UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
(Mark One)
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20202021
or
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______

Commission file number 814-00813

OFS CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware46-1339639
State or Other Jurisdiction ofI.R.S. Employer Identification No.
Incorporation or Organization
10 S. Wacker Drive, Suite 2500, Chicago, Illinois60606
Address of Principal Executive OfficesZip Code
(847) 734-2000
Registrant’s Telephone Number, Including Area Code
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareOFSThe Nasdaq Global Select Market
6.25% Notes due 2023OFSSGThe Nasdaq Global Select Market
6.375% Notes due 2025OFSSLThe Nasdaq Global Select Market
6.50% Notes due 2025OFSSZThe Nasdaq Global Select Market
5.95% Notes due 2026OFSSIThe Nasdaq Global Select Market

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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý     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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨Accelerated filerý¨
Non-accelerated filer
¨
☒		Smaller reporting company¨
Emerging growth company¨


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

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

The number of shares of the issuer’s Common Stock, $0.01 par value, outstanding as of November 4, 2020August 5, 2021 was 13,406,402.13,415,235.


OFS CAPITAL CORPORATION

TABLE OF CONTENTS
 
 
Item 1.
 
Consolidated Statements of Assets and Liabilities as of SeptemberJune 30, 20202021 (unaudited) and December 31, 20192020
3
 
Consolidated Statements of Operations for the Three and Nine Six Months Ended SeptemberJune 30, 20202021 (unaudited) and 20192020 (unaudited)
4
 
Consolidated Statements of Changes in Net Assets for the ThreeThree and NineSix Months Ended SeptemberJune 30, 20202021 (unaudited) and 20192020 (unaudited)
5
 
Consolidated Statements of Cash Flows for the NineSix Months Ended SeptemberJune 30, 20202021 (unaudited) and 20192020 (unaudited)
7
 
Consolidated Schedules of Investments as of SeptemberJune 30, 20202021 (unaudited) and December 31, 20192020
8
 
3230
Item 2.
5854
Item 3.
7872
Item 4.
7873
 
8074
Item 1.
8074
Item 1A.
8074
Item 2
8475
Item 3.
8476
Item 4.
8476
Item 5.
8576
Item 6.
8677
8778



Defined Terms
We have used "we," "us," "our," "our company" and "the Company" to refer to OFS Capital Corporation in this report. We also have used several other terms in this report, which are explained or defined below:
TermExplanation or Definition
1940 ActInvestment Company Act of 1940, as amended
Administration AgreementAdministration Agreement between the Company and OFS Services dated November 7, 2012
Affiliated AccountAnotherAn account, other than the Company, managed by OFS Advisor or an affiliate of OFS Advisor
Affiliated FundCertain other funds, including other BDCs and registered investment companies managed by OFS Advisor
ASCAccounting Standards Codification, as issued by the FASB
ASUAccounting Standards Updates, as issued by the FASB
BDCBusiness Development Company under the 1940 Act
BLABusiness Loan Agreement, as amended, with Pacific Western Bank, as lender, which provides the Company with a senior secured revolving credit facility
BNP Facility
A secured revolving credit facility that provides for borrowings in an aggregate principal amount up to $150,000,000 issued pursuant to a Revolving Credit and Security Agreement by and among OFSCC-FS, the lenders from time to time parties thereto, BNP Paribas, as administrative agent, OFSCC-FS Holdings, LLC, a wholly owned subsidiary of the Company, as equityholder, the Company, as servicer, Citibank, N.A., as collateral agent and Virtus Group, LP, as collateral administrator

BoardThe Company's board of directors
CLOCollateralized loan obligation
CodeInternal Revenue Code of 1986, as amended
CompanyOFS Capital Corporation and its consolidated subsidiaries
DRIPDistribution reinvestment plan
EBITDAEarnings before interest, taxes, depreciation and amortization
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
GAAPAccounting principles generally accepted in the United States
HPCIHancock Park Corporate Income, Inc., a Maryland corporation and non-traded BDC for whom OFS Advisor serves as investment adviser
ICTIInvestment company taxable income, which is generally net ordinary income plus net short-term capital gains in excess of net long-term capital losses
Indicative PricesMarket quotations, prices from pricing services or bids from brokers or dealers
Investment Advisory AgreementInvestment Advisory and Management Agreement between the Company and OFS Advisor dated November 7, 2012
LIBORLondon Interbank Offered Rate
NBIPNon-binding indicative price
Net Loan FeesThe cumulative amount of fees, such as origination fees, discounts, premiums and amendment fees that are deferred and recognized as income over the life of the loan
OCCIOFS Credit Company, Inc., a Delaware corporation and a non-diversified, closed-end management investment company for whom OFS Advisor serves as investment adviser
OFS AdvisorOFS Capital Management, LLC, a wholly owned subsidiary of OFSAM and registered investment advisor under the Investment Advisers Act of 1940, as amended
OFS ServicesOFS Capital Services, LLC, a wholly owned subsidiary of OFSAM and affiliate of OFS Advisor
OFSAMOrchard First Source Asset Management, LLC, a full-service provider of capital and leveraged finance solutions to U.S. corporations
OFSCC-FSOFSCC-FS, LLC, an indirect wholly owned subsidiary of the Company
OFSCC-FS AssetsAssets held by the Company through OFSCC-FS


TermExplanation or Definition
OFSCC-MBOFSCC-MB, Inc., a wholly owned subsidiary taxed under subchapter C of the Code that generally holds the equity investments of the Company that are taxed as pass-through entities

TermExplanation or Definition
OIDOriginal issue discount
OrderAn exemptive relief order from the SEC to permit us to co-invest in portfolio companies with certain funds managed by OFS AdvisorAffiliated Funds in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions
ParentOFS Capital Corporation
PIKPayment-in-kind, non-cash interest or dividends payable as an addition to the loan or equity security producing the income.income
Portfolio Company InvestmentA debt or equity investment in a portfolio company. Portfolio Company Investments exclude Structured Finance Notes
Prime RateUnited States Prime interest rate
PWB Credit FacilitySenior secured revolving credit facility between the Company and Pacific Western Bank, as lender
Reunderwriting AnalysisA discount rate method based upon a hypothetical recapitalization of the entity given its current operating performance and current market condition
RICRegulated investment company under the Code
SBAU.S.United States Small Business Administration
SBCAASmall Business Credit Availability Act
SBICA fund licensed under the SBA small business investment company programSmall Business Investment Company Program
SBIC AcquisitionThe Company's acquisition of the remaining ownership interests in SBIC I LP and OFS SBIC I GP, LLC on December 4, 2013
SBIC ActSmall Business Investment Act of 1958, as amended
SBIC I LPOFS SBIC I, LP, a wholly owned SBIC subsidiary of the Company
SBIC I GPOFS SBIC I GP, LLC
SECU.S.United States Securities and Exchange Commission
Securities ActSecurities Act of 1933, as amended
Secured Revolver AmendmentThe amended Business Loan Agreement with Pacific Western Bank, as lender, dated October 7, 2020February 17, 2021
Stock Repurchase ProgramThe open market stock repurchase program for shares of the Company’s common stock under Rule 10b-18 of the Exchange Act
Structured Finance NotesCLO mezzanine debt, and CLO subordinated debt and CLO loan accumulation facility positions
Synthetic Rating AnalysisA discount rate method that assigns a surrogate debt rating to the entity based on known industry standards for assigning such ratings and then estimates the discount rate based on observed market yields for actual rated debt
Transaction PriceThe cost of an arm's length transaction occurring in the same security
Unsecured NotesThe combination of the Unsecured Notes Due September 2023, the Unsecured Notes Due April 2025, the Unsecured Notes Due October 2025, andthe Unsecured Notes Due October 2026 and the Unsecured Notes Due February 2026
Unsecured Notes Due April 2025The Company’s $50.0 million aggregate principal amount of 6.375% notes due April 30, 2025, which were redeemed on March 12, 2021
Unsecured Notes Due February 2026    The Company’s $125.0 million aggregate principal amount of 4.75% notes due February 10, 2026
Unsecured Notes Due October 2025The Company’s $46.0$48.5 million aggregate principal amount of 6.5% notes due October 30, 2025, which were redeemed on March 12, 2021
Unsecured Notes Due October 2026The Company's $54.3 million aggregate principal amount of 5.95% notes due October 31, 2026
Unsecured Notes Due September 2023The Company’s $25.0 million aggregate principal amount of 6.25% notes due September 30, 2023



Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” ���should,“should,” “targets,” “projects” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
•our ability and experience operating a BDC or an SBIC, or maintaining our tax treatment as a RIC under Subchapter M of the Code;
•our dependence on key personnel;
•our ability to maintain or develop referral relationships;
•our ability to replicate historical results;
•the ability of OFS Advisor to identify, invest in and monitor companies that meet our investment criteria;
•the belief that the carrying amounts of our financial instruments, such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments and that such financial instruments are held with high credit quality institutions to mitigate the risk of loss due to credit risk;
•actual and potential conflicts of interest with OFS Advisor and other affiliates of OFSAM;
•constraint on investmentinvestments due to access to material nonpublic information;
•restrictions on our ability to enter into transactions with our affiliates;
•our ability to comply with SBA regulations and requirements;
•the use of borrowed money to finance a portion of our investments;
•our ability to incur additional leverage pursuant to Section 61(a)(2) of the SBCAA1940 Act and the impact of such leverage on our net investment income and results of operations;
•competition for investment opportunities;
•our plans to focus on lower-yielding, first lien senior secured loans to larger borrowers and the impact on our risk profile, including our belief that the seniority of such loans in a borrower's capital structure may provide greater downside protection against the impact of the coronavirus ("COVID-19") pandemic;
•the percentage of investments that will bear interest on a floating rate or fixed rate basis;
•the impact of inflation rates on our business prospects and the prospects of our portfolio companies;
• the impact of any new tax legislation on our investments, our stockholders, and our business;
•interest rate volatility, including the decommissioning of LIBOR;
•the ability of SBIC I LP to make distributions enabling us to meet RIC requirements;
•plans by SBIC I LP to repay its outstanding SBA debentures;
•our ability to raise debt or equity capital as a BDC;
•the timing, form and amount of any distributions from our portfolio companies;
•the impact of a protracted decline in the liquidity of credit markets on our business;
•the general economy and its impact on the industries in which we invest;
•changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including with respect to changes from the impact of the COVID-19 pandemic; the length and duration of the COVID-19 pandemic in the United States as well as worldwide and the magnitude of the economic impact of the outbreak;pandemic; the effect of the COVID-19 pandemic on our business, financial condition, results of operations and cash flows and those of our portfolio companies (including the expectation that a shift from cash interest to PIK interest will result from concessions granted to borrowers due to the COVID-19 pandemic), including our and their ability to achieve our respective objectives; the effect of the disruptions caused
1

by the COVID-19 pandemic, including those caused by variants of the virus, on our ability to continue to effectively manage our business (including our belief that new loan activity in the market in which we operate has slowed) and on the availability of equity and debt capital and our use of borrowed money to finance a portion of our investments;

•the belief that we have sufficient levels of liquidity to support our existing portfolio companies and deploy capital in new investment opportunities;
•the belief that one or more of our investments can be restored to accrual status in the near term, or otherwise;
•uncertain valuations of our portfolio investments,Portfolio Company Investments, including our belief that reverting back to an equal weighting of the Reunderwriting Analysis method and Synthetic Rating Analysis method more accurately captures certain data related to the observed return of market liquidity and the historic correlative relationship between these markets; and
•the effect of new or modified laws or regulations governing our operations.
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include, among others, those described or identified in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 20192020 and in "Part II, Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and this Quarterly Report on Form 10-Q. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.
We have based the forward-looking statements on information available to us on the date of this Quarterly Report on Form 10-Q. Except as required by the federal securities laws, 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, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The forward-looking statements and projections contained in this Quarterly Report on Form 10-Q are excluded from the safe harbor protection provided by Section 21E of the Exchange Act.
2

PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
OFS Capital Corporation and Subsidiaries
Consolidated Statements of Assets and Liabilities
(Dollar amounts in thousands, except per share data)
June 30,
2021		December 31,
2020
(unaudited)
Assets
Investments, at fair value:
Non-control/non-affiliate investments (amortized cost of $373,780 and $363,628, respectively)$358,471 $328,665 
Affiliate investments (amortized cost of $83,740 and $86,484, respectively)113,493 102,846 
Control investment (amortized cost of $11,057 and $10,911, respectively)12,062 10,812 
Total investments at fair value (amortized cost of $468,577 and $461,023, respectively)484,026 442,323 
Cash35,159 37,708 
Interest receivable1,051 1,298 
Prepaid expenses and other assets2,204 2,484 
Total assets$522,440 $483,813 
Liabilities
Revolving lines of credit$24,050 $32,050 
SBA debentures (net of deferred debt issuance costs of $865 and $1,088, respectively)94,640 104,182 
Unsecured notes (net of deferred debt issuance costs of $5,607 and $4,897 respectively)198,718 172,953 
Interest payable4,088 3,176 
Payable to adviser and affiliates (Note 3)3,352 3,252 
Payable for investments purchased16,363 8,411 
Accrued professional fees597 495 
Other liabilities639 338 
Total liabilities342,447 324,857 
Commitments and contingencies (Note 6)
Net assets
Preferred stock, par value of $0.01 per share, 2,000,000 shares authorized, -0- shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively$— $— 
Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,415,235 and 13,409,559 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively134 134 
Paid-in capital in excess of par187,179 187,124 
Total distributable earnings (losses)(7,320)(28,302)
Total net assets179,993 158,956 
Total liabilities and net assets$522,440 $483,813 
Number of shares outstanding13,415,235 13,409,559 
Net asset value per share$13.42 $11.85 

