497,227 £12,568,533 8/11/2022Bank of New York Mellon$222,471 
$352,041 


(1)All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted.
(2)See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition by geographic region.
(3)Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents.
(4)Each of the Company's investments is pledged as collateral under one or more of its credit facilities. A single investment may be divided into parts that are individually pledged as collateral to separate credit facilities.
(5)The interest rate on the principal balance outstanding for most of the floating rate loans is indexed to the London Interbank Offered Rate ("LIBOR") and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. Certain loans may also be indexed to the secured overnight financing rate ("SOFR") or the sterling overnight index average ("SONIA"). The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over the reference rates based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars unless otherwise noted. As of June 30, 2022, the reference rates for the Company's variable rate loans were the 30-day LIBOR at 1.67%, the 90-day LIBOR at 2.25%, the 180-day LIBOR at 2.88%, the 360-day LIBOR at 3.61%, the PRIME at 4.75%, the 30-day SOFR at 1.53%, the 90-day SOFR at 2.05%, the SONIA at 1.19%, the 30-day EURIBOR at (0.54)%, the 90-day EURIBOR at (0.30)% and the 180-day EURIBOR at (0.38)%. Most loans include an interest floor, which generally ranges from 0% to 1%. SOFR and SONIA based contracts may include a credit spread adjustment that is charged in addition to the base rate and the stated spread.
(6)Principal includes accumulated payment in kind ("PIK") interest and is net of repayments, if any. "€" signifies the investment is denominated in Euros. “£” signifies the investment is denominated in British Pounds. All other investments are denominated in U.S. dollars.
(7)Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments. Control Investments generally are defined by the Investment Company Act of 1940, as amended (the "Investment Company Act"), as investments in companies in which the Company owns more than 25% of the voting securities and/or has the power to exercise control over the management or policies of the company. Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities.
(8)As of June 30, 2022, these investments are categorized as Level 3 within the fair value hierarchy established by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("ASC 820") and were valued using significant unobservable inputs.
(9)Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
(10)Investment is not a qualifying asset as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of June 30, 2022, qualifying assets represented 80.6% of the Company's total assets and non-qualifying assets represented 19.4% of the Company's total assets.
(11)One half of the Seller Earn Out Shares will vest if, at any time through June 16, 2027, the Alvotech SA common share price is at or above a volume weighted average price ("VWAP") of $15.00 per share for any ten trading days within any twenty trading day period, and the other half will vest, if at any time during such period, the common share price is at or above a VWAP of $20.00 per share for any ten trading days within any twenty trading day period.
(12)The sale of all or a portion of this investment did not qualify for sale accounting under FASB ASC Topic 860, Transfers and Servicing ("ASC 860"), and therefore the investment remains on the Company's Consolidated Schedule of Investments as of June 30, 2022. See "Secured Borrowings" in Note 6 in the Consolidated Financial Statements for further details.

See notes to Consolidated Financial Statements.




16
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
September 30, 20182021


Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Non-Control/Non-Affiliate Investments(7)
109 Montgomery Owner LLCReal Estate Operating Companies
First Lien Delayed Draw Term Loan, LIBOR+7.00% cash due 2/2/20237.50 %$750,674 $725,811 $763,057 (5)(8)(9)
725,811 763,057 
A.T. Holdings II SÀRLBiotechnology
First Lien Term Loan, 9.50% cash due 12/22/202212,812,000 12,733,548 12,747,940 (8)(10)
12,733,548 12,747,940 
Accupac, Inc.Personal Products
First Lien Term Loan, LIBOR+6.00% cash due 1/17/20267.00 %4,513,601 4,457,062 4,513,600 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 1/17/2026— (10,729)— (5)(8)(9)
First Lien Revolver, LIBOR+6.00% cash due 1/17/20267.00 %513,907 506,754 513,907 (5)(8)(9)
4,953,087 5,027,507 
Acquia Inc.Application Software
First Lien Term Loan, LIBOR+7.00% cash due 10/31/20258.00 %4,381,994 4,322,248 4,373,230 (5)(8)
First Lien Revolver, LIBOR+7.00% cash due 10/31/20258.00 %37,488 30,931 36,551 (5)(8)(9)
4,353,179 4,409,781 
ADB Companies, LLCConstruction & Engineering
First Lien Term Loan, LIBOR+6.25% cash due 12/18/20257.25 %7,716,667 7,551,815 7,628,697 (5)(8)
7,551,815 7,628,697 
AI Sirona (Luxembourg) Acquisition S.a.r.l.Pharmaceuticals
Second Lien Term Loan, EURIBOR+7.25% cash due 9/28/20267.25 %€5,147,000 5,634,400 5,955,154 (5)(8)(10)
5,634,400 5,955,154 
Alvogen Pharma US, Inc.Pharmaceuticals
First Lien Term Loan, LIBOR+5.25% cash due 12/31/20236.25 %$5,082,606 4,799,993 4,920,090 (5)
4,799,993 4,920,090 
Alvotech Holdings S.A.Biotechnology
Fixed Rate Bond 15% PIK Tranche A due 6/24/20253,109,198 3,047,984 3,109,198 (8)(10)(11)
Fixed Rate Bond 15% PIK Tranche B due 6/24/20252,909,948 2,860,464 2,909,948 (8)(10)(11)
3,690 Common Shares854,309 854,309 (8)(10)
6,762,757 6,873,455 
Amplify Finco Pty Ltd.Movies & Entertainment
First Lien Term Loan, LIBOR+4.25% cash due 11/26/20265.00 %8,077,000 7,804,890 7,871,723 (5)(8)(10)
7,804,890 7,871,723 
Anastasia Parent, LLCPersonal Products
First Lien Term Loan, LIBOR+3.75% cash due 8/11/20253.88 %1,823,712 1,445,347 1,549,015 (5)
1,445,347 1,549,015 
Ankura Consulting Group LLCResearch & Consulting Services
Second Lien Term Loan, LIBOR+8.00% cash due 3/19/20298.75 %2,398,000 2,362,030 2,442,962 (5)(8)
2,362,030 2,442,962 
Apptio, Inc.Application Software
First Lien Term Loan, LIBOR+7.25% cash due 1/10/20258.25 %7,129,297 7,050,240 7,018,308 (5)(8)
First Lien Revolver, LIBOR+7.25% cash due 1/10/20258.25 %184,615 179,575 177,430 (5)(8)(9)
7,229,815 7,195,738 
Ardonagh Midco 3 PLCInsurance Brokers
First Lien Term Loan, EURIBOR+7.25 cash due 7/14/20268.25 %€1,052,732 1,173,350 1,223,724 (5)(8)(10)
First Lien Term Loan, UK LIBOR+7.25% cash due 7/14/20268.00 %£9,987,149 12,450,863 13,573,902 (5)(8)(10)
13,624,213 14,797,626 



17
Portfolio Company/Type of Investment (1)(2)(3)  Cash Interest Rate (4) Industry Principal (5)
 Cost Fair Value
Non-Control/Non-Affiliate Investments (6)          
 AI Sirona (Luxembourg) Acquisition S.a.r.l    Pharmaceuticals      
 Second Lien Term Loan, EURIBOR+7.25% (0% Floor) cash due 7/10/2026 (4)(9) 7.25%   €2,500,000
 $2,862,090
 $2,889,231
        2,862,090
 2,889,231
 Altice France S.A.    Integrated telecommunication services      
 Fixed Rate Callable Bond 7.75% cash due 5/15/2022 (9)     $465,000
 445,977
 454,305
 Fixed Rate Callable Bond 7.75% cash due 5/15/2022 (9)     265,000
 254,400
 258,905
        700,377
 713,210
 Ball Metalpack Finco, LLC    Metal & glass containers      
 First Lien Term Loan B, LIBOR+4.5% due 7/31/2025 (4) 6.74%   1,496,250
 1,488,884
 1,514,018
        1,488,884
 1,514,018
 EHR Canada, LLC    Food retail      
 First Lien Term Loan, LIBOR+8% (1% Floor) cash due 9/28/2020 (4)(7) 10.30%   1,500,000
 1,470,123
 1,470,000
        1,470,123
 1,470,000
 GI Chill Acquisition LLC    Managed healthcare      
 First Lien Term Loan, LIBOR+4% cash due 8/6/2025 (4)(7) 6.39%   2,000,000
 1,990,000
 2,012,500
 Second Lien Term Loan, LIBOR+7.5% cash due 8/6/2026 (4)(7) 9.68%   2,000,000
 1,980,329
 1,980,000
        3,970,329
 3,992,500
 GTT Communications Inc.   Internet services & infrastructure      
 Fixed Rate Callable Bond 7.875% cash due 12/31/2024 (9)     266,000
 252,625
 260,015
        252,625
 260,015
 iCIMs, Inc.   Application software      
 First Lien Term Loan, LIBOR+6.5% (1% Floor) cash due 9/12/2024 (4)(7) 8.64%   1,411,765
 1,383,774
 1,383,529
 First Lien Revolver, LIBOR+6.5% (1% Floor) cash due 9/12/2024 (4)(7)(8)       (1,749) (1,765)
        1,382,025
 1,381,764
 LTI Holdings, Inc.    Auto parts & equipment      
 Second Lien Term Loan, LIBOR+6.75% cash due 9/6/2026 (4) 8.99%   1,000,000
 1,000,000
 1,002,710
        1,000,000
 1,002,710
 Maravai Intermediate Holdings, LLC    Biotechnology      
 First Lien Term Loan, LIBOR+4.25% cash due 8/2/2025 (4)(7) 6.38%   1,300,000
 1,287,000
 1,295,938
        1,287,000
 1,295,938
 ProFrac Services, LLC    Industrial machinery      
 First Lien Term Loan B, LIBOR+5.75% (1% Floor) cash due 9/15/2023 (4)(7) 8.07%   1,500,000
 1,485,091
 1,492,500
        1,485,091
 1,492,500
 Recorded Books Inc.    Publishing      
 First Lien Term Loan, LIBOR+4.5% cash due 8/29/2025 (4)(7) 6.89%   2,000,000
 1,980,000
 2,022,500
        1,980,000
 2,022,500
 Scilex Pharmaceuticals Inc.    Pharmaceuticals      
 Fixed Rate Zero Coupon Bond due 8/15/2026 (7)     2,400,000
 1,500,000
 1,500,000
        1,500,000
 1,500,000
 Sequa Mezzanine Holdings, LLC    Aerospace & defense      
 First Lien Term Loan B, LIBOR+5% (1% Floor) cash due 11/28/2021 (4) 7.19%   1,496,212
 1,484,303
 1,474,390
        1,484,303
 1,474,390
See notes to Consolidated Financial Statements.
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
September 30, 20182021


Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Assembled Brands Capital LLCSpecialized Finance
First Lien Revolver, LIBOR+6.00% cash due 10/17/20237.00 %$1,720,438 $1,720,438 $1,700,145 (5)(8)(9)
174,131 Class A Units82,713 63,558 (8)
100,285 Preferred Units, 6%110,285 124,622 (8)
7,621 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029— — (8)
1,913,436 1,888,325 
Associated Asphalt Partners, LLCConstruction Materials
First Lien Term Loan, LIBOR+5.25% cash due 4/5/20246.25 %913,116 809,832 847,865 (5)
809,832 847,865 
Athenex, Inc.Pharmaceuticals
First Lien Term Loan, 11.00% cash due 6/19/202612,484,249 12,075,426 12,395,611 (8)(10)
First Lien Delayed Draw Term Loan, 11.00% cash due 6/19/2026— (86,693)(44,319)(8)(9)(10)
97,205 Common Stock Warrants (exercise price $12.63) expiration date 6/19/2027334,385 28,189 (8)(10)
12,323,118 12,379,481 
Aurora Lux Finco S.À.R.L.Airport Services
First Lien Term Loan, LIBOR+6.00% cash due 12/24/20267.00 %7,387,500 7,249,544 6,951,637 (5)(8)(10)
7,249,544 6,951,637 
The AveryReal Estate Operating Companies
First Lien Delayed Draw Term Loan in T8 Urban Condo Owner, LLC, LIBOR+7.30% cash due 2/17/20237.55 %5,120,365 5,081,993 5,171,494 (5)(8)(9)
Subordinated Delayed Draw Debt in T8 Senior Mezz LLC, LIBOR+12.50% cash due 2/17/202312.75 %1,184,147 1,175,581 1,185,820 (5)(8)(9)
6,257,574 6,357,314 
BAART Programs, Inc.Health Care Services
First Lien Term Loan, LIBOR+5.00% cash due 6/11/20276.00 %1,197,000 1,185,030 1,194,008 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+5.00% cash due 6/11/20276.00 %90,000 87,103 89,250 (5)(8)(9)
Second Lien Term Loan, LIBOR+8.50% cash due 6/11/20289.50 %1,754,000 1,727,690 1,745,230 (5)(8)
Second Lien Delayed Draw Term Loan, LIBOR+8.50% cash due 6/11/2028— (12,769)(4,385)(5)(8)(9)
2,987,054 3,024,103 
Berner Food & Beverage, LLCSoft Drinks
First Lien Term Loan, LIBOR+6.50% cash due 7/30/20277.50 %8,078,034 7,940,733 7,940,707 (5)(8)
First Lien Revolver, LIBOR+6.50% cash due 7/30/20277.50 %149,593 136,880 136,878 (5)(8)(9)
8,077,613 8,077,585 
Blumenthal Temecula, LLCAutomotive Retail
First Lien Term Loan, 9.00% cash due 9/24/20231,277,827 1,277,827 1,277,827 (8)
415,294 Preferred Units in Unstoppable Automotive AMV, LLC415,294 415,294 (8)
95,837 Preferred Units in Unstoppable Automotive VMV, LLC95,837 95,837 (8)
95,837 Common Units in Unstoppable Automotive AMV, LLC95,837 95,837 (8)
31,946 Common Units in Unstoppable Automotive VMV, LLC31,946 31,946 (8)
1,916,741 1,916,741 
Cadence Aerospace, LLCAerospace & Defense
First Lien Term Loan, LIBOR+6.50% cash 2.00% PIK due 11/14/20237.50 %3,155,766 3,125,999 2,898,255 (5)(8)
3,125,999 2,898,255 
Chief Power Finance II, LLCIndependent Power Producers & Energy Traders
First Lien Term Loan, LIBOR+6.50% cash due 12/31/20227.50 %7,650,000 7,574,559 7,554,375 (5)(8)
7,574,559 7,554,375 



18
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
September 30, 2021

Portfolio Company/Type of Investment (1)(2)(3)  Cash Interest Rate (4) Industry Principal (5)
 Cost Fair Value
 Sirva Worldwide, Inc.    Diversified support services      
 First Lien Term Loan, LIBOR+5.5% cash due 8/4/2025 (4) 7.75%   $2,000,000
 $1,970,000
 $2,007,500
        1,970,000
 2,007,500
 Tullow Oil PLC   Oil & gas exploration & production      
 Fixed Rate Callable Bond 6.25% cash due 04/15/2022 (9)     700,000
 688,282
 701,015
        688,282
 701,015
 Verscend Holding Corp.    Healthcare technology      
 First Lien Term Loan B, LIBOR+4.5% cash due 8/27/2025 (4) 6.74%   1,500,000
 1,488,750
 1,515,315
        1,488,750
 1,515,315
 Total Non-Control/Non-Affiliate Investments (83.1% of net assets)       $25,009,879
 $25,232,606
Cash and Cash Equivalents       $10,131,268
 $10,131,268
 Total Cash and Cash Equivalents (33.4% of net assets)       $10,131,268
 $10,131,268
Total Portfolio Investments, Cash and Cash Equivalents (116.4% of net assets)       $35,141,147
 $35,363,874
Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
CITGO Holding, Inc.Oil & Gas Refining & Marketing
First Lien Term Loan, LIBOR+7.00% cash due 8/1/20238.00 %$649,713 $632,186 $642,891 (5)
632,186 642,891 
CITGO Petroleum Corp.Oil & Gas Refining & Marketing
First Lien Term Loan, LIBOR+6.25% cash due 3/28/20247.25 %7,110,606 7,039,500 7,134,320 (5)
7,039,500 7,134,320 
Continental Intermodal Group LPOil & Gas Storage & Transportation
First Lien Term Loan, LIBOR+9.50% PIK due 1/28/20259,902,357 9,902,357 8,311,048 (5)(8)
Common Stock Warrants expiration date 7/28/2025— 486,258 (8)
9,902,357 8,797,306 
Convergeone Holdings, Inc.IT Consulting & Other Services
First Lien Term Loan, LIBOR+5.00% cash due 1/4/20265.08 %5,789,540 5,644,359 5,772,258 (5)
5,644,359 5,772,258 
CorEvitas, LLCHealth Care Services
First Lien Term Loan, LIBOR+5.50% cash due 12/13/20256.50 %3,722,865 3,677,272 3,691,221 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 12/13/20256.50 %709,056 693,504 697,725 (5)(8)(9)
First Lien Revolver, PRIME+4.50% cash due 12/13/20257.75 %111,500 103,307 105,814 (5)(8)(9)
401 Class A2 Common Units in CorEvitas Group Holdings, L.P.378,610 429,503 (8)
4,852,693 4,924,263 
Coty Inc.Personal Products
First Lien Revolver, LIBOR+1.75% cash due 4/5/2023— (457,344)(254,080)(5)(8)(9)(10)
(457,344)(254,080)
CPC Acquisition Corp.Specialty Chemicals
Second Lien Term Loan, LIBOR+7.75% cash due 12/29/20288.50 %727,000 716,095 732,453 (5)
716,095 732,453 
Curium Bidco S.à.r.l.Biotechnology
Second Lien Term Loan, LIBOR+7.75% cash due 10/27/20288.50 %3,788,000 3,731,180 3,851,941 (5)(8)(10)
3,731,180 3,851,941 
Dialyze Holdings, LLCHealth Care Equipment
First Lien Term Loan, LIBOR+7.00% cash 2.00% PIK due 8/4/20268.00 %4,429,232 4,124,905 4,130,258 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+7.00% cash 2.00% PIK due 8/4/2026— (31,261)(29,961)(5)(8)(9)
993,431 Class A Warrants (exercise price $1.00) expiration date 8/4/2028258,292 268,226 (8)
4,351,936 4,368,523 
Digital.AI Software Holdings, Inc.Application Software
First Lien Term Loan, LIBOR+7.00% cash due 2/10/20278.00 %2,637,713 2,566,997 2,579,683 (5)(8)
First Lien Revolver, LIBOR+7.00% cash due 2/10/20278.00 %47,339 39,724 41,090 (5)(8)(9)
2,606,721 2,620,773 
DirecTV Financing, LLCCable & Satellite
First Lien Term Loan, LIBOR+5.00% cash due 8/2/20275.75 %9,000,000 8,910,000 9,015,930 (5)
8,910,000 9,015,930 
EHR Canada, LLCFood Retail
First Lien Term Loan, LIBOR+8.00% cash due 12/31/20219.00 %250,000 249,637 250,000 (5)(8)
249,637 250,000 
Enviva Holdings, LPForest Products
First Lien Term Loan, LIBOR+5.50% cash due 2/17/20266.50 %1,959,339 1,939,746 1,964,238 (5)(8)(10)
1,939,746 1,964,238 



19
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
September 30, 2021

Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Fortress Biotech, Inc.Biotechnology
First Lien Term Loan, 11.00% cash due 8/27/2025$2,943,000 $2,803,017 $2,869,425 (8)(10)(12)
85,811 Common Stock Warrants (exercise price $3.20) expiration date 8/27/203090,960 88,385 (8)(10)
2,893,977 2,957,810 
GI Chill Acquisition LLCManaged Health Care
First Lien Term Loan, LIBOR+3.75% cash due 8/6/20253.90 %1,940,000 1,930,300 1,935,150 (5)(8)
Second Lien Term Loan, LIBOR+7.50% cash due 8/6/20267.63 %2,000,000 1,987,852 1,990,000 (5)(8)
3,918,152 3,925,150 
Gibson Brands, Inc.Leisure Products
First Lien Term Loan, LIBOR+5.00% cash due 8/11/20285.75 %1,500,000 1,485,000 1,492,500 (5)
1,485,000 1,492,500 
Global Medical Response, Inc.Health Care Services
First Lien Term Loan, LIBOR+4.25% cash due 3/14/20255.25 %1,067,720 1,053,918 1,073,192 (5)
First Lien Term Loan, LIBOR+4.75% cash due 10/2/20255.75 %3,745,001 3,683,273 3,764,194 (5)
4,737,191 4,837,386 
Grab Holdings Inc.Interactive Media & Services
First Lien Term Loan, LIBOR+4.50% cash due 1/29/20265.50 %3,980,000 3,876,279 4,033,053 (5)(10)
3,876,279 4,033,053 
Gulf Operating, LLCOil & Gas Storage & Transportation
First Lien Revolver, LIBOR+4.00% cash due 12/27/2021— (242,900)(26,025)(5)(8)(9)
(242,900)(26,025)
iCIMs, Inc.Application Software
First Lien Term Loan, LIBOR+6.50% cash due 9/12/20247.50 %2,517,618 2,487,768 2,506,876 (5)(8)
First Lien Revolver, LIBOR+6.50% cash due 9/12/20247.50 %88,235 87,128 87,859 (5)(8)
2,574,896 2,594,735 
Immucor, Inc.Health Care Supplies
First Lien Term Loan, LIBOR+5.75% cash due 7/2/20256.75 %2,342,678 2,307,525 2,319,251 (5)(8)
Second Lien Term Loan, LIBOR+8.00% cash 3.50% PIK due 10/2/20259.00 %5,908,637 5,822,441 5,849,551 (5)(8)
8,129,966 8,168,802 
Indivior Finance S.À.R.L.Pharmaceuticals
First Lien Term Loan, LIBOR+5.25% cash due 6/30/20266.00 %1,995,000 1,956,371 1,988,347 (5)(10)
1,956,371 1,988,347 
Intelsat Jackson Holdings S.A.Alternative Carriers
First Lien Term Loan, PRIME+4.75% cash due 11/27/20238.00 %986,227 964,264 1,001,020 (5)(10)
964,264 1,001,020 
Inventus Power, Inc.Electrical Components & Equipment
First Lien Term Loan, LIBOR+5.00% cash due 3/29/20246.00 %4,560,085 4,522,223 4,525,884 (5)(8)
Second Lien Term Loan, LIBOR+8.50% cash due 9/29/20249.50 %2,750,000 2,702,992 2,701,875 (5)(8)
7,225,215 7,227,759 
INW Manufacturing, LLCPersonal Products
First Lien Term Loan, LIBOR+5.75% cash due 5/7/20276.50 %11,850,000 11,516,219 11,613,000 (5)(8)
11,516,219 11,613,000 
Itafos Inc.Fertilizers & Agricultural Chemicals
First Lien Term Loan, LIBOR+8.25% cash due 8/25/20249.25 %5,442,000 5,231,669 5,235,204 (5)(8)
5,231,669 5,235,204 
Ivanti Software, Inc.Application Software
Second Lien Term Loan, LIBOR+8.50% cash due 12/1/20289.50 %7,975,000 7,753,202 7,984,969 (5)(8)
7,753,202 7,984,969 
Jazz Acquisition, Inc.Aerospace & Defense
First Lien Term Loan, LIBOR+7.50% cash due 1/29/20278.50 %9,509,160 9,263,766 9,490,379 (5)(8)(12)
9,263,766 9,490,379 
Latam Airlines Group S.A.Airlines
First Lien Delayed Draw Term Loan, LIBOR+11.00% PIK due 3/29/20224,208,032 4,169,586 4,238,488 (5)(8)(9)(10)
4,169,586 4,238,488 



20
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
September 30, 2021

Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Lightbox Intermediate, L.P.Real Estate Services
First Lien Term Loan, LIBOR+5.00% cash due 5/9/20265.13 %$8,797,500 $8,710,292 $8,753,513 (5)(8)
8,710,292 8,753,513 
Lightstone Holdco LLCElectric Utilities
First Lien Term Loan, LIBOR+3.75% cash due 1/30/20244.75 %1,902,000 1,641,216 1,578,793 (5)
1,641,216 1,578,793 
LTI Holdings, Inc.Electronic Components
Second Lien Term Loan, LIBOR+6.75% cash due 9/6/20266.83 %1,396,000 1,375,156 1,394,255 (5)
1,375,156 1,394,255 
Maravai Intermediate Holdings, LLCBiotechnology
First Lien Term Loan, LIBOR+3.75% cash due 10/19/20274.75 %5,909,583 5,850,488 5,933,606 (5)
5,850,488 5,933,606 
Marinus Pharmaceuticals, Inc.Pharmaceuticals
First Lien Term Loan, 11.50% cash due 5/11/20262,529,720 2,483,088 2,491,774 (8)(10)
First Lien Delayed Draw Term Loan, 11.50% cash due 5/11/2026— — — (8)(9)(10)
2,483,088 2,491,774 
MedAssets Software Intermediate Holdings, Inc.Health Care Technology
Second Lien Term Loan, LIBOR+7.75% cash due 1/29/20298.50 %4,874,000 4,784,294 4,813,075 (5)(8)
4,784,294 4,813,075 
MHE Intermediate Holdings, LLCDiversified Support Services
First Lien Term Loan, LIBOR+5.75% cash due 7/21/20276.75 %4,107,143 4,027,699 4,025,000 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+5.75% cash due 7/21/20276.75 %26,429 20,807 20,807 (5)(8)(9)
First Lien Revolver, LIBOR+5.75% cash due 7/21/2027— (6,908)(7,143)(5)(8)(9)
4,041,598 4,038,664 
Mindbody, Inc.Internet Services & Infrastructure
First Lien Term Loan, LIBOR+7.00% cash 1.50% PIK due 2/14/20258.00 %7,385,581 7,304,181 7,245,255 (5)(8)
First Lien Revolver, LIBOR+8.00% cash due 2/14/2025— (8,568)(14,476)(5)(8)(9)
7,295,613 7,230,779 
Mosaic Companies, LLCHome Improvement Retail
First Lien Term Loan, LIBOR+6.75% cash due 7/2/20267.75 %11,595,000 11,374,657 11,374,695 (5)(8)
11,374,657 11,374,695 
MRI Software LLCApplication Software
First Lien Term Loan, LIBOR+5.50% cash due 2/10/20266.50 %7,031,843 6,986,046 7,027,448 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026— (8,232)(145)(5)(8)(9)
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026— (4,612)(288)(5)(8)(9)
6,973,202 7,027,015 
Navisite, LLCData Processing & Outsourced Services
Second Lien Term Loan, LIBOR+8.50% cash due 12/30/20269.50 %7,779,000 7,642,947 7,646,757 (5)(8)
7,642,947 7,646,757 
NeuAG, LLCFertilizers & Agricultural Chemicals
First Lien Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/20247.00 %13,405,671 13,038,932 13,110,746 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/2024— (62,040)(34,122)(5)(8)(9)
12,976,892 13,076,624 
NN, Inc.Industrial Machinery
First Lien Term Loan, LIBOR+6.88% cash due 9/19/20267.88 %14,802,615 14,468,636 14,580,576 (5)(8)(10)
14,468,636 14,580,576 