September 30,
2020
December 31,
2019

(unaudited)

Assets




Investments, at fair value:




Non-control/non-affiliate investments (amortized cost of $359,108 and $396,201, respectively)$324,059

$372,535
Affiliate investments (amortized cost of $114,141 and $131,950, respectively)124,185

135,679
Control investment (amortized cost of $10,811 and $10,520, respectively)8,084

8,717
Total investments at fair value (amortized cost of $484,060 and $538,671, respectively)456,328

516,931
Cash18,297

13,447
Interest receivable2,790

3,349
Receivable for investments sold1,453

—
Prepaid expenses and other assets2,807

4,461
Total assets$481,675

$538,188






Liabilities




Revolving lines of credit$24,650

$56,450
SBA debentures (net of deferred debt issuance costs of $1,415 and $1,904, respectively)127,355

147,976
Unsecured notes (net of deferred debt issuance costs of $5,168 and $4,798 respectively)172,682

148,052
Interest payable2,055

3,505
Payable to adviser and affiliates (Note 3)2,773

4,106
Payable for investments purchased1,494

10,264
Accrued professional fees426

621
Other liabilities328

587
Total liabilities331,763

371,561






Commitments and contingencies (Note 6)










Net assets




Preferred stock, par value of $0.01 per share, 2,000,000 shares authorized, -0- shares issued and outstanding as of September 30, 2020, and December 31, 2019, respectively$—

$—
Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,406,402 and 13,376,836 shares issued and outstanding as of September 30, 2020, and December 31, 2019, respectively134

134
Paid-in capital in excess of par186,979

187,305
Total distributable earnings (losses)(37,201)
(20,812)
Total net assets149,912

166,627






Total liabilities and net assets$481,675

$538,188






Number of shares outstanding13,406,402

13,376,836
Net asset value per share$11.18

$12.46

See Notes to Consolidated Financial Statements.
3

OFS Capital Corporation and Subsidiaries
Consolidated Statements of Operations (unaudited)
(Dollar amounts in thousands, except per share data)

Three Months Ended September 30,
Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,

2020
2019
2020
20192021202020212020
Investment income










Investment income
Interest income:










Interest income:
Non-control/non-affiliate investments$8,014

$10,181

$25,319

$28,110
Non-control/non-affiliate investments$9,089 $8,233 $17,616 $17,305 
Affiliate investments1,708

2,647

5,794

7,640
Affiliate investments911 1,692 1,815 4,086 
Control investment201

262

606

784
Control investment221 209 490 405 
Total interest income9,923

13,090

31,719

36,534
Total interest income10,221 10,134 19,921 21,796 
Payment-in-kind interest and dividend income:










Payment-in-kind interest and dividend income:
Non-control/non-affiliate investments275

96

800

289
Non-control/non-affiliate investments275 264 593 525 
Affiliate investments72

347

532

899
Affiliate investments80 191 151 460 
Control investment91

28

278

83
Control investment101 102 199 187 
Total payment-in-kind interest and dividend income438

471

1,610

1,271
Total payment-in-kind interest and dividend income456 557 943 1,172 
Dividend income:










Dividend income:
Affiliate investments—

—

100

173
Affiliate investments— — — 100 
Control investment—

—

—

89
Control investment136 — 136 — 
Total dividend income—

—

100

262
Total dividend income136 — 136 100 
Fee income:










Fee income:
Non-control/non-affiliate investments80

285

844

781
Non-control/non-affiliate investments603 279 870 764 
Affiliate investments3

6

16

216
Affiliate investments— 8 37 13 
Control investment43

6

49

39
Control investment— 3 — 6 
Total fee income126

297

909

1,036
Total fee income603 290 907 783 
Total investment income10,487

13,858

34,338

39,103
Total investment income11,416 10,981 21,907 23,851 
Expenses










Expenses
Interest expense4,448

4,464

14,301

11,564
Interest expense4,241 4,931 9,066 9,853 
Management fee1,871

2,164

5,759

6,062
Management fee1,876 1,869 3,710 3,888 
Incentive fee234

1,214

1,332

3,622
Incentive fee809 215 809 1,098 
Professional fees422

510

1,530

1,413
Professional fees489 460 876 1,108 
Administration fee436

396

1,456

1,250
Administration fee439 500 1,007 1,020 
Other expenses364

257

1,110

651
Other expenses327 399 654 746 
Total expenses before incentive fee waiver7,775

9,005

25,488

24,562
Total expenses before incentive fee waiver8,181 8,374 16,122 17,713 
Incentive fee waiver (see Note 3)—

—

(441)
—
Incentive fee waiver (see Note 3)— — — (441)
Total expenses, net of incentive fee waiver7,775

9,005

25,047

24,562
Total expenses, net of incentive fee waiver8,181 8,374 16,122 17,272 
Net investment income2,712

4,853

9,291

14,541
 Net investment income3,235 2,607 5,785 6,579 
Net realized and unrealized gain (loss) on investments










Net realized and unrealized gain (loss) on investments
Net realized gain (loss) on non-control/non-affiliate investments(33)
51

(10,046)
(843)
Net realized loss on non-control/non-affiliate investmentsNet realized loss on non-control/non-affiliate investments(10,841)(1,040)(10,750)(10,013)
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes4,649

(6,534)
(10,965)
(9,506)Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes17,866 6,808 19,384 (15,614)
Net unrealized appreciation on affiliate investments10,120

4,765

6,316

5,305
Net unrealized appreciation (depreciation) on affiliate investmentsNet unrealized appreciation (depreciation) on affiliate investments11,465 (880)13,391 (3,804)
Net unrealized appreciation (depreciation) on control investment577

(1,373)
(924)
(650)Net unrealized appreciation (depreciation) on control investment716 163 1,104 (1,501)
Net gain (loss) on investments15,313

(3,091)
(15,619)
(5,694)Net gain (loss) on investments19,206 5,051 23,129 (30,932)
Loss on extinguishment of debt(187)
—

(336)
—
Loss on extinguishment of debt— — (2,299)(149)
Loss on impairment of goodwill(1,077)
—

(1,077)
—
Net increase (decrease) in net assets resulting from operations$16,761

$1,762

$(7,741)
$8,847
Net increase (decrease) in net assets resulting from operations$22,441 $7,658 $26,615 $(24,502)
Net investment income per common share – basic and diluted$0.20

$0.36

$0.69

$1.09
Net investment income per common share – basic and diluted$0.24 $0.19 $0.43 $0.49 
Net increase (decrease) in net assets resulting from operations per common share – basic and diluted$1.25

$0.13

$(0.58)
$0.66
Net increase (decrease) in net assets resulting from operations per common share – basic and diluted$1.67 $0.57 $1.98 $(1.83)
Distributions declared per common share$0.17

$0.34

$0.68

$1.02
Distributions declared per common share$0.22 $0.17 $0.42 $0.51 
Basic and diluted weighted average shares outstanding13,399,767

13,366,515

13,389,830

13,361,757
Basic and diluted weighted average shares outstanding13,411,998 13,392,608 13,410,524 13,384,808 
See Notes to Consolidated Financial Statements.
4
OFS Capital Corporation and Subsidiaries
Consolidated Statements of Changes in Net Assets (unaudited)
(Dollar amounts in thousands)



Preferred StockCommon StockPaid-in capital in excess of parTotal distributable earnings (losses)Total net assets
Number of sharesPar valueNumber of sharesPar value
Balances at January 1, 2020— — 13,376,836 $134 $187,305 $(20,812)$166,627 
Net decrease in net assets resulting from operations:
  Net investment income— — — — — 6,579 6,579 
  Net realized loss on investments— — — — — (10,013)(10,013)
Loss on extinguishment of debt— — — — — (149)(149)
  Net unrealized depreciation on investments, net of taxes— — — — — (20,919)(20,919)
  Tax reclassifications of permanent differences— — — — 36 (36)— 
Distributions to stockholders:
  Common stock issued from reinvestment of stockholder distributions— — 22,858 — 96 — 96 
  Dividends declared— — — — — (6,824)(6,824)
Net increase (decrease) for the period ended June 30, 2020— — 22,858 — 132 (31,362)(31,230)
Balances at June 30, 2020— $— 13,399,694 $134 $187,437 $(52,174)$135,397 
Balances at March 31, 2020— $— 13,392,529 $134 $187,387 $(57,538)$129,983 
Net increase in net assets resulting from operations:
  Net investment income— — — — — 2,607 2,607 
  Net realized loss on investments— — — — — (1,040)(1,040)
  Net unrealized appreciation on investments, net of taxes— — — — — 6,091 6,091 
  Tax reclassifications of permanent differences— — — — 18 (18)— 
Distributions to stockholders:
  Common stock issued from reinvestment of stockholder distributions——7,165 — 32 — 32 
  Dividends declared— — — — — (2,276)(2,276)
Net increase for the period ended June 30, 2020— — 7,165 — 50 5,364 5,414 
Balances at June 30, 2020— $— 13,399,694 $134 $187,437 $(52,174)$135,397 
5
 Preferred Stock Common Stock Paid-in capital in excess of par Total distributable earnings (losses) Total net assets
 Number of shares Par value Number of shares Par value
Balances at January 1, 2019—
 $—
 13,357,337

$134

$187,540

$(12,651)
$175,023
Net increase in net assets resulting from operations:             
  Net investment income—
 —
 —

—

—

14,541
 14,541
  Net realized loss on investments—
 —
 —

—

—

(843) (843)
  Net unrealized depreciation on investments, net of taxes—
 —
 —

—

—

(4,851)
(4,851)
  Tax reclassifications of permanent differences—
 —
 —
 —
 183

(183)
—
Distributions to stockholders:             
  Common stock issued from reinvestment of stockholder distributions—
 —
 14,114
 —
 167
 —
 167
  Dividends declared—
 —
 —

—

—

(13,631)
(13,631)
Net increase (decrease) for the period ended September 30, 2019—
 —
 14,114
 —
 350
 (4,967) (4,617)
Balances at September 30, 2019—
 $—
 13,371,451
 $134
 $187,890
 $(17,618) $170,406
              
Balances at June 30, 2019—
 $—
 13,366,461

$134

$187,814

$(14,816) $173,132
Net increase in net assets resulting from operations:             
  Net investment income—
 —
 —

—

—

4,853

4,853
  Net realized gain on investments—
 —
 —

—

—

51

51
  Net unrealized depreciation on investments, net of taxes—
 —
 —

—

—

(3,142) (3,142)
  Tax reclassifications of permanent differences—
 —
 —
 —
 18

(18)
—
Distributions to stockholders:             
  Common stock issued from reinvestment of stockholder distributions—
 —
 4,990

—

58

—

58
  Dividends declared—
 —
 —

—

—

(4,546)
(4,546)
Net increase (decrease) for the period ended September 30, 2019—
 —
 4,990
 —
 76
 (2,802) (2,726)
Balances at September 30, 2019—
 $—
 13,371,451
 $134
 $187,890
 $(17,618) $170,406
              
OFS Capital Corporation and Subsidiaries
Consolidated Statements of Changes in Net Assets (unaudited)
(Dollar amounts in thousands)


Preferred StockCommon StockPaid-in capital in excess of parTotal distributable earnings (losses)Total net assets
Preferred Stock Common Stock Paid-in capital in excess of par Total distributable earnings (losses) Total net assetsNumber of sharesPar valueNumber of sharesPar value
Number of shares Par value Number of shares Par value
Balances at January 1, 2020—
 $—
 13,376,836

$134

$187,305

$(20,812)
$166,627
Net decrease in net assets resulting from operations:             
Net investment income—
 —
 —
 —
 —
 9,291
 9,291
Net realized loss on investments—
 —
 —
 —
 —
 (10,046) (10,046)
Loss on extinguishment of debt—
 —
 —
 —
 —
 (336) (336)
Loss on impairment of goodwill—
 —
 —
 —
 —
 (1,077) (1,077)
Net unrealized depreciation on investments, net of taxes—
 —
 —
 —
 —
 (5,573) (5,573)
Tax reclassifications of permanent differences—
 —
 —
 —
 (454)
454

—
Distributions to stockholders:             
Common stock issued from reinvestment of stockholder distributions—
 —
 29,566
 —
 128
 —
 128
Dividends declared—
 —
 —
 —
 —
 (9,102) (9,102)
Net increase (decrease) for the period ended September 30, 2020—
 —
 29,566
 —
 (326) (16,389) (16,715)
Balances at September 30, 2020—
 $—
 13,406,402
 $134
 $186,979
 $(37,201) $149,912
             
Balances at June 30, 2020—
 $—
 13,399,694

$134

$187,437

$(52,174)
$135,397
Balances at January 1, 2021Balances at January 1, 2021— $— 13,409,559 $134 $187,124 $(28,302)$158,956 
Net increase in net assets resulting from operations:             Net increase in net assets resulting from operations:
Net investment income—
 —
 —

—

—

2,712

2,712
 Net investment income— — — — — 5,785 5,785 
Net realized loss on investments—
 —
 —