21
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
September 30, 2021

Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
OEConnection LLCApplication Software
First Lien Term Loan, LIBOR+4.00% cash due 9/25/20264.08 %$9,324,115 $9,281,397 $9,312,460 (5)
9,281,397 9,312,460 
Olaplex, Inc.Personal Products
First Lien Term Loan, LIBOR+6.25% cash due 1/8/20267.25 %11,546,327 11,392,153 11,459,729 (5)(8)
First Lien Revolver, LIBOR+6.25% cash due 1/8/2025— (13,422)(16,108)(5)(8)(9)
11,378,731 11,443,621 
OTG Management, LLCAirport Services
First Lien Term Loan, LIBOR+10.00% cash due 9/1/202511.00 %3,205,000 3,142,216 3,140,900 (5)(8)
First Lien Delayed Draw Term Loan, LIBOR+10.00% cash due 9/1/2025— (5,979)(6,104)(5)(8)(9)
3,136,237 3,134,796 
Park Place Technologies, LLCInternet Services & Infrastructure
First Lien Term Loan, LIBOR+5.00% cash due 11/10/20276.00 %4,975,000 4,800,895 4,980,696 (5)
4,800,895 4,980,696 
Performance Health Holdings, Inc.Health Care Distributors
First Lien Term Loan, LIBOR+6.00% cash due 7/12/20277.00 %4,915,000 4,820,334 4,816,700 (5)(8)
4,820,334 4,816,700 
Planview Parent, Inc.Application Software
Second Lien Term Loan, LIBOR+7.25% cash due 12/18/20288.00 %9,872,000 9,723,920 9,896,680 (5)(8)
9,723,920 9,896,680 
PLNTF Holdings, LLCLeisure Facilities
First Lien Term Loan, LIBOR+8.00% cash due 3/22/20269.00 %4,408,845 4,329,641 4,430,889 (5)(8)
4,329,641 4,430,889 
Pluralsight, LLCApplication Software
First Lien Term Loan, LIBOR+8.00% cash due 4/6/20279.00 %15,361,250 15,076,598 15,069,387 (5)(8)
First Lien Revolver, LIBOR+8.00% cash due 4/6/2027— (19,440)(20,101)(5)(8)(9)
15,057,158 15,049,286 
PRGX Global, Inc.Data Processing & Outsourced Services
First Lien Term Loan, LIBOR+6.75% cash due 3/3/20267.75 %8,256,663 8,110,702 8,118,504 (5)(8)
First Lien Revolver, LIBOR+6.75% cash due 3/3/2026— (10,773)(10,197)(5)(8)(9)
19,485 Class B Common Units19,485 19,485 (8)
8,119,414 8,127,792 
ProFrac Services, LLCIndustrial Machinery
First Lien Term Loan, LIBOR+8.50% cash due 9/15/20239.75 %1,176,313 1,171,701 1,164,550 (5)(8)
1,171,701 1,164,550 
Project Boost Purchaser, LLCApplication Software
Second Lien Term Loan, LIBOR+8.00% cash due 5/31/20278.08 %1,500,000 1,500,000 1,492,500 (5)(8)
1,500,000 1,492,500 
Quantum Bidco LimitedFood Distributors
First Lien Term Loan, UK LIBOR+6.00% cash due 1/29/20286.11 %£1,125,000 1,486,303 1,501,725 (5)(10)
1,486,303 1,501,725 
Relativity ODA LLCApplication Software
First Lien Term Loan, LIBOR+7.50% PIK due 5/12/2027$5,601,876 5,474,760 5,484,237 (5)(8)
First Lien Revolver, LIBOR+6.50% cash due 5/12/2027— (12,712)(11,418)(5)(8)(9)
5,462,048 5,472,819 
Renaissance Holding Corp.Diversified Banks
Second Lien Term Loan, LIBOR+7.00% cash due 5/29/20267.08 %1,138,000 1,129,465 1,144,401 (5)
1,129,465 1,144,401 



22
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
September 30, 2021

Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
RumbleOn, Inc.Automotive Retail
First Lien Term Loan, LIBOR+8.25% cash due 8/31/20269.25 %$9,192,486 $8,616,072 $8,613,359 (5)(8)(10)
First Lien Delayed Draw Term Loan, LIBOR+8.25% cash due 8/31/2026— (247,035)(248,197)(5)(8)(9)(10)
39,794 Class B Common Stock Warrants (exercise price $33.00) expiration date 2/28/2023290,496 375,257 (8)(10)
8,659,533 8,740,419 
Sabert CorporationMetal & Glass Containers
First Lien Term Loan, LIBOR+4.50% cash due 12/10/20265.50 %2,727,699 2,700,422 2,737,928 (5)
2,700,422 2,737,928 
Scilex Pharmaceuticals Inc.Pharmaceuticals
Fixed Rate Zero Coupon Bond due 8/15/20261,153,753 976,809 1,075,413 (8)
976,809 1,075,413 
SIO2 Medical Products, Inc.Metal & Glass Containers
Subordinated Debt, 11.25% cash due 2/28/20222,883,000 2,749,617 2,724,435 (8)
Subordinated Delayed Draw Debt, 11.25% cash due 2/28/2022— (19,881)(21,623)(8)(9)
Common Stock Warrants (exercise price $0.75) expiration date 7/31/2028123,557 124,249 (8)
2,853,293 2,827,061 
Sirva Worldwide, Inc.Diversified Support Services
First Lien Term Loan, LIBOR+5.50% cash due 8/4/20255.58 %434,731 428,210 410,958 (5)
428,210 410,958 
SM Wellness Holdings, Inc.Health Care Services
Second Lien Term Loan, LIBOR+8.00% cash due 4/16/20298.75 %2,925,000 2,881,125 2,946,938 (5)(8)
2,881,125 2,946,938 
Sorenson Communications, LLCCommunications Equipment
First Lien Term Loan, LIBOR+5.50% cash due 3/17/20266.25 %4,746,200 4,698,738 4,784,763 (5)
4,698,738 4,784,763 
Sorrento Therapeutics, Inc.Biotechnology
25,600 Common Stock Units63,040 122,080 (10)
63,040 122,080 
Star US Bidco LLCIndustrial Machinery
First Lien Term Loan, LIBOR+4.25% cash due 3/17/20275.25 %5,221,148 4,961,750 5,242,920 (5)
4,961,750 5,242,920 
SumUp Holdings Luxembourg S.À.R.L.Other Diversified Financial Services
First Lien Delayed Draw Term Loan, EURIBOR+8.50% cash due 3/10/202610.00 %€5,637,867 6,559,321 6,415,445 (5)(8)(9)(10)
6,559,321 6,415,445 
Sunland Asphalt & Construction, LLCConstruction & Engineering
First Lien Term Loan, LIBOR+6.00% cash due 1/13/20267.00 %$11,720,960 11,519,948 11,556,867 (5)(8)
First Lien Revolver, LIBOR+6.00% cash due 1/13/20227.00 %55,236 44,849 46,122 (5)(8)(9)
11,564,797 11,602,989 
Supermoose Borrower, LLCApplication Software
First Lien Term Loan, LIBOR+3.75% cash due 8/29/20253.88 %2,894,861 2,634,239 2,699,009 (5)
2,634,239 2,699,009 
SVP-Singer Holdings Inc.Home Furnishings
First Lien Term Loan, LIBOR+6.75% cash due 7/28/20287.50 %5,072,000 4,723,943 4,771,890 (5)(8)
4,723,943 4,771,890 
Tacala, LLCRestaurants
Second Lien Term Loan, LIBOR+7.50% cash due 2/4/20288.25 %3,394,977 3,347,525 3,396,250 (5)
3,347,525 3,396,250 
Tecta America Corp.Construction & Engineering
Second Lien Term Loan, LIBOR+8.50% cash due 4/9/20299.25 %1,671,000 1,645,935 1,671,000 (5)(8)
1,645,935 1,671,000 



23
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
September 30, 2021

Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
Telestream Holdings CorporationApplication Software
First Lien Term Loan, LIBOR+8.75% cash due 10/15/20259.75 %$5,275,138 $5,194,678 $5,201,286 (5)(8)
First Lien Revolver, LIBOR+8.75% cash due 10/15/20259.75 %140,280 132,091 133,266 (5)(8)(9)
5,326,769 5,334,552 
TerSera Therapeutics LLCPharmaceuticals
Second Lien Term Loan, LIBOR+10.00% cash due 3/30/202611.00 %6,100,000 5,951,995 6,148,666 (5)(8)
5,951,995 6,148,666 
Thermacell Repellents, Inc.Leisure Products
First Lien Term Loan, LIBOR+5.75% cash due 12/4/20266.75 %6,636,042 6,602,572 6,603,150 (5)(8)
First Lien Revolver, LIBOR+5.75% cash due 12/4/2026— (4,167)(4,167)(5)(8)(9)
6,598,405 6,598,983 
Thrasio, LLCInternet & Direct Marketing Retail
First Lien Term Loan, LIBOR+7.00% cash due 12/18/20268.00 %9,796,366 9,568,725 9,747,384 (5)(8)
2,182 Shares of Series C-3 Preferred Stock in Thrasio Holdings, Inc.26,665 44,186 (8)
73,648 Shares of Series C-2 Preferred Stock in Thrasio Holdings, Inc.600,000 1,491,376 (8)
6,000 Shares of Series X Preferred Stock in Thrasio Holdings, Inc.6,000,300 6,414,321 (8)(9)
16,195,690 17,697,267 
TIBCO Software Inc.Application Software
Second Lien Term Loan, LIBOR+7.25% cash due 3/3/20287.34 %1,394,000 1,379,054 1,411,774 (5)
1,379,054 1,411,774 
Velocity Commercial Capital, LLCThrifts & Mortgage Finance
First Lien Term Loan, LIBOR+8.00% cash due 2/5/20269.00 %3,850,058 3,748,666 3,830,807 (5)(8)
3,748,666 3,830,807 
Veritas US Inc.Application Software
First Lien Term Loan, LIBOR+5.00% cash due 9/1/20256.00 %7,425,141 7,307,798 7,469,209 (5)
7,307,798 7,469,209 
Verscend Holding Corp.Health Care Technology
First Lien Term Loan, LIBOR+4.00% cash due 8/27/20254.08 %834,184 818,972 836,440 (5)
818,972 836,440 
Virgin Pulse, Inc.Application Software
Second Lien Term Loan, LIBOR+7.25% cash due 4/6/20298.00 %1,540,000 1,524,600 1,543,850 (5)
1,524,600 1,543,850 
Win Brands Group LLCHousewares & Specialties
First Lien Term Loan, LIBOR+9.00% cash 5.00% PIK due 1/22/202610.00 %652,012 645,632 648,752 (5)(8)
62 Class F Warrants in Brand Value Growth LLC (exercise price $0.01) expiration date 1/25/2027— 41,013 (8)
645,632 689,765 
Windstream Services II, LLCIntegrated Telecommunication Services
First Lien Term Loan, LIBOR+6.25% cash due 9/21/20277.25 %10,861,810 10,490,500 10,928,339 (5)
10,490,500 10,928,339 
WP CPP Holdings, LLCAerospace & Defense
First Lien Term Loan, LIBOR+3.75% cash due 4/30/20254.75 %3,893,225 3,877,791 3,799,535 (5)
3,877,791 3,799,535 
WPEngine, Inc.Application Software
First Lien Term Loan, LIBOR+6.50% cash due 3/27/20267.50 %14,623,000 14,349,695 14,434,364 (5)(8)
14,349,695 14,434,364 
Zephyr Bidco LimitedSpecialized Finance
Second Lien Term Loan, UK LIBOR+7.50% cash due 7/23/20267.55 %£2,000,000 2,585,581 2,689,958 (5)(10)
2,585,581 2,689,958 



24
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
September 30, 2021

Portfolio Company/Type of Investment (1)(2)(3)(4) Cash Interest Rate (5)IndustryPrincipal (6)CostFair ValueNotes
 Total Non-Control/Non-Affiliate Investments (166.1% of net assets)$568,303,425 $575,429,432 
 Cash and Cash Equivalents and Restricted Cash (6.8% of net assets)$23,573,015 $23,573,015 
Total Portfolio Investments, Cash and Cash Equivalents and Restricted Cash (172.9% of net assets)$591,876,440 $599,002,447 

Derivative InstrumentNotional Amount to be PurchasedNotional Amount to be SoldMaturity DateCounterpartyCumulative Unrealized Appreciation (Depreciation)
Foreign currency forward contract$13,551,234 €11,534,208 11/12/2021Bank of New York Mellon$173,075 
Foreign currency forward contract$17,392,336 £12,568,533 11/12/2021Bank of New York Mellon$444,929 
$618,004 





25
Oaktree Strategic Income II, Inc.
Consolidated Schedule of Investments
September 30, 2021

(1)All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted.
(2)See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition by geographic region.
(3)Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents.
(4)Each of the Company's investments is pledged as collateral under one or more of its credit facilities. A single investment may be divided into parts that are individually pledged as collateral to separate credit facilities.
(5)The interest rate on the principal balance outstanding for all floating rate loans is indexed to the LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars unless otherwise noted. As of September 30, 2021, the reference rates for the Company's variable rate loans were the 30-day LIBOR at 0.08%, the 60-day LIBOR at 0.11%, the 90-day LIBOR at 0.13%, the 180-day LIBOR at 0.16%, the 360-day LIBOR at 0.24%, the PRIME at 3.25%, the 30-day UK LIBOR at 0.05%, the 180-day UK LIBOR at 0.09%, the 30-day EURIBOR at (0.57)%, the 90-day EURIBOR at (0.56)% and the 180-day EURIBOR at (0.53)%. Most loans include an interest floor, which generally ranges from 0% to 1%.
(6)Principal includes accumulated PIK interest and is net of repayments, if any. "€" signifies the investment is denominated in Euros. “£” signifies the investment is denominated in British Pounds. All other investments are denominated in U.S. dollars.
(7)Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments. Control Investments generally are defined by the Investment Company Act, as investments in companies in which the Company owns more than 25% of the voting securities and/or has the power to exercise control over the management or policies of the company. Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities.
(8)As of September 30, 2021, these investments are categorized as Level 3 within the fair value hierarchy established by ASC 820 and were valued using significant unobservable inputs.
(9)Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
(10)Investment is not a qualifying asset as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of September 30, 2021, qualifying assets represented 79.8% of the Company's total assets and non-qualifying assets represented 20.2% of the Company's total assets.
(11)PIK interest income for this investment accrues at an annualized rate of 15%, however, the PIK interest is not contractually capitalized on the investment subsequent to a restructuring that occurred during the year ended September 30, 2021. As a result, the principal amount of the investment does not increase over time for accumulated PIK interest. As of September 30, 2021, the accumulated PIK interest balance for each of the Alvotech A notes and the B notes was $0.1 million. The fair value of this investment is inclusive of PIK interest income.
(12)The sale of all or a portion of this investment did not qualify for sale accounting under ASC 860, and therefore the investment remains on the Company's Consolidated Schedule of Investments as of September 30, 2021. See "Secured Borrowings" in Note 6 in the Company's annual report on Form 10-K for year ended September 30, 2021 for further details.





See notes to Consolidated Financial Statements.


(1)All debt investments are income producing unless otherwise noted.
(2)See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition by geographic region.
(3)Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents.
(4)The interest rate on the principal balance outstanding for all floating rate loans is indexed to the LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate based rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars unless otherwise noted. As of September 30, 2018, the reference rates for our variable rate loans were the 30-day LIBOR at 2.24%, 60-day LIBOR at 2.29%, the 90-day LIBOR at 2.39%, the 180-day LIBOR at 2.59% and the 30-day EURIBOR at (0.40)%.
(5)"€" signifies the investment is denominated in Euros. All other investments are denominated in U.S. dollars.
(6)Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments. Control Investments generally are defined by the Investment Company Act, as investments in companies in which the Company owns more than 25% of the voting securities and/or has the power to exercise control over the management or policies of the company. Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities.
(7)As of September 30, 2018, these investments are categorized as Level 3 within the fair value hierarchy established by ASC 820 and were valued using significant unobservable inputs.
(8)Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
(9)Investment is not a qualifying asset as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of September 30, 2018, qualifying assets represented 85.2% of the Company's total assets and non-qualifying assets represented 14.8% of the Company's total assets.



26
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1. Organization
Oaktree Strategic Income II, Inc. (the(together with its consolidated subsidiaries, where applicable, the "Company") is structured as a closed-end investment company focused on lending to small- and medium-sized companies. The Company has elected to be regulated as a business development company (a "BDC") under the Investment Company Act of 1940, as amended (the "Investment Company Act") and intends to electhas elected to be treated, and intends to comply with the requirements to qualify annually, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (together with the rules and regulations promulgated thereunder, the "Code").

The Company was formed on April 30, 2018 as a Delaware corporation and as of June 30, 2022 is externally managed by Oaktree Fund Advisors, LLC (the "Adviser") pursuant to an investment advisory agreement (the “Investment Advisory Agreement”), between the Company and the Adviser, which was approved by the Board of Directors of the Company on May 11, 2020. From July 9, 2018 through May 11, 2020, the Company was managed by Oaktree Capital Management, L.P. (the "Adviser", an affiliate of the Adviser. The Adviser is a subsidiary of Oaktree Capital Group, LLC ("OCG"). In 2019, Brookfield Asset Management Inc. ("Brookfield") acquired a majority economic interest in OCG. OCG operates as an independent business within Brookfield, with its own product offerings and investment, marketing and support teams.

The Company conductsconducted private offerings (each, a “Private Offering”) of its common stock ("Common Stock") to investors in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). At each closing of a Private Offering, each investor participating in that closing makesmade a capital commitment (each, a “Capital Commitment”) to purchase the Company's Common Stock pursuant to a subscription agreement entered into with the Company in connection with its Capital Commitment ("Subscription Agreement"). Investors are required to fund drawdowns to purchase the Company's Common Stock up to the amount of their respective Capital Commitments on an as-needed basis. On July 23, 2018, the Company was initially capitalized with a $1,000 investment by the Adviser. The initial closing of a Private Offering occurred on August 6, 2018 (the "Initial Closing"). The Company's operationsCompany commenced on August 6, 2018, andits loan origination and investment activities commenced shortly after its initial capital drawdown from its non-affiliated investors (the "Initial Drawdown"). The proceeds from the Initial Closing.Drawdown provided the Company with the necessary seed capital to commence operations. As of December 31, 2018,June 30, 2022, the Company raised $337,683,996 in totalcompleted drawdowns of $337,558,996, or 100%, of Capital Commitments from investors in connection with Private Offerings.Offerings, of which $3,854,346 in Capital Commitments were made by one or more affiliates of the Adviser.

The Company seeks to invest opportunistically across asset classes and geographies, primarily in the form of senior loans, and to a lesser extent, high yield bonds, where such companiesto borrowers that are in need of direct loans, rescue financings or other capital solutions or that have had challenged or unsuccessful primary offerings. The Company's investment objective is to generate current income and long-term capital appreciation. The Company seeks to achieve its investment objective without subjecting principal to undue risk of loss by lending to and investing in the debt of public and private companies, primarily in situations where a company or its owners are (a) overleveraged or facing pressure to recapitalize, (b) unable to access broadly syndicated capital markets, (c) undervalued after having recently exited bankruptcy, completed a restructuring or are in a cyclically out-of-favor industry or (d) otherwise affected by mispricings or inefficiencies in the capital markets or at different points throughout the credit cycle.

Note 2. Significant Accounting Policies
Basis of Presentation:
The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments of a normal recurring nature considered necessary for the fair presentation of the consolidated financial statementsConsolidated Financial Statements have been made. All intercompany balances and transactions have been eliminated.eliminated in consolidation. The Company is an investment company following the accounting and reporting guidance in FASB ASC Topic 946, Financial Services - Investment Companies ("ASC 946").
Use of Estimates:
The preparation of the financial statements in conformity with GAAP requires management to make certain estimates and assumptions affecting amounts reported in the financial statements and accompanying notes. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Changes in the economic and political environments, financial markets and any other parameters used in determining these estimates could cause actual results to differ and such differences could be material. Significant estimates include the valuation of investments.investments and revenue recognition.




27
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Consolidation:
The accompanying consolidated financial statements include the accounts of Oaktree Strategic Income II, Inc.the Company and its consolidated subsidiaries. Each consolidated subsidiary OSI 2 AB Blocker LLC. OSI 2 AB Blocker LLC is wholly-owned and, as such, consolidated into the consolidated financial statements. Certain subsidiaries of the Company that hold investments are treated as pass through entities for tax purposes. The assets of OSI 2 AB Blocker LLCthe consolidated subsidiaries are not directly available to satisfy the claims of the creditors of Oaktree Strategic Income II, Inc.the Company. As an investment company, portfolio investments held by the Company are not consolidated into the consolidated financial statements but rather are included on the Consolidated Statements of Assets and Liabilities as investments at fair value.
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Fair Value Measurements:
The Company's board of directors, with the assistance of its audit committee (the “Audit Committee”) and the Adviser, determines the fair value of its assets on at least a quarterly basis, in accordance with the terms of FASB ASC Topic 820, Fair Value Measurement. The Audit Committee is comprised of independent directors. The Company's investments are valued at fair value. For purposes of periodic reporting, the AdviserCompany values its assets in accordance with GAAP and based on the principles and methods of valuation summarized below. GAAP requires that a “fair value” be assigned to all assets and establishes a single authoritative definition of fair value that includes a framework for measuring fair value and enhanced disclosures about fair value measurements.
GAAP establishes a hierarchal disclosure framework, which prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market price observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

•Level I - Quoted unadjusted prices for identical instruments in active markets to which the Company has access at the date of measurement.

•Level II - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are directly or indirectly observable.

•Level III - Valuations for which one or more significant inputs are unobservable. These inputs reflect our assessment of the assumptions that market participants use to value the investment based on the best available information. Level III inputs include prices of quoted securitiesobtained from brokers in markets for which there are few transactions, less public information exists or prices vary among brokeredbroker market makers.
In some instances, an instrument may fall into different levels of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the value measurement. The assessment of the significance of an input requires judgment and considers factors specific to the instrument. The transfer of assets into or out of each fair value hierarchy level as a result of changes in the observability of the inputs used in measuring fair value are accounted for as of the beginning of the reporting period. Transfers resulting from a specific event, such as a reorganization or restructuring, are accounted for as of the date of the event that caused the transfer.
In the absence of observable market prices, the Company values Level III investments using valuation methodologies applied on a consistent basis. The quarterly valuation process for Level III investments begins with each portfolio company, property or security being initially valued by the Adviser's valuation team in conjunction with the investment team. The preliminary valuations are then reviewed and approved by the valuation team, the valuation committee, which consists of senior members of the investment team, and designated investment professionals as well as the valuation officer who is independent of the investment teams and reports directly to the Adviser's Chief Financial Officer.teams. The Audit Committee reviews the preliminary valuations provided by the valuation committee and makes a recommendation to the Company's full board of directors regarding the fair value of the investments in our portfolio. The Company's board of directors ultimately determines in good faith the fair value of each investment in the Company's portfolio. Results of the valuation process are evaluated each quarter, including an assessment of whether the underlying calculations should be adjusted or recalibrated. In connection with this process, the Company evaluates changes in fair value measurements from period to period for reasonableness, considering items such as industry trends, general economic and market conditions, and factors specific to the investment.
Certain Level III assets are valued using prices obtained from pricing vendors or brokers. These investments are classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be



28
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


for similar securities or may require adjustment for investment-specific factors or restrictions. The Company seeks to obtain at least two quotations for the subject or similar securities, typically from pricing vendors. If the Company is unable to obtain two quotes from pricing vendors, or if the prices obtained from pricing vendors are not within ourthe Company's set threshold, the Company will seekseeks to obtain a quote directly from a broker making a market for the asset. However, given the anticipated nature of our portfolio, the Company does not expect that all of our Level III assets will be valued at least annually using prices obtained from pricing vendors or brokers. Generally, the Company does not adjust any of the prices received from these sources, and all prices are reviewed by the Company. The Company evaluates the prices obtained from pricing vendors or brokers based on available market information, including trading activity of the subject or
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. The CompanyAdviser also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, the CompanyAdviser performs due diligence procedures over pricing vendors to understand their methodology and controls to support their use in the valuation process.
Non-publicly traded debt and equity securities and other securities or instruments for which reliable market quotations are not available are valued by the Company using valuation methodologies applied on a consistent basis. These securities may initially be valued at the acquisition price as the best indicator of fair value. The Company reviews the significant unobservable inputs, valuations of comparable investments and other similar transactions for investments valued at acquisition price to determine whether another valuation methodology should be utilized. Subsequent valuations will depend on facts and circumstances known as of the valuation date and the application of valuation methodologies further described below under “– Non-Exchange-Traded Investments.” The fair value may also be based on a pending transaction expected to close after the valuation date. These valuation methodologies involve a significant degree of management judgment. Accordingly, valuations do not necessarily represent the amounts which may eventually be realized from sales or other dispositions of investments.investments in the future. Fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the consolidated financial statements.
Exchange-Traded Investments
Securities listed on one or more national securities exchanges are valued at their last reported sales price on the date of valuation. If no sale occurred on the valuation date, the security is valued at the mean of the last “bid” and “ask” prices on the valuation date. Securities that are not marketable due to legal restrictions that may limit or restrict transferability are generally valued at a discount from quoted market prices. The discount would reflect the amount market participants would require due to the risk relating to the inability to access a public market for the security for the specified period and would vary depending on the nature and duration of the restriction and the risk and volatility of the underlying securities. Securities with longer duration restrictions or higher volatility are generally valued at a higher discount. Such discounts are generally estimated based on put option models or analysis of market studies. Instances where discounts have been applied to quoted prices of restricted listed securities have been infrequent. The impact of such discounts is not material to the consolidated financial statements.
Non-Exchange-Traded Investments
Investments in corporate and government debt which are not listed or admitted to trading on any securities exchange are valued at the mean of the last bid and ask prices on the valuation date based on quotations supplied by recognized quotation services or by reputable broker dealers.
If the quotations obtained from pricing vendors or brokers are determined to not be reliable or are not readily available, the Company values such investments using different valuation techniques. One valuation technique is the transaction precedent technique, which utilizes recent or expected future transactions of the investment to determine fair value, to the extent applicable. The market yield approachtechnique is considered in the valuation of non-publicly traded debt investments, utilizing expected future cash flows, discounted using estimated current market rates. Discounted cash flow calculations may be adjusted to reflect current market conditions and/or the perceived credit risk of the borrowers. Consideration is also given to a borrower’s ability to meet principal and interest obligations; this may include an evaluation of collateral or the underlying value of the borrower, utilizing either the market or income techniques. A market technique utilizes valuations of comparable public companies or transactions and generally seeks to establish the enterprise value of the portfolio company using a market multiple technique. This technique takes into account a specific financial measure (such as earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, free cash flow, net operating income, net income, book value or net asset value) believed to be most relevant for the given company. Consideration may also be given to such factors as acquisition price of the security, historical and projected operational and financial results for the portfolio company, the strengths and weaknesses of the portfolio company relative to its comparable companies, industry trends, general economic and market conditions and other factors deemed relevant. The income technique is typically a discounted cash flow method that incorporates expected timing and level of cash flows. It incorporates assumptions in determining growth rates, income and expense projections, discount rates, capital structure, terminal values and other factors. The applicability and weight assigned to



29
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


market and income techniques are determined based on the availability of reliable projections and comparable companies and transactions.
The valuation of securities may be impacted by expectations of investors’ receptiveness to a public offering of the securities, the size of the holding of the securities and any associated control, information with respect to transactions or offers for the securities (including the transaction pursuant to which the investment was made and the period of time elapsed from the date of the investment to the valuation date) and applicable restrictions on the transferability of the securities.
Investments made by the Company are, by nature, generally considered to be long-term investments and are not intended to be liquidated on a short-term basis. Accordingly, valuations by the Company do not necessarily represent amounts that could be realized on the valuation date or amounts that eventually will be realized from sales or other dispositions of investments in the future.
Additionally, these valuation methodologies involve a significant degree of management judgment. Accordingly, valuations by the Company do not necessarily represent the amounts which may eventually be realized from sales or other dispositions of
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


investments. investments in the future. Estimated fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the consolidated financial statements.
The Company may estimate the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an enterprise value analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk-free rate. Changes in the subjective input assumptions can materially affect the fair value estimates.
With the exception of the line items entitled "deferred financing costs," "other assets," "deferred tax liability," "secured borrowings" and "credit facilities payable," which are reported at amortized cost, all assets and liabilities on the Consolidated Statements of Assets and Liabilities approximate fair value. The carrying value of the line items titled "interest receivable," "receivables from unsettled transactions," "accounts payable, accrued expenses and other liabilities," "base management fee and incentive fees payable," "due to affiliates," "interest payable," "director fees payable" and "payables from unsettled transactions" approximate fair value due to their short maturities.
Foreign Currency Translation:
The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the prevailing foreign exchange rate on the reporting date. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. The Company’s investments in foreign securities may involve certain risks, including foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company.
Derivative InstrumentsInstruments:
The Company uses foreign currency forward contracts to reduce the Company's exposure to fluctuations in the value of foreign currencies. In a foreign currency forward contract, the Company agrees to receive or deliver a fixed quantity of one currency for another at a pre-determined price at a future date. Foreign currency forward contracts are marked-to-market at the applicable forward rate. Unrealized appreciation (depreciation) on foreign currency forward contracts are recorded as a "derivative asset at fair value" or "derivative liability at fair value" on the Consolidated Statements of Assets and Liabilities by counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable. Purchases and settlements of foreign currency forward contracts having the same settlement date and counterparty are generally settled net and any realized gains or losses are recognized on the settlement date. The Company does not utilize hedge accounting with respect to foreign currency forward contracts and as such, valuesthe Company recognizes its derivative instrumentsforeign currency forward contracts at fair value with thenet unrealized gains or losses recordedincluded in "net unrealized appreciation (depreciation)" in the Consolidated Statements of Operations and net realized gains or losses included in “net unrealized appreciation (depreciation)realized gains (losses)” in the Company’s Consolidated StatementStatements of Operations.
Secured Borrowings:
Securities sold and simultaneously repurchased at a premium are reported as financing transactions in accordance with FASB ASC Topic 860, Transfers and Servicing ("ASC 860"). Amounts payable to the counterparty are due on the repurchase settlement date and, excluding accrued interest, such amounts are presented in the accompanying Consolidated Statements of Assets and Liabilities as secured borrowings. Premiums payable are separately reported as accrued interest.



30
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Investment Income:
Interest Income
Interest income, adjusted for accretion of original issue discount ("OID"), is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on investments when it is determined that interest is no longer collectible. Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when there is reasonable doubt that principal or interest cash payments will be collected. Cash interest payments received on investments may be recognized as income or a return of capital depending upon management’s judgment. A non-accrual investment is restored to accrual status if past due principal and interest are paid in cash, and the portfolio company, in management’s judgment, is likely to continue timely payment of its remaining obligations. As of each of June 30, 2022 and September 30, 2021, there were no investments on non-accrual status.
In connection with its investment in a portfolio company, the Company sometimes receives nominal cost equity that is valued as part of the negotiation process with the portfolio company. When the Company receives nominal cost equity, the Company allocates its cost basis in the investment between debt securities and the nominal cost equity at the time of origination. Any resulting discount from recording the loan, or otherwise purchasing a security at a discount, is accreted into interest income over the life of the loan.
For the Company's secured borrowings, the interest earned on the entire loan balance is recorded within interest income and the interest earned by the counterparty is recorded within interest expense in the Consolidated Statements of Operations.
PIK Interest Income
The Company's investments in debt securities may contain payment-in-kind ("PIK")PIK interest provisions. PIK interest, which generally represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. The Company generally ceases accruing PIK interest if there is insufficient value to support the accrual or if the Company does not expect the portfolio company to be able to pay all principal and interest due. The Company's decision to cease accruing PIK interest on a loan or debt security involves subjective judgments and determinations based on available information about a particular portfolio company, including whether the portfolio company is current with respect to its payment of principal and interest on its loans and debt securities; financial statements and financial projections for the portfolio company; the Company's assessment of the portfolio company's business development success; information obtained by the Company in connection with periodic formal update interviews with the portfolio company's management and, if appropriate, the private equity sponsor; and information about the general economic and market conditions in which the portfolio company operates. Based on this and other information, the Company determines whether to cease accruing PIK interest on a loan or debt security. The Company's determination to cease accruing PIK interest is generally made well before the Company's full write-down of a loan or debt security. In addition, if it is subsequently determined that the Company will not be able to collect any previously accrued PIK interest, the fair value of the loans or debt securities would be reduced by the amount of such previously accrued, but uncollectible, PIK interest. The accrual of PIK interest on the Company’s debt investments increases the recorded cost bases of these investments in the consolidated financial statements and, as a result, increases the cost bases of these investmentsincluding for purposes of computing the capital gaingains incentive fee payable by the Company to Oaktree.the Adviser. To maintain its status as a RIC, certain income from PIK interest may be required to be distributed to the Company’s stockholders, even though the Company has not yet collected the cash and may never do so.

OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Fee Income
OaktreeThe Adviser or its affiliates may provide financial advisory services to portfolio companies in connection with structuring a transaction and in return the Company may receive fees for capital structuring services. These fees are generally nonrecurring and are recognized by the Company upon the investment closing date. The Company may also receive additional fees in the ordinary course of business, including servicing, amendment, and prepayment fees, which are classified as fee income and recognized as they are earned or the services are rendered.
The Company may structurehas also structured exit fees across certain of its portfolio investments to be received upon the future exit of those investments. These fees are typically paid to the Company upon the earliest to occur of (i) a sale of the borrower or substantially all of itsthe assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs. The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments. A percentage of theseThese fees isare included in net investment income over the life of the loan.





31
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Dividend Income
The Company generally recognizes dividend income on the ex-dividend date for public securities and the record date for private equity investments. Distributions received from private equity investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from private equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.
Cash and Cash Equivalents:Equivalents and Restricted Cash:
Cash and cash equivalents and restricted cash consist of demand deposits and highly liquid investments with maturities of three months or less, when acquired. The Company places its cash and cash equivalents and restricted cash with financial institutions and, at times, cash held in bank accounts may exceed the Federal Deposit Insurance Corporation ("FDIC") insurance limit. Cash and cash equivalents and restricted cash are included on the Company's Consolidated Schedule of Investments and cash equivalents are classified as Level 1 assetsassets.
As of June 30, 2022 and areSeptember 30, 2021, included on the Company's Schedule of Investments.
Organizationin restricted cash was $9,815,519 and Offering Expenses:
Costs incurred to organize the$4,317,968, respectively, which was held at Deutsche Bank Trust Company are expensed as incurred. For the three months ended December 31, 2018, the Company incurred organizational costs of $56,211.
Offering costs incurredAmericas in connection with Private Offerings are recognized as a deferred costthe Company's Citibank Facility (defined in Note 6– Borrowings). The Company was restricted in terms of access to the $9,815,519 and amortized on a straight line basis over twelve months beginning on August 6, 2018 (commencement$4,317,968, respectively, until the occurrence of operations). For the three months ended December 31, 2018,periodic distribution dates and, in connection therewith, the Company incurred additional offering costsCompany’s submission of $96,748its required periodic reporting schedules and amortized $168,269verifications of deferred offering costs.the Company’s compliance with the terms of the Citibank Facility.
Receivables/Payables Fromfrom Unsettled Transactions:

Receivables/payables from unsettled transactions consistsconsist of amounts receivable to or payable by the Company for transactions that have not settled at the reporting date.
Deferred Financing Costs:
Deferred financing costs consist of fees and expenses paid in connection with the closing or amending of credit facilities and debt offerings.facilities. Deferred financing costs incurred in connection with credit facilities are capitalized as an asset at the time of payment.when incurred. Deferred financing costs incurred in connection with all other debt arrangements are a direct deduction from the related debt liability at the time of payment.when incurred. Deferred financing costs are amortized using the effective interest method over the termsterm of the respective debt arrangement. This amortization expense is included in interest expense in the Company's Consolidated StatementStatements of Operations. Upon early termination or modification of a credit facility, all or a portion of unamortized fees related to such facility may be accelerated into interest expense.
Income Taxes:
The Company intends to electhas elected to be subject to tax as a RIC under Subchapter M of the Code and operatesintends to operate in a manner so as to qualify for the tax treatment applicable to RICs. In order to be subject to tax as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute dividends to its stockholders of an amount generally at least equal to 90% of investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each taxabletax year. As a RIC, the Company is not subject to federal income tax on the portion of its taxable income and gains distributed currently to stockholders as a dividend. Depending on the level of taxable income earned during a taxabletax year, the Company may choose to retain taxable income in excess of current year dividend distributions and would distribute such taxable income in the next taxabletax year. The Company would then incur a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income, determined on a calendar year basis, could exceed estimated current calendar year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. The Company anticipates timely distribution of its taxable income within the tax rules under Subchapter M of the Code. The Company expectsdid not incur a U.S. federal excise tax for calendar years 2020 and 2021 and does not expect to incur a U.S. federal excise tax of $9,357 for calendar year 2018.2022.
The Company holds certain portfolio investments through taxable subsidiaries. The purpose of the Company's taxable subsidiaries is to permit the Company to hold equity investments in portfolio companies which are "pass through" entities for U.S. federal income tax purposes in order to comply with the RIC tax requirements. The taxable subsidiaries are consolidated for financial reporting purposes, and portfolio investments held by them are included in the Company’s consolidated financial statements as portfolio investments and recorded at fair value. The taxable subsidiaries are not consolidated with the Company for U.S. federal income tax purposes and may generate income tax expense, or benefit, and the related tax assets and liabilities,



32
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



as a result of their ownership of certain portfolio investments. This income tax expense, if any, would be reflected in the Company's Consolidated Statements of Operations. The Company uses the asset and liability method to account for its taxable subsidiaries' income taxes. Using this method, the Company recognizes deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences between financial reporting and tax bases of assets and liabilities. In addition, the Company recognizes deferred tax benefits associated with net operating loss carry forwards that it may use to offset future tax obligations. The Company measures deferred tax assets and liabilities using the enacted tax rates expected to apply to taxable income in the years in which it expects to recover or settle those temporary differences.
FASB ASC Topic 740, Accounting for Uncertainty in Income Taxes ("ASC 740"), provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the Company's 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. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Management's determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including but not limited to, an ongoing analysis of tax laws, regulations and interpretations thereof. The 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. 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 on returns filed for open tax years 2019, 2020 and 2021. The Company identifies its major tax jurisdictions as U.S. Federal and California, and 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.
RecentRecently Adopted Accounting Pronouncements:Pronouncements
In May 2014,March 2020, the FASB issued Accounting Standards Update ("ASU") 2014-09, RevenueASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting if certain criteria are met. The guidance is effective from Contracts with Customers ("ASU 2014-09"), which requires an entity to recognizeMarch 12, 2020 through December 31, 2022. As of June 30, 2022, the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The amendments in ASU No. 2014-09 were adopted using the modified retrospective approach by the Company beginning on October 1, 2018. The adoption and application of this guidance did not have a materialan impact on the Company’sCompany's consolidated financial statements, and the Company did not recognize a cumulative effect adjustment on net assets in connection with the adoption of the new revenue recognition guidance.statements.

In August 2018, the FASB issued ASU 2018-13,
Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which changes the fair value disclosure requirements. The new guidance includes new, eliminated and modified fair value disclosures. Among other requirements, the guidance requires disclosure of the range and weighted average of the significant unobservable inputs for Level 3 fair value measurements and the way it is calculated. The guidance also eliminated the following disclosures: (i) amount and reason for transfers between Level 1 and Level 2, (ii) policy for timing of transfers between levels of the fair value hierarchy and (iii) valuation processes for Level 3 fair value measurement. The guidance is effective for all entities for interim and annual periods beginning after December 15, 2019. Early adoption is permitted upon issuance of the guidance. The adoption of this guidance is not expected to have a material effect on the Company’s consolidated financial statements.

Note 3. Portfolio Investments
Portfolio Composition
As of December 31, 2018,June 30, 2022, the fair value of the Company's investment portfolio was $58.4$566.7 million and was comprised of investments in 35115 portfolio companies. As of September 30, 2018,2021, the fair value of the Company's investment portfolio was $25.2$575.4 million and was comprised of investments in 16108 portfolio companies.
As of December 31, 2018June 30, 2022 and September 30, 2018,2021, the Company's investment portfolio consisted of the following:
 
 June 30, 2022September 30, 2021
Cost: % of Total Investments% of Total Investments
Senior Secured Debt$566,441,459 97.50 %$554,526,097 97.57 %
Preferred Equity10,332,238 1.78 %7,248,381 1.28 %
Common Equity & Warrants2,894,660 0.50 %2,623,630 0.46 %
Subordinated Debt1,299,461 0.22 %3,905,317 0.69 %
Total$580,967,818 100.00 %$568,303,425 100.00 %




33
  December 31, 2018 September 30, 2018
Cost:    % of Total Investments    % of Total Investments
Senior secured debt $50,271,610
 84.91% $21,868,595
 87.44%
Subordinated debt 8,292,765
 14.01% 3,141,284
 12.56%
Common equity 642,713
 1.09% —
 —%
Total $59,207,088
 100.00% $25,009,879
 100.00%
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



 June 30, 2022September 30, 2021
Fair Value: % of Total Investments% of Net Assets% of Total Investments% of Net Assets
Senior Secured Debt$551,018,412 97.24 %169.40 %$559,926,869 97.30 %161.59 %
Preferred Equity11,515,452 2.03 %3.54 %8,585,636 1.49 %2.48 %
Common Equity & Warrants2,841,028 0.50 %0.87 %3,028,295 0.53 %0.87 %
Subordinated Debt1,300,761 0.23 %0.40 %3,888,632 0.68 %1.12 %
Total$566,675,653 100.00 %174.21 %$575,429,432 100.00 %166.06 %
  December 31, 2018 September 30, 2018
Fair Value:    % of Total Investments % of Net Assets    % of Total Investments % of Net Assets
Senior secured debt $49,868,096
 85.36% 75.11% $22,058,366
 87.42% 72.63%
Subordinated debt 8,020,988
 13.73% 12.08% 3,174,240
 12.58% 10.45%
Common equity 530,489
 0.91% 0.80% —
 —% —%
Total $58,419,573
 100.00% 87.99% $25,232,606
 100.00% 83.08%

The composition of the Company's debt investments as of December 31, 2018June 30, 2022 and September 30, 20182021 by floating rates and fixed rates was as follows:
 June 30, 2022September 30, 2021
 Fair Value% of Debt InvestmentsFair Value% of Debt Investments
Floating rate$509,694,882 92.28 %$522,279,872 92.63 %
Fixed rate42,624,291 7.72 %41,535,629 7.37 %
Total$552,319,173 100.00 %$563,815,501 100.00 %
  December 31, 2018 September 30, 2018
  Fair Value % of Debt Investments Fair Value % of Debt Investments
Floating rate $45,947,593
 79.37% $22,058,366
 87.42%
Fixed rate 11,941,491
 20.63% 3,174,240
 12.58%
Total $57,889,084
 100.00% $25,232,606
 100.00%


The geographic composition of the Company's portfolio is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company's business. The following tables show the portfolio composition by geographic region at cost as a percentage of total investments and at fair value as a percentage of total investments and net assets:
 June 30, 2022September 30, 2021
Cost: % of Total Investments% of Total Investments
United States$513,648,67988.41%$489,879,81586.21%
United Kingdom34,883,6156.00%33,461,3335.89%
Switzerland11,420,4641.97%12,733,5482.24%
Australia7,776,1261.34%7,804,8901.37%
Iceland6,811,7401.17%6,762,7571.19%
Luxembourg6,427,1941.11%9,365,5801.65%
Chile——%4,169,5860.73%
Singapore——%3,876,2790.68%
Canada——%249,6370.04%
Total$580,967,818100.00%$568,303,425100.00%
 December 31,2018 September 30, 2018
Cost:   % of Total Investments    % of Total Investments
United States$46,402,051
 78.37% $19,289,006
 77.13%
Iceland3,920,504
 6.62% —
 —%
Luxembourg3,564,300
 6.02% 3,562,467
 14.24%
United Kingdom1,713,131
 2.89% 688,283
 2.75%
Canada1,512,994
 2.56% 1,470,123
 5.88%
Denmark1,050,710
 1.77% —
 —%
France1,043,398
 1.76% —
 —%
Total$59,207,088
 100.00% $25,009,879
 100.00%

 June 30, 2022September 30, 2021
Fair Value: % of Total Investments% of Net Assets% of Total Investments% of Net Assets
United States$502,497,43888.67%154.48%$495,262,94086.07%142.94%
United Kingdom32,360,9235.71%9.95%34,344,7385.97%9.91%
Switzerland11,475,7552.03%3.53%12,747,9402.22%3.68%
Australia7,821,7651.38%2.40%7,871,7231.37%2.27%
Iceland6,902,2291.22%2.12%6,873,4551.19%1.98%
Luxembourg5,617,5430.99%1.73%9,807,0951.70%2.83%
Chile——%—%4,238,4880.74%1.22%
Singapore——%—%4,033,0530.70%1.16%
Canada——%—%250,0000.04%0.07%
Total$566,675,653100.00%174.21%$575,429,432100.00%166.06%





34
 December 31, 2018 September 30, 2018
Fair Value:   % of Total Investments % of Net Assets    % of Total Investments % of Net Assets
United States$45,847,316
 78.48% 69.05% $19,459,150
 77.11% 64.07%
Iceland3,920,504
 6.71% 5.90% —
 —% —%
Luxembourg3,492,761
 5.98% 5.26% 3,602,441
 14.28% 11.86%
United Kingdom1,614,750
 2.76% 2.43% 701,015
 2.78% 2.31%
Canada1,526,742
 2.61% 2.30% 1,470,000
 5.83% 4.84%
Denmark1,027,500
 1.76% 1.55% —
 —% —%
France990,000
 1.69% 1.49% —
 —% —%
Total$58,419,573
 100.00% 87.99% $25,232,606
 100.00% 83.08%
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The composition of the Company's portfolio by industry at cost as a percentage of total investments and at fair value as a percentage of total investments and net assets as of December 31, 2018June 30, 2022 and September 30, 20182021 was as follows:
June 30, 2022September 30, 2021
Cost: % of Total Investments% of Total Investments
Application Software$114,791,606 19.76 %$105,037,693 18.50 %
Pharmaceuticals31,286,094 5.39 %34,125,774 6.00 %
Biotechnology23,221,984 4.00 %32,034,990 5.64 %
Construction & Engineering21,337,318 3.67 %20,762,547 3.65 %
Industrial Machinery20,642,554 3.55 %20,602,087 3.63 %
Aerospace & Defense18,599,999 3.20 %16,267,556 2.86 %
Fertilizers & Agricultural Chemicals17,790,873 3.06 %18,208,561 3.20 %
Health Care Technology17,550,714 3.02 %5,603,266 0.99 %
Personal Products16,513,517 2.84 %28,836,040 5.07 %
Internet & Direct Marketing Retail16,417,426 2.83 %16,195,690 2.85 %
Data Processing & Outsourced Services15,746,936 2.71 %15,762,361 2.77 %
Health Care Supplies13,974,081 2.41 %8,129,966 1.43 %
Insurance Brokers13,678,059 2.35 %13,624,213 2.40 %
Automotive Retail13,365,316 2.30 %10,576,274 1.86 %
Internet Services & Infrastructure13,361,386 2.30 %12,096,508 2.13 %
Health Care Services12,062,858 2.08 %15,458,063 2.72 %
Health Care Distributors11,305,960 1.95 %4,820,334 0.85 %
Home Improvement Retail11,266,711 1.94 %11,374,657 2.00 %
Airport Services10,561,654 1.82 %10,385,781 1.83 %
Integrated Telecommunication Services9,647,987 1.66 %10,490,500 1.85 %
Distributors9,638,101 1.66 %— — %
Metal & Glass Containers9,118,452 1.57 %5,553,715 0.98 %
Real Estate Services8,657,515 1.49 %8,710,292 1.53 %
Cable & Satellite8,643,224 1.49 %8,910,000 1.57 %
Soft Drinks8,366,677 1.44 %8,077,613 1.42 %
Oil & Gas Storage & Transportation8,198,818 1.41 %9,659,457 1.70 %
Other Diversified Financial Services7,959,220 1.37 %6,559,321 1.15 %
Movies & Entertainment7,776,126 1.34 %7,804,890 1.37 %
Leisure Facilities7,372,999 1.27 %4,329,641 0.76 %
Electrical Components & Equipment7,214,132 1.24 %7,225,215 1.27 %
Oil & Gas Refining & Marketing6,196,176 1.07 %7,671,686 1.35 %
IT Consulting & Other Services5,626,217 0.97 %5,644,359 0.99 %
Real Estate Operating Companies5,468,655 0.94 %6,983,385 1.23 %
Specialized Finance5,139,651 0.88 %4,499,017 0.79 %
Education Services4,909,797 0.85 %— — %
Home Furnishings4,726,358 0.81 %4,723,943 0.83 %
Environmental & Facilities Services4,699,056 0.81 %— — %
Diversified Support Services4,526,305 0.78 %4,469,808 0.79 %
Health Care Equipment4,436,601 0.76 %4,351,936 0.77 %
Communications Equipment4,327,785 0.74 %4,698,738 0.83 %
Restaurants3,353,116 0.58 %3,347,525 0.59 %
Paper Packaging3,249,692 0.56 %— — %
Hotels, Resorts & Cruise Lines3,224,184 0.55 %— — %
Leisure Products2,467,600 0.42 %8,083,405 1.42 %
Consumer Finance2,244,785 0.39 %— — %
Air Freight & Logistics2,074,897 0.36 %— — %
Research & Consulting Services1,681,765 0.29 %2,362,030 0.42 %
Food Distributors1,491,941 0.26 %1,486,303 0.26 %
Diversified Banks1,129,465 0.19 %1,129,465 0.20 %
Housewares & Specialties1,089,554 0.19 %645,632 0.11 %
Alternative Carriers1,068,681 0.18 %964,264 0.17 %
Construction Materials833,056 0.14 %809,832 0.14 %
Specialty Chemicals716,095 0.12 %716,095 0.13 %
Advertising218,089 0.04 %— — %
Independent Power Producers & Energy Traders— — %7,574,559 1.33 %
Airlines— — %4,169,586 0.73 %



35
 December 31, 2018 September 30, 2018
Cost:   % of Total Investments    % of Total Investments
Biotechnology$13,105,140
 22.13% $1,287,000
 5.15%
Pharmaceuticals5,476,061
 9.25% 4,362,090
 17.44%
Interactive media & services4,290,681
 7.25% —
 —%
Managed healthcare3,965,993
 6.70% 3,970,329
 15.88%
Diversified support services3,848,050
 6.50% 1,970,000
 7.88%
Trading companies & distributors3,018,441
 5.10% —
 —%
Systems software2,849,750
 4.81% —
 —%
Application software2,671,671
 4.51% 1,382,025
 5.53%
Healthcare technology2,392,185
 4.04% 1,488,750
 5.95%
Publishing1,975,050
 3.34% 1,980,000
 7.92%
Internet services & infrastructure1,823,382
 3.08% 252,625
 1.01%
Integrated telecommunication services1,752,920
 2.96% 700,377
 2.80%
Food retail1,512,994
 2.56% 1,470,123
 5.88%
Metal & glass containers1,485,426
 2.51% 1,488,884
 5.95%
Industrial machinery1,482,142
 2.50% 1,485,091
 5.93%
Healthcare services1,072,729
 1.81% —
 —%
Oil & gas equipment & services1,043,398
 1.76% —
 —%
Construction & engineering1,024,083
 1.73% —
 —%
Oil & gas drilling1,022,946
 1.73% —
 —%
Healthcare distributors1,017,195
 1.72% —
 —%
Auto parts & equipment1,000,000
 1.69% 1,000,000
 4.00%
Oil & gas exploration & production689,047
 1.16% 688,282
 2.75%
Financial exchanges & data516,863
 0.87% —
 —%
Specialized finance170,941
 0.29% —
 —%
Aerospace & defense—
 —
 1,484,303
 5.93%
Total$59,207,088
 100.00% $25,009,879
 100.00%
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