—

—

(33)
(33) Net realized loss on investments— — — — — (10,750)(10,750)
Loss on extinguishment of debt—
 —
 —
 —
 —
 (187) (187) Loss on extinguishment of debt— — — — — (2,299)(2,299)
Loss on impairment of goodwill—
 —
 —
 —
 —
 (1,077) (1,077)
Net unrealized appreciation on investments, net of taxes—
 —
 —

—

—

15,346

15,346
 Net unrealized appreciation on investments, net of taxes— — — — — 33,879 33,879 
Tax reclassifications of permanent differences—
 —
 —

—

(490)
490

—
Distributions to stockholders:             Distributions to stockholders:
Common stock issued from reinvestment of stockholder distributions—
 —
 6,708

—

32

—

32
 Common stock issued from reinvestment of stockholder distributions— — 6,376 — 60 — 60 
Dividends declared—
 —
 —

—

—

(2,278)
(2,278) Dividends declared— — — — — (5,633)(5,633)
Net increase for the period ended September 30, 2020—
 —
 6,708
 —
 (458) 14,973
 14,515
Balances at September 30, 2020—
 $—
 13,406,402
 $134
 $186,979
 $(37,201) $149,912
Common stock repurchased under stock repurchase program Common stock repurchased under stock repurchase program— — (700)— (5)— (5)
Net increase for the period ended June 30, 2021Net increase for the period ended June 30, 2021— — 5,676 — 55 20,982 21,037 
Balances at June 30, 2021Balances at June 30, 2021— $— 13,415,235 $134 $187,179 $(7,320)$179,993 
Balances at March 31, 2021Balances at March 31, 2021— $— 13,411,962 $134 $187,146 $(26,810)$160,470 
Net increase in net assets resulting from operations:Net increase in net assets resulting from operations:
Net investment incomeNet investment income— — — — — 3,235 3,235 
Net realized loss on investmentsNet realized loss on investments— — — — — (10,841)(10,841)
Net unrealized appreciation on investments, net of taxesNet unrealized appreciation on investments, net of taxes— — — — — 30,047 30,047 
Distributions to stockholders:Distributions to stockholders:
Common stock issued from reinvestment of stockholder distributions Common stock issued from reinvestment of stockholder distributions— — 3,273 — 33 — 33 
Dividends declaredDividends declared— — — — — (2,951)(2,951)
Net increase for the period ended June 30, 2021Net increase for the period ended June 30, 2021— — 3,273 — 33 19,490 19,523 
Balances at June 30, 2021Balances at June 30, 2021— $— 13,415,235 $134 $187,179 $(7,320)$179,993 
See Notes to Consolidated Financial Statements.
6

OFS Capital Corporation and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(Dollar amounts in thousands)
Six Months Ended June 30,
20212020
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations$26,615 $(24,502)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net realized loss on investments10,750 10,013 
Loss on extinguishment of debt2,299 149 
Net unrealized (appreciation) depreciation on investments, net of taxes(33,879)20,919 
Amortization of Net Loan Fees(1,521)(760)
Amendment fees collected97 31 
Payment-in-kind interest and dividend income(943)(1,191)
Accretion of interest income on structured finance notes(4,670)(2,626)
Amortization of debt issuance costs888 867 
Amortization of intangible asset111 98 
Purchase and origination of portfolio investments(128,848)(70,914)
Proceeds from principal payments on portfolio investments100,817 56,276 
Proceeds from sale or redemption of portfolio investments10,294 65,528 
Proceeds from distributions received from structured finance notes6,356 3,290 
Changes in operating assets and liabilities:
Interest receivable247 235 
Interest payable912 (396)
Payable to adviser and affiliates100 (1,412)
Receivable for investment sold— (634)
Payable for investments purchased7,952 (9,293)
Other assets and liabilities249 194 
Net cash provided by (used in) operating activities(2,174)45,872 
Cash flows from financing activities
Distributions paid to stockholders(5,573)(6,728)
Borrowings under revolving lines of credit42,400 72,600 
Repayments under revolving lines of credit(50,400)(77,300)
Repayments of SBA debentures(9,765)(16,110)
Redemption of unsecured notes(98,525)— 
Proceeds from unsecured notes offering, net of discounts121,791 — 
Payment of deferred financing costs(298)— 
Repurchases of common stock under Stock Repurchase Program(5)— 
Net cash used in financing activities(375)(27,538)
Net increase (decrease) in cash(2,549)18,334 
   Cash at beginning of period37,708 13,447 
   Cash at end of period$35,159 $31,781 
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest$7,266 $9,383 
Reinvestment of distributions to stockholders60 96 
 Nine Months Ended September 30,
 2020 2019
Cash flows from operating activities   
Net increase (decrease) in net assets resulting from operations$(7,741)
$8,847
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:




Net realized loss on investments10,046

843
Loss on impairment of goodwill1,077
 —
Loss on extinguishment of debt336
 —
Net unrealized depreciation on investments, net of taxes5,573

4,851
Amortization of Net Loan Fees(1,006)
(788)
Amendment fees collected54

103
Payment-in-kind interest and dividend income(1,610)
(1,271)
Accretion of interest income on structured finance notes(4,141) (2,001)
Amortization of debt issuance costs1,258

942
Amortization of intangible asset152

146
Purchase and origination of portfolio investments(80,990)
(169,638)
Proceeds from principal payments on portfolio investments60,071

30,750
Proceeds from sale or redemption of portfolio investments67,409

30,368
Proceeds from distributions received from structured finance notes4,614

1,976
Changes in operating assets and liabilities:




Interest receivable559

(511)
Interest payable(1,450)
(746)
Payable to adviser and affiliates(1,333)
349
Receivable for investment sold(1,453) —
Payable for investments purchased(8,770) 924
Other assets and liabilities(160)
(493)
Net cash provided by (used in) operating activities42,495

(95,349)
    
Cash flows from financing activities   
Distributions paid to stockholders(8,974)
(13,464)
Borrowings under revolving lines of credit78,800

128,675
Repayments under revolving lines of credit(110,600)
(48,200)
Proceeds from unsecured notes offering, net of discounts24,250
 —
Repayments of SBA debentures(21,110)
—
Payment of deferred financing costs(11)
(1,857)
Repurchases of common stock under Stock Repurchase Program—
 (3)
Net cash provided by (used in) financing activities(37,645)
65,151
Net increase (decrease) in cash4,850

(30,198)
   Cash at beginning of period13,447

38,172
   Cash at end of period$18,297

$7,974
    
Supplemental Disclosure of Cash Flow Information:   
Cash paid for interest$14,494

$11,368
Reinvestment of distributions to stockholders128

167
See Notes to Consolidated Financial Statements.
7
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments (unaudited)
SeptemberJune 30, 20202021
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Non-control/Non-affiliate Investments
Debt and Equity Investments
AAdvantage Loyalty IP Ltd. and American Airlines, Inc. (14) (15) (22)Scheduled Passenger Air Transportation
Senior Secured Loan5.50%(L +4.75%)3/10/20214/28/2028$364 $360 $380 0.2 %
Aegion Corporation (15) (22)Water and Sewer Line and Related Structures Construction
Senior Secured Loan5.50%(L +4.75%)4/1/20215/17/2028632 628 628 0.3 
Allen Media, LLC (14) (15)Cable and Other Subscription Programming
Senior Secured Loan5.65%(L +5.50%)3/2/20212/10/20272,919 2,922 2,926 1.6 
All Star Auto Lights, Inc. (4)Motor Vehicle Parts (Used) Merchant Wholesalers
Senior Secured Loan9.00%(L +8.00%)12/19/20198/20/202415,437 15,260 15,437 8.6 
Autokiniton US Holdings, Inc. (14) (15)Automotive Parts and Accessories Stores
Senior Secured Loan5.00%(L +4.50%)3/26/20214/6/20281,714 1,710 1,730 1.0 
A&A Transfer, LLCConstruction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers
Senior Secured Loan (15)7.75%(L +6.50%)2/7/20202/7/202516,204 16,028 16,141 9.0 
Senior Secured Loan (Revolver) (5)7.75%(L +6.50%)2/7/20202/7/2025427 396 425 0.2 
16,631 16,424 16,566 9.2 
Ball MetalpackMetal Can Manufacturing
Senior Secured Loan9.75%(L +8.75%)6/8/20217/31/20261,250 1,225 1,225 0.7 
Banijay Entertainment S.A.S. (14) (15) (22)Motion Picture and Video Production
Senior Secured Loan3.84%(L +3.75%)4/5/20213/3/2025997 993 995 0.6 
Bass Pro Group, LLC (14) (15)Sporting Goods Stores
Senior Secured Loan5.00%(L +4.25%)2/26/20212/24/20285,719 5,709 5,746 3.2 
8
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets
Non-control/Non-affiliate Investments  



















Debt and Equity Investments  



















All Star Auto Lights, Inc. (4)
Motor Vehicle Parts (Used) Merchant Wholesalers



















Senior Secured Loan


8.50%
(L +7.50%)
12/19/2019
8/20/2024
$14,328

$14,194

$13,633

9.1%























American Bath Group, LLC (14) (15)
Plastics Plumbing Fixture Manufacturing



















Senior Secured Loan


5.00%
(L +4.00%)
6/24/2019
9/30/2023
1,478

1,473

1,479

1.0























A&A Transfer, LLC
Construction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers



















Senior Secured Loan (15)


8.25%
(L +6.50%)
2/7/2020
2/7/2025
16,848

16,628

17,091

11.5
Senior Secured Loan (Revolver) (5)


n/m (18)
(L +6.50%)
2/7/2020
2/7/2025
—

(38)
31

—












16,848

16,590

17,122

11.5
Bass Pro Group, LLC (14) (15)
Sporting Goods Stores



















Senior Secured Loan


5.75%
(L +5.00%)
6/24/2019
9/25/2024
2,962

2,911

2,942

2.0























Baymark Health Services, Inc.
Outpatient Mental Health & Sub. Abuse Centers



















Senior Secured Loan


9.25%
(L +8.25%)
3/22/2018
3/1/2025
4,000

3,975

3,951

2.6























Carolina Lubes, Inc.
Automotive Oil Change and Lubrication Shops



















Senior Secured Loan (4) (8)


8.64%
(L +7.64%)
8/23/2017
8/23/2022
19,840

19,773

19,609

13.2
Senior Secured Loan (Revolver) (5)


n/m (18)
(L +7.25%)
8/23/2017
8/23/2022
—

(6)
(34)
—












19,840
 19,767
 19,575
 13.2
Community Intervention Services, Inc. (4) (6) (11)
Outpatient Mental Health and Substance Abuse Centers



















Subordinated  Loan


7.0% cash / 6.0% PIK
N/A
7/16/2015
1/16/2021
10,071

7,639

—

—























Confie Seguros Holdings II Co.
Insurance Agencies and Brokerages



















Senior Secured Loan


8.66%
(L +8.50%)
7/7/2015
11/1/2025
9,678

9,537

8,951

6.0























Connect U.S. Finco LLC (14) (15)
Taxi Service



















Senior Secured Loan


5.50%
(L +4.50%)
11/20/2019
12/11/2026
1,990

1,981

1,934

1.3
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
SeptemberJune 30, 20202021
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Baymark Health Services, Inc. (15)Outpatient Mental Health & Sub. Abuse Centers
Senior Secured Loan9.50%(L +8.50%)6/10/20216/11/2028$4,962 $4,888 $4,873 2.7 %
Senior Secured Loan (Delayed Draw) (5)n/m (18)(L +8.50%)6/10/20216/11/2028— (37)(44)— 
4,962 4,851 4,829 2.7 %
Connect U.S. Finco LLC (14) (15) (22)Taxi Service
Senior Secured Loan4.50%(L +3.50%)11/20/201912/11/20261,975 1,975 1,980 1.1 
Constellis Holdings, LLC (10)Other Justice, Public Order, and Safety Activities
Common Equity (20,628 common shares)3/27/2020703 342 0.2 
Convergint Technologies Holdings, LLC (15)Security Systems Services (except Locksmiths)
Senior Secured Loan (14)4.50%(L +3.75%)3/18/20213/31/20282,011 2,001 2,022 1.1 
Senior Secured Loan7.50%(L +6.75%)9/28/20183/30/20297,499 7,480 7,601 4.2 
Senior Secured Loan (Delayed Draw) (5) (14)4.50%(L +3.75%)4/6/20213/31/2028320 318 322 0.2 
9,830 9,799 9,945 5.5 
Corel Inc. (15)Software Publishers
Senior Secured Loan5.14%(L +5.00%)3/2/20217/2/20261,301 1,293 1,287 0.7 
Dexko Global Inc. (15)Motor Vehicle Body Manufacturing
Senior Secured Loan9.25%(L +8.25%)1/28/20217/24/20251,460 1,465 1,460 0.8 
DHX Media Ltd. (14) (15) (22)Motion Picture and Video Production
Senior Secured Loan5.00%(L +4.25%)3/19/20213/18/20282,494 2,446 2,488 1.3 
Diamond Sports Group, LLC (14) (15)Television Broadcasting
Senior Secured Loan3.36%(L +3.25%)11/19/20198/24/20261,965 1,967 1,199 — 
Eblens Holdings, Inc. (20)Shoe Store
Subordinated Loan (11)12.00% cash / 1.00% PIKN/A7/13/20171/13/20239,160 9,071 8,438 4.7 
Common Equity (71,250 Class A units) (10)7/13/2017713 114 0.1 
9,160 9,784 8,552 4.8 
9
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets
Constellis Holdings, LLC (10)
Other Justice, Public Order, and Safety Activities



