June 30, 2022September 30, 2021
Cost: % of Total Investments% of Total Investments
Managed Health Care$— — %$3,918,152 0.69 %
Interactive Media & Services— — %3,876,279 0.68 %
Thrifts & Mortgage Finance— — %3,748,666 0.66 %
Forest Products— — %1,939,746 0.34 %
Electric Utilities— — %1,641,216 0.29 %
Electronic Components— — %1,375,156 0.24 %
Food Retail— — %249,637 0.04 %
Total$580,967,818 100.00 %$568,303,425 100.00 %
June 30, 2022September 30, 2021
Fair Value: % of Total Investments% of Net Assets% of Total Investments% of Net Assets
Application Software$111,466,001 19.67 %34.25 %$105,949,514 18.42 %30.58 %
Pharmaceuticals29,788,147 5.26 %9.16 %34,958,925 6.08 %10.09 %
Biotechnology23,038,161 4.07 %7.08 %32,486,832 5.65 %9.38 %
Construction & Engineering21,238,442 3.75 %6.53 %20,902,686 3.63 %6.03 %
Industrial Machinery20,415,971 3.60 %6.28 %20,988,046 3.65 %6.06 %
Aerospace & Defense17,848,225 3.15 %5.49 %16,188,169 2.81 %4.67 %
Fertilizers & Agricultural Chemicals17,693,330 3.12 %5.44 %18,311,828 3.18 %5.28 %
Internet & Direct Marketing Retail17,603,064 3.11 %5.41 %17,697,267 3.08 %5.11 %
Health Care Technology17,413,937 3.07 %5.35 %5,649,515 0.98 %1.63 %
Personal Products16,211,459 2.86 %4.98 %29,379,063 5.11 %8.48 %
Data Processing & Outsourced Services15,434,305 2.72 %4.74 %15,774,549 2.74 %4.55 %
Health Care Supplies13,853,910 2.44 %4.26 %8,168,802 1.42 %2.36 %
Automotive Retail13,289,562 2.35 %4.09 %10,657,160 1.85 %3.08 %
Internet Services & Infrastructure13,245,650 2.34 %4.07 %12,211,475 2.12 %3.52 %
Insurance Brokers13,229,472 2.33 %4.07 %14,797,626 2.57 %4.27 %
Health Care Services11,770,676 2.08 %3.62 %15,732,690 2.73 %4.54 %
Home Improvement Retail11,232,511 1.98 %3.45 %11,374,695 1.98 %3.28 %
Health Care Distributors11,117,134 1.96 %3.42 %4,816,700 0.84 %1.39 %
Airport Services10,286,579 1.82 %3.16 %10,086,433 1.75 %2.91 %
Integrated Telecommunication Services9,343,717 1.65 %2.87 %10,928,339 1.90 %3.15 %
Distributors9,324,189 1.65 %2.87 %— — %— %
Metal & Glass Containers9,019,210 1.59 %2.77 %5,564,989 0.97 %1.61 %
Real Estate Services8,511,750 1.50 %2.62 %8,753,513 1.52 %2.53 %
Soft Drinks8,200,366 1.45 %2.52 %8,077,585 1.40 %2.33 %
Cable & Satellite8,076,085 1.43 %2.48 %9,015,930 1.57 %2.60 %
Movies & Entertainment7,821,765 1.38 %2.40 %7,871,723 1.37 %2.27 %
Leisure Facilities7,347,568 1.30 %2.26 %4,430,889 0.77 %1.28 %
Oil & Gas Storage & Transportation7,143,683 1.26 %2.20 %8,771,281 1.52 %2.53 %
Electrical Components & Equipment7,011,752 1.24 %2.16 %7,227,759 1.26 %2.09 %
Other Diversified Financial Services6,931,043 1.22 %2.13 %6,415,445 1.11 %1.85 %
Oil & Gas Refining & Marketing6,222,384 1.10 %1.91 %7,777,211 1.35 %2.24 %
Real Estate Operating Companies5,589,334 0.99 %1.72 %7,120,371 1.24 %2.05 %
IT Consulting & Other Services4,940,733 0.87 %1.52 %5,772,258 1.00 %1.67 %
Specialized Finance4,663,457 0.82 %1.43 %4,578,283 0.80 %1.32 %
Education Services4,637,838 0.82 %1.43 %— — %— %
Environmental & Facilities Services4,610,621 0.81 %1.42 %— — %— %
Home Furnishings4,546,320 0.80 %1.40 %4,771,890 0.83 %1.38 %
Diversified Support Services4,486,003 0.79 %1.38 %4,449,622 0.77 %1.28 %
Health Care Equipment4,376,122 0.77 %1.35 %4,368,523 0.76 %1.26 %
Communications Equipment4,286,802 0.76 %1.32 %4,784,763 0.83 %1.38 %
Paper Packaging3,228,599 0.57 %0.99 %— — %— %
Hotels, Resorts & Cruise Lines3,223,713 0.57 %0.99 %— — %— %
Restaurants3,185,626 0.56 %0.98 %3,396,250 0.59 %0.98 %
Consumer Finance2,219,360 0.39 %0.68 %— — %— %
Leisure Products2,126,813 0.38 %0.65 %8,091,483 1.41 %2.34 %
Air Freight & Logistics2,000,985 0.35 %0.62 %— — %— %



36
 December 31, 2018 September 30, 2018
Fair Value:   % of Total Investments % of Net Assets    % of Total Investments % of Net Assets
Biotechnology$12,960,477
 22.19% 19.52% $1,295,938
 5.14% 4.27%
Pharmaceuticals5,405,724
 9.25% 8.14% 4,389,231
 17.38% 14.45%
Interactive media & services4,281,666
 7.33% 6.45% —
 —% —%
Managed healthcare3,995,000
 6.84% 6.02% 3,992,500
 15.82% 13.15%
Diversified support services3,810,423
 6.52% 5.74% 2,007,500
 7.96% 6.61%
Trading companies & distributors2,992,405
 5.12% 4.51% —
 —% —%
Systems software2,789,535
 4.78% 4.20% —
 —% —%
Application software2,639,665
 4.52% 3.98% 1,381,764
 5.48% 4.55%
Healthcare technology2,335,725
 4.00% 3.52% 1,515,315
 6.01% 4.99%
Publishing1,972,556
 3.38% 2.97% 2,022,500
 8.02% 6.66%
Internet services & infrastructure1,811,169
 3.10% 2.73% 260,015
 1.03% 0.86%
Integrated telecommunication services1,694,538
 2.90% 2.55% 713,210
 2.83% 2.35%
Food retail1,526,742
 2.61% 2.30% 1,470,000
 5.83% 4.84%
Industrial machinery1,466,325
 2.51% 2.21% 1,492,500
 5.91% 4.91%
Metal & glass containers1,458,919
 2.50% 2.20% 1,514,018
 6.00% 4.98%
Oil & gas drilling1,027,200
 1.76% 1.55% —
 —% —%
Healthcare services1,026,057
 1.76% 1.55% —
 —% —%
Healthcare distributors1,002,500
 1.72% 1.51% —
 —% —%
Oil & gas equipment & services990,000
 1.69% 1.49% —
 —% —%
Construction & engineering937,500
 1.60% 1.41% —
 —% —%
Auto parts & equipment933,750
 1.60% 1.41% 1,002,710
 3.97% 3.30%
Oil & gas exploration & production677,250
 1.16% 1.02% 701,015
 2.78% 2.31%
Financial exchanges & data513,506
 0.88% 0.77% —
 —% —%
Specialized finance170,941
 0.29% 0.26% —
 —% —%
Aerospace & defense—
 —
 —
 1,474,390
 5.84% 4.85%
Total$58,419,573
 100.00% 87.99% $25,232,606
 100.00% 83.08%
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2022September 30, 2021
Fair Value: % of Total Investments% of Net Assets% of Total Investments% of Net Assets
Research & Consulting Services$1,536,638 0.27 %0.47 %$2,442,962 0.42 %0.71 %
Housewares & Specialties1,156,522 0.20 %0.36 %689,765 0.12 %0.20 %
Food Distributors1,137,408 0.20 %0.35 %1,501,725 0.26 %0.43 %
Diversified Banks1,063,558 0.19 %0.33 %1,144,401 0.20 %0.33 %
Alternative Carriers1,022,496 0.18 %0.31 %1,001,020 0.17 %0.29 %
Specialty Chemicals648,848 0.11 %0.20 %732,453 0.13 %0.21 %
Construction Materials646,065 0.11 %0.20 %847,865 0.15 %0.24 %
Advertising211,744 0.04 %0.07 %— — %— %
Independent Power Producers & Energy Traders— — %— %7,554,375 1.31 %2.18 %
Airlines— — %— %4,238,488 0.74 %1.22 %
Interactive Media & Services— — %— %4,033,053 0.70 %1.16 %
Managed Health Care— — %— %3,925,150 0.68 %1.13 %
Thrifts & Mortgage Finance— — %— %3,830,807 0.67 %1.11 %
Forest Products— — %— %1,964,238 0.34 %0.57 %
Electric Utilities— — %— %1,578,793 0.27 %0.46 %
Electronic Components— — %— %1,394,255 0.24 %0.40 %
Food Retail— — %— %250,000 0.04 %0.07 %
Total$566,675,653 100.00 %174.21 %$575,429,432 100.00 %166.06 %

Fair Value Measurements
The following table presents the financial instruments carried at fair value as of December 31, 2018June 30, 2022 on the Company's Consolidated Statements of Assets and Liabilities for each of the three levels of hierarchy established by ASC 820:
Level 1Level 2Level 3Total
Senior secured debt$— $104,146,874 $446,871,538 $551,018,412 
Subordinated debt— 325,234 975,527 1,300,761 
Common equity & warrants684,338 — 2,156,690 2,841,028 
Preferred equity— — 11,515,452 11,515,452 
Total investments at fair value$684,338 $104,472,108 $461,519,207 $566,675,653 
Derivative asset— 352,041 — 352,041 
Total assets at fair value$684,338 $104,824,149 $461,519,207 $567,027,694 



37
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  Level 1 Level 2 Level 3 Total
Senior secured debt $—
 $23,110,433
 $26,757,663
 $49,868,096
Subordinated debt —
 6,460,988
 1,560,000
 8,020,988
Common equity —
 —
 530,489
 530,489
Total investments at fair value —
 29,571,421
 28,848,152
 58,419,573
Cash and cash equivalents 16,000,000
 —
 —
 16,000,000
Derivative asset —
 34,535
 —
 34,535
Total assets at fair value $16,000,000
 $29,605,956
 $28,848,152
 $74,454,108

The following table presents the financial instruments carried at fair value as of September 30, 20182021 on the Company's Consolidated Statements of Assets and Liabilities for each of the three levels of hierarchy established by ASC 820:
 Level 1 Level 2 Level 3 TotalLevel 1Level 2Level 3Total
Senior secured debt $—
 $10,403,164
 $11,655,202
 $22,058,366
Senior secured debt$— $117,763,997 $442,162,872 $559,926,869 
Subordinated debt —
 1,674,240
 1,500,000
 3,174,240
Subordinated debt— — 3,888,632 3,888,632 
Common equity & warrantsCommon equity & warrants122,080 — 2,906,215 3,028,295 
Preferred equityPreferred equity— — 8,585,636 8,585,636 
Total investments at fair value $—
 $12,077,404
 $13,155,202
 $25,232,606
Total investments at fair value$122,080 $117,763,997 $457,543,355 $575,429,432 
Derivative assetDerivative asset— 618,004 — 618,004 
Total assets at fair valueTotal assets at fair value$122,080 $118,382,001 $457,543,355 $576,047,436 
When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the fact that the unobservable factors are significant to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to thehave both unobservable or Level 3 components and observable components (i.e. components that are actively quoted and can be validated by external sources). Accordingly, the appreciation (depreciation) in the tables below includes changes in fair value due in part to observable factors that are part of the valuation methodology.
The principal value of the Company's credit facilities payable approximates fair value due to its variable rates and is included in Level 3 of the hierarchy. The principal value of the secured borrowings approximates fair value due to its short-term nature and is included in Level 3 of the hierarchy.
The following table provides a roll-forward inof the changes in fair value from SeptemberMarch 31, 2022 to June 30, 2018 to December 31, 2018,2022, for all investments for which the Company determined fair value using unobservable (Level 3) factors:
  Investments
         
  Senior Secured debt Subordinated Debt Common Equity Total
Fair value as of September 30, 2018 $11,655,202
 $1,500,000
 $—
 $13,155,202
New investments 13,654,560
 —
 642,713
 14,297,273
Redemptions/repayments/sales (20,750) —
 —
 (20,750)
Transfers in (a) 1,514,018
 —
 —
 1,514,018
Capitalized PIK interest income 39,054
 —
 —
 39,054
Accretion of OID 30,582
 55,567
 —
 86,149
Net unrealized appreciation (depreciation) (115,003) 4,433
 (112,224) (222,794)
Fair value as of December 31, 2018 $26,757,663
 $1,560,000
 $530,489
 $28,848,152
Net unrealized appreciation (depreciation) relating to Level 3 assets and liabilities still held at December 31, 2018 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the three months ended December 31, 2018 $(115,003) $4,433
 $(112,224) $(222,794)
Senior Secured DebtSubordinated DebtPreferred EquityCommon Equity & WarrantsTotal
Fair value as of March 31, 2022$465,010,868 $992,043 $12,141,461 $3,472,525 $481,616,897 
Purchases9,542,236 7,197 — 29,278 9,578,711 
Sales and repayments(27,262,439)(30,145)— (5,486)(27,298,070)
Transfers in (a)5,069,253 — — — 5,069,253 
Transfer out (b)— — — (788,800)(788,800)
Capitalized PIK interest income1,208,975 — — — 1,208,975 
Accretion of OID871,669 1,278 — — 872,947 
Net unrealized appreciation (depreciation)(7,566,467)5,154 (626,009)(550,827)(8,738,149)
Net realized gains (losses)(2,557)— — — (2,557)
Fair value as of June 30, 2022$446,871,538 $975,527 $11,515,452 $2,156,690 $461,519,207 
Net unrealized appreciation (depreciation) relating to Level 3 assets still held at June 30, 2022 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the three months ended June 30, 2022$(7,563,889)$5,154 $(626,009)$(556,990)$(8,741,734)
__________
(a) There was a transferwere transfers into Level 3 from Level 2 for one investmentcertain investments during the three months ended December 31, 2018June 30, 2022 as a result of a decreasedchange in the number of market quotes available and/or decreaseda change in market liquidity.

(b) This transfer out was the result of a transaction in which Level 3 common equity was exchanged for Level 1 common equity.



38
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following table provides a roll-forward in the changes in fair value from March 31, 2021 to June 30, 2021, for all investments for which the Company determined fair value using unobservable (Level 3) factors:
Senior Secured DebtSubordinated DebtPreferred EquityCommon Equity & WarrantsTotal
Fair value as of March 31, 2021$368,029,913 $2,193,933 $5,633,293 $1,334,827 $377,191,966 
Purchases45,226,385 52,078 — — 45,278,463 
Sales and repayments(19,473,795)(1,033,584)— — (20,507,379)
Transfers in (a)— — — 854,309 854,309 
Transfers out (a)(b)(5,862,799)— — — (5,862,799)
Capitalized PIK interest income939,198 — — — 939,198 
Accretion of OID1,132,866 3,682 — — 1,136,548 
Net unrealized appreciation (depreciation)112,219 (133,759)153,110 (5,224)126,346 
Net realized gains (losses)24,363 169,214 — — 193,577 
Fair value as of June 30, 2021$390,128,350 $1,251,564 $5,786,403 $2,183,912 $399,350,229 
Net unrealized appreciation (depreciation) relating to Level 3 assets still held at June 30, 2021 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the three months ended June 30, 2021$1,830,135 $14,899 $153,110 $(5,224)$1,992,920 
__________
(a) There was one transfer from senior secured debt to common equity and warrants during the three months ended June 30, 2021 as a result of an investment restructuring, in which $0.9 million of senior secured debt was exchanged for $0.9 million of common equity.
(b) There were transfers from Level 3 to Level 2 for certain investments during the three months ended June 30, 2021 as a result of a change in the number of market quotes available and/or a change in market liquidity.




39
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following table provides a roll-forward of the changes in fair value from September 30, 2021 to June 30, 2022, for all investments for which the Company determined fair value using unobservable (Level 3) factors:
Senior Secured DebtSubordinated DebtPreferred EquityCommon Equity & WarrantsTotal
Fair value as of September 30, 2021$442,162,872 $3,888,632 $8,585,636 $2,906,215 $457,543,355 
Purchases97,249,956 715,863 3,083,857 522,737 101,572,413 
Sales and repayments(93,001,094)(3,797,682)— (192,059)(96,990,835)
Transfers in (a)8,404,983 — — — 8,404,983 
Transfers out (a)(b)(3,851,936)— — (788,800)(4,640,736)
Capitalized PIK interest income3,349,052 56,759 — — 3,405,811 
Accretion of OID3,443,496 84,555 — — 3,528,051 
Net unrealized appreciation (depreciation)(11,159,942)27,400 (154,041)(297,792)(11,584,375)
Net realized gains (losses)274,151 — — 6,389 280,540 
Fair value as of June 30, 2022$446,871,538 $975,527 $11,515,452 $2,156,690 $461,519,207 
Net unrealized appreciation (depreciation) relating to Level 3 assets still held at June 30, 2022 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the nine months ended June 30, 2022$(10,158,136)$476 $(154,041)$(297,792)$(10,609,493)
__________
(a) There were transfers into/out of Level 3 from/to Level 2 for certain investments during the nine months ended June 30, 2022 as a result of a change in the number of market quotes available and/or a change in market liquidity.
(b) One transfer out was the result of a transaction in which Level 3 common equity was exchanged for Level 1 common equity.

The following table provides a roll-forward of the changes in fair value from September 30, 2020 to June 30, 2021, for all investments for which the Company determined fair value using unobservable (Level 3) factors:
Senior Secured DebtSubordinated DebtPreferred EquityCommon Equity & WarrantsTotal
Fair value as of September 30, 2020$205,373,831 $10,164,710 $118,004 $1,826,297 $217,482,842 
Purchases216,199,923 1,498,294 5,137,996 147,268 222,983,481 
Sales and repayments(36,942,230)(11,142,309)— — (48,084,539)
Transfers in (a)— — — 854,309 854,309 
Transfers out (a)(b)(3,417,436)— — — (3,417,436)
Capitalized PIK interest income2,706,557 — — — 2,706,557 
Accretion of OID2,014,710 161,502 — — 2,176,212 
Net unrealized appreciation (depreciation)4,154,794 (728,570)530,403 (643,962)3,312,665 
Net realized gains (losses)38,201 1,297,937 — — 1,336,138 
Fair value as of June 30, 2021$390,128,350 $1,251,564 $5,786,403 $2,183,912 $399,350,229 
Net unrealized appreciation (depreciation) relating to Level 3 assets still held at June 30, 2021 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the nine months ended June 30, 2021$6,585,451 $12,563 $530,403 $(284,762)$6,843,655 
__________
(a) There was one transfer from senior secured debt to common equity and warrants during the nine months ended June 30, 2021 as a result of an investment restructuring, in which $0.9 million of senior secured debt was exchanged for $0.9 million of common equity.



40
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(b) There were transfers out of Level 3 to Level 2 for certain investments during the nine months ended June 30, 2021 as a result of a change in the number of market quotes available and/or a change in market liquidity.
Significant Unobservable Inputs for Level 3 Investments
The following table provides quantitative information related to the significant unobservable inputs for Level 3 investments, which arewere carried at fair value as of December 31, 2018:June 30, 2022:
AssetFair ValueValuation TechniqueUnobservable InputRangeWeighted
Average (a)
Senior secured debt$366,463,230 Market YieldMarket Yield(b)7.0%-25.0%12.7%
77,184,595 Broker QuotationsBroker Quoted Price(c)N/A-N/AN/A
3,223,713 Transaction PrecedentTransaction Price(e)N/A-N/AN/A
Subordinated debt975,527 Market YieldMarket Yield(b)16.0%-18.0%17.0%
Common equity & warrants & preferred equity28,188 Transaction PrecedentTransaction Price(e)N/A-N/AN/A
8,764,367 Enterprise ValueRevenue Multiple(d)0.9x-8.4x8.0x
4,879,587 Enterprise ValueEBITDA Multiple(d)4.8x-17.7x13.3x
Total$461,519,207 
Asset Fair Value Valuation Technique Unobservable Input Range 
Weighted
Average (a)
Senior secured debt $13,366,329
 Market yield technique Market yield (b)9.0% 23.0% 14.5%
  9,470,830
 Broker quotations Broker quoted price (c)N/A N/A N/A
  3,920,504
 Transaction precedent technique Transaction price (d)N/A N/A N/A
Subordinated debt 1,560,000
 Market yield technique Market yield (b)14.0% 16.0% 15.0%
Common equity 530,489
 Market approach (comparable companies) Earnings multiple (e)7.0x 9.0x 8.0x
Total $28,848,152
           
_____________________
(a) Weighted averages are calculated based on fair value of investments.
(b) Used when market participant would take into account market yield when pricing the investment.
(c) The Company generally uses prices provided by an independent pricing service which are non-binding indicative prices on or near the valuation date as the primary basis for the fair value determinations for quoted senior secured debt investments. Since these prices are non-binding, they may not be indicative of fair value. The Company evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Each quoted price is evaluated by the Audit Committee of the Company's Board of Directors in conjunction with additional information compiled by the Adviser, including financial performance, recent business developments and various other factors.Adviser.
(d) Used when market participant would use such multiple when pricing the investment.
(e) Used when there is an observable transaction or pending event for the investment.
(e) Used when market participant would use such multiples when pricing the investment.

The following table provides quantitative information related to the significant unobservable inputs for Level 3 investments, which arewere carried at fair value as of September 30, 2018:2021:
Asset Fair Value Valuation Technique Unobservable Input Range 
Weighted
Average (a)
AssetFair ValueValuation TechniqueUnobservable InputRangeWeighted
Average (a)
Senior secured debt $4,810,938
 Broker quotations Broker quoted price (b)N/A N/A N/ASenior secured debt$337,518,859 Market YieldMarket Yield(b)4.0%-30.0%10.3%
 6,844,264
 Transaction precedent technique Transaction price (c)N/A N/A N/A104,644,013 Broker QuotationsBroker Quoted Price(c)N/A-N/AN/A
Subordinated debt 1,500,000
 Market yield technique Market yield (d)14.0% 16.0% 15.0%Subordinated debt3,888,632 Market YieldMarket Yield(b)12.0%-14.0%12.6%
Common equity & warrants & preferred equityCommon equity & warrants & preferred equity915,261 Enterprise ValueRevenue Multiple(d)1.0x-11.2x2.5x
9,722,281 Enterprise ValueEBITDA multiple(d)6.0x-35.0x30.5x
854,309 Transactions PrecedentTransaction price(e)N/A-N/AN/A
Total $13,155,202
 Total$457,543,355 
_____________________
(a) Weighted averages are calculated based on fair value of investments.
(b) Used when market participant would take into account market yield when pricing the investment.
(c) The Company generally uses prices provided by an independent pricing service which are non-binding indicative prices on or near the valuation date as the primary basis for the fair value determinations for quoted senior secured debt investments. Since these prices are non-binding, they may not be indicative of fair value. The Company evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Each quoted price is evaluated by the Audit Committee of the Company's Board of Directors in conjunction with additional information compiled by the Adviser, including financial performance, recent business developments and various other factors.Adviser.
(c)(d) Used when market participant would use such multiple when pricing the investment.
(e) Used when there is an observable transaction or pending event for the investment.
(d) Used when market participant would take into account market yield when pricing the investment.



41
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Under the market yield technique, the significant unobservable input used in the fair value measurement of the Company's investments in debt securities is the market yield. Increases or decreases in the market yield may result in a lower or higher fair value measurement, respectively.
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Under the market approach (comparable companies),enterprise value technique, the significant unobservable input used in the fair value measurement of the Company's investments is the earnings multiples derived from comparable businesses.EBITDA, revenue or asset multiple, as applicable. Increases or decreases in the earnings multiplevaluation multiples in isolation may result in a higher or lower fair value measurement, respectively.
With the exception of the line items entitled "deferred financing costs," "deferred offering costs" and "other assets," which are reported at amortized cost, all assets and liabilities approximate fair value on the Consolidated Statements of Assets and Liabilities. The carrying value of the line items titled "interest receivable," "receivable for shares sold," "accounts payable, accrued expenses and other liabilities," "base management fee and incentive fee payable," "due to affiliates," "interest payable," "director fees payable" and "payables from unsettled transactions" approximate fair value due to their short maturities.
Note 4. Fee Income
For the three and nine months ended December 31, 2018,June 30, 2022, the Company recorded total fee income of $0.3 million,$558,320 and $1,271,325, respectively, of which less than $0.1 million$58,523 and $166,557, respectively, was recurring in nature. For the three and nine months ended June 30, 2021, the Company recorded total fee income of $1,927,862 and $4,031,867, respectively, of which $11,290 and $25,573, respectively, was recurring in nature. Recurring fee income primarily consisted of servicing fees and exit fees.

Note 5. Share Data and Distributions
Earnings per Share
The following table sets forth the computation of basic and diluted earnings per share, pursuant to FASB ASC Topic 260-10, Earnings per Share, for the three and nine months ended December 31, 2018:June 30, 2022 and 2021:
Three months ended
June 30, 2022		Three months ended
June 30, 2021		Nine months ended
June 30, 2022		Nine months ended
June 30, 2021
Earnings (loss) per common share — basic and diluted:
Net increase (decrease) in net assets resulting from operations$(5,226,508)$9,006,135 $7,836,203 $29,173,724 
Weighted average common shares outstanding17,401,121 17,401,121 17,401,121 17,401,121 
Earnings (loss) per common share — basic and diluted$(0.30)$0.52 $0.45 $1.68 

Changes in Net Assets
The following table presents the changes in net assets for the three and nine months ended June 30, 2022:
Common Stock
SharesPar ValueAdditional Paid-in-CapitalAccumulated Distributable Earnings (Loss)Total Net Assets
Balance at September 30, 202117,401,121 $17,401 $337,337,998 $9,147,810 $346,503,209 
Net investment income— — — 7,550,335 7,550,335 
Net unrealized appreciation (depreciation)— — — (238,721)(238,721)
Net realized gains (losses)— — — 1,072,998 1,072,998 
Provision for income tax (expense) benefit— — — 13,414 13,414 
Distributions to stockholders— — — (13,920,896)(13,920,896)
Balance at December 31, 202117,401,121 $17,401 $337,337,998 $3,624,940 $340,980,339 
Net investment income— — — 9,017,519 9,017,519 
Net unrealized appreciation (depreciation)— — — (4,790,853)(4,790,853)
Net realized gains (losses)— — — 439,361 439,361 
Provision for income tax (expense) benefit— — — (1,342)(1,342)
Distributions to stockholders— — — (7,482,481)(7,482,481)
Balance at March 31, 202217,401,121 $17,401 $337,337,998 $807,144 $338,162,543 
Net investment income— — — 8,687,813 8,687,813 
Net unrealized appreciation (depreciation)— — — (16,688,591)(16,688,591)
Net realized gains (losses)— — — 2,730,439 2,730,439 
Provision for income tax (expense) benefit— — — 43,831 43,831 
Distributions to stockholders— — — (7,656,494)(7,656,494)
Balance at June 30, 202217,401,121 $17,401 $337,337,998 $(12,075,858)$325,279,541 




42
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  Three months ended December 31, 2018
Loss per common share — basic and diluted:  
Net decrease in net assets resulting from operations $(679,093)
Weighted average common shares outstanding 2,682,977
Loss per common share — basic and diluted $(0.25)
The following table presents the changes in net assets for the three and nine months ended June 30, 2021:
Common Stock
SharesPar ValueAdditional Paid-in-CapitalAccumulated Distributable Earnings (Loss)Total Net Assets
Balance at September 30, 202017,401,121 $17,401 $337,337,998 $9,646,368 $347,001,767 
Net investment income— — — 5,139,882 5,139,882 
Net unrealized appreciation (depreciation)— — — 5,185,354 5,185,354 
Net realized gains (losses)— — — 384,604 384,604 
Provision for income tax (expense) benefit— — — (8,017)(8,017)
Distributions to stockholders— — — (16,879,089)(16,879,089)
Balance at December 31, 202017,401,121 $17,401 $337,337,998 $3,469,102 $340,824,501 
Net investment income— — — 5,923,604 5,923,604 
Net unrealized appreciation (depreciation)— — — 2,806,298 2,806,298 
Net realized gains (losses)— — — 741,081 741,081 
Provision for income tax (expense) benefit— — — (5,217)(5,217)
Distributions to stockholders— — — (6,090,393)(6,090,393)
Balance at March 31, 202117,401,121 $17,401 $337,337,998 $6,844,475 $344,199,874 
Net investment income— — — 8,512,379 8,512,379 
Net unrealized appreciation (depreciation)— — — (98,033)(98,033)
Net realized gains (losses)— — — 695,814 695,814 
Provision for income tax (expense) benefit— — — (104,025)(104,025)
Distributions to stockholders— — — (6,960,449)(6,960,449)
Balance at June 30, 202117,401,121 $17,401 $337,337,998 $8,890,161 $346,245,560 

Capital Activity
Through December 31, 2018,As of June 30, 2022 and September 30, 2021, the Company received $337,683,996 incompleted drawdowns of $337,558,996, or 100%, of Capital Commitments from investors in connection with Private Offerings, of which $3,854,346 in Capital Commitments were made by one or more affiliates of the Adviser. As of December 31, 2018, the Company completed drawdowns of $67,536,799, or 20.0%, on such Capital Commitments.
In connection with its formation, theThe Company has the authority to issue 250,000,000 shares of Common Stock, $0.001 per share par value and 100,000,000 shares of preferred stock, $0.001 per share par value. The following table summarizes total shares issued and proceeds related to capital drawdowns delivered pursuant to the Subscription Agreements for the Company’s Common Stock through December 31, 2018:June 30, 2022:
 Shares Issued Price per Share ProceedsShares IssuedPrice per ShareProceeds
August 6, 2018 (1) 770,869
 $20.00
 $15,417,385
August 6, 2018 (1)770,869 $20.00 $15,417,385 
September 17, 2018 770,869
 20.00
 15,417,384
September 17, 2018770,869 20.00 15,417,384 
October 29, 2018 1,060,964
 19.85
 21,060,130
October 29, 20181,060,964 19.85 21,060,130 
November 15, 2018 789,198
 19.82
 15,641,900
November 15, 2018789,198 19.82 15,641,900 
April 29, 2019April 29, 20191,655,314 20.40 33,768,400 
August 30, 2019August 30, 20191,631,324 20.70 33,768,400 
September 23, 2019September 23, 20191,631,323 20.70 33,768,399 
March 26, 2020 (2)March 26, 2020 (2)3,263,385 20.68 67,486,799 
April 30, 2020 (2)April 30, 2020 (2)5,827,875 17.37 101,230,199 
Total 3,391,900
 
 $67,536,799
Total17,401,121 $337,558,996 
__________________
(1)Includes 50 shares issued to one or more affiliates of the Adviser on July 23, 2018.
(1)Includes 50 shares issued to one or more affiliates of the Adviser on July 23, 2018.
(2)For the March 26, 2020 and April 30, 2020 drawdowns, the shares issued exclude 2,418 shares and 4,318 shares, respectively, related to defaulted investors. In connection with these defaults, Capital Commitments and proceeds from capital drawdowns were each reduced by $125,000.



43
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Distributions
Distributions to common stockholders are recorded on the ex-dividend date. The Company is required to distribute dividends each taxabletax year to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, determined without regard to any deduction for dividends paid, in order to be eligible for tax benefits allowed to a RIC under Subchapter M of the Code. The Company anticipates paying out as a distribution all or substantially all of those amounts. The amount to be paid out as a dividend is determined by the Boardboard of Directorsdirectors and is based on management’s estimate of the Company’s annual
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


taxable income. Net realized capital gains, if any, are generallymay be distributed althoughto stockholders or retained for reinvestment.

The following table reflects the distributions per share that the Company may decide to retain such net realized capital gains for investment. There were no distributionshas paid on its common stock during the threenine months ended December 31, 2018.June 30, 2022:

Distribution TypeRecord DatePayment DateAmount
per Share		Cash Distribution
QuarterlyDecember 15, 2021December 28, 2021$0.42 $7,308,472 
SpecialDecember 15, 2021December 28, 20210.38 6,612,424 
QuarterlyMarch 15, 2022March 28, 20220.43 7,482,481 
QuarterlyJune 15, 2022June 30, 20220.44 7,656,494 
$1.67 $29,059,871 

The following table reflects the distributions per share that the Company has paid on its common stock during the nine months ended June 30, 2021:
Distribution TypeRecord DatePayment DateAmount
per Share		Cash Distribution
QuarterlyDecember 15, 2020December 31, 2020$0.35 $6,090,393 
SpecialDecember 15, 2020December 31, 20200.62 10,788,696 
QuarterlyMarch 15, 2021March 26, 20210.35 6,090,393 
QuarterlyJune 15, 2021June 30, 20210.40 6,960,449 
$1.72 $29,929,931 

Note 6. Borrowings
CNB-2 Facility
On October 16, 2018,June 9, 2020 (the “CNB-2 Closing Date”), the Company entered into a revolving creditloan and security agreement, (the “Creditwhich was subsequently amended on March 31, 2021 (as amended, the “CNB-2 Loan Agreement”) between the Company, as borrower, and City National Bank (“CNB”),CNB, as lender. The CreditCNB-2 Loan Agreement provides for a senior secured revolving credit facility (the “Credit“CNB-2 Facility”) of up to $100$60 million (the “Maximum“CNB-2 Facility Maximum Commitment”) in aggregate principal amount, subject to (i) the lesser of a percentage of unfunded commitments from certain classes of(i) the borrowing base, which is an amount determined by applying different rates to eligible investors inassets held by the Company based generally on the value of such assets and (ii) the CNB-2 Facility Maximum Commitment. The maturity date of the CreditCNB-2 Facility is October 15, 2020. June 9, 2023.
Borrowings under the CreditCNB-2 Facility bear interest at a rate equal to (a) the LIBOR for the selected period (subject to a floor of 0.25%) plus 1.65% for LIBOR loans or (b) the prime rate of CNB minus 0.25% for prime rate loans.2.50%. There is a non-usage fee of 2550 basis points per year on the unused portion of the CreditCNB-2 Facility, payable quarterly.annually, if on any anniversary of the CNB-2 Closing Date, the average daily utilization of the CNB-2 Facility is less than $25 million over the prior 365-day period.
The CreditCNB-2 Facility is secured by a first priority security interest subject to customary exceptions, in (i)substantially all Capital Commitments, (ii)of the Company's right to make capital calls, receive payment of capital contributions from investors and enforce payment of capital commitments and capital contributions under the Subscription Agreements with investors and other operative documents and (iii) a cash collateral account into which the capital contributions from investors are made.Company’s assets, including its portfolio investments but excluding those investments held in OSI 2 SPV (as defined below). The Company has made customary representations and warranties and is required to comply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar credit facilities. The Company's borrowings of the Company, including under the CreditCNB-2 Facility, are subject to the leverage restrictions contained in the Investment Company Act.
As of December 31, 2018,June 30, 2022 and September 30, 2021, the Company had $7.0$33.0 million and $51.0 million, respectively, outstanding under the CreditCNB-2 Facility. TheFor the nine months ended June 30, 2022 and 2021, the Company’s borrowings under the CreditCNB-2 Facility bore interest at a weighted average interest rate of 4.03% for the three months ended December 31, 2018.2.88% and 3.05%, respectively. For the three and nine



44
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


months ended December 31, 2018,June 30, 2022, the Company recorded interest expense (inclusive of $0.1 millionfees) of $293,381 and $967,745, respectively, related to the CreditCNB-2 Facility. For the three and nine months ended June 30, 2021, the Company recorded interest expense (inclusive of fees) of $412,780 and $951,038, respectively, related to the CNB-2 Facility.

Citibank Facility
On July 26, 2019 (the “Citibank Closing Date”), the Company and OSI 2 Senior Lending SPV, LLC ("OSI 2 SPV"), a wholly-owned and consolidated subsidiary of the Company, entered into a loan and security agreement, which was subsequently amended on September 20, 2019, July 2, 2020, December 31, 2020 and March 31, 2021 (as amended, the “Citibank Loan Agreement”) with the lenders from time to time party thereto and the other parties referenced below. Under the terms of the Citibank Loan Agreement, the Company serves as the collateral manager and seller and OSI 2 SPV serves as borrower with Citibank, N.A., as administrative agent, and Deutsche Bank Trust Company Americas, as collateral agent.
The Citibank Loan Agreement provides for a senior secured revolving credit facility (the “Citibank Facility”) of up to $250 million (the “Citibank Maximum Commitment”) in aggregate principal amount, subject to the lesser of (i) the borrowing base, which is an amount based on advance rates that vary depending on the class of assets and the value assigned to such assets under the Citibank Loan Agreement and (ii) the Citibank Maximum Commitment. The Citibank Facility has a forty-two (42) month reinvestment period (the “Reinvestment Period”) during which advances may be made and matures sixty-six (66) months from the Citibank Closing Date. Following the Reinvestment Period, OSI 2 SPV will be required to make certain mandatory amortization payments. Borrowings under the Citibank Facility bear interest payable quarterly at a rate per year equal to (a) in the case of a lender that is identified as a conduit lender under the Citibank Loan Agreement, the lesser of (i) the applicable commercial paper rate for such conduit lender and (ii) the LIBOR for a three month maturity and (b) for all other lenders under the Citibank Facility, LIBOR, plus, in each case, an applicable spread. During the Reinvestment Period, the applicable spread is the greater of (i) a weighted average rate of (x) 1.65% per year for broadly syndicated loans and (y) 2.25% per year for all other eligible loans and (ii) 1.85%. After the Reinvestment Period, the applicable spread is 3.00% per year. There is also a non-usage fee of (i) 0.40% per year for the first six months following the Citibank Closing Date (the “Ramp-Up Period”) and (ii) 0.50% per year thereafter, in each case, on the unused portion of the Citibank Facility, payable quarterly; provided that if after the Ramp-Up Period the unused portion of the Citibank Facility is greater than 30% of the commitments under the Citibank Facility, the non-usage fee will be based on an unused portion of 30% of the commitments under the Citibank Facility.
The Citibank Facility is secured by a first priority security interest in substantially all of OSI 2 SPV’s assets.
As part of the Citibank Facility, OSI 2 SPV is subject to certain limitations as to how borrowed funds may be used and the types of loans that are eligible to be acquired by OSI 2 SPV including, but not limited to, restrictions on sector concentrations, loan size, tenor and minimum investment ratings (or estimated ratings). The Citibank Facility also contains certain requirements relating to interest coverage, collateral quality and portfolio performance, certain violations of which could result in the acceleration of the amounts due under the Citibank Facility.
Under the Citibank Facility, the Company and OSI 2 SPV, as applicable, have made customary representations and warranties, and are required to comply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar credit facilities.
OSI 2 SPV’s borrowings are non-recourse to the Company but are considered borrowings of the Company for purposes of complying with the asset coverage requirements under the Investment Company Act.
As of June 30, 2022 and September 30, 2021, the Company had $231.0 million and $200.0 million, respectively, outstanding under the Citibank Facility. The Company’s borrowings under the Citibank Facility bore interest at a weighted average interest rate of 2.69% and 2.36% for the nine months ended June 30, 2022 and 2021, respectively. For the three and nine months ended June 30, 2022, the Company recorded interest expense (inclusive of fees) of $2,063,349 and $4,992,882, respectively, related to the Citibank Facility. For the three and nine months ended June 30, 2021, the Company recorded interest expense (inclusive of fees) of $1,154,709 and $2,794,358, respectively, related to the Citibank Facility.

Secured Borrowings

As of June 30, 2022, the Company had $5.8 million of secured borrowings outstanding, which were recorded as a result of certain securities that were sold and simultaneously repurchased at a premium, with amounts payable to the counterparty due on the repurchase settlement date, which is generally within 120 days of the trade date. The Company's secured borrowings bore interest at a weighted average rate of 3.47% for the nine months ended June 30, 2022. The Company recorded $42,650 and



45
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


$246,222 of interest expense in connection with secured borrowings for the three and nine months ended June 30, 2022, respectively.

Note 7. Taxable/Distributable Income and Dividend Distributions
Taxable income differs from net increase (decrease) in net assets resulting from operations primarily due to: (1) unrealized appreciation (depreciation) on investments and foreign currency, as gains and losses are not included in taxable income until they are realized, and (2) organizational and deferred offering costs.costs and (3) the capital gains incentive fee accrual.
ListedPresented below is a reconciliation of net decreaseincrease (decrease) in net assets resulting from operations to taxable income for the three and nine months ended December 31, 2018:June 30, 2022 and 2021:
Three months
ended
June 30, 2022		Three months
ended
June 30, 2021		Nine months
ended
June 30, 2022		Nine months
ended
June 30, 2021
Net increase (decrease) in net assets resulting from operationsNet increase (decrease) in net assets resulting from operations$(5,226,508)$9,006,135 $7,836,203 $29,173,724 
Net unrealized (appreciation) depreciationNet unrealized (appreciation) depreciation16,688,591 98,033 21,718,165 (7,893,619)
Book/tax differences due to capital gains incentive feeBook/tax differences due to capital gains incentive fee(1,287,059)75,540 (1,988,557)1,655,613 
Book/tax difference due to organizational and deferred offering costsBook/tax difference due to organizational and deferred offering costs(7,601)(7,601)(22,805)(22,805)
Other book/tax differencesOther book/tax differences(546,997)498,154 (1,553,772)1,527,643 
 Three months ended December 31, 2018
Net decrease in net assets resulting from operations $(679,093)
Net unrealized depreciation 963,085
Book/tax difference due to organizational and deferred offering costs 216,878
Other book/tax differences (32,664)
Taxable income (1) $468,206
Taxable income (1)$9,620,426 $9,670,261 $25,989,234 $24,440,556 
__________________
(1)The Company's taxable income for the three months ended December 31, 2018 is an estimate and will not be finally determined until the Company files its tax return for the fiscal year ending September 30, 2019. Therefore, the final taxable income may be different than the estimate.
(1)The Company's taxable income for the three and nine months ended June 30, 2022 is an estimate and will not be finally determined until the Company files its tax return for the fiscal year ending September 30, 2022. Therefore, the final taxable income may be different than the estimate.
For the three months ended June 30, 2022, the Company recognized a total provision for income tax benefit of $43,831, which was comprised of a deferred income tax benefit of $43,831 that resulted from unrealized depreciation on an investment held by a wholly-owned taxable subsidiary. For the nine months ended June 30, 2022, the Company recognized a total provision for income tax benefit of $55,903, which was comprised of a deferred income tax benefit of $60,594 that resulted from unrealized depreciation on an investment held by a wholly-owned taxable subsidiary and a current tax expense of $4,691.
For the three months ended June 30, 2021, the Company recognized a total provision for income tax expense of $104,025, which was comprised of a deferred income tax expense of $101,678 that resulted from unrealized appreciation on an investment held by a wholly-owned taxable subsidiary and a current tax expense of $2,347. For the nine months ended June 30, 2021, the Company recognized a total provision for income tax expense of $117,259, which was comprised of a deferred income tax expense of $104,706 that resulted from unrealized appreciation on an investment held by a wholly-owned taxable subsidiary and a current tax expense of $12,553.
As of September 30, 2018,2021, the Company's tax year end, the components of accumulated undistributed lossesincome on a tax basis were as follows:
Undistributed ordinary loss, net$(189,507)
Net realized capital losses—
Unrealized losses, net$(272,945)
As a RIC, the Company is also subject to a U.S. federal excise tax based on distribution requirements of its taxable income on a calendar year basis. The Company anticipates timely distribution of its taxable income in accordance with tax rules. The Company
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


expects to incur a U.S. federal excise tax of $9,357 for calendar year 2018, which has been recognized on the Company's Consolidated Statement of Operations for the three months ended December 31, 2018.
Undistributed ordinary income, net$6,474,540 
Net realized capital gains$— 
Unrealized gains, net$2,673,270 
The aggregate cost of investments for income tax purposes was $25,492,928$573,402,904 as of September 30, 2018.2021. As of September 30, 2018,2021, the aggregate gross unrealized appreciation for all investments in which there was an excess of value over cost for income tax purposes was $233,353.$28,135,526. As of September 30, 2018,2021, the aggregate gross unrealized depreciation for all investments in which there was an excess of cost for income tax purposes over value was $506,298.$25,462,256. As of September 30, 2018,2021, net unrealized depreciation based on the aggregate cost of investments for income tax purposes was $272,945.$2,673,270.

Note 8. Concentration of Credit Risks
The Company deposits its cash with financial institutions and at times such balances may be in excess of the FDIC insurance limit. The Company limits its exposure to credit loss by depositing its cash with high credit quality financial institutions and monitoring their financial stability.




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OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 9. Related Party Transactions
The Company has entered into an Investment Advisory Agreement with the Adviser. Pursuant to the Investment Advisory Agreement, the Company pays the Adviser a fee for investment advisory and management services consisting of two components - the Management Fee and the Incentive Fee (each as defined below).
Management Fee
Prior to (i) the listing of the Company’s Common Stock on a national securities exchange or (ii) an initial public offering of the Company’s Common Stock that results in gross proceeds to the Company of at least $50 million and a listing of the Common Stock on a national securities exchange (each of (i) and (ii), a “Qualified Listing”), if any, the Adviser is entitled to receive quarterly in arrears a management fee (the “Management Fee”) equal to 1.00% per annum (the “Applicable Management Fee Percentage”) of the Company’s Gross Asset Value (as defined below); provided, that prior to a Qualified Listing, the Management Fee does not exceed 1.75% per annum of the Unleveraged Asset Value (as defined below). From and after the date of a Qualified Listing, if any, the Applicable Management Fee Percentage will increase to 1.50% per annum of the Company’s Gross Asset Value.
For purposes of calculating the Management Fee, the Gross Asset Value is determined by the Company’s board of directors (including any committee thereof). Until (a) the 12-month anniversary of the Initial Closing (as defined below) or (b) the completion of a Qualified Listing, whichever occurs first,August 6, 2019, the Management Fee for each quarter iswas calculated based on the Company’s average Gross Asset Value at the end of each month during such calendar quarter (prior to taking into account any Incentive Fee); provided, that the Management Fee for the Company’s first calendar quarter iswas calculated based on the Company’s Gross Asset Value at the end of such calendar quarter (prior to taking into account any Incentive Fee). Following (a) the 12-month anniversary of the Initial Closing or (b) the completion of a Qualified Listing, whichever occurs first,August 6, 2019, the Management Fee for each quarter will beis calculated based on the Company’s average Gross Asset Value at the end of such quarter and at the end of the preceding quarter (in each case, prior to taking into account any Incentive Fee); provided, that the Management Fee for the calendar quarter in which the Company consummates a Qualified Listing will be calculated based on the Company’s Gross Asset Value at the end of such calendar quarter (prior to taking into account any Incentive Fee). For the three and nine months ended December 31, 2018,June 30, 2022, base management fees were $120,929.$1,363,619 and $4,289,728, respectively. For the three and nine months ended June 30, 2021, base management fees were $1,398,118 and $3,845,876, respectively.
The term “Gross Asset Value” means the value of the Company’s gross assets, determined on a consolidated basis in accordance with GAAP, including portfolio investments purchased with borrowed funds and other forms of leverage, but excluding cash and cash equivalents.
The term “Unleveraged Asset Value” means the Gross Asset Value less the Company’s borrowings for investment purposes determined on a consolidated basis in accordance with GAAP (other than borrowings under the Company’s investor subscription credit facility that are repaid within 180 days following incurrence).


OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Incentive Fee
The Incentive Fee consists of two parts: the Investment Income Incentive Fee and the Capital Gains Incentive Fee (each defined below).
Investment Income Incentive Fee
The Investment Income Incentive Fee is calculated and payable quarterly in arrears based on the Company’s Pre-Incentive Fee Net Investment Income, which means consolidated interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the operating expenses accrued for the quarter (including the Management Fee, Company expenses and any interest expense or fees on any credit facilities or outstanding debt, but excluding the Incentive Fee). The Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero coupon securities), accrued income that has not yet been received in cash. For the avoidance of doubt, the Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. The Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s net



47
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


assets at the end of the immediately preceding calendar quarter, is compared to a hurdle of 1.50% per quarter (6% annualized) (the “Hurdle Rate”). The Company pays the Adviser an Investment Income Incentive Fee each quarter as follows:
(a)Hurdle Rate Return: No Investment Income Incentive Fee in any calendar quarter in which the Pre-Incentive Fee Net Investment Income does not exceed the Hurdle Rate;
(b)Catch-Up: 100% of the Pre-Incentive Fee Net Investment Income, if any, that exceeds the Hurdle Rate but is less than a 1.875% (7.5% annualized) rate of return on the value of the Company’s net assets in such calendar quarter (the “Catch-Up”), which is intended to provide the Adviser with 20% of the Pre-Incentive Fee Net Investment Income as if the Hurdle Rate did not apply, if the Pre-Incentive Fee Net Investment Income exceeds the Hurdle Rate in such calendar quarter; and
(c)80/20 Split: 20% of the Pre-Incentive Fee Net Investment Income, if any, that exceeds a 1.875% (7.5% annualized) rate of return on the value of the Company’s net assets in such calendar quarter, so that once the Hurdle Rate is reached and the Catch-Up in (b) immediately above is achieved, 20% of the Pre-Incentive Fee Net Investment Income thereafter is allocated to the Adviser.
(a)Hurdle Rate Return: No Investment Income Incentive Fee in any calendar quarter in which the Pre-Incentive Fee Net Investment Income does not exceed the Hurdle Rate;
(b)Catch-Up: 100% of the Pre-Incentive Fee Net Investment Income, if any, that exceeds the Hurdle Rate but is less than a 1.875% (7.5% annualized) rate of return on the value of the Company’s net assets in such calendar quarter (the “Catch-Up”), which is intended to provide the Adviser with 20% of the Pre-Incentive Fee Net Investment Income as if the Hurdle Rate did not apply, if the Pre-Incentive Fee Net Investment Income exceeds the Hurdle Rate in such calendar quarter; and
(c)80/20 Split: 20% of the Pre-Incentive Fee Net Investment Income, if any, that exceeds a 1.875% (7.5% annualized) rate of return on the value of the Company’s net assets in such calendar quarter, so that once the Hurdle Rate is reached and the Catch-Up in (b) immediately above is achieved, 20% of the Pre-Incentive Fee Net Investment Income thereafter is allocated to the Adviser.
The foregoing calculations will be appropriately prorated for any period of less than three months and adjusted for any issuances or repurchases of Common Stock during a quarter. For the three and nine months ended December 31, 2018, there was noJune 30, 2022, Investment Income Incentive Fee.Fees were $1,850,189 and $5,816,775, respectively. For the three and nine months ended June 30, 2021, Investment Income Incentive Fees were $2,149,705 and $5,371,468, respectively.
Capital Gains Incentive Fee
In addition to the Investment Income Incentive Fee described above, commencing as of December 31, 2018, the Adviser will beis entitled to receive a Capital Gains Incentive Fee (as defined below). The Capital Gains Incentive Fee is determined and payable in arrears as of the end of each calendar year. The Capital Gains Incentive Fee will beis equal to 20% of the realized capital gains, if any, on a cumulative basis from the date of the Initial Closing through the end of each calendar year, computed net of all realized capital losses on a cumulative basis and unrealized capital depreciation, less the aggregate amount of any previously paid Capital Gains Incentive Fee with respect to each of the investments in the Company’s portfolio, provided, that the Capital Gains Incentive Fee determined as of December 31, 2018 if any, will bewas calculated for a period of shorter than 12 calendar months to take into account any realized capital gains computed net of all realized capital losses and unrealized capital depreciation from the date of the Initial Closing through the end of 2018 (the “Capital Gains Incentive Fee,” and together with the Investment Income Incentive Fee, the “Incentive Fee”Fees”). For the calendar year ended December 31, 2021, the Company incurred $1,231,906 of capital gains incentive fees under the Investment Advisory Agreement.
Although the Capital Gains Incentive Fee due to the Adviser willis not be payable until it is contractually due based on the Investment Advisory Agreement, the Company will accrueaccrues this component at the end of each reporting period based on the Company’s realized capital gains, if any, on a cumulative basis from the date of the Initial Closing through the end of each reporting period, computed net of all realized capital losses on a cumulative basis and unrealized capital depreciation, less the aggregate amount of any previously paid Capital Gains Incentive Fee, as contractually included in the calculation of the Capital Gains Incentive Fee, plus the cumulative amount of unrealized capital appreciation. If such amount is positive at the end of a period, then the Company will accrue an incentive fee equal to 20% of such amount. If such amount is negative, then there will be no accrual for such period or an
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


appropriate reduction in any amount previously accrued. U.S. GAAP requires that the Capital Gains Incentive Fee accrual consider cumulative unrealized capital appreciation in the calculation, as a Capital Gains Incentive Fee would be payable if such unrealized capital appreciation were realized. There can be no assurance that such unrealized capital appreciation will be realized in the future. For the three and nine months ended December 31, 2018,June 30, 2022, the Company reversed $42,021 of previously accrued Capital Gains Incentive Fee.Fees of $1,287,059 and $1,988,557, respectively. For the three and nine months ended June 30, 2021, the Company accrued Capital Gains Incentive Fees of $96,473 and $1,920,041, respectively. As of December 31, 2018,June 30, 2022, there was no Capital Gains Incentive Fee accrued on a net cumulative basis.capital gains incentive fee liability. As of September 30, 2021, the total accrued capital gains incentive fee liability was $3,220,463.
As of December 31, 2018,June 30, 2022 and September 30, 2021, the Company had a liability on its Consolidated Statements of Assets and Liabilities in the amountamounts of $120,929$3,213,805 and $6,433,876, respectively, reflecting the unpaid portion of the base management feeBase Management Fee and Incentive Fees payable to the Adviser. As of September 30, 2018, the Company had a liability on its Consolidated Statements of Assets and Liabilities in the amount of $81,747 reflecting the unpaid portion of the base management fee and incentive fee payable to the Adviser.