Common Equity (20,628 common shares)






3/27/2020





$703

$696

0.5%























Convergint Technologies Holdings, LLC
Security Systems Services (except Locksmiths)



















Senior Secured Loan


7.50%
(L +6.75%)
9/28/2018
2/2/2026
3,481

3,439

3,287

2.2























Custom Truck One Source (14) (15)
Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing



















Senior Secured Loan


4.40%
(L +4.25%)
9/30/2020
4/18/2025
500

499

497

0.3























Davis Vision, Inc.
Direct Health and Medical Insurance Carriers



















Senior Secured Loan


7.75%
(L +6.75%)
10/31/2019
12/1/2025
405

396

405

0.3























Diamond Sports Group, LLC (14) (15)
Television Broadcasting



















Senior Secured Loan


3.40%
(L +3.25%)
11/19/2019
8/24/2026
1,980

1,982

1,554

1.0























DuPage Medical Group (15)
Offices of Physicians, Mental Health Specialists



















Senior Secured Loan


7.75%
(L +7.00%)
8/22/2017
8/15/2025
10,098

10,162

9,916

6.6























Eblens Holdings, Inc.
Shoe Store



















Subordinated Loan (11)


12.50% cash / 1.50% PIK
N/A
7/13/2017
1/13/2023
9,086

9,029

5,351

3.6
Common Equity (71,250 Class A units) (10)






7/13/2017





713

—

—












9,086

9,742

5,351

3.6
Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4)
Electrical Contractors and Other Wiring Installation Contractors



















Senior Secured Loan


6.75% cash / 4.25% PIK
N/A
6/30/2017
6/30/2022
16,998

16,887

13,960

9.3
Preferred Equity (238,095 Series B units) (10)






6/30/2017





300

—

—
Preferred Equity (13,315 Series C units) (10)






8/13/2018





13

—

—












16,998

17,200

13,960

9.3
Excelin Home Health, LLC
Home Health Care Services



















Senior Secured Loan


11.50%
(L +9.50%)
10/25/2018
4/25/2024
4,250

4,195

4,250

2.8























OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
SeptemberJune 30, 20202021
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Electrical Components International, Inc.Current-Carrying Wiring Device Manufacturing
Senior Secured Loan (14) (15)4.37%(L +4.25%)4/8/20216/26/2025$2,952 $2,912 $2,923 1.6 %
Senior Secured Loan8.62%(L +8.50%)4/8/20216/26/20263,000 2,614 2,614 1.5 
5,952 5,526 5,537 3.1 
Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4)Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan7.50% cash / 3.50% PIK(L +7.00%)6/30/20176/30/202217,453 17,349 12,432 6.9 
Preferred Equity (238,095 Series B units) (10)6/30/2017300 — — 
Preferred Equity (13,315 Series C units) (10)8/13/201813 — — 
17,453 17,662 12,432 6.9 
Excelin Home Health, LLC (4)Home Health Care Services
Senior Secured Loan11.50%(L +9.50%)10/25/20184/25/20244,250 4,206 4,250 2.4 
GGC Aerospace Topco L.P.Other Aircraft Parts and Auxiliary Equipment Manufacturing
Common Equity (368,852 Class A units) (10)12/29/2017450 84 — 
Common Equity (40,984 Class B units) (10)12/29/201750 3 — 
500 87 — 
Inergex Holdings, LLCOther Computer Related Services
Senior Secured Loan8.00% cash / 1.0% PIK(L +8.00%)10/1/201810/1/202415,260 15,091 15,260 8.4 
Senior Secured Loan (Revolver) (5) (18)n/m (18)(L +7.00%)10/1/201810/1/2024— (15)— — 
15,260 15,076 15,260 8.4 
Intouch Midco Inc. (15) (22)All Other Professional, Scientific, and Technical Services
Senior Secured Loan4.85%(L +4.75%)12/20/20198/24/20252,300 2,241 2,297 1.3 
Ivanti Software, Inc. (14) (15)Software Publishers
Senior Secured Loan5.75%(L +4.75%)3/26/202112/1/20275,986 6,022 6,001 3.3 
I&I Sales Group, LLCMarketing Consulting Services
Senior Secured Loan (15)9.50%(L +8.50%)12/30/20207/10/20255,285 5,203 5,286 2.9 
Senior Secured Loan (Revolver) (5) (18)n/m (18)(L +8.50%)12/30/20207/10/2025— (2)— — 
5,285 5,201 5,286 2.9 
10
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets
GGC Aerospace Topco L.P.
Other Aircraft Parts and Auxiliary Equipment Manufacturing



















Senior Secured Loan


9.75%
(L +8.75%)
12/29/2017
9/8/2024
$5,000

$4,926

$4,456

2.9%
Common Equity (368,852 Class A units) (10)






12/29/2017





450

231

0.2
Common Equity (40,984 Class B units) (10)






12/29/2017





50

9

—












5,000

5,426

4,696

3.1
Inergex Holdings, LLC
Other Computer Related Services



















Senior Secured Loan


8.00%
(L +7.00%)
10/1/2018
10/1/2024
16,464

16,296

15,368

10.2
Senior Secured Loan (Revolver) (5)


8.00%
(Prime + 7.00%)
10/1/2018
10/1/2024
469

450

438

0.3












16,933

16,746

15,806

10.5
Institutional Shareholder Services, Inc.
Administrative Management and General Management Consulting Services



















Senior Secured Loan


8.72%
(L +8.50%)
3/4/2019
3/5/2027
6,244

6,093

6,046

4.0























Intouch Midco Inc. (15)
All Other Professional, Scientific, and Technical Services



















Senior Secured Loan


4.90%
(L +4.75%)
12/20/2019
8/24/2025
1,985

1,923

1,830

1.2























Milrose Consultants, LLC (4) (8)
Administrative Management and General Management Consulting Services



















Senior Secured Loan


7.74%
(L +6.74%)
7/16/2019
7/16/2025
19,167

19,041

19,049

12.7























My Alarm Center, LLC (10)
Security Systems Services (except Locksmiths)



















Preferred Equity (335 Class Z units) (13)






9/12/2018





$325

$1,136

0.8%
Preferred Equity (1,485 Class A units), 8% PIK (4) (13)






7/14/2017





1,571

229

0.2
Preferred Equity (1,198 Class B units) (4)






7/14/2017





1,198

5

—
Common Equity (64,149 units) (4) (13)






7/14/2017





—

—

—















3,094

1,370

1.0
Online Tech Stores, LLC (4) (6)
Stationary & Office Supply Merchant Wholesaler



















Subordinated Loan


13.50% PIK
N/A
2/1/2018
8/1/2023
18,058

16,129

7,093

4.7























OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
SeptemberJune 30, 20202021
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
JP Intermediate B, LLC (15)Drugs and Druggists' Sundries Merchant Wholesalers
Senior Secured Loan6.50%(L +5.50%)1/14/202111/15/2025$5,919 $5,675 $5,736 3.2 %
KNS Acquisition Corp. (14) (15)Electronic Shopping and Mail-Order Houses
Senior Secured Loan7.00%(L +6.25%)4/16/20214/21/20275,000 4,958 4,998 2.8 
LogMeIn, Inc. (14) (15)Data Processing, Hosting, and Related Services
Senior Secured Loan4.83%(L +4.75%)3/26/20218/31/20274,994 4,991 4,992 2.8 
McGraw Hill Global Education Holdings, LLC (14) (15)All Other Publishers
Senior Secured Loan5.75%(L +4.75%)4/1/202111/1/20241,995 1,994 2,001 1.1 
Micro Holding Corp (14)Internet Publishing and Broadcasting and Web Search Portals
Senior Secured Loan3.60%(L +3.50%)3/26/20219/15/20242,000 2,003 2,007 1.1 
Milrose Consultants, LLC (4) (8)Administrative Management and General Management Consulting Services
Senior Secured Loan7.60%(L +6.60%)7/16/20197/16/202522,574 22,388 23,026 12.7 
Odyssey Logistics and Technology Corporation (14) (15)Freight Transportation Arrangement
Senior Secured Loan5.00%(L +4.00%)4/5/202110/12/20241,995 1,966 1,972 1.1 
Online Tech Stores, LLC (4) (6)Stationary & Office Supply Merchant Wholesaler
Subordinated Loan10.50% cash / 3.0% PIKN/A2/1/20188/1/202319,823 16,160 94 0.1 
Panther BF Aggregator 2 LP (14) (15) (19)Other Commercial and Service Industry Machinery Manufacturing
Senior Secured Loan3.35%(L +3.25%)11/19/20194/30/20261,817 1,817 1,803 1.0 
11
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets
OnSite Care, PLLC (4) (8)
Home Health Care Services



















Senior Secured Loan


8.70%
(L +7.70%)
8/10/2018
8/10/2023
$9,516

$9,441

$9,516

6.3%























Panther BF Aggregator 2 LP (14) (15)
Other Commercial and Service Industry Machinery Manufacturing



















Senior Secured Loan


3.65%
(L +3.50%)
11/19/2019
4/30/2026
1,980

1,965

1,934

1.3























Parfums Holding Company, Inc.
Cosmetics, Beauty Supplies, and Perfume Stores



















Senior Secured Loan (14) (15)


4.26%
(L +4.00%)
6/25/2019
6/30/2024
1,537

1,536

1,507

1.0
Senior Secured Loan


9.75%
(L +8.75%)
11/16/2017
6/30/2025
6,320

6,332

6,289

4.2












7,857

7,868

7,796

5.2
Pelican Products, Inc.
Unlaminated Plastics Profile Shape Manufacturing



















Senior Secured Loan


8.75%
(L +7.75%)
9/24/2018
5/1/2026
6,055

6,059

5,835

3.9























Pike Corp. (14) (15)
Electrical Contractors and Other Wiring Installation Contractors



















Senior Secured Loan


3.15%
(L +3.00%)
9/17/2020
7/24/2026
500

500

497

0.3























PM Acquisition LLC
All Other General Merchandise Stores
















Senior Secured Loan


11.50% cash / 2.5% PIK
N/A
9/30/2017
10/29/2021
4,828

4,793

4,615

3.1
Common Equity (499 units) (10) (13)






9/30/2017





499

165

0.1












4,828

5,292

4,780

3.2
Quest Software US Holdings Inc. (14) (15)
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers



















Senior Secured Loan


4.51%
(L +4.25%)
6/25/2019
5/16/2025
1,975

1,959

1,939

1.3























Resource Label Group, LLC
Commercial Printing (except Screen and Books)



















Senior Secured Loan


9.50%
(L +8.50%)
6/7/2017
11/26/2023
4,821

4,786

4,549

3.1























Rocket Software, Inc. (15)
Software Publishers



















Senior Secured Loan


8.51%
(L +8.25%)
11/20/2018
11/28/2026
6,275

6,186

5,959

4.0























OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
SeptemberJune 30, 20202021
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Parfums Holding Company, Inc. (14) (15)Cosmetics, Beauty Supplies, and Perfume Stores
Senior Secured Loan4.10%(L +4.00%)6/25/20196/30/2024$1,534 $1,533 $1,530 0.9 %
Pelican Products, Inc.Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan8.75%(L +7.75%)9/24/20185/1/20266,249 6,249 6,249 3.4 
Peraton Inc. (14) (15)Management Consulting Services
Senior Secured Loan4.50%(L +3.75%)4/2/20212/1/2028748 749 752 0.4 
Pike Corp. (14) (15)Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan3.11%(L +3.00%)9/17/20201/21/2028131 131 131 0.1 
PM Acquisition LLC (20)All Other General Merchandise Stores
Common Equity (499 units) (10) (13)9/30/2017499 1,308 0.7 
Quest Software US Holdings Inc. (14) (15)Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Senior Secured Loan4.44%(L +4.25%)6/25/20195/16/20251,148 1,145 1,149 0.6 
Resource Label Group, LLCCommercial Printing (except Screen and Books)
Senior Secured Loan9.50%(L +8.50%)6/7/201711/26/20234,821 4,795 4,821 2.7 
RPLF Holdings, LLC (10) (13)Software Publishers
Common Equity (254,110 Class A units)1/17/2018492 791 0.4 
RSA Security (15)Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Senior Secured Loan (14)5.50%(L +4.75%)4/16/20214/27/2028937 928 937 0.5 
Senior Secured Loan8.50%(L +7.75%)4/16/20214/27/20292,670 2,633 2,633 1.5 
Senior Secured Loan (Delayed Draw) (5)n/m (18)(L +4.75%)4/16/20214/27/2028— — — — 
Senior Secured Loan (Delayed Draw) (5)n/m (18)(L +7.75%)4/16/20214/16/2029— — (21)— 
3,607 3,561 3,549 2.0 
12
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets
RPLF Holdings, LLC (10) (13)
Software Publishers



















Common Equity (254,110 Class A units)






1/17/2018





$254

$418

0.3%























Sentry Centers Holdings, LLC (10) (13)
Convention and Trade Show Organizers



















Preferred Equity (2,248 Series A units)






9/4/2020


—

51

47

—
Preferred Equity (1,603 Series B units)






9/4/2020


—

160

160

0.1
Common Equity (269 units)






9/4/2020


—

3

3

—












—

214

210

0.1
SkyMiles IP Ltd. and Delta Air Lines, Inc. (14) (15)
Scheduled Passenger Air Transportation



















Senior Secured Loan


4.75%
(L +3.75%)
9/15/2020
9/16/2027
500

495

504

0.3























SourceHOV Tax, Inc. (4) (8)
Other Accounting Services



















Senior Secured Loan


7.87%
(L +6.37%)
3/16/2020
3/17/2025
12,915

12,832

13,172

8.9























Southern Technical Institute, LLC (4) (10)
Colleges, Universities, and Professional Schools



















Equity appreciation rights






6/27/2018





—

3,356

2.2























Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.,)
Child Day Care Services



















Senior Secured Loan


8.47%
(L +8.25%)
7/26/2018
7/30/2026
5,216

5,180

4,948

3.3























SSJA Bariatric Management LLC (15)
Offices of Physicians, Mental Health Specialists



















Senior Secured Loan


6.00%
(L +5.00%)
8/26/2019
8/26/2024
9,975

9,897

9,605

6.5
Senior Secured Loan (Revolver) (5)


5.25%
(L +4.00%)
8/26/2019
8/26/2024
667

662

642

0.4












10,642

10,559

10,247

6.9
Stancor, L.P. (4)
Pump and Pumping Equipment Manufacturing



















Preferred Equity (1,250,000 Class A units), 8% PIK (10)






8/19/2014





1,501

1,220

0.8























Staples, Inc. (14) (15)
Business to Business Electronic Markets



















Senior Secured Loan


5.25%
(L +5.00%)
6/24/2019
4/16/2026
2,967

2,895

2,768

1.8























OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
SeptemberJune 30, 20202021
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Sentry Centers Holdings, LLC (10) (13)Convention and Trade Show Organizers
Preferred Equity (2,248 Series A units)9/4/2020$51 $— — %
Preferred Equity (1,603 Series B units)9/4/2020160 28 — 
Common Equity (269 units)9/4/20203 — — 
214 28 — 
Signal Parent, Inc. (15)New Single-Family Housing Construction (except For-Sale Builders)
Senior Secured Loan4.25%(L +3.50%)3/25/20214/3/2028851 842 835 0.5 
SourceHOV Tax, Inc.Other Accounting Services
Senior Secured Loan (4)7.50%(L +6.50%)3/16/20203/16/202519,890 19,728 19,733 11.0 
Senior Secured Loan (Revolver) (5) (18)n/m (18)(L +6.50%)5/17/20213/17/2025— (14)(9)— 
19,890 19,714 19,724 11.0 
Southern Technical Institute, LLC (4) (10)Colleges, Universities, and Professional Schools
Equity appreciation rights6/27/2018— 6,120 3.4 
Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.,) (15)Child Day Care Services
Senior Secured Loan8.40%(L +8.25%)7/26/20187/30/20266,399 6,318 5,823 3.1 
SSJA Bariatric Management LLC (15)Offices of Physicians, Mental Health Specialists
Senior Secured Loan6.25%(L +5.25%)8/26/20198/26/20249,825 9,762 9,825 5.5 
Senior Secured Loan6.25%(L +5.25%)12/31/20208/26/20241,061 1,052 1,061 0.6 
Senior Secured Loan (Revolver) (5) (18)n/m (18)(L +5.25%)8/26/20198/26/2024— (4)— — 
10,886 10,810 10,886 6.1 
Stancor, L.P. (4)Pump and Pumping Equipment Manufacturing
Preferred Equity (1,250,000 Class A units), 8% PIK (10)8/19/20141,501 1,300 0.7 
Staples, Inc. (14) (15) (22)Business to Business Electronic Markets
Senior Secured Loan5.18%(L +5.00%)6/24/20194/16/20262,945 2,883 2,875 1.6 
13
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets
STS Operating, Inc.
Industrial Machinery and Equipment Merchant Wholesalers



















Senior Secured Loan (14) (15)


5.25%
(L +4.25%)
5/16/2018
12/11/2024
$627

$626

$599

0.4%
Senior Secured Loan


9.00%
(L +8.00%)
5/15/2018
4/30/2026
9,073

9,070

8,461

5.6












9,700

9,696

9,060

6.0
Sunshine Luxembourg VII SARL (14) (15)
Pharmaceutical Preparation Manufacturing



















Senior Secured Loan


4.47%
(L +4.25%)
11/20/2019
9/25/2026
1,985

1,994

1,978

1.3























Tank Holding Corp. (14) (15)
Unlaminated Plastics Profile Shape Manufacturing



















Senior Secured Loan


4.93%
(L +3.50%)
6/24/2019
3/26/2026
1,980

1,987

1,960

1.3























The Escape Game, LLC (4)
Other amusement and recreation industries



















Senior Secured Loan


9.75%
(L +8.75%)
12/22/2017
12/22/2022
7,000

6,969

6,549

4.4
Senior Secured Loan


9.75%
(L +8.75%)
2/14/2020
12/31/2020
2,333

2,323

2,183

1.5
Senior Secured Loan


8.00%
(L +7.00%)
7/18/2019
12/31/2020
4,667

4,661

4,392

2.9
Senior Secured Loan (Delayed Draw)


9.75%
(L +8.75%)
7/20/2018
12/22/2022
7,000

7,000

6,549

4.4












21,000

20,953

19,673

13.2
Truck Hero, Inc. (15)
Truck Trailer Manufacturing



















Senior Secured Loan


9.25%
(L +8.25%)
5/30/2017
4/21/2025
7,014

6,987

6,915

4.6























United Biologics Holdings, LLC (4) (10)
Medical Laboratories



















Preferred Equity (151,787 units)






4/16/2013





9

30

—
Warrants (29,374 units)






7/26/2012
3/5/2022 (12)



82

14

—















91

44

—
United Natural Foods (14) (15)
General Line Grocery Merchant Wholesalers



















Senior Secured Loan


4.40%
(L +4.25%)
6/9/2020
10/22/2025
478

460

468

0.3























Wastebuilt Environmental Solutions, LLC (4)
Industrial Supplies Merchant Wholesalers



















Senior Secured Loan


10.25%
(L +8.75%)
10/11/2018
10/11/2024
7,000

6,901

5,402

3.6























OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
SeptemberJune 30, 20202021
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
STS Operating, Inc.Industrial Machinery and Equipment Merchant Wholesalers
Senior Secured Loan (14) (15)5.25%(L +4.25%)5/16/201812/11/2024$622 $621 $616 0.3 %
Senior Secured Loan9.00%(L +8.00%)5/15/20184/30/20269,073 9,070 8,933 5.0 
9,695 9,691 9,549 5.3 
Sunshine Luxembourg VII SARL (14) (15) (22)Pharmaceutical Preparation Manufacturing
Senior Secured Loan4.50%(L +3.75%)11/20/201910/1/20261,975 1,975 1,985 1.1 
Tailwind Smith Cooper Intermediate Corporation (14) (15)Fabricated Pipe and Pipe Fitting Manufacturing
Senior Secured Loan5.11%(L +5.00%)2/23/20215/28/20262,587 2,544 2,584 1.4 
Tank Holding Corp. (14) (15)Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan3.60%(L +3.50%)6/24/20193/26/20261,965 1,971 1,955 1.1 
Senior Secured Loan5.75%(L +5.00%)12/18/20203/26/2026891 879 895 0.5 
2,856 2,850 2,850 1.6 
The Escape Game, LLC (4)Other amusement and recreation industries
Senior Secured Loan9.75%(L +8.75%)12/22/201712/31/20212,333 2,329 2,333 1.3 
Senior Secured Loan9.75%(L +8.75%)2/14/202012/22/20227,000 6,979 7,000 3.9 
Senior Secured Loan9.75%(L +8.75%)7/18/201912/22/20227,000 7,000 7,000 3.8 
Senior Secured Loan (Delayed Draw)8.00%(L +7.00%)7/20/201812/31/20214,667 4,665 4,659 2.6 
21,000 20,973 20,992 11.6 
Thryv, Inc. (14) (15)Directory and Mailing List Publishers
Senior Secured Loan9.50%(L +8.50%)2/18/20213/1/20262,314 2,257 2,351 1.3 
Truck Hero, Inc. (14) (15)Truck Trailer Manufacturing
Senior Secured Loan4.50%(L +3.75%)4/1/20211/31/2028748 747 749 0.4 
TruGreen Limited PartnershipLandscaping Services
Senior Secured Loan9.25%(L +8.50%)5/13/202111/2/20284,500 4,639 4,639 2.6 
14
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets
Weight Watchers International, Inc. (14) (15)
Diet and Weight Reducing Centers



















Senior Secured Loan


5.50%
(L +4.75%)
6/10/2020
11/29/2024
$485

$485

$485

0.3%























Xperi (14) (15)
Semiconductor and Related Device Manufacturing



















Senior Secured Loan


4.15%
(L +4.00%)
6/1/2020
6/1/2025
514

471

502

0.3























Total Debt and Equity Investments










$321,583

$322,848

$291,528

194.5%























Structured Finance Note Investments





















Dryden 76 CLO, Ltd. (7)





















Subordinated Notes


19.80% (9)


9/27/2019
10/20/2032 (17)
2,750

2,320 (16)

2,038

1.4























Elevation CLO 2017-7, Ltd. (7)





















Subordinated Notes


12.26% (9)


2/6/2019
7/15/2030 (17)
10,000

7,165 (16)

5,754

3.8




 




 



 





Flatiron CLO 18, Ltd. (7)


 




 



 





Subordinated Notes


21.27% (9)


1/2/2019
4/17/2031 (17)
9,680

7,306 (16)

6,839

4.6




 

















Madison Park Funding XXIII, Ltd. (7)





















Subordinated Notes


19.45% (9)


1/8/2020
7/27/2047 (17)
10,000

6,819 (16)

6,743

4.5























Monroe Capital MML CLO X, LTD.





















Mezzanine bond - Class E


9.08% (9)
(L +8.85%)
8/7/2020
8/20/2031 (17)
863

799

797

0.5























Octagon Investment Partners 39, Ltd. (7)





















Subordinated Notes


21.01% (9)


1/23/2020
10/20/2030 (17)
7,000

5,277 (16)

4,904

3.3























Park Avenue Institutional Advisers CLO 2017-1





















Mezzanine bond - Class D


6.48% (9)
(L +6.22%)
6/5/2020
11/14/2029 (17)
100

82

89

0.1























OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
SeptemberJune 30, 20202021
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
United Biologics Holdings, LLC (4) (10)Medical Laboratories
Preferred Equity (151,787 units)4/16/2013$9 $12 — %
Warrants (29,374 units)7/26/20123/5/2022 (12)82 5 — 
91 17 — 
United Natural Foods (14) (15) (22)General Line Grocery Merchant Wholesalers
Senior Secured Loan3.60%(L +3.50%)6/9/202010/22/2025283 273 283 0.2 
West Corporation (14) (15)All Other Telecommunications
Senior Secured Loan4.50%(L +3.50%)2/26/202110/10/2024887 872 862 0.5 
Total Debt and Equity Investments$307,467 $306,248 $290,226 161.0 %
Structured Finance Note Investments (9) (16) (22)
Apex Credit CLO 2020 Ltd. (7)
Subordinated Notes13.26%11/16/202011/19/203111,080 9,268 9,534 5.3 
Apex Credit CLO 2021 Ltd (7)
Subordinated Notes14.53%5/28/20217/18/20348,630 7,267 7,288 4.0 
Dryden 53 CLO, LTD. (7)
Income Notes23.16%10/26/20201/15/20312,700 1,704 1,780 1.0 
Subordinated Notes23.13%10/26/20201/15/20312,159 1,363 1,424 0.8 
4,859 3,067 3,204 1.8 
Dryden 76 CLO, Ltd. (7)
Subordinated Notes16.20%9/27/201910/20/20322,750 2,215 2,385 1.3 
Elevation CLO 2017-7, Ltd. (7)
Subordinated Notes12.38%2/6/20197/15/203010,000 6,577 5,678 3.2 
Flatiron CLO 18, Ltd. (7)
Subordinated Notes19.14%1/2/20194/17/20319,680 7,111 7,369 4.1 
Madison Park Funding XXIII, Ltd. (7)
Subordinated Notes23.28%1/8/20207/27/204710,000 6,468 7,402 4.1 
15
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets
Regatta II Funding





















Mezzanine bond - Class DR2


7.23% (9)
(L +6.95%)
6/5/2020
1/15/2029 (17)
$800

$685

$720

0.5%























THL Credit Wind River 2019‐3 CLO Ltd (7)


 

















Subordinated Notes


15.73% (9)


4/5/2019
4/15/2031 (17)
7,000

5,807 (16)

4,647

3.1























Total Structured Finance Note Investments










$48,193

$36,260

$32,531

21.8%























Total Non-control/Non-affiliate Investments










$369,776

$359,108

$324,059

216.3%
Affiliate Investments





















3rd Rock Gaming Holdings, LLC
Software Publishers



















Senior Secured Loan (6)


8.50% cash / 1.0% PIK
(L +7.50%)
3/13/2018
3/12/2023
21,285

20,993

11,664

7.8
Common Equity (2,547,250 units) (10) (13)






3/13/2018





2,547

—

—












21,285

23,540

11,664

7.8
Chemical Resources Holdings, Inc.
Custom Compounding of Purchased Resins



















Senior Secured Loan (4) (8)