48
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Administration Agreement
The Company entered into an administration agreement (the “Administration Agreement”) with Oaktree Fund Administration, LLC (the “Administrator”), an affiliate of the Adviser. Pursuant to the Administration Agreement, the Administrator furnishes the Company with office facilities (certain of which are located in buildings owned by a Brookfield affiliate), equipment and clerical, bookkeeping and recordkeeping services at such facilities. Under the Administration Agreement, the Administrator also performs, or oversees the performance of, the Company’s required administrative services, which include, among other things, providing assistance in accounting, legal, compliance, operations, technology and investor relations, and being responsible for the financial records that the Company is required to maintain and preparing reports to stockholders and reports filed with the SEC. In addition, the Administrator assists the Company in determining and publishing the net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to the Company’s stockholders, and generally overseeing the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others.
Payments under the Administration Agreement are equal to an amount that reimburses the Administrator for its costs and expenses incurred in performing its obligations under the Administration Agreement and providing personnel and facilities. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party, by the vote of a majority of the Company’s outstanding voting securities, or by the vote of the Company’s directors or by the Administrator. In addition, our Administrator entered into a sub-administration agreement (the “Sub-Administration Agreement”) with State Street Bank and Trust Company (“State Street”), pursuant to which State Street provides for certain administrative and professional services. The Company bears all of the costs and expenses of any sub-administration agreements that the Administrator enters into.
For the avoidance of doubt, the Company will bearbears its allocable portion of the costs of the compensation, benefits, and related administrative expenses (including travel expenses) of the Company’s officers who provide operational and administrative services under the Administration Agreement, their respective staffs and other professionals who provide services to the Company (including, in each case, employees of the Administrator or an affiliate) who assist with the preparation, coordination, and administration of the foregoing or provide other “back office” or “middle office” financial or operational services to the Company. The Company will reimbursereimburses the Adviser (or its affiliates) for an allocable portion of the compensation paid by the Adviser (or its affiliates) to such individuals (based on a percentage of time such individuals devote, on an estimated basis, to the Company’s business and affairs and to acting on the Company’s behalf). Our board of directors will reviewreviews the fees payable under the Administration Agreement to determine that these fees are reasonable and comparable to administrative services charged by unaffiliated third parties.
For the three months ended December 31, 2018,June 30, 2022, the Company incurred $217,608$136,224 of expenses under the Administration Agreement.Agreement, of which $108,141 was included in administrator expense and the remaining $28,083 was included in general and administrative expenses on the Consolidated Statements of Operations. For the nine months ended June 30, 2022, the Company incurred $427,588 of expenses under the Administration Agreement, of which $342,356 was included in administrator expense and the remaining $85,232 was included in general and administrative expenses on the Consolidated Statements of Operations. For the three months ended June 30, 2021, the Company incurred $127,319 of expenses under the Administration Agreement, of which $105,792 was included in administrator expense and the remaining $21,527 was included in general and administrative expenses on the Consolidated Statements of Operations. For the nine months ended June 30, 2021, the Company incurred $376,393 of expenses under the Administration Agreement, of which $313,934 was included in administrator expense and the remaining $62,459 was included in general and administrative expenses on the Consolidated Statements of Operations. As of December 31, 2018, $327,093June 30, 2022 and September 30, 2021, $576,181 and $1,055,391, respectively, was included in “Due to affiliates” in the Consolidated Statements of Assets and Liabilities, reflecting the unpaid portion of administrative expenses and other reimbursable expenses. As of September 30, 2018, $1,114,484 was included in “Due to affiliates” in the Consolidated Statements of Assets and Liabilities, reflecting the unpaid portion of administrative expenses and other reimbursable expenses, including deferred offering costs, payable to the Administrator.
Placement Agent Agreement
The Company has entered into a Placement Agent Agreement with OCM Investments, LLC (the “Placement Agent”), an affiliate of the Adviser, which may require investors (other than investors sourced by the Company, the Adviser, the Placement Agent or their respective affiliates) to pay a distribution fee to the Placement Agent for its services. Although the Company willdoes not pay any fees to the Placement Agent, the Company will indemnifyindemnifies the Placement Agent in connection with its activities.



49
OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 10. Financial Highlights
  Three months ended December 31, 2018
Net asset value at beginning of period $19.70
Net investment income (1) 0.10
Net unrealized appreciation (depreciation) (2) (0.32)
Effect of offering price of drawdowns (3) 0.09
Net asset value at end of period $19.57
Total return (4) (0.66)%
Common stock outstanding at beginning of period 1,541,738
Common stock outstanding at end of period 3,391,900
Net assets at beginning of period $30,372,317
Net assets at end of period $66,395,254
Average net assets (5) $52,674,266
Ratio of net investment income to average net assets (6) 0.52 %
Ratio of total expenses to average net assets (6) 1.69 %
Ratio of portfolio turnover to average investments at fair value 3.77 %
Weighted average outstanding debt $2,619,565
Average debt per share (1) $0.98
Asset coverage ratio (7) 1,048.50 %
Three months ended
June 30, 2022		Three months ended
June 30, 2021		Nine months ended
June 30, 2022		Nine months ended
June 30, 2021
Net asset value at beginning of period$19.43 $19.78 $19.91 $19.94 
Net investment income (1)0.50 0.49 1.45 1.12 
Net unrealized appreciation (depreciation) (1)(0.96)— (1.24)0.47 
Net realized gains (losses) (1)0.16 0.04 0.24 0.10 
Provision for income taxes (1)— (0.01)— (0.01)
Distributions of net investment income to stockholders(0.44)(0.40)(1.43)(1.32)
Distributions of capital gains to stockholders— — (0.24)(0.40)
Net asset value at end of period$18.69 $19.90 $18.69 $19.90 
Total return (2)(1.63)%2.64 %2.09 %8.68 %
Common stock outstanding at beginning of period17,401,121 17,401,121 17,401,121 17,401,121 
Common stock outstanding at end of period17,401,121 17,401,121 17,401,121 17,401,121 
Net assets at beginning of period$338,162,543 $344,199,874 $346,503,209 $347,001,767 
Net assets at end of period$325,279,541 $346,245,560 $325,279,541 $346,245,560 
Average net assets (3)$334,116,941 $347,605,099 $341,435,634 $347,149,075 
Ratio of net investment income to average net assets (4)2.60 %2.45 %7.40 %5.64 %
Ratio of total expenses to average net assets (4)1.48 %1.69 %4.75 %4.84 %
Ratio of portfolio turnover to average investments at fair value (4)3.89 %9.44 %23.02 %36.21 %
Weighted average outstanding debt$267,730,862 $221,445,055 $265,234,933 $164,304,029 
Average debt per share (1)$15.39 $12.73 $15.24 $9.44 
Asset coverage ratio (5)220.56 %262.56 %220.56 %262.56 %
(1)Calculated based upon weighted average shares outstanding for the period.
(2)The amount shown does not correspond with the net unrealized appreciation (depreciation) for the period as it includes the effect of the timing of equity issuances.
(3)Increase is due to drawdowns during the period that were executed at an offering price at a premium to net asset value in order to effect a reallocation of organizational costs to subsequent investors.
(4)Total return is calculated as the change in net asset value (“NAV”) per share during the period, plus distributions per share or capital activity, if any, divided by the beginning NAV per share, and has not been annualized.assuming a dividend reinvestment price equal to the NAV per share at the beginning of the period.
(5)(3)Calculated based upon the weighted average net assets for the period.
(6)(4)Financial results for the three and nine months ended December 31, 2018June 30, 2022 and 2021 have not been annualized for purposes of this ratio.
(7)(5)Based on outstanding senior securities of $7.0$269.8 million and $213.0 million as of December 31, 2018.June 30, 2022 and 2021, respectively.





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OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 11. Commitments and Contingencies
Off-Balance Sheet Arrangements
The Company may beis a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its portfolio companies. As indicated in the table below, as of December 31, 2018,June 30, 2022 and September 30, 2021, off-balance sheet arrangements consisted of $9,541,809$29,975,431 and $48,497,448, respectively, of unfunded commitments to provide debt financing. Asand equity financing to certain of September 30, 2018, off-balance sheet arrangements consisted of $88,235 of unfunded commitments to provide debt financing.the Company's portfolio companies. Such commitments are subject to the portfolio companies'company's satisfaction of certain financial and nonfinancial covenants and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Consolidated Statements of Assets and Liabilities.
June 30, 2022September 30, 2021
Athenex, Inc.$6,242,124 $6,242,124 
BioXcel Therapeutics, Inc.3,290,615— 
BAART Programs, Inc.2,404,5781,087,000 
Innocoll Pharmaceuticals Limited1,509,774— 
Marinus Pharmaceuticals, Inc.1,405,4004,497,280 
Accupac, Inc.1,402,026913,612 
RumbleOn, Inc.1,165,4763,939,637 
Pluralsight, LLC1,057,9321,057,932 
Grove Hotel Parcel Owner, LLC992,930— 
Mesoblast, Inc.852,520— 
Mindbody, Inc.761,905761,905 
Thrasio, LLC666,700666,700 
Dialyze Holdings, LLC630,750630,750 
OTG Management, LLC610,476610,476 
PRGX Global, Inc.609,399609,399 
Liquid Environmental Solutions Corporation557,926— 
CorEvitas, LLC557,5001,181,433 
Relativity ODA LLC543,700543,700 
Assembled Brands Capital LLC513,5262,690,942 
MRI Software LLC461,191693,399 
Tahoe Bidco B.V.420,825— 
Acquia Inc.412,369431,113 
ASP-R-PAC Acquisition Co LLC395,957— 
PFNY Holdings, LLC366,409— 
MHE Intermediate Holdings, LLC357,143866,429 
LSL Holdco, LLC307,709— 
Telestream Holdings Corporation300,600360,720 
Kings Buyer, LLC289,831— 
Apptio, Inc.276,923 276,923 
Berner Food & Beverage, LLC269,268 598,373 
Digital.AI Software Holdings, Inc.217,758 236,693 
109 Montgomery Owner LLC124,191 226,821 
Coty Inc.— 6,352,000 
Gulf Operating, LLC— 3,470,000 
Latam Airlines Group S.A.— 1,883,102 
Sunland Asphalt & Construction, LLC— 1,767,564 
NeuAG, LLC1,551,000 
SumUp Holdings Luxembourg S.À.R.L.— 1,406,325 
Olaplex, Inc.— 1,026,000 
Thermacell Repellents, Inc.— 833,333 
SIO2 Medical Products, Inc.— 617,786 
The Avery— 466,977 
$29,975,431 $48,497,448 




51
  December 31, 2018 September 30, 2018
Assembled Brands Capital LLC $4,323,153
 $—
Sorrento Therapeutics, Inc. 4,000,000
 —
US Well Services, LLC 933,333
 —
Access CIG, LLC 197,088
 —
iCIMs, Inc. 88,235
 88,235
  $9,541,809
 $88,235

OAKTREE STRATEGIC INCOME II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 12. Derivative Instruments
The Company enters into foreign currency forward currency contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. As of December 31, 2018,
In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty to these forward currency contracts wasrisk, the Company entered into an International Swaps and Derivatives Association, Inc. Master Agreement ("ISDA Master Agreement") with its derivative counterparty, The Bank of New York Mellon. The ISDA Master Agreement permits a single net payment in the event of a default or similar event. As of June 30, 2022, no cash collateral has been pledged to cover obligations and no cash collateral has been received from the counterparty with respect to the Company's foreign currency forward contracts.
Net unrealized gains or losses on foreign currency forward contracts are included in “net unrealized appreciation (depreciation)” and net realized gains or losses on foreign currency forward currency contracts are included in “net realized gains (losses)” in the accompanying Consolidated StatementStatements of Operations. ForwardForeign currency forward contracts are considered undesignated derivative instruments.
Certain information related to the Company’s foreign currency forward contracts is presented below as of December 31, 2018.June 30, 2022.
DescriptionNotional Amount to be PurchasedNotional Amount to be SoldMaturity DateGross Amount of Recognized AssetsGross Amount of Recognized LiabilitiesBalance Sheet Location of Net Amounts
Foreign currency forward contract$13,453,877 €12,710,431 8/11/2022$129,570 $— Derivative asset
Foreign currency forward contract$15,497,227 £12,568,533 8/11/2022$222,471 $— Derivative asset
$352,041 $— 
Certain information related to the Company’s foreign currency forward contracts is presented below as of September 30, 2021.
DescriptionNotional Amount to be PurchasedNotional Amount to be SoldMaturity DateGross Amount of Recognized AssetsGross Amount of Recognized LiabilitiesBalance Sheet Location of Net Amounts
Foreign currency forward contract$13,551,234 €11,534,208 11/12/2021$173,075 $— Derivative asset
Foreign currency forward contract$17,392,336 £12,568,533 11/12/2021$444,929 $— Derivative asset
$618,004 $— 





52
Description Notional Amount to be Purchased Notional Amount to be Sold Maturity Date Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Balance Sheet Location of Net Amounts
Foreign currency forward contract $2,881,172
 €2,475,000
 3/14/2019 $34,535
 $—
 Derivative asset
OAKTREE STRATEGIC INCOME II, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 13. Subsequent Events
The Company's management evaluated subsequent events through the date of issuance of the consolidated financial statements. There have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in, the consolidated financial statements as of and for the three and nine months ended December 31, 2018.June 30, 2022, except as discussed below.

Distribution Declaration
On August 5, 2022, the Company's Board of Directors approved a quarterly distribution of $0.44 per share, payable in cash on September 27, 2022 to the Company's stockholders of record as of the close of business on September 15, 2022.




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Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the notes thereto included elsewhere in this quarterly report on Form 10-Q.
Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or ourthe future performance or financial condition.condition of Oaktree Strategic Income II, Inc. (together with its subsidiaries, where applicable, the "Company", which may also be referred to as "we," "us" or "our"). The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to:

•our future operating results and distribution projections;
•the ability of our AdviserOaktree Fund Advisors, LLC (our "Adviser" or "Oaktree") to implement its future plans with respect to our business and to achieve our investment objective;
•the ability of Oaktree and its affiliates to attract and retain highly talented professionals;
•our business prospects and the prospects of our portfolio companies;
•the impact of the investments that we expect to make;
•the ability of our portfolio companies to achieve their objectives;
•our expected financings and investments;investments and additional leverage we may seek to incur in the future;
•the adequacy of our cash resources and working capital; and
•the timing of cash flows, if any, from the operations of our portfolio companies.companies; and
•the impact of the COVID-19 pandemic and the conflict between Russia and Ukraine on all of the foregoing.
In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Item 1A. Risk Factors” in our annual report on Form 10-K for the year ended September 30, 20182021 and in this quarterly report on Form 10-Q and elsewhere in this quarterly report on Form 10-Q.
Other factors that could cause actual results to differ materially include:
•changes or potential disruptions in our operations, the economy, financial markets andor political environment;
•risks associated with possible disruption in our operations, the operations of our portfolio companies or the economy generally due to terrorism, war or other geopolitical conflict (including the current conflict between Russia and Ukraine), natural disasters;disasters or the COVID-19 pandemic;
•future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to business development companies ("BDCs") or RICs;regulated investment companies ("RICs");
•general considerations associated with the COVID-19 pandemic; and
•other considerations that may be disclosed from time to time in our publicly disseminated documents and filings.
We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC,Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Business Overview
We are structured as a closed-end investment company focused on lending to small-and medium-sized companies. We have elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and intend to electhave elected to be treated, and intend to comply with the requirements to qualify annually, as a RIC under Subchapter M of the Code.Internal Revenue Code of 1986, as amended (together with the rules and regulations promulgated thereunder, the “Code”).
We were formed on April 30, 2018 as a Delaware corporation and are externally managed by our Adviser pursuant to an investment advisory agreement (the “Investment Advisory Agreement”) between us and our Adviser, which was approved by our board of directors most recently on August 6, 2021. From July 9, 2018 through May 11, 2020, we were managed by Oaktree Capital Management, L.P., an affiliate of our Adviser. We seek to invest opportunistically across asset classes and



54

geographies, primarily in the form of senior loans, and to a lesser extent, high yield bonds, to borrowers that are in need of direct loans, rescue financings or other capital solutions or that have had challenged or unsuccessful primary offerings. Our investment objective is to generate current income and long-term capital appreciation. We seek to achieve our investment objective without subjecting principal to undue risk of loss by investing primarily in situations where a company or its owners (a) are overleveraged or facing pressures to recapitalize, (b) are unable to access broadly syndicated capital markets, (c) are undervalued after having recently exited bankruptcy or completed a restructuring or (d) are otherwise affected by mispricings or inefficiencies in the capital markets or at different points throughout the credit cycle. We seek to generate revenues primarily in the form of interest income from the investments we hold.
In the current market environment, Oaktree intends to focus primarily on the following areas, in which Oaktree believes there is less competition and thus potential for greater returns, for new investment opportunities: (1) situational lending, which we define to include directly originated loans to non-sponsor companies that are hard to understand and value using traditional underwriting techniques, (2) select sponsor lending, which we define to include financing to support leveraged buyouts of companies with specialized sponsors that have expertise in certain industries, and (3) stressed sector and rescue lending, which we define to include opportunistic private loans in industries experiencing stress or limited access to capital.
We conduct Private Offeringsconducted private offerings (each, a “Private Offering”) of shares of our common stock ("Common StockStock") to investors in reliance on exemptions from the registration requirements of the Securities Act.Act of 1933, as amended (the “Securities Act”). At each Closing of a Private Offering, each investor participating in that closing makesmade a Capital Commitmentcapital commitment (each, a “Capital Commitment") to purchase our Common Stock pursuant to a Subscription Agreementsubscription agreement entered into with us in connection with its Capital Commitment.Commitment (“Subscription Agreement”). Investors arewere required to fund drawdowns to purchase our Common Stock up to the amount of their respective Capital Commitments on an as-needed basis.basis with a minimum of ten calendar days' prior notice (excluding the initial drawdown for each investor). The Initial Closinginitial closing of a Private Offering occurred on August 6, 2018. Loan origination and investment activities commenced shortly after the Initial Closing. As of December 31, 2018 we raised $337,683,996 in total Capital Commitments from investors in connection with Private Offerings.
(the “Initial Closing”). We commenced our loan origination and investment activities shortly after the Initial Closing.our initial capital drawdown from our non-affiliated investors (the "Initial Drawdown"). The proceeds from the Initial ClosingDrawdown provided us with the necessary seed capital to commence operations. As of December 31, 2018,June 30, 2022, we completed drawdowns of

$67,536,799, $337,558,996, or 20%100%, onof Capital Commitments. AsCommitments from investors in connection with Private Offerings, of December 31, 2018, we held $58,419,573which $3,854,346 in Capital Commitments were made by one or more affiliates of investments at fair value, up from $25,232,606 held at September 30, 2018.the Adviser.
Business Environment and Developments
We believe thatGlobal financial markets have experienced an increase in volatility as concerns about the shiftimpact of commercial banks away from lendinghigher inflation, rising interest rates, a potential recession, the current conflict in Ukraine and the ongoing uncertainty related to middle-marketthe COVID-19 pandemic have weighed on market participants. These factors have created disruptions in supply chains and economic activity and have had a particularly adverse impact on certain companies followingin the 2008 financial crisis, including as a resultenergy, raw materials and transportation sectors, among others. These uncertainties can ultimately impact the overall supply and demand of the passage of the Dodd-Frank Wall Street Reformmarket through changing spreads, deal terms and Consumer Protection Act,structures and the adoption of the Basel III Accord continues to create opportunities for non-bank lenders such as us. We believe middle-market companies represent a significant opportunity for direct lending as there are nearly 200,000 middle-market businesses, representing one-third of private sector gross domestic product and accounting for approximately 48 million jobs according to the National Center for the Middle Market. In addition, according to the S&P Global Market Intelligence LCD Middle Market Review, there was a total of $10.7 billion of syndicated middle market loan issuance in calendar year 2018.equity purchase price multiples.
We believe that quantitative easing and other similar monetary policies implemented by central banks worldwide in reactionare unable to predict the 2008 financial crisis have created significant inflowsfull effects of capital, including from private equity sponsors, focused on yield-driven products such as sub-investment grade debt. While we believe that private equity sponsorsthese macroeconomic events or how long any further market disruptions or volatility might last. We continue to closely monitor the impact these events have a large pool of available capitalon our business, industry and portfolio companies and will continue to pursue acquisitions in the middle market, increased competition from other lenders to middle-market companies together with increased capital focused on the sector have led to spread compression across the middle market, resulting in spreads near historically low levels.provide constructive solutions where necessary.
We believe that the fundamentals of middle-market companies remain strong. In
Against this environment,uncertain macroeconomic backdrop, we believe attractive risk-adjusted returns can be achieved by investing inmaking loans to middle market companies that cannot efficiently access traditional debt capital markets. Wetypically possess resilient business models with strong underlying fundamentals. Given the breadth of the investment platform and decades of credit investing experience of Oaktree and its affiliates, we believe that the Company haswe have the resources and experience to source, diligence and structure investments in these companies and isare well placed to generate attractive returns for investors.
As of June 30, 2022, 92.3% of our debt investment portfolio (at fair value) and 92.5% of our debt investment portfolio (at cost) bore interest at floating rates. Most of our floating rate loans are indexed to the LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly or monthly at the borrower’s option. Certain loans are also indexed to the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements, backed by Treasury Securities, or the Sterling Overnight Index Average ("SONIA"), an alternative reference rate that is based on transactions. In July 2017, the head of the United Kingdom Financial Conduct Authority (the "FCA") announced the desire to phase out the use of LIBOR by the end of 2021. However, in March 2021 the FCA announced that most U.S. dollar LIBOR would continue to be published through June 30, 2023 effectively extending the LIBOR transition period to June 30, 2023. The FCA no longer compels panel banks to continue to contribute to LIBOR and the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation encouraged banks to cease entering into new contracts that use U.S. dollar LIBOR as a reference rate no later than December 31, 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, supports replacing U.S.-dollar LIBOR with SOFR. Although there have been issuances utilizing SOFR or SONIA,



55

it is unknown whether these alternative reference rates will attain market acceptance as replacements for LIBOR. In anticipation of the cessation of LIBOR, we may need to renegotiate any credit agreements extending beyond the applicable phase out date with our prospective portfolio companies that utilize LIBOR as a factor in determining the interest rate. Certain of the loan agreements with our portfolio companies have included fallback language in the event that LIBOR becomes unavailable. This language generally provides that the administrative agent may identify a replacement reference rate, typically with the consent of (or prior consultation with) the borrower. In certain cases, the administrative agent will be required to obtain the consent of either a majority of the lenders under the facility, or the consent of each lender, prior to identifying a replacement reference rate. Certain of the loan agreements with our portfolio companies do not include any fallback language providing a mechanism for the parties to negotiate a new reference interest rate and will instead revert to the base rate in the event LIBOR ceases to exist.
Critical Accounting PoliciesEstimates
Basis of Presentation
Our accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments of a normal recurring nature considered necessary for the fair presentation of the consolidated financial statements have been made. All intercompany balances and transactions have been eliminated. We are an investment company following the accounting and reporting guidance in Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 946, Financial Services – Investment Companies, or ASC 946.
Investment ValuationFair Value Measurements
Our board of directors, with the assistance of our audit committee (the “Audit Committee”) and the Adviser, determines the fair value of our assets on at least a quarterly basis, in accordance with the terms of FASB ASC Topic 820, Fair Value Measurement. The Audit Committee is comprised of independent directors. Our investments are valued at fair value. For purposes of periodic reporting, the Adviser will value ourCompany values its assets in accordance with GAAP and based on the principles and methods of valuation summarized below. GAAP requires that a “fair value” be assigned to all assets and establishes a single authoritative definition of fair value that includes a framework for measuring fair value and enhanced disclosures about fair value measurements.
GAAP establishes a hierarchal disclosure framework, which prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market price observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.
Financial assets and liabilities measured and reported at fair value are classified as follows:

•Level I - Quoted unadjusted prices for identical instruments in active markets to which we have access at the date of measurement. The types of investments in Level I include exchange traded equities, debt and derivatives with quoted prices.

•Level II - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are directly or indirectly observable. Level II inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates. The types of investments in Level II generally include corporate bonds and loans, government and

agency securities, less liquid and restricted equity investments, over-the-counter traded derivatives and other investments where the fair value is based on observable inputs.

•Level III - Valuations for which one or more significant inputs are unobservable. These inputs reflect our assessment of the assumptions that market participants use to value the investment based on the best available information. Level III inputs include prices of quoted securitiesobtained from brokers in markets for which there are few transactions, less public information exists or prices vary among brokeredbroker market makers. The types of investments in Level III include non-publicly traded equity, debt, real estate and derivatives.

In some instances, an instrument may fall into different levels of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level III being the lowest) that is significant to the value measurement. The assessment of the significance of an input requires judgment and considers factors specific to the instrument. The transfer of assets into or out of each fair value hierarchy level as a result of changes in the observability of the inputs used in measuring fair value are accounted for as of the beginning of the reporting period. Transfers resulting from a specific event, such as a reorganization or restructuring, are accounted for as of the date of the event that caused the transfer.
In the absence of observable market prices, we value Level III investments using valuation methodologies applied on a consistent basis. The quarterly valuation process for Level III investments begins with each portfolio company, property or security being initially valued by the Adviser's valuation team in conjunction with the investment team. The preliminary



56

valuations are then reviewed and approved by the valuation team, the valuation committee, which consists of senior members of the investment team, and designated investment professionals as well as the valuation officer who is independent of the investment teams and reports directly to our Adviser's Chief Financial Officer.teams. The Audit Committee reviews the preliminary valuations provided by the valuation committee and makes a recommendation to our full board of directors regarding the fair value of the investments in our portfolio. Our board of directors ultimately determines in good faith the fair value of each investment in our portfolio. Results of the valuation process are evaluated each quarter, including an assessment of whether the underlying calculations should be adjusted or recalibrated. In connection with this process, we evaluate changes in fair value measurements from period to period for reasonableness, considering items such as industry trends, general economic and market conditions, and factors specific to the investment.
Certain Level III assets are valued using prices obtained from pricing vendors or brokers. These investments are classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities or may require adjustment for investment-specific factors or restrictions. We will seek to obtain at least two quotations for the subject or similar securities, typically from pricing vendors. If we are unable to obtain two quotes from pricing vendors, or if the prices obtained from pricing vendors are not within our set threshold, we will seek to obtain a quote directly from a broker making a market for the asset. However, given the anticipated nature of our portfolio, we do not expect that all of our Level III assets will be valued at least annually using prices obtained from pricing vendors or brokers. Generally, we do not adjust any of the prices received from these sources, and all prices are reviewed by us. We evaluate the prices obtained from pricing vendors or brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. WeThe Adviser also performperforms back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, we performthe Adviser performs due diligence procedures over pricing vendors to understand their methodology and controls to support their use in the valuation process.
Non-publicly traded debt and equity securities and other securities or instruments for which reliable market quotations are not available are valued by us using valuation methodologies applied on a consistent basis. These securities may initially be valued at the acquisition price as the best indicator of fair value. We review the significant unobservable inputs, valuations of comparable investments and other similar transactions for investments valued at acquisition price to determine whether another valuation methodology should be utilized. Subsequent valuations will depend on facts and circumstances known as of the valuation date and the application of valuation methodologies further described below under “–Non-Exchange-Traded Investments.” The fair value may also be based on a pending transaction expected to close after the valuation date. These valuation methodologies involve a significant degree of management judgment. Accordingly, valuations do not necessarily represent the amounts which may eventually be realized from sales or other dispositions of investments.investments in the future. Fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the consolidated financial statements.
Exchange-Traded Investments
Securities listed on one or more national securities exchanges are valued at their last reported sales price on the date of valuation. If no sale occurred on the valuation date, the security is valued at the mean of the last “bid” and “ask” prices on the valuation date. Securities that are not marketable due to legal restrictions that may limit or restrict transferability are generally valued at a discount from quoted market prices. The discount would reflect the amount market participants would require due to the risk relating to the inability to access a public market for the security for the specified period and would vary depending on the nature and duration of the restriction and the risk and volatility of the underlying securities. Securities with longer duration restrictions or higher volatility are generally valued at a higher discount. Such discounts are generally estimated based on put option models or analysis of market studies. Instances

where discounts have been applied to quoted prices of restricted listed securities have been infrequent. The impact of such discounts is not material to the consolidated financial statements.
Non-Exchange-Traded Investments
Investments in corporate and government debt which are not listed or admitted to trading on any securities exchange are valued at the mean of the last bid and ask prices on the valuation date based on quotations supplied by recognized quotation services or by reputable broker dealers.
If the quotations obtained from pricing vendors or brokers are determined to not be reliable or are not readily available, we value such investments using different valuation techniques. One valuation technique is the transaction precedent technique, which utilizes recent or expected future transactions of the investment to determine fair value, to the extent applicable. The market yield approachtechnique is considered in the valuation of non-publicly traded debt investments, utilizing expected future cash flows, discounted using estimated current market rates. Discounted cash flow calculations may be adjusted to reflect current market conditions and/or the perceived credit risk of the borrowers. Consideration is also given to a borrower’s ability to meet principal and interest obligations; this may include an evaluation of collateral or the underlying value of the borrower, utilizing either the market or income techniques. A market technique utilizes valuations of comparable public companies or transactions and generally seeks to establish the enterprise value of the portfolio company using a market multiple



57

technique. This technique takes into account a specific financial measure (such as earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, free cash flow, net operating income, net income, book value or net asset value) believed to be most relevant for the given company. Consideration may also be given to such factors as acquisition price of the security, historical and projected operational and financial results for the portfolio company, the strengths and weaknesses of the portfolio company relative to its comparable companies, industry trends, general economic and market conditions and other factors deemed relevant. The income technique is typically a discounted cash flow method that incorporates expected timing and level of cash flows. It incorporates assumptions in determining growth rates, income and expense projections, discount rates, capital structure, terminal values and other factors. The applicability and weight assigned to market and income techniques are determined based on the availability of reliable projections and comparable companies and transactions.
Under the market and income techniques, the significant unobservable input used in the fair value measurement of our investments in debt or equity securities is EBITDA, revenue or asset multiple, as applicable. Increases or decreases in the valuation multiples in isolation may result in a higher or lower fair value measurement, respectively. Under the market yield technique, the significant unobservable input used in the fair value measurement of the Company's investments in debt securities is the market yield. Increases or decreases in the market yield may result in a lower or higher fair value measurement, respectively.
The valuation of securities may be impacted by expectations of investors’ receptiveness to a public offering of the securities, the size of the holding of the securities and any associated control, information with respect to transactions or offers for the securities (including the transaction pursuant to which the investment was made and the period of time elapsed from the date of the investment to the valuation date) and applicable restrictions on the transferability of the securities.
Investments made by us are, by nature, generally considered to be long-term investments and are not intended to be liquidated on a short-term basis. Accordingly, valuations by us do not necessarily represent amounts that could be realized on the valuation date or amounts that eventually will be realized from sales or other dispositions of investments in the future.
Additionally, these valuation methodologies involve a significant degree of management judgment. Accordingly, valuations by us do not necessarily represent the amounts which may eventually be realized from sales or other dispositions of investments.investments in the future. Estimated fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the consolidated financial statements.
We may estimate the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an enterprise value analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk-free rate. Changes in the subjective input assumptions can materially affect the fair value estimates.
With the exception of the line items entitled "deferred financing costs," "other assets," "deferred tax liability," "secured borrowings" and "credit facilities payable," which are reported at amortized cost, all assets and liabilities on the Consolidated Statements of Assets and Liabilities approximate fair value. The carrying value of the line items titled "interest receivable," "receivables from unsettled transactions," "accounts payable, accrued expenses and other liabilities," "base management fee and incentive fees payable," "due to affiliates," "interest payable," "director fees payable" and "payables from unsettled transactions" approximate fair value due to their short maturities.
As of June 30, 2022, investments at fair value were $566,675,653, down from $575,429,432 held at September 30, 2021, primarily driven by unrealized losses related to credit spread widening, partially offset by new originations during the nine months ended June 30, 2022.
Revenue Recognition
We generate revenues in the form of interest income on debt investments and, to a lesser extent, capital gains and distributions, if any, on equity securities that we may acquire in portfolio companies. Some of our investments may provide for deferred interest payments or payment-in-kind ("PIK") interest.interest income. The principal amount of the debt investments and any accrued but unpaid interest generally becomes due at the maturity date.
Interest Income
Interest income, adjusted for accretion of original issue discount or OID,("OID"), is recorded on an accrual basis to the extent that such amounts are expected to be collected. We stop accruing interest on investments when it is determined that interest is no longer collectible. Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when there is reasonable doubt that principal or interest cash payments will be collected. Cash interest payments received on investments may be recognized as income or a return of capital depending upon management’s judgment. A non-accrual investment is restored to accrual status if past due principal and interest are paid in cash, and the portfolio company, in management’s judgment, is likely to continue timely payment of its remaining obligations. As of December 31, 2018, there were no investments on which we had stopped accruing cash interest and/or PIK interest or OID income.



58

In connection with our investment in a portfolio company, we sometimes receive nominal cost equity that is valued as part of the negotiation process with the portfolio company. When we receive nominal cost equity, we allocate our cost basis in the investment between debt securities and the nominal cost equity at the time of origination. Any resulting discount from recording the loan, or otherwise purchasing a security at a discount, is accreted into interest income over the life of the loan.
Fee Income
Oaktree may provide financial advisory services to portfolio companiesFor our secured borrowings, the interest earned on the entire loan balance is recorded within interest income and in return we may receive fees for capital structuring services. These fees are generally nonrecurring and are recognizedthe interest earned by us upon the investment closing date. We may also receive

additional feescounterparty is recorded within interest expense in the ordinary courseConsolidated Statements of business, including servicing, amendment, and prepayment fees, which are classified as fee income and recognized as they are earned or the services are rendered.
We have also structured exit fees across certain of our portfolio investments to be received upon the future exit of those investments. Exit fees are payable upon the exit of a debt security. These fees are to be paid to us upon the sooner to occur of (i) a sale of the borrower or substantially all of the assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs. The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments. A percentage of these fees is included in net investment income over the life of the loan.Operations.
PIK Interest Income
Our investments in debt securities may contain PIK interest provisions. PIK interest, which generally represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. We generally cease accruing PIK interest if there is insufficient value to support the accrual or if we do not expect the portfolio company to be able to pay all principal and interest due. Our decision to cease accruing PIK interest on a loan or debt security involves subjective judgments and determinations based on available information about a particular portfolio company, including whether the portfolio company is current with respect to its payment of principal and interest on its loans and debt securities; financial statements and financial projections for the portfolio company; our assessment of the portfolio company's business development success; information obtained by us in connection with periodic formal update interviews with the portfolio company's management and, if appropriate, the private equity sponsor; and information about the general economic and market conditions in which the portfolio company operates. Based on this and other information, we determine whether to cease accruing PIK interest on a loan or debt security. Our determination to cease accruing PIK interest is generally made well before our full write-down of a loan or debt security. In addition, if it is subsequently determined that we will not be able to collect any previously accrued PIK interest, the fair value of the loans or debt securities would be reduced by the amount of such previously accrued, but uncollectible, PIK interest. The accrual of PIK interest on our debt investments increases the recorded cost bases of these investments in our consolidated financial statements and, as a result, increases the cost bases of these investmentsincluding for purposes of computing the capital gains incentive fee payable by us to Oaktree.the Adviser. To maintain our status as a RIC, certain income from PIK interest may be required to be distributed to our stockholders even though we have not yet collected the cash and may never do so.
As of each of June 30, 2022 and September 30, 2021, there were no investments on non-accrual status.



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Portfolio Composition
As of December 31, 2018,June 30, 2022, the fair value of our investment portfolio was $58.4$566.7 million and was comprised of investments in 35115 portfolio companies. As of September 30, 2018,2021, the fair value of our investment portfolio was $25.2$575.4 million and was comprised of investments in 16108 portfolio companies.
As of December 31, 2018June 30, 2022 and September 30, 2018,2021, our investment portfolio consisted of the following:
 June 30, 2022September 30, 2021
Cost:
Senior Secured Debt97.50 %97.57 %
Preferred Equity1.78 %1.28 %
Common Equity & Warrants0.50 %0.46 %
Subordinated Debt0.22 %0.69 %
Total100.00 %100.00 %
  December 31, 2018 September 30, 2018
Cost:    
Senior secured debt $50,271,610
 $21,868,595
Subordinated debt 8,292,765
 3,141,284
Common equity 642,713
 —
Total $59,207,088
 $25,009,879

 June 30, 2022September 30, 2021
Fair Value:
Senior Secured Debt97.24 %97.30 %
Preferred Equity2.03 %1.49 %
Common Equity & Warrants0.50 %0.53 %
Subordinated Debt0.23 %0.68 %
Total100.00 %100.00 %






















60
  December 31, 2018 September 30, 2018
Fair Value:    
Senior secured debt $49,868,096
 $22,058,366
Subordinated debt 8,020,988
 3,174,240
Common equity 530,489
 —
Total $58,419,573
 $25,232,606










The table below describes investments by industry composition based on fair value as a percentage of total investments:
June 30, 2022September 30, 2021
Fair Value:
Application Software19.67 %18.42 %
Pharmaceuticals5.26 %6.08 %
Biotechnology4.07 %5.65 %
Construction & Engineering3.75 %3.63 %
Industrial Machinery3.60 %3.65 %
Aerospace & Defense3.15 %2.81 %
Fertilizers & Agricultural Chemicals3.12 %3.18 %
Internet & Direct Marketing Retail3.11 %3.08 %
Health Care Technology3.07 %0.98 %
Personal Products2.86 %5.11 %
Data Processing & Outsourced Services2.72 %2.74 %
Health Care Supplies2.44 %1.42 %
Automotive Retail2.35 %1.85 %
Internet Services & Infrastructure2.34 %2.12 %
Insurance Brokers2.33 %2.57 %
Health Care Services2.08 %2.73 %
Home Improvement Retail1.98 %1.98 %
Health Care Distributors1.96 %0.84 %
Airport Services1.82 %1.75 %
Integrated Telecommunication Services1.65 %1.90 %
Distributors1.65 %— %
Metal & Glass Containers1.59 %0.97 %
Real Estate Services1.50 %1.52 %
Soft Drinks1.45 %1.40 %
Cable & Satellite1.43 %1.57 %
Movies & Entertainment1.38 %1.37 %
Leisure Facilities1.30 %0.77 %
Oil & Gas Storage & Transportation1.26 %1.52 %
Electrical Components & Equipment1.24 %1.26 %
Other Diversified Financial Services1.22 %1.11 %
Oil & Gas Refining & Marketing1.10 %1.35 %
Real Estate Operating Companies0.99 %1.24 %
IT Consulting & Other Services0.87 %1.00 %
Specialized Finance0.82 %0.80 %
Education Services0.82 %— %
Environmental & Facilities Services0.81 %— %
Home Furnishings0.80 %0.83 %
Diversified Support Services0.79 %0.77 %
Health Care Equipment0.77 %0.76 %
Communications Equipment0.76 %0.83 %
Paper Packaging0.57 %— %
Hotels, Resorts & Cruise Lines0.57 %— %
Restaurants0.56 %0.59 %
Consumer Finance0.39 %— %
Leisure Products0.38 %1.41 %
Air Freight & Logistics0.35 %— %
Research & Consulting Services0.27 %0.42 %
Housewares & Specialties0.20 %0.12 %
Food Distributors0.20 %0.26 %
Diversified Banks0.19 %0.20 %
Alternative Carriers0.18 %0.17 %
Specialty Chemicals0.11 %0.13 %
Construction Materials0.11 %0.15 %
Advertising0.04 %— %
Independent Power Producers & Energy Traders— %1.31 %
Airlines— %0.74 %
Interactive Media & Services— %0.70 %
Managed Health Care— %0.68 %
Thrifts & Mortgage Finance— %0.67 %
Forest Products— %0.34 %
Electric Utilities— %0.27 %
Electronic Components— %0.24 %
Food Retail— %0.04 %
Total100.00 %100.00 %




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  December 31, 2018 September 30, 2018
Fair Value:    
Biotechnology 22.19% 5.14%
Pharmaceuticals 9.25% 17.38%
Interactive media & services 7.33% —%
Managed healthcare 6.84% 15.82%
Diversified support services 6.52% 7.96%
Trading companies & distributors 5.12% —%
Systems software 4.78% —%
Application software 4.52% 5.48%
Healthcare technology 4.00% 6.01%
Publishing 3.38% 8.02%
Internet services & infrastructure 3.10% 1.03%
Integrated telecommunication services 2.90% 2.83%
Food retail 2.61% 5.83%
Industrial machinery 2.51% 5.91%
Metal & glass containers 2.50% 6.00%
Oil & gas drilling 1.76% —%
Healthcare services 1.76% —%
Healthcare distributors 1.72% —%
Oil & gas equipment & services 1.69% —%
Construction & engineering 1.60% —%
Auto parts & equipment 1.60% 3.97%
Oil & gas exploration & production 1.16% 2.78%
Financial exchanges & data 0.88% —%
Specialized finance 0.29% —%
Aerospace & defense —
 5.84%
Total 100.00% 100.00%

The table below describes investments by geographic composition at fair value as a percentage of total investments:
 June 30, 2022September 30, 2021
Fair Value:
United States88.67%86.07%
United Kingdom5.71%5.97%
Switzerland2.03%2.22%
Australia1.38%1.37%
Iceland1.22%1.19%
Luxembourg0.99%1.70%
Chile—%0.74%
Singapore—%0.70%
Canada—%0.04%
Total100.00%100.00%
  December 31, 2018 September 30, 2018
Fair Value:    
United States 78.48% 77.11%
Iceland 6.71% —%
Luxembourg 5.98% 14.28%
United Kingdom 2.76% 2.78%
Canada 2.61% 5.83%
Denmark 1.76% —%
France 1.69% —%
Total 100.00% 100.00%

See the Schedule of Investments as of December 31, 2018June 30, 2022 and September 30, 2021 in our consolidated financial statements in Part I, Item 1, of this Form 10-Q for more information on these investments, including a list of companies and the type, cost and fair value of investments.

 Discussion and Analysis of Results and Operations
Results of Operations
The principal measure of our financial performance is the net increase (decrease) in net assets resulting from operations, which includes net investment income, (loss), net realized gains (losses) and net unrealized appreciation (depreciation). Net investment income (loss) is the difference between our income from interest income and fee income and total expenses. Net realized gains (losses) on investments is the difference between the proceeds received from dispositions of portfolio investments and their stated costs. Net unrealized appreciation (depreciation) is the net change in the fair value of our investment portfolio during the reporting period, including the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized. The net increase or decrease in net assets from operations may vary substantially from period to period as a result of various factors, including the recognition of realized gains and losses and net change in unrealized appreciation and depreciation.
ForComparison of the Three Months Ended December 31, 2018three and nine months ended June 30, 2022 and June 30, 2021
Investment Income
Total investment income for the three months ended December 31, 2018June 30, 2022 was $1,166,218$13,633,243 and consisted of $910,654$13,050,211 of interest income primarily from portfolio investments (including $1,120,082 of PIK interest income), $558,320 of fee income and $255,564$24,712 of dividend income. Total investment income for the three months ended June 30, 2021 was $14,402,313 and consisted of $12,474,451 of interest income primarily from portfolio investments (including $1,063,850 of PIK interest income) and $1,927,862 of fee income. AsThe decrease of December 31, 2018,$769,070 in total investment income, as compared to the prior year comparative quarter, was due to a $1,369,542 decrease in fee income primarily due to lower prepayment fees during the quarter, partially offset by a $575,760 increase in interest income, which was due to a larger investment portfolio and a higher yield on investments partially offset by lower OID accretion, and a $24,712 increase in dividend income.
Total investment income for the nine months ended June 30, 2022 was $41,469,543 and consisted of $40,173,506 of interest income primarily from portfolio investments (including $3,010,940 of PIK interest income), $1,271,325 of fee income and $24,712 of dividend income. Total investment income for the nine months ended June 30, 2021 was $36,377,375 and consisted of $32,345,508 of interest income primarily from portfolio investments (including $2,960,403 of PIK interest income) and $4,031,867 of fee income. The increase of $5,092,168 in total investment income, as compared to the prior year comparative period, was due to a $7,827,998 increase in interest income, which was due to a larger investment portfolio and a higher yield on investments, and a $24,712 increase in dividend income, partially offset by a $2,760,542 decrease in fee income primarily due to lower prepayment fees during the nine month period. Based on fair value as of June 30, 2022, the weighted average yield on our investment portfoliodebt investments was 9.0%.9.4%, compared to 8.2% as of June 30, 2021.



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Expenses
Total expenses for the three months ended December 31, 2018June 30, 2022 and June 30, 2021 were $882,338. This amount consisted$4,945,430 and $5,889,934, respectively. The decrease in total expenses for the three months ended June 30, 2022, as compared to the prior year comparative quarter, was primarily due to (1) a $1,383,532 decrease in accrued capital gains incentive fees as a result of a reversal of previously accrued capital gains incentive fees driven by unrealized losses during the current quarter, (2) a decrease in total investment income and higher interest expense which resulted in a $299,516 decrease in investment income incentive fees and (3) a $34,499 decrease in base management fees primarily driven by an increase in leverage since management fees are not to exceed 1.75% per annum of the following:Unleveraged Asset Value, partially offset by a $768,766 increase in interest expense as leverage and reference rates increased.
  Three months ended December 31, 2018
Expenses:  
Base management fee $120,929
Capital gains incentive fee (42,021)
Offering costs 168,269
Organization expenses 56,211
Professional fees 192,840
Directors fees 26,250
Interest expense 133,883
Administrator expense 82,045
General and administrative expenses 143,932
Total expenses $882,338
Total expenses for the nine months ended June 30, 2022 and June 30, 2021 were $16,213,876 and $16,801,510, respectively. The decrease in total expenses for the nine months ended June 30, 2022, as compared to the prior year comparative period, was primarily due to a $3,908,598 decrease in accrued capital gains incentive fees as a result of a reversal of previously accrued capital gains incentive fees driven by unrealized losses during the current period, partially offset by (1) a $2,358,987 increase in interest expense as leverage and reference rates increased, (2) an increase in total investment income, partially offset by higher interest expense which resulted in a $445,307 increase in investment income incentive fees, and (3) an increase in the size of our investment portfolio as compared to the prior year comparative period, which drove a $443,852 increase in base management fees.
 Three months ended June 30, 2022Three months ended June 30, 2021Nine months ended June 30, 2022Nine months ended June 30, 2021
Expenses:
Base management fee$1,363,619 $1,398,118 $4,289,728 $3,845,876 
Investment income incentive fee1,850,189 2,149,705 5,816,775 5,371,468 
Capital gains incentive fee(1,287,059)96,473 (1,988,557)1,920,041 
Professional fees252,017 257,669 801,637 741,431 
Directors fees38,750 38,750 116,250 116,250 
Interest expense2,399,380 1,630,614 6,206,849 3,847,862 
Administrator expense108,141 105,792 342,356 313,934 
General and administrative expenses220,393 212,813 628,838 644,648 
Total expenses$4,945,430 $5,889,934 $16,213,876 $16,801,510 
Net Unrealized Appreciation (Depreciation)
Net unrealized depreciation on investments was $963,085$16,688,591 for the three months ended December 31, 2018June 30, 2022, primarily due to unrealized depreciation across various investments in the portfolio and unrealized depreciation on foreign currency forward contracts. Net unrealized depreciation was $98,033 for the three months ended June 30, 2021, primarily driven by volatility experiencedunrealized depreciation across various investments in the broadly syndicated loan market duringportfolio, partially offset by unrealized appreciation of foreign currency forward contracts.
Net unrealized depreciation was $21,718,165 for the quarter which ultimately caused spreadsnine months ended June 30, 2022, primarily due to widenunrealized depreciation across various investments in the portfolio and pricesunrealized depreciation of foreign currency forward contracts. Net unrealized appreciation was $7,893,619 for the nine months ended June 30, 2021, primarily driven by unrealized appreciation across various investments in the portfolio and unrealized appreciation of foreign currency forward contracts.
Net Realized Gains (Losses)
Net realized gains were $2,730,439 and $695,814 for the three months ended June 30, 2022 and 2021, respectively. For the three months ended June 30, 2022, net realized gains were primarily due to decline.realized gains on foreign currency forward contracts and realized gains resulting from exits of various investments in the portfolio. For the three months ended June 30, 2021, net realized gains were primarily due to realized gains resulting from exits of various investments in the portfolio, partially offset by realized losses on foreign currency forward contracts. Net realized gains were $4,242,798 and $1,821,499 for the nine months ended June 30, 2022 and 2021, respectively. For the nine months ended June 30, 2022, net realized gains were primarily due to realized gains on foreign currency forward contracts and realized gains resulting from exits of various investments in the portfolio. For the nine months ended June 30, 2021, net realized gains were primarily due to realized gains resulting from exits of various investments in the portfolio, partially offset by realized losses on foreign currency forward contracts.



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Financial Condition, Liquidity and Capital Resources
We expect to generate cash from (1) the cash proceeds from Private Offerings and any other future offerings of securities, (2) cash flows from operations, including earnings on investments, as well as interest earned from the temporary investment of cash in cash-equivalents, U.S. government securities and other high-quality debt investments that mature in one year or less, and (3) future(2) borrowings from banks and issuances of senior securities, including before we have fully invested the cash proceeds of the Private Offerings.securities.
Our primary use of cash will beis for (1) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (2) the cost of operations (including our expenses, the Management Fee and the Incentive Fee), (3) debt service of anyborrowings under our credit facilities and secured borrowings, and (4) cash distributions to the stockholders.
For the threenine months ended December 31, 2018,June 30, 2022, we experienced a net increase in cash and cash equivalents and restricted cash of $15,209,370.$7,417,681. During that period, $28,033,742$27,935,145 of cash was provided by operating activities, primarily consisting of cash proceeds from the sales and repayments of investments, a net decrease in net receivables from unsettled transactions and cash provided by net investment income, partially offset by cash used to fund new investments. During the same period, cash used in financing activities was $20,227,174, primarily consisting of distributions to stockholders of $29,059,871 and $4,167,303 of net repayment of secured borrowings, partially offset by $13,000,000 of net borrowings under our credit facilities.
For the nine months ended June 30, 2021, we experienced a net decrease in cash and cash equivalents and restricted cash of $7,250,962. During that period, $84,106,941 of cash was used in operating activities, primarily consisting of cash used to fund new investments, partially offset by cash proceeds from the sales and repayments of investments. During the same period, cash provided by financing activities was $43,211,625,$77,264,867, primarily consisting of $36,742,030$98,000,000 of net proceeds from Private Offerings and $7,000,000 of borrowings under our credit facility.facilities and $10,000,000 of proceeds from secured borrowings, partially offset by distributions to stockholders of $29,929,931 and financings costs paid of $805,202.