9.22%
(L +7.72%)
1/25/2019
1/25/2024
13,743

13,620

13,857

9.2
Common Equity (1,832 Class A shares) (10) (13)






1/25/2019





1,813

2,475

1.7












13,743

15,433

16,332

10.9
Contract Datascan Holdings, Inc. (4)
Office Machinery and Equipment Rental and Leasing



















Subordinated Loan


12.00%
N/A
8/5/2015
2/5/2021
8,022

8,012

7,706

5.1
Preferred Equity (3,061 Series A shares), 10% PIK






8/5/2015





5,848

2,523

1.7
Common Equity (11,273 shares) (10)






6/28/2016





104

36

—












8,022

13,964

10,265

6.8
DRS Imaging Services, LLC
Data Processing, Hosting, and Related Services



















Senior Secured Loan (4) (8)


10.12%
(L +9.12%)
3/8/2018
11/20/2023
10,626

10,570

10,626

7.1
Common Equity (1,135 units) (10) (13)






3/8/2018





1,135

1,694

1.1












10,626

11,705

12,320

8.2
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
SeptemberJune 30, 20202021
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Madison Park Funding XXIX, Ltd. (7)
Subordinated Notes17.08%12/22/202010/18/2047$9,500 $7,256 $7,373 4.1 %
Monroe Capital MML CLO X, Ltd.
Mezzanine bond - Class E10.82%(L +8.85%)8/7/20208/20/20311,000 943 1,007 0.6 
Park Avenue Institutional Advisers CLO Ltd 2021-1
Mezzanine bond - Class E8.74%(L +7.30%)1/26/20211/20/20341,000 972 997 0.6 
Octagon Investment Partners 39, Ltd. (7)
Subordinated Notes18.62%1/23/202010/20/20307,000 4,966 5,182 2.9 
Redding Ridge 4 (7)
Subordinated Notes17.77%3/4/20214/15/20301,300 1,152 1,168 0.6 
Regatta II Funding
Mezzanine bond - Class DR213.83%(L +6.95%)6/5/20201/15/2029800 716 789 0.4 
THL Credit Wind River 2019‐3 CLO Ltd (7)
Subordinated Notes10.68%4/5/20194/15/20317,000 5,680 4,806 2.7 
Trinitas CLO VIII (7)
Subordinated Notes22.57%3/4/20217/20/20315,200 3,205 3,360 1.9 
Wellfleet CLO 2018-2 (7)
Subordinated Notes21.08%3/4/202110/20/20311,000 669 703 0.4 
Total Structured Finance Note Investments$90,799 $67,532 $68,245 38.0 %
Total Non-control/Non-affiliate Investments$398,266 $373,780 $358,471 199.0 %
Affiliate Investments
3rd Rock Gaming Holdings, LLC (20)Software Publishers
Senior Secured Loan (6)8.50% cash / 1.0% PIK(L +7.50%)3/13/20183/12/202319,305 17,333 6,975 3.9 
Common Equity (2,547,250 units) (10) (13)3/13/20182,547 — — 
19,305 19,880 6,975 3.9 
16
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets
Master Cutlery, LLC (4) (10)
Sporting and Recreational Goods and Supplies Merchant Wholesalers



















Subordinated Loan (6) (11)


13.00%
N/A
4/17/2015
7/20/2022
$6,546

$4,764

$—

—%
Preferred Equity (3,723 Series A units), 8% PIK






4/17/2015





3,483

—

—
Common Equity (15,564 units)






4/17/2015





—

—

—












6,546

8,247

—

—
NeoSystems Corp. (4)
Other Accounting Services



















Preferred Equity (521,962 convertible shares), 10% PIK






8/14/2014





1,831

2,250

1.5























Pfanstiehl Holdings, Inc. (4)
Pharmaceutical Preparation Manufacturing



















Subordinated Loan


10.50%
N/A
1/1/2014
9/27/2024
3,788

3,788

3,788

2.5
Common Equity (400 Class A shares)






1/1/2014





217

31,932

21.3












3,788

4,005

35,720

23.8
Professional Pipe Holdings, LLC
Plumbing, Heating, and Air-Conditioning Contractors



















Senior Secured Loan


8.90% cash / 1.50% PIK
(L +8.75%)
3/23/2018
3/23/2023
7,180

7,111

6,849

4.6
Common Equity (1,414 Class A units) (10)






3/23/2018





1,414

1,011

0.7












7,180

8,525

7,860

5.3
TalentSmart Holdings, LLC
Professional and Management Development Training



















Senior Secured Loan (4)


8.50%
(L +6.75%)
10/11/2019
10/11/2024
9,813

9,674

9,901

6.6
Senior Secured Loan (Revolver) (5)


8.50%
(L +6.75%)
10/11/2019
10/11/2024
500

493

504

0.3
Common Equity (1,595 Class A shares) (10) (13)






10/11/2019





1,595

900

0.6












10,313

11,762

11,305

7.5
TRS Services, LLC (4) (10)
Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance



















Preferred Equity (2,088,305 Class A units), 11% PIK






12/10/2014





279

811

0.5
Common Equity (3,000,000 units)






12/10/2014





572

—

—












—

851

811

0.5
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
SeptemberJune 30, 20202021
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Chemical Resources Holdings, Inc. (20)Custom Compounding of Purchased Resins
Senior Secured Loan (4) (8)8.77%(L +7.27%)1/25/20191/25/2024$13,743 $13,648 $13,956 7.8 %
Common Equity (1,832 Class A shares) (10) (13)1/25/20191,814 3,400 1.9 
13,743 15,462 17,356 9.7 
Contract Datascan Holdings, Inc. (4) (20)Office Machinery and Equipment Rental and Leasing
Preferred Equity (3,061 Series A shares), 10% PIK8/5/20155,849 2,787 1.5 
Common Equity (11,273 shares) (10)6/28/2016104 41 — 
5,953 2,828 1.5 
DRS Imaging Services, LLC (20)Data Processing, Hosting, and Related Services
Common Equity (1,135 units) (10) (13)3/8/20181,135 1,259 0.7 
Master Cutlery, LLC (4) (10) (20)Sporting and Recreational Goods and Supplies Merchant Wholesalers
Subordinated Loan (6) (11)13.00%N/A4/17/20157/20/20227,123 4,725 687 0.4 
Preferred Equity (3,723 Series A units), 8% PIK4/17/20153,483 — — 
Common Equity (15,564 units)4/17/2015— — — 
7,123 8,208 687 0.4 
NeoSystems Corp. (4) (20)Other Accounting Services
Preferred Equity (521,962 convertible shares), 10% PIK8/14/20141,985 3,255 1.8 
Pfanstiehl Holdings, Inc. (4) (20) (21)Pharmaceutical Preparation Manufacturing
Common Equity (400 Class A shares)1/1/2014217 49,236 27.4 
Professional Pipe Holdings, LLC (19)Plumbing, Heating, and Air-Conditioning Contractors
Senior Secured Loan9.75% cash / 1.50% PIK(L +10.25%)3/23/20183/23/20235,742 5,692 5,518 3.1 
Common Equity (1,414 Class A units) (10)3/23/20181,414 849 0.5 
5,742 7,106 6,367 3.6 
TalentSmart Holdings, LLC (20)Professional and Management Development Training
Common Equity (1,595 Class A shares) (10) (13)10/11/20191,595 1,011 0.6 
17
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets
TTG Healthcare, LLC
Diagnostic Imaging Centers



















Senior Secured Loan (4)


10.00%
(L +9.00%)
3/1/2019
3/1/2024
$12,103

$11,969

$12,194

8.1%
Preferred Equity ( 2,309 Class B units) (10) (13)






3/1/2019





2,309

3,464

2.3












12,103

14,278

15,658

10.4























Total Affiliate Investments










$93,606

$114,141

$124,185

82.7%
Control Investment





















MTE Holding Corp. (4)
Travel Trailer and Camper Manufacturing



















Subordinated Loan (to Mirage Trailers, LLC, a controlled, consolidated subsidiary of MTE Holding Corp.)


11.00% cash / 5.00% PIK
(L +8.50%)
11/25/2015
11/25/2021
7,742

7,742

7,626

5.1
Common Equity (554 shares) (10)






11/25/2015





3,069

458

0.3












7,742

10,811

8,084

5.4
Total Control Investment










$7,742

$10,811

$8,084

5.4%























Total Investments










$471,124

$484,060

$456,328

304.4%

(1)Equity ownership may be held in shares or units of companies affiliated with the portfolio company. The Company's investments are generally classified as "restricted securities" as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144.
(2)Substantially all of the investments that bear interest at a variable rate are indexed to LIBOR (L) at September 30, 2020, and reset monthly, quarterly, or semi-annually. Variable-rate loans with an aggregate cost of $342,661 include LIBOR reference rate floor provisions of generally 0.75% to 1.75%; at September 30, 2020, the reference rate on such instruments was generally below the stated floor provisions. For each investment, the Company has provided the spread over the reference rate and current interest rate in effect at September 30, 2020. Unless otherwise noted, all investments with a stated PIK rate require interest payments with the issuance of additional securities as payment of the entire PIK provision.
(3)
Unless otherwise noted with footnote 14, fair value was determined using significant unobservable inputs for all of the Company's investments and are considered Level 3 under GAAP. See Note 5 for further details.
(4)Investments (or portion thereof) held by SBIC I LP. These assets are pledged as collateral of the SBA debentures and cannot be pledged under any debt obligation of the Company.
(5)
Subject to unfunded commitments. See Note 6 for further details.
(6)
Investment was on non-accrual status as of September 30, 2020, meaning the Company has suspended recognition of all or a portion of income on the investment. See Note 4 for further details.
(7)CLO subordinated debt positions are entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying securities less contractual payments to debt holders and fund expenses.
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
SeptemberJune 30, 20202021
(Dollar amounts in thousands)

Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
TRS Services, LLC (4) (10) (20)Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance
Preferred Equity (2,088,305 Class A units), 11% PIK12/10/2014$572 $867 0.5 %
Common Equity (3,000,000 units) (10)12/10/2014— — — 
572 867 0.5 
TTG Healthcare, LLC (20)Diagnostic Imaging Centers
Senior Secured Loan (4)8.50%(L +7.50%)3/1/201911/28/202519,505 19,318 19,612 10.9 
Preferred Equity ( 2,309 Class B units) (10) (13)3/1/20192,309 4,040 2.2 
19,505 21,627 23,652 13.1 
Total Affiliate Investments$65,418 $83,740 $113,493 63.2 %
Control Investment
MTE Holding Corp. (4) (19)Travel Trailer and Camper Manufacturing
Subordinated Loan (to Mirage Trailers, LLC, a controlled, consolidated subsidiary of MTE Holding Corp.)11.00% cash / 5.00% PIK(L +15.00%)11/25/201511/25/20217,988 7,988 7,988 4.4 
Common Equity (554 shares)11/25/20153,069 4,074 2.3 
7,988 11,057 12,062 6.7 
Total Control Investment$7,988 $11,057 $12,062 6.7 %
Total Investments$471,672 $468,577 $484,026 268.9 %

(8)The Company has entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it has agreed to receive its payment after the repayment of certain co‑lenders pursuant to a payment waterfall. The table below provides additional details as of September 30, 2020:
(1)Equity ownership may be held in shares or units of companies affiliated with the portfolio company. The Company's investments are generally classified as "restricted securities" as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144.
(2)Substantially all of the investments that bear interest at a variable rate are indexed to LIBOR (L) at June 30, 2021, and reset monthly, quarterly, or semi-annually. Variable-rate loans with an aggregate cost of $339,970 include LIBOR reference rate floor provisions of generally 0.75% to 1.75%; at June 30, 2021, the reference rate on such instruments was generally below the stated floor provisions. For each investment, the Company has provided the spread over the reference rate and current interest rate in effect at June 30, 2021. Unless otherwise noted, all investments with a stated PIK rate require interest payments with the issuance of additional securities as payment of the entire PIK provision.
(3)Unless otherwise noted with footnote 14, fair value was determined using significant unobservable inputs for all of the Company's investments and are considered Level 3 under GAAP. See Note 5 for further details.
(4)Investments (or portion thereof) held by SBIC I LP. These assets are pledged as collateral of the SBA debentures and cannot be pledged under any debt obligation of the Company.
(5)Subject to unfunded commitments. See Note 6 for further details.
(6)Investment was on non-accrual status as of June 30, 2021, meaning the Company has suspended recognition of all or a portion of income on the investment. See Note 4 for further details.
(7)CLO subordinated debt positions are entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying securities less contractual payments to debt holders and fund expenses.
18
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
June 30, 2021
(Dollar amounts in thousands)

Portfolio Company Reported Interest Rate Interest Rate per Credit Agreement Additional Interest per Annum
Carolina Lubes, Inc. 8.64% 8.25% 0.39%
Chemical Resources Holdings, Inc. 9.22% 7.50% 1.72%
DRS Imaging Services, LLC 10.12% 9.00% 1.12%
Milrose Consultants, LLC 7.74% 7.00% 0.74%
OnSite Care, PLLC 8.70% 7.25% 1.45%
SourceHOV Tax, Inc. 7.87% 7.00% 0.87%
(8)The Company has entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it has agreed to receive its payment after the repayment of certain co‑lenders pursuant to a payment waterfall. The table below provides additional details as of June 30, 2021:
Portfolio CompanyReported Interest RateInterest Rate per Credit AgreementAdditional Interest per Annum
Chemical Resources Holdings, Inc.8.77%7.50%1.27%
Milrose Consultants, LLC7.60%7.00%0.60%

(9)The rate disclosed is the estimated effective yield, generally established at purchase and re-evaluated upon receipt of distributions, and based upon projected amounts and timing of future distributions and the projected amount and timing of terminal principal payments at the time of estimation. The estimated yield and investment cost may ultimately not be realized.
(10)Non-income producing.
(9)The rate disclosed is the estimated effective yield, generally established at purchase and re-evaluated upon receipt of distributions, and based upon projected amounts and timing of future distributions and the projected amount and timing of terminal principal payments at the time of estimation. The estimated yield and investment cost may ultimately not be realized. Maturity date represents the contractual maturity date of the structured finance notes. Projected cash flows, including the projected amount and timing of terminal principal payments which may be projected to occur prior to the contractual maturity date, were utilized in deriving the effective yield of the investments.
(10)Non-income producing.
(11)The interest rate on these investments contains a PIK provision, whereby the issuer has the option to make interest payments in cash or with the issuance of additional securities as payment of the entire PIK provision. The interest rate in the schedule represents the current interest rate in effect for these investments. The following table provides additional details on these PIK investments, including the maximum annual PIK interest rate allowed as of SeptemberJune 30, 2020:2021:
Portfolio CompanyInvestment Type
Range of PIK

Option
Range of Cash

Option
Maximum PIK

Rate Allowed
Community Intervention Services, Inc.
Subordinated Loan
0% to 6.00%
13.00% to 7.00%
6.00%
Eblens Holdings, Inc.
Subordinated Loan
0% or 1.50%1.00%
14.00%13.00% or 12.50%12.00%
1.50%1.00%
Master Cutlery, LLC
Senior SecuredSubordinated Loan
0% to 13.00%
13.00% to 0%
13.00%

(12)Represents expiration date of the warrants.
(13)All or portion of investment held by a wholly-owned subsidiary subject to income tax.
(14)Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP. See Note 5 for further details.
(15)Investments (or portion thereof) held by OFSCC-FS. These assets are pledged as collateral of the BNP Facility and cannot be pledged under any debt obligation of the Company.
(16)Amortized cost reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO subordinated debt investments.
(17)Maturity date represents the contractual maturity date of the structured finance notes. Projected cash flows, including the projected amount and timing of terminal principal payments which may be projected to occur prior to the contractual maturity date, were utilized in deriving the effective yield of the investments.
(18)Not meaningful as there is no outstanding balance on the revolver. The Company earns unfunded commitment fees on undrawn revolving lines of credit balances, which are reported in fee income.

(12)Represents expiration date of the warrants.
(13)All or portion of investment held by a wholly-owned subsidiary of the Company subject to income tax.
(14)Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP. See Note 5 for further details.
(15)Investments (or portion thereof) held by OFSCC-FS. These assets are pledged as collateral of the BNP Facility and cannot be pledged under any debt obligation of the Company.
(16)Amortized cost reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO subordinated debt investments.
(17)Reserved.
(18)Not meaningful as there is no outstanding balance on the revolver. The Company earns unfunded commitment fees on undrawn revolving lines of credit balances, which are reported in fee income.
(19)The Company holds at least one seat on the portfolio company’s board of directors.
(20)The Company has an observer seat on the portfolio company’s board of directors.
(21)Portfolio company represents greater than 5% of total assets at June 30, 2021.
(22)Non-qualifying assets under Section 55(a) of the 1940 Act. As defined under Section 55 of the 1940 Act, qualifying assets must represent at least 70% of the Company's assets at the time of acquisition of any additional non-qualifying assets. As of June 30, 2021, approximately 85% of the Company's assets were qualifying assets.

See Notes to Consolidated Financial Statements.
19
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments
December 31, 20192020
(Dollar amounts in thousands)

Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above
Index (2)		Initial Acquisition DateMaturityPrincipal
Amount		Amortized CostFair Value (3)Percent of
Net Assets
Non-control/Non-affiliate Investments
All Star Auto Lights, Inc. (4)Motor Vehicle Parts (Used) Merchant Wholesalers
Senior Secured Loan8.50%(L +7.50%)12/19/20198/20/2024$14,293 $14,167 $13,581 8.5 %
A&A Transfer, LLCConstruction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers
Senior Secured Loan (15)8.25%(L +6.50%)2/7/20202/7/202516,632 16,427 16,798 10.6 
Senior Secured Loan (Revolver) (5)n/m (18)(L +6.50%)2/7/20202/7/2025— (35)(21)— 
16,632 16,392 16,777 10.6 
Bass Pro Group, LLC (14) (15)Sporting Goods Stores
Senior Secured Loan5.75%(L +5.00%)6/24/20199/25/20242,954 2,907 2,968 1.9 
BayMark Health Services, Inc.Outpatient Mental Health and Substance Abuse Centers
Senior Secured Loan9.25%(L +8.25%)3/22/20183/1/20254,000 3,976 4,000 2.5 
Community Intervention Services, Inc. (4) (6) (11)Outpatient Mental Health and Substance Abuse Centers
Subordinated  Loan7.00% cash / 6.00% PIKN/A7/16/20151/16/202110,225 7,639 105 0.1 
Confie Seguros Holdings II Co.Insurance Agencies and Brokerages
Senior Secured Loan8.73%(L +8.50%)7/7/201511/1/20259,678 9,544 9,302 5.9 
Connect U.S. Finco LLC (14) (15)Taxi Service
Senior Secured Loan5.50%(L +4.50%)11/20/201912/11/20261,985 1,976 1,997 1.3 
Constellis Holdings, LLC (10)Other Justice, Public Order, and Safety Activities
Common Equity (20,628 common shares)3/27/2020703 676 0.4 
Convergint Technologies Holdings, LLCSecurity Systems Services (except Locksmiths)
Senior Secured Loan7.50%(L +6.75%)9/28/20182/2/20263,481 3,437 3,390 2.1 
Custom Truck One Source (14) (15)Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing
Senior Secured Loan4.40%(L +4.25%)9/30/20204/18/2025497 496 499 0.3 
20
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
Non-control/Non-affiliate Investments              
Acrisure, LLC (14) (15) Insurance Agencies and Brokerages                
Senior Secured Loan   6.19% (L +4.25%) 10/29/2019 11/15/2023 $1,995
 $1,971
 $2,004
 1.2%
                   
AHP Health Partners (14) (15) General Medical and Surgical Hospitals                
Senior Secured Loan   6.30% (L +4.50%) 6/27/2019 6/30/2025 2,607
 2,612
 2,632
 1.6
                   
Albertson's Holdings LLC (14) (15) Supermarkets and Other Grocery (except Convenience) Stores                
Senior Secured Loan   4.55% (L +2.75%) 6/24/2019 11/17/2025 1,082
 1,081
 1,094
 0.7
                   
All Star Auto Lights, Inc. (4) Motor Vehicle Parts (Used) Merchant Wholesalers                
Senior Secured Loan   9.24% (L +7.50%) 12/19/2019 8/20/2024 13,250
 13,119
 13,119
 7.9
                   
American Bath Group, LLC (14) (15) Plastics Plumbing Fixture Manufacturing                
Senior Secured Loan   6.05% (L +4.25%) 6/24/2019 9/30/2023 1,489
 1,484
 1,498
 0.9
                   
AppLovin Corporation (14) (15) Advertising Agencies                
Senior Secured Loan   5.30% (L +3.50%) 6/24/2019 8/15/2025 1,985
 1,987
 2,001
 1.2
                   
Asurion, LLC (14) (15) Communication Equipment Repair and Maintenance                
Senior Secured Loan   4.80% (L +3.00%) 6/24/2019 11/3/2024 1,985
 1,985
 1,998
 1.2
Senior Secured Loan   4.80% (L +3.00%) 7/24/2019 11/3/2023 995
 997
 1,002
 0.6
Senior Secured Loan   8.30% (L +6.50%) 11/19/2019 8/24/2025 1,500
 1,511
 1,511
 0.9
            4,480
 4,493
 4,511
 2.7
Athenahealth, Inc. (14) (15) Software Publishers                
Senior Secured Loan   6.40% (L +4.50%) 6/24/2019 2/11/2026 1,985
 1,990
 1,998
 1.2
                   
Bass Pro Group, LLC (14) (15) Sporting Goods Stores                
Senior Secured Loan   6.80% (L +5.00%) 6/24/2019 9/25/2024 1,985
 1,921
 1,983
 1.2
                   
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 20192020
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above
Index (2)		Initial Acquisition DateMaturityPrincipal
Amount		Amortized CostFair Value (3)Percent of
Net Assets
Diamond Sports Group, LLC (14) (15)Television Broadcasting
Senior Secured Loan3.40%(L +3.25%)11/19/20198/24/2026$1,975 $1,977 $1,758 1.1 %
DuPage Medical Group (15)Offices of Physicians, Mental Health Specialists
Senior Secured Loan7.75%(L +7.00%)8/22/20178/15/202510,098 10,159 10,098 6.4 
Eblens Holdings, Inc. (20)Shoe Store
Subordinated  Loan (11)12.00% cash / 1.00% PIKN/A7/13/20171/13/20239,114 9,035 4,368 2.7 
Common Equity (71,250 Class A units) (10)7/13/2017713 — — 
9,114 9,748 4,368 2.7 
Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4)Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan7.50% cash / 3.50% PIK(L +7.50%)6/30/20176/30/202217,150 17,055 12,668 8.0 
Preferred Equity (238,095 Series B units) (10)6/30/2017300 — — 
Preferred Equity (13,315 Series C units) (10)8/13/201813 — — 
17,150 17,368 12,668 8.0 
Excelin Home Health, LLCHome Health Care Services
Senior Secured Loan11.50%(L +9.50%)10/25/20184/25/20244,250 4,199 4,250 2.7 
GGC Aerospace Topco L.P.Other Aircraft Parts and Auxiliary Equipment Manufacturing
Senior Secured Loan9.75%(L +9.50%)12/29/20179/8/20245,000 4,931 4,102 2.6 
Common Equity (368,852 Class A units) (10)12/29/2017450 166 0.1 
Common Equity (40,984 Class B units) (10)12/29/201750 7 — 
5,000 5,431 4,275 2.7 
Inergex Holdings, LLCOther Computer Related Services
Senior Secured Loan8.00%(L +7.00%)10/1/201810/1/202416,422 16,265 15,913 9.9 
Senior Secured Loan (Revolver) (5)n/m (18)(L +7.00%)10/1/201810/1/2024— (18)87 0.1 
16,422 16,247 16,000 10.0 
Institutional Shareholder Services, Inc.Administrative Management and General Management Consulting Services
Senior Secured Loan8.75%(L +8.50%)3/4/20193/5/20276,244 6,099 6,244 3.9 
Intouch Midco Inc. (15)All Other Professional, Scientific, and Technical Services
Senior Secured Loan4.90%(L +4.75%)12/20/20198/24/20251,980 1,921 1,905 1.2 
21
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
BayMark Health Services, Inc. Outpatient Mental Health and Substance Abuse Centers                
Senior Secured Loan   10.21% (L +8.25%) 3/22/2018 3/1/2025 $4,000
 $3,970
 $4,000
 2.4%
                   
Blackhawk Network Holdings, Inc. (14) (15) Computer and Computer Peripheral Equipment and Software Merchant Wholesalers                
Senior Secured Loan   4.80% (L +3.00%) 10/30/2019 6/15/2025 1,995
 1,982
 1,999
 1.2
                   
BrightSpring Health Services (14) (15) Residential Intellectual and Developmental Disability Facilities                
Senior Secured Loan   6.21% (L +4.50%) 6/24/2019 3/5/2026 2,985
 2,991
 3,006
 1.8
                   
Brookfield WEC Holdings Inc. (14) (15) Business to Business Electronic Markets                
Senior Secured Loan   4.67% (L +3.00%) 7/25/2019 8/1/2025 1,990
 2,000
 2,000
 1.2
                   
Carolina Lubes, Inc. Automotive Oil Change and Lubrication Shops                
Senior Secured Loan (4) (8)   9.83% (L +7.73%) 8/23/2017 8/23/2022 20,268
 20,172
 20,466
 12.3
Senior Secured Loan (Revolver) (5)   n/m (18) (L +7.25%) 8/23/2017 8/23/2022 —
 (8) (8) —
            20,268
 20,164
 20,458
 12.3
Charter NEX US, Inc. (14) (15) Unlaminated Plastics Profile Shape Manufacturing                
Senior Secured Loan   5.30% (L +3.50%) 10/30/2019 5/16/2024 2,000
 1,985
 1,985
 1.2
                   
CHG Healthcare Services, Inc. (15) All Other Outpatient Care Centers                
Senior Secured Loan   4.80% (L +3.00%) 7/24/2019 6/7/2023 1,999
 2,001
 2,015
 1.2
                   
Cirrus Medical Staffing, Inc. (4) Temporary Help Services                
Senior Secured Loan   10.19% (L +8.25%) 3/5/2018 10/19/2022 12,564
 12,458
 12,358
 7.4
Senior Secured Loan (Revolver)   10.19% (L +8.25%) 3/5/2018 10/19/2022 1,408
 1,408
 1,384
 0.8
            13,972
 13,866
 13,742
 8.2
Community Intervention Services, Inc. (4) (6) (10) (11) Outpatient Mental Health and Substance Abuse Centers                
Subordinated  Loan   7.00% cash / 6.00% PIK N/A 7/16/2015 1/16/2021 9,624
 7,639
 —
 —
                   
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 20192020
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above
Index (2)		Initial Acquisition DateMaturityPrincipal
Amount		Amortized CostFair Value (3)Percent of
Net Assets
I&I Sales Group, LLCMarketing Consulting Services
Senior Secured Loan (15)9.50%(L +8.50%)12/30/20207/10/2025$5,325 $5,232 $5,232 3.3 %
Senior Secured Loan (Revolver) (5)n/m (18)(L +8.50%)12/30/20207/10/2025— (3)(3)— 
5,325 5,229 5,229 3.3 
Milrose Consultants, LLC (4) (8)Administrative Management and General Management Consulting Services
Senior Secured Loan7.62%(L +6.62%)7/16/20197/16/202522,574 22,404 22,485 14.0 
My Alarm Center, LLC (10)Security Systems Services (except Locksmiths)
Preferred Equity (335 Class Z units) (13)9/12/2018325 97 0.1 
Preferred Equity (1,485 Class A units), 8% PIK (4) (13)7/14/20171,571 — — 
Preferred Equity (1,198 Class B units) (4)7/14/20171,198 — — 
Common Equity (64,149 units) (4) (13)7/14/2017— — — 
3,094 97 0.1 
Online Tech Stores, LLC (4) (6)Stationery and Office Supplies Merchant Wholesalers
Subordinated Loan13.50% PIKN/A2/1/20188/1/202318,360 16,129 2,426 1.5 
Panther BF Aggregator 2 LP (14) (15) (19)Other Commercial and Service Industry Machinery Manufacturing
Senior Secured Loan3.65%(L +3.50%)11/19/20194/30/20261,939 1,925 1,936 1.2 
Parfums Holding Company, Inc.Cosmetics, Beauty Supplies, and Perfume Stores
Senior Secured Loan (14) (15)4.23%(L +4.00%)6/25/20196/30/20241,537 1,536 1,530 1.0 
Senior Secured Loan9.75%(L +8.75%)11/16/20176/30/20255,171 5,202 5,171 3.3 
6,708 6,738 6,701 4.3 
Pelican Products, Inc.Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan8.75%(L +7.75%)9/24/20185/1/20266,055 6,059 5,994 3.8 
Pike Corp. (14) (15)Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan3.14%(L +3.00%)9/17/20207/24/2026469 469 469 0.3 
22
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
Confie Seguros Holdings II Co. (14) Insurance Agencies and Brokerages                
Senior Secured Loan   10.41% (L +8.50%) 7/7/2015 11/1/2025 $9,678
 $9,515
 $9,382
 5.6%
                   
Connect U.S. Finco LLC (14) (15) Taxi Service                
Senior Secured Loan   6.29% (L +4.50%) 11/20/2019 12/11/2026 2,000
 1,990
 1,990
 1.2
                   
Constellis Holdings, LLC (6) Other Justice, Public Order, and Safety Activities                
Senior Secured Loan   10.93% (L +9.00%) 4/28/2017 4/21/2025 9,950
 9,846
 407
 0.2
                   
Convergint Technologies Holdings, LLC Security Systems Services (except Locksmiths)                
Senior Secured Loan   8.55% (L +6.75%) 9/28/2018 2/2/2026 3,481
 3,430
 3,424
 2.1
                   
Curium BidCo S.A R.L. (14) (15) Pharmaceutical and Medicine Manufacturing                
Senior Secured Loan   5.94% (L +4.00%) 10/29/2019 7/1/2026 848
 853
 853
 0.5
                   
Davis Vision, Inc. Direct Health and Medical Insurance Carriers                
Senior Secured Loan   8.55% (L +6.75%) 10/31/2019 12/1/2025 405
 395
 405
 0.2
                   
Dexko Global Inc. (14) (15) Motor Vehicle Body Manufacturing                
Senior Secured Loan   5.30% (L +3.50%) 10/30/2019 7/24/2024 1,995
 1,970
 1,997
 1.2
                   
Diamond Sports Group, LLC (14) (15) Television Broadcasting                
Senior Secured Loan   5.03% (L +3.25%) 11/19/2019 8/24/2026 1,995
 1,997
 1,997
 1.2
                   
DuPage Medical Group (15) Offices of Physicians, Mental Health Specialists                
Senior Secured Loan   8.80% (L +7.00%) 8/22/2017 8/15/2025 10,098
 10,170
 10,098
 6.1
                   
Eblens Holdings, Inc. Shoe Store                
Subordinated  Loan (11)   12.00% cash / 1.00% PIK   7/13/2017 1/13/2023 9,010
 8,962
 9,025
 5.4
Common Equity (71,250 Class A units) (10)       7/13/2017     713
 892
 0.5
            9,010
 9,675
 9,917
 5.9
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 20192020
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above
Index (2)		Initial Acquisition DateMaturityPrincipal
Amount		Amortized CostFair Value (3)Percent of
Net Assets
PM Acquisition LLC (20)All Other General Merchandise Stores
Senior Secured Loan11.50% cash / 2.50% PIKN/A9/30/201710/29/2021$4,780 $4,753 $4,780 3.0 %
Common Equity (499 units) (10) (13)9/30/2017499 280 0.2 
4,780 5,252 5,060 3.2 
Quest Software US Holdings Inc. (14) (15)Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Senior Secured Loan4.46%(L +4.25%)6/25/20195/16/20251,970 1,955 1,942 1.2 
Resource Label Group, LLCCommercial Printing (except Screen and Books)
Senior Secured Loan9.50%(L +8.50%)6/7/201711/26/20234,821 4,789 4,812 3.0 
Rocket Software, Inc. (15)Software Publishers
Senior Secured Loan8.46%(L +8.25%)11/20/201811/28/20266,275 6,190 6,241 3.9 
RPLF Holdings, LLC (10) (13)Software Publishers
Common Equity (254,110 Class A units)1/17/2018492 605 0.4 
Sentry Centers Holdings, LLC (10) (13)Other Professional, Scientific, and Technical Services
Preferred Equity (2,248 Series A units)9/4/202051 47 — 
Preferred Equity (1,603 Series B units)9/4/2020160 160 0.1 
Common Equity (269 units)9/4/20203 3 — 
214 210 0.1 
SkyMiles IP Ltd. and Delta Air Lines, Inc. (14) (15)Scheduled Passenger Air Transportation
Senior Secured Loan4.75%(L +3.75%)9/15/202010/20/2027500 495 520 0.3 
SourceHOV Tax, Inc. (4) (8)Other Accounting Services
Senior Secured Loan7.61%(L +6.11%)3/16/20203/16/202519,892 19,742 19,988 12.6 
Southern Technical Institute, LLC (4) (10)Colleges, Universities, and Professional Schools
Equity appreciation rights6/27/2018— 4,295 2.7 
23
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
Endo International PLC (14) (15) Pharmaceutical Preparation Manufacturing                
Senior Secured Loan   6.06% (L +4.25%) 6/24/2019 4/29/2024 $1,985
 $1,897
 $1,906
 1.1%
                   
Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4) Electrical Contractors and Other Wiring Installation Contractors                
Senior Secured Loan   6.00% cash / 5.00% PIK (L +6.00%) 6/30/2017 6/30/2022 16,367
 16,207
 14,639
 8.8
Preferred Equity (238,095 Series B units) (10)       6/30/2017     300
 —
 —
Preferred Equity (13,315 Series C units) (10)       8/13/2018     13
 —
 —
            16,367
 16,520
 14,639
 8.8
Excelin Home Health, LLC Home Health Care Services                
Senior Secured Loan   11.50% (L +9.50%) 10/25/2018 4/25/2024 4,250
 4,183
 4,070
 2.4
                   
Explorer Holdings, Inc. (14) (15) Testing Laboratories                
Senior Secured Loan   5.60% (L +3.75%) 6/25/2019 5/2/2023 1,985
 1,987
 2,004
 1.2
                   
Garda World Security (14) (15) Security Systems Services (except Locksmiths)                
Senior Secured Loan   6.66% (L +4.75%) 10/24/2019 10/30/2026 1,667
 1,634
 1,680
 1.0
                   
GGC Aerospace Topco L.P. Other Aircraft Parts and Auxiliary Equipment Manufacturing                
Senior Secured Loan   10.65% (L +8.75%) 12/29/2017 9/8/2024 5,000
 4,912
 4,084
 2.5
Common Equity (368,852 Class A units) (10)       12/29/2017     450
 124
 0.1
Common Equity (40,984 Class B units) (10)       12/29/2017     50
 5
 —
            5,000
 5,412
 4,213
 2.6
Hyland Software, Inc. Software Publishers                
Senior Secured Loan (14) (15)   5.30% (L +3.50%) 10/24/2018 7/1/2024 1,660
 1,655
 1,672
 1.0
Senior Secured Loan   8.80% (L +7.00%) 10/24/2018 7/7/2025 2,601
 2,614
 2,617
 1.6
            4,261
 4,269
 4,289
 2.6
Inergex Holdings, LLC Other Computer Related Services                
Senior Secured Loan   8.94% (L +7.00%) 10/1/2018 10/1/2024 16,590
 16,389
 16,489
 9.9
Senior Secured Loan (Revolver) (5) (18)   6.05% (L +7.00%) 10/1/2018 10/1/2024 1,875
 1,853
 1,864
 1.1
            18,465
 18,242
 18,353
 11.0
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 20192020
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above
Index (2)		Initial Acquisition DateMaturityPrincipal
Amount		Amortized CostFair Value (3)Percent of
Net Assets
Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.)Child Day Care Services
Senior Secured Loan8.50%(L +8.25%)7/26/20187/30/2026$5,216 $5,178 $4,656 2.9 %
SSJA Bariatric Management LLC (15)Offices of Physicians, Mental Health Specialists
Senior Secured Loan6.00%(L +5.00%)8/26/20198/26/20249,875 9,803 9,647 6.1 
Senior Secured Loan6.25%(L +5.25%)12/31/20208/26/20241,067 1,056 1,042 0.7 
Senior Secured Loan (Revolver) (5)n/m (18)(L +5.00%)8/26/20198/26/2024— (5)15 — 
10,942 10,854 10,704 6.8 
Stancor, L.P. (4)Pump and Pumping Equipment Manufacturing
Preferred Equity (1,250,000 Class A units), 8% PIK (10)8/19/20141,501 1,281 0.8 
Staples, Inc. (14) (15)Business to Business Electronic Markets
Senior Secured Loan5.21%(L +5.00%)6/24/20194/16/20262,960 2,891 2,875 1.8 
STS Operating, Inc.Industrial Machinery and Equipment Merchant Wholesalers
Senior Secured Loan (14) (15)5.25%(L +4.25%)5/16/201812/11/2024625 626 601 0.4 
Senior Secured Loan9.00%(L +8.00%)5/15/20184/30/20269,073 9,070 8,578 5.4 
9,698 9,696 9,179 5.8 
Sunshine Luxembourg VII SARL (14) (15)Pharmaceutical Preparation Manufacturing
Senior Secured Loan5.00%(L +4.00%)11/20/20199/25/20261,980 1,988 1,992 1.3 
Tank Holding Corp. (15)Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan (14)5.50%(L +4.00%)6/24/20193/26/20261,975 1,981 1,942 1.2 
Senior Secured Loan3.40%(L +3.25%)12/18/20203/26/2026896 882 882 0.6 
2,871 2,863 2,824 1.8 
The Escape Game, LLC (4)Other amusement and recreation industries
Senior Secured Loan9.75%(L +8.75%)7/18/201912/22/20227,000 6,973 6,647 4.2 
Senior Secured Loan9.75%(L +8.75%)12/22/201712/31/20212,333 2,329 2,216 1.4 
Senior Secured Loan8.00%(L +7.00%)7/20/201812/31/20214,667 4,665 4,463 2.8 
Senior Secured Loan (Delayed Draw)9.75%(L +8.75%)7/20/201812/22/20227,000 7,000 6,647 4.2 
21,000 20,967 19,973 12.6 
24
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
Institutional Shareholder Services, Inc. Administrative Management and General Management Consulting Services                
Senior Secured Loan   10.44% (L +8.50%) 3/4/2019 3/5/2027 $6,244
 $6,075
 $6,098
 3.7%
                   
Intouch Midco Inc. (15) All Other Professional, Scientific, and Technical Services                
Senior Secured Loan   6.05% (L +4.25%) 12/20/2019 8/24/2025 1,995
 1,925
 1,925
 1.2
                   
Kindred Healthcare, Inc. (F/K/A Kindred at Home) (14) (15) Home Health Care Services                
Senior Secured Loan   5.56% (L +3.75%) 6/25/2019 7/2/2025 2,985
 2,998
 3,004
 1.8
                   
McAfee, LLC (14) (15) Software Publishers                
Senior Secured Loan   5.55% (L +3.75%) 6/25/2019 9/30/2024 1,985
 1,987
 1,996
 1.2
Senior Secured Loan   10.30% (L +8.50%) 11/15/2019 9/29/2025 2,000
 2,002
 2,018
 1.2
            3,985
 3,989
 4,014
 2.4
Micro Holding Corp (14) (15) Internet Publishing and Broadcasting and Web Search Portals                
Senior Secured Loan   5.55% (L +3.75%) 6/25/2019 9/13/2024 1,985
 1,969
 1,991
 1.2
                   
Milrose Consultants, LLC (4) (8) Administrative Management and General Management Consulting Services                
Senior Secured Loan   8.14% (L +6.20%) 7/16/2019 7/16/2025 11,500
 11,420
 11,394
 6.7
                   
My Alarm Center, LLC (4) (10) (13) Security Systems Services (except Locksmiths)                
Preferred