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As of December 31, 2018,June 30, 2022, we had $25,340,638$30,990,696 of cash and cash equivalents (including $9,815,519 of restricted cash), portfolio investments (at fair value) of $58,419,573, $254,090$566,675,653, $2,673,301 of interest receivable, $10,820,061$264,000,000 of borrowings outstanding under our credit facilities, $5,802,122 of secured borrowings and $1,202,630 of net payables from unsettled transactions and unfunded commitments of $9,541,809.transactions.
As of September 30, 2018,2021, we had $10,131,268$23,573,015 of cash and cash equivalents (including $4,317,968 of restricted cash), portfolio investments (at fair value) of $25,232,606, $87,979$575,429,432, $3,196,194 of interest receivable, $4,334,741$251,000,000 of net payablesborrowings outstanding under our credit facilities, $9,969,425 of secured borrowings and $11,349,581 of receivables from unsettled transactionstransactions.
We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. As of June 30, 2022 and September 30, 2021, off-balance sheet arrangements consisted of $29,975,431 and $48,497,448, respectively, of unfunded commitments to provide debt and equity financing to certain of $88,235.our portfolio companies. Such commitments are subject to the portfolio company's satisfaction of certain financial and nonfinancial covenants and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in our Consolidated Statements of Assets and Liabilities.
As of June 30, 2022, we have analyzed cash and cash equivalents, availability under our credit facilities, the ability to rotate out of certain assets and amounts of unfunded commitments that could be drawn and believe our liquidity and capital resources are sufficient to take advantage of market opportunities in the current economic climate.
Contractual Obligations
Debt Outstanding
as of September 30, 2021		Debt Outstanding
as of June 30, 2022		Weighted average debt
outstanding for the
nine months ended
June 30, 2022		Maximum debt
outstanding for the nine months ended
June 30, 2022
Citibank Facility$200,000,000 $231,000,000 $220,260,073 $231,000,000 
CNB-2 Facility51,000,000 33,000,000 35,619,048 51,000,000 
Secured Borrowings9,969,425 5,802,122 9,355,812 13,000,786 
Total debt$260,969,425 $269,802,122 $265,234,933 
 Payments due by period as of June 30, 2022
 Total< 1 year1-3 years3-5 years
CNB-2 Facility$33,000,000 $33,000,000 $— $— 
Interest due on CNB-2 Facility1,125,870 1,125,870 — — 
Citibank Facility231,000,000 — 231,000,000 — 
Interest due on Citibank Facility25,882,276 10,039,352 15,842,924 — 
Secured borrowings5,802,122 5,802,122 — — 
Interest due on secured borrowings51,106 51,106 — — 
Total$296,861,374 $50,018,450 $246,842,924 $— 
Equity Activity
Through December 31, 2018,As of June 30, 2022 and September 30, 2021, we received $337,683,996 incompleted drawdowns of $337,558,996, or 100%, of Capital Commitments from investors in connection with Private Offerings, of which $3,854,346 in Capital Commitments were made by one or more affiliates of the Adviser. As of December 31, 2018, we completed drawdowns of $67,536,799, or 20%, on such Capital Commitments.



65

We have the authority under our organizational documents to issue 250,000,000 shares of Common Stock, $0.001 per share par value and 100,000,000 shares of preferred stock, $0.001 per share par value. The following table summarizes total shares issued and proceeds related to capital drawdowns delivered pursuant to the Subscription Agreements for our Common Stock through December 31, 2018:June 30, 2022:
 Shares Issued Price per Share ProceedsShares IssuedPrice per ShareProceeds
August 6, 2018 (1) 770,869
 $20.00
 $15,417,385
August 6, 2018 (1)770,869 $20.00 $15,417,385 
September 17, 2018 770,869
 20.00
 15,417,384
September 17, 2018770,869 20.00 15,417,384 
October 29, 2018 1,060,964
 19.85
 21,060,130
October 29, 20181,060,964 19.85 21,060,130 
November 15, 2018 789,198
 19.82
 15,641,900
November 15, 2018789,198 19.82 15,641,900 
April 29, 2019April 29, 20191,655,314 20.40 33,768,400 
August 30, 2019August 30, 20191,631,324 20.70 33,768,400 
September 23, 2019September 23, 20191,631,323 20.70 33,768,399 
March 26, 2020 (2)March 26, 2020 (2)3,263,385 20.68 67,486,799 
April 30, 2020 (2)April 30, 2020 (2)5,827,875 17.37 101,230,199 
Total 3,391,900
 
 $67,536,799
Total17,401,121 $337,558,996 
__________________
(1)Includes 50 shares issued to one or more affiliates of the Adviser on July 23, 2018.
(1)Includes 50 shares issued to one or more affiliates of the Adviser on July 23, 2018.
(2)For the March 26, 2020 and April 30, 2020 drawdowns, the shares issued exclude 2,418 shares and 4,318 shares related to defaulted investors. In connection with these defaults, Capital Commitments and proceeds from capital drawdowns were each reduced by $125,000.
Leverage
On July 9, 2018, our sole stockholder approved our becoming subject to a minimum asset coverage ratio of 150% as set forth in Section 61(a)(2) of the Investment Company Act. As a result of this approval, we are permitted to borrow amounts so long as our asset coverage ratio, as defined in the Investment Company Act, is at least 150% after such borrowing (if certain requirements are met). As of December 31, 2018,June 30, 2022, our asset coverage ratio, as defined in the Investment Company Act, was 1,048.5%220.6%, and aggregatesenior securities outstanding principal amount of indebtedness was $7.0were $269.8 million.
On October 16, 2018, we entered into the Credit Agreement between us, as borrower, and CNB, as lender. The Credit Agreement provides for the Credit Facility of up to $100 million, or the Maximum Commitment, in aggregate principal amount, subject to (i) the lesser of a percentage of unfunded commitments from certain classes of eligible investors in the Company and (ii) the Maximum Commitment. The maturity date of the Credit Facility is October 15, 2020. Borrowings under the Credit Facility bear interest at a rate equal to (a) the LIBOR for the selected period plus 1.65% for LIBOR loans or (b) the prime rate of CNB minus 0.25% for prime rate loans. There is a non-usage fee of 25 basis points per year on the unused portion of the Credit Facility, payable quarterly.
The Credit Facility is secured by a first priority security interest, subject to customary exceptions, in (i) all Capital Commitments, (ii) our right to make capital calls, receive payment of capital contributions from investors and enforce payment of capital commitments and capital contributions under our Subscription Agreements with investors and other operative documents and (iii) a cash collateral account into which the capital contributions from investors are made. We have made customary representations and warranties and are required to comply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar credit facilities. Our borrowings, including under the Credit Facility, are subject to the leverage restrictions contained in the Investment Company Act.
As of December 31, 2018, we had $7.0 million outstanding under the Credit Facility. Our borrowings under the Credit Facility bore interest at a weighted average interest rate of 4.03% for the three months ended December 31, 2018. For the three months ended December 31, 2018, we recorded interest expense of $0.1 million related to the Credit Facility.
In addition, we may issue debt securities or preferred stock and/or borrow additional money from banks or other financial institutions, which we refer to collectively as "senior securities," up to the maximum amount permitted by the Investment Company Act. InWe have securitized and may in the future we may also securitize a portion of our investments to the extent permitted by applicable law and regulation. To securitize investments, we would likelytypically create a wholly-owned subsidiary and contribute a pool of loans to the subsidiary. We would then typically sell interests in the subsidiary on a non-recourse basis to purchasers and we would retain all or a portion of the equity in the subsidiary. Our primary uses of funds are investments in our targeted asset classes and cash distributions to holders of our common stock.

CNB-2 Facility

On June 9, 2020 (the “CNB-2 Closing Date”), we entered into a loan and security agreement, which was subsequently amended on March 31, 2021 (as amended, the “CNB-2 Loan Agreement”) between us, as borrower, and CNB, as lender. The CNB-2 Loan Agreement provides for a senior secured revolving credit facility (the “CNB-2 Facility”) of up to $60 million (the “CNB-2 Facility Maximum Commitment”) in aggregate principal amount, subject to the lesser of (i) the borrowing base, which is an amount determined by applying different rates to eligible assets held by the Company based generally on the value of such assets and (ii) the CNB-2 Facility Maximum Commitment. The maturity date of the CNB-2 Facility is June 9, 2023.
Contractual ObligationsBorrowings under the CNB-2 Facility bear interest at a rate equal to LIBOR for the selected period (subject to a floor of 0.25%) plus 2.50%. There is a non-usage fee of 50 basis points per year on the unused portion of the CNB-2 Facility, payable annually, if on any anniversary of the CNB-2 Closing Date, the average daily utilization of the CNB-2 Facility is less than $25 million over the prior 365-day period.
  Payments due by period as of December 31, 2018
  Total < 1 year 1-3 years 3-5 years > 5 years
Credit Facility $7,000,000
 $—
 $7,000,000
 $—
 $—
Interest due on Credit Facility 521,946
 291,300
 230,646
 —
 —
Total $7,521,946
 $291,300
 $7,230,646
 $—
 $—
Off-Balance Sheet Arrangements
We may beThe CNB-2 Facility is secured by a party to financial instruments with off-balance sheet riskfirst priority security interest in the normal course of business to meet the financial needssubstantially all of our assets, including our portfolio companies. As of December 31, 2018, off-balance sheet arrangements consisted of $9,541,809 of unfunded commitmentsinvestments but excluding those investments held in OSI 2 SPV (defined below). We have made customary representations and warranties and are required to provide debt financing. As of September 30, 2018, off-balance sheet arrangements consisted of $88,235 of unfunded commitments to provide debt financing. Such commitmentscomply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar credit facilities. Our borrowings, including under the CNB-2 Facility, are subject to the leverage restrictions contained in the Investment Company Act.



66

As of June 30, 2022 and September 30, 2021, we had $33.0 million and $51.0 million, respectively, outstanding under the CNB-2 Facility. For the nine months ended June 30, 2022 and 2021, our borrowings under the CNB-2 Facility bore interest at a weighted average interest rate of 2.88% and 3.05%, respectively. For the three and nine months ended June 30, 2022, we recorded interest expense (inclusive of fees) of $293,381 and $967,745, respectively, related to the CNB-2 Facility. For the three and nine months ended June 30, 2021, we recorded interest expense (inclusive of fees) of $412,780 and $951,038, respectively, related to the CNB-2 Facility.
Citibank Facility
On July 26, 2019 (the "Citibank Closing Date"), we and OSI 2 Senior Lending SPV, LLC ("OSI 2 SPV"), a wholly-owned and consolidated subsidiary of us, entered into a loan and security agreement, which was subsequently amended on September 20, 2019, July 2, 2020, December 31, 2020 and March 31, 2021 (as amended, the "Citibank Loan Agreement"), with the lenders from time to time party thereto and the other parties referenced below. Under the terms of the Citibank Loan Agreement, we serve as the collateral manager and seller and OSI 2 SPV serves as borrower with Citibank, N.A., as administrative agent, and Deutsche Bank Trust Company Americas, as collateral agent.
The Citibank Loan Agreement provides for a senior secured revolving credit facility (the "Citibank Facility"), of up to $250 million (the "Citibank Maximum Commitment"), in aggregate principal amount, subject to the lesser of (i) the borrowing base, which is an amount based on advance rates that vary depending on the class of assets and the value assigned to such assets under the Citibank Loan Agreement and (ii) the Citibank Maximum Commitment. The Citibank Facility has a forty-two (42) month reinvestment period (the "Reinvestment Period"), during which advances may be made; and matures sixty-six (66) months from the Citibank Closing Date. Following the Reinvestment Period, OSI 2 SPV will be required to make certain mandatory amortization payments. Borrowings under the Citibank Facility bear interest payable quarterly at a rate per year equal to (a) in the case of a lender that is identified as a conduit lender under the Loan Agreement, the lesser of (i) the applicable commercial paper rate for such conduit lender and (ii) the LIBOR for a three month maturity and (b) for all other lenders under the Citibank Facility, LIBOR, plus, in each case, an applicable spread. During the Reinvestment Period, the applicable spread is the greater of (i) a weighted average rate of (x) 1.65% per year for broadly syndicated loans and (y) 2.25% per year for all other eligible loans and (ii) 1.85%. After the Reinvestment Period, the applicable spread is 3.00% per year. There is also a non-usage fee of (i) 0.40% per year for the first six months following the Citibank Closing Date (the "Ramp-Up Period"), and (ii) 0.50% per year thereafter, in each case, on the unused portion of the Citibank Facility, payable quarterly; provided that if after the Ramp-Up Period the unused portion of the Citibank Facility is greater than 30% of the commitments under the Citibank Facility, the non-usage fee will be based on an unused portion of 30% of the commitments under the Citibank Facility.
The Citibank Facility is secured by a first priority security interest in substantially all of OSI 2 SPV’s assets.
As part of the Citibank Facility, OSI 2 SPV is subject to certain limitations as to how borrowed funds may be used and the types of loans that are eligible to be acquired by OSI 2 SPV including, but not limited to, restrictions on sector concentrations, loan size, tenor and minimum investment ratings (or estimated ratings). The Citibank Facility also contains certain requirements relating to interest coverage, collateral quality and portfolio companies' satisfactionperformance, certain violations of which could result in the acceleration of the amounts due under the Citibank Facility.
Under the Citibank Facility, we and OSI 2 SPV, as applicable, have made customary representations and warranties, and are required to comply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar credit facilities.
OSI 2 SPV’s borrowings are non-recourse to us but are considered borrowings of us for purposes of complying with the asset coverage requirements under the Investment Company Act.
As of June 30, 2022 and September 30, 2021, we had $231.0 million and $200.0 million, respectively, outstanding under the Citibank Facility. Our borrowings under the Citibank Facility bore interest at a weighted average interest rate of 2.69% and 2.36% for the nine months ended June 30, 2022 and 2021, respectively. For the three and nine months ended June 30, 2022, we recorded interest expense (inclusive of fees) of $2,063,349 and $4,992,882, respectively, related to the Citibank Facility. For the three and nine months ended June 30, 2021, the Company recorded interest expense (inclusive of fees) of $1,154,709 and $2,794,358, respectively, related to the Citibank Facility.
Secured Borrowings
As of June 30, 2022, we had $5.8 million of secured borrowings outstanding, which were recorded as a result of certain financialsecurities that were sold and nonfinancial covenants and may involve,simultaneously repurchased at a premium, with amounts payable to varying degrees, elements of credit risk in excessthe counterparty due on the repurchase settlement date, which is generally within 120 days of the amount recognizedtrade date. Our secured borrowings bore interest at a



67

weighted average rate of 3.47% for the nine months ended June 30, 2022. We recorded $42,650 and $246,222 of interest expense in our Consolidated Statements of Assetsconnection with secured borrowings for the three and Liabilities.
  December 31, 2018 September 30, 2018
Assembled Brands Capital LLC $4,323,153
 $—
Sorrento Therapeutics, Inc. 4,000,000
 —
US Well Services, LLC 933,333
 —
Access CIG, LLC 197,088
 —
iCIMs, Inc. 88,235
 88,235
  $9,541,809
 $88,235
nine months ended June 30, 2022, respectively.
Regulated Investment Company Status and Distributions
When the business begins to generate sufficient income, weWe anticipate that we will make quarterly distributions of at least 90% of our realized net ordinary income and net short-term capital gains in excess of our net long-term capital losses, if any, then available for distribution, each as determined by our board of directors in accordance with applicable law and the terms of the Governing Documents. Any distributions will be declared out of assets legally available for distribution. We expect quarterly distributions to be paid from income primarily generated by interest and dividends earned on our investments, although distributions to stockholders may also include a return of capital.
We intend to electhave elected to be treated, and intend to qualify annually, as a RIC under Subchapter M of the Code. To maintain RIC qualification, we must distribute to our stockholders, for each taxabletax year, at least 90% of our “investment company taxable income” for that year. In order to avoid certain excise taxes imposed on RICs, we intend to distribute during each calendar year an amount at least equal to the sum of: (1) 98% of our ordinary income for the calendar year;year; (2) 98.2% of our capital gain net income (both long-term and short-term) for the one-year period ending on October 31 of the calendar year;year; and, (3) any undistributed ordinary income and capital gain net income for preceding years on which we paid no U.S. federal income tax less certain over-distributions in prior years. In addition, although we currently intend to distribute realized net capital gains (i.e., net long term capital gains in excess of short term capital losses), if any, at least annually, we may in the future decide to retain such capital gains for investment, pay U.S. federal income tax on such amounts at regular corporate tax rates, and elect to treat such gains as deemed distributions to stockholders. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, to the extent that we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the Investment Company Act or if distributions are limited by the terms of any of our borrowings.
Depending on the level of taxable income and net capital gain earned in a year, we may choose to carry forward taxable income or net capital gain for distribution in the following year and pay the applicable U.S. federal excise tax. Distributions will be appropriately adjusted for any taxes payable by us or any direct or indirect subsidiary through which it invests (including any corporate, state, local, non-U.S. and withholding taxes). Any Incentive Fee to be paid to our Adviser will not be reduced to take into account any such taxes.
ForWe may generate qualified net interest income or qualified net short-term capital gains that may be exempt from U.S. withholding tax when distributed to foreign stockholders. A RIC is permitted to designate distributions of qualified net interest income and qualified short-term capital gains as exempt from U.S. withholding tax when paid to non-U.S. shareholders with proper documentation. The following table, which may be subject to change as we finalize our annual tax filings, lists the period frompercentage of qualified net interest income and qualified short-term capital gains for the commencement of operations, October 1, 2018, through December 31, 2018, no dividends oryear ended September 30, 2021, our most recently completed tax year end.
Year EndedQualified Net Interest IncomeQualified Short-Term Capital Gains
September 30, 202161.6 %34.5 %


The following table reflects the distributions had been declared orper share that we have paid byon our common stock during the Company.nine months ended June 30, 2022:
Distribution TypeRecord DatePayment DateAmount
per Share		Cash Distribution
QuarterlyDecember 15, 2021December 28, 2021$0.42 $7,308,472 
SpecialDecember 15, 2021December 28, 20210.38 6,612,424 
QuarterlyMarch 15, 2022March 28, 20220.43 7,482,481 
QuarterlyJune 15, 2022June 30, 20220.44 7,656,494 
$1.67 $29,059,871 




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The following table reflects the distributions per share that the Company has paid on its common stock during the nine months ended June 30, 2021:

Distribution TypeRecord DatePayment DateAmount
per Share		Cash Distribution
QuarterlyDecember 15, 2020December 31, 2020$0.35 $6,090,393 
SpecialDecember 15, 2020December 31, 20200.62 10,788,696 
QuarterlyMarch 15, 2021March 26, 20210.35 6,090,393 
QuarterlyJune 15, 2021June 30, 20210.40 6,960,449 
$1.72 $29,929,931 
Related Party Transactions
We have entered into the Investment Advisory Agreement with the Adviser and the Administration Agreement with the Administrator, a wholly-owned subsidiaryan affiliate of the Adviser. The Adviser is a registered investment adviser under the Investment Advisers Act thatof 1940, as amended, and is partially and indirectly owned bya subsidiary of Oaktree Capital Group, LLC.

Recent Developments
Distribution Declaration
On August 5, 2022, our Board of Directors approved a quarterly distribution of $0.44 per share, payable in cash on September 27, 2022 to our stockholders of record as of the close of business on September 15, 2022.

Rule 2a-5

On August 5, 2022, the Board of Directors appointed the Adviser as the valuation designee under Rule 2a-5 of the 1940 Act effective September 8, 2022 for purposes of determining the fair value of our investments.




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are subject to financial market risks, including changes in the valuations of our investment portfolio and interest rates.
Valuation Risk
Our investments mayoften do not have a readily available market price, and we value these investments at fair value as determined in good faith by our board of directors, with the assistance of the Audit Committee and the Adviser. There is no single standard for determining fair value in good faith and valuation methodologies involve a significant degree of management judgment. In addition, our valuation methodology utilizes discount rates in part in valuing our investments, and changes in those discount rates may have an impact on the valuation of our investments. Accordingly, valuations by us do not necessarily represent the amounts which may eventually be realized from sales or other dispositions of investments. Estimated fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to our consolidated financial statements.
Interest Rate Risk
We are subject to financial market risks, including changes in interest rates. Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments, cash and cash equivalents and idle funds investments. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks and limits by means of reliable administrative and information systems and other policies and programs.risks. Our investment income will be affected by changes in various interest rates, including LIBOR, SOFR, SONIA and prime rates, to the extent our debt investments include floating interest rates.
As of December 31, 2018, 79.4%June 30, 2022, 92.3% of our debt investment portfolio at fair value bore interest at floating rates and hadrates. The composition of our floating rate debt investments by interest rate floors between 0%floor as of June 30, 2022 and 1%.September 30, 2021 was as follows:
 June 30, 2022September 30, 2021
($ in thousands)Fair Value% of Floating
Rate Portfolio		Fair Value% of Floating
Rate Portfolio
0%$39,670,770 7.79 %$48,594,490 9.30 %
>0% and <1%127,023,848 24.92 97,766,063 18.72 
1%322,346,972 63.24 355,262,700 68.02 
>1%20,653,292 4.05 20,656,619 3.96 
Total$509,694,882 100.00 %$522,279,872 100.00 %
Based on our Consolidated Statements of Assets and Liabilities as of December 31, 2018,June 30, 2022, the following table shows the approximate annualized net increase or decrease(decrease) in net investment income (loss)assets resulting from operations of hypothetical base rate changes in interest rates, assuming no changes in our investment and capital structure. However, there can be no assurances our portfolio companies will be able to meet their contractual obligations at any or all levels of increases in interest rates.
Basis point increaseIncrease in Interest Income(Increase) in Interest ExpenseNet increase in net assets resulting from operations
250$12,852,424 $(6,600,000)$6,252,424 
20010,238,155 (5,280,000)4,958,155 
1507,645,419 (3,960,000)3,685,419 
1005,070,993 (2,640,000)2,430,993 
502,522,957 (1,320,000)1,202,957 
Basis point decrease(Decrease) in Interest IncomeDecrease in Interest ExpenseNet (decrease) in net assets resulting from operations
50$(2,496,052)$1,320,000 $(1,176,052)
100(4,550,595)2,597,100 (1,953,495)
150(5,702,568)3,752,100 (1,950,468)
200(6,104,763)4,907,100 (1,197,663)





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Basis point increase 
Interest
income
 
Interest
expense
 
Net increase
(decrease)
300 $1,627,319
 $(210,000) $1,417,319
200 1,084,879
 (140,000) 944,879
100 542,440
 (70,000) 472,440


Basis point decrease (1) 
Interest
income
 
Interest
expense
 
Net increase
(decrease)
100 $(484,666) $70,000
 $(414,666)
200 (847,899) 140,000
 (707,899)
 __________
(1) The effect of a greater than 200 basis point decrease is limited by interest rate floors on certain investments.
We regularly measure exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on this review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates. The interest rate on the principal balance outstanding for allprimarily most of the floating rate loans is indexed to the LIBOR, SOFR, SONIA and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. The following table shows a comparison of the interest rate base for our interest-bearing cash and outstanding debt investments, at principal, and our outstanding borrowings as of December 31, 2018June 30, 2022 and September 30, 2018:2021:

June 30, 2022September 30, 2021
Debt InvestmentsBorrowingsDebt InvestmentsBorrowings
Prime rate$590,198 $— $1,097,727 $— 
LIBOR:
30 day176,839,513 33,000,000 135,281,414 51,000,000 
90 day207,583,418 231,000,000 259,893,962 200,000,000 
180 day65,035,176 — 79,023,702 — 
360 day8,194,427 — 20,074,643 — 
EURIBOR:
30 day5,380,931 — 5,965,116 — 
90 day7,129,969 — 7,904,039 — 
180 day1,100,579 — 5,428,096 — 
SOFR
30 day28,896,120 — — — 
90 day16,525,205 — — — 
SONIA
30 day3,795,156 — — — 
180 day12,128,893 
UK LIBOR:
30 day— — 4,213,594 — 
180 day— — 13,466,173 — 
Fixed rate42,897,946 5,802,122 42,102,695 9,969,425 
Total$576,097,531 $269,802,122 $574,451,161 $260,969,425 



71
  December 31, 2018 September 30, 2018
  Interest Bearing Cash and Investments Borrowings Interest Bearing Investments
Money market rate $16,000,000
 $—
 $—
LIBOR:      
30 day 35,181,330
 7,000,000
 10,204,227
60 day 3,035,304
 —
 3,000,000
90 day 13,169,444
 —
 6,000,000
EURIBOR:      
30 day 2,857,875
 —
 2,903,750
Fixed rate 12,990,000
 —
 4,096,000
Total $83,233,953
 $7,000,000
 $26,203,977

Item 4. Controls and Procedures

As of the end of the period covered by this report, management, with the participation of the Company’s Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2018.June 30, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Based on the evaluation of our disclosure controls and procedures as of December 31, 2018,June 30, 2022, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, in timely identifying, recording, processing, summarizing and reporting any material information relating to us that is required to be disclosed in the reports we file or submit under the Exchange Act.

There were no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2018June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



PART II — OTHER INFORMATION

Item 1.     Legal Proceedings

From time to time, we may beWe are currently not a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies. We and our Adviser are not currently subject to any pending material legal proceedings, and, to our knowledge, no material legal proceeding is threatened against us.proceedings.




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Item 1A. Risk Factors
ThereExcept as set forth below, there have been no material changes during the three months ended December 31, 2018 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended September 30, 2018.2021.

Our business, financial condition and results of operations could be adversely affected by disruptions in the global
economy caused by the ongoing conflict between Russia and Ukraine.

The global economy has been negatively impacted by the military conflict between Russia and Ukraine. Furthermore, governments in the U.S., United Kingdom, and European Union have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia. We do not currently have investments in companies headquartered or that operate primarily in Russia or Ukraine. However, businesses in the United States and globally have experienced shortages in materials and increased costs for transportation, energy, and raw material due in part to the negative impact of the Russia-Ukraine military conflict on the global economy, all of which could have an indirect impact on our portfolio companies. Further escalation of geopolitical tensions related to the military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business, financial condition and results of operations and that of our portfolio companies. In addition, the effects of the ongoing conflict could heighten many of our known risks described in the Company's Annual Report on Form 10-K for the year ended September 30, 2021.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

None.
Except as previously reported by us on our current reports on Form 8-K, we did not sell any securities during the period covered by this Form 10-Q that were not registered under the Securities Act.

Item 3. Defaults Upon Senior Securities
None.

Item 4.     Mine Safety Disclosures
Not applicable.

Item 5. Other Information
None.





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Item 6. Exhibits


The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:
 
ExhibitDescription
31.1
Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.*
31.2
Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*
32.1
Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2
Certification of Chief Financial Officer (Principal Financial Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

*Filed herewith.





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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
OAKTREE STRATEGIC INCOME II, INC.

By: /s/   Edgar LeeArmen Panossian
 Edgar LeeArmen Panossian
 Chairman, Chief Executive Officer and Chief Investment Officer
By: /s/    Mel CarlisleChristopher McKown
 Mel CarlisleChristopher McKown
 Chief Financial Officer and Treasurer
Date: February 12, 2019August 8, 2022



43



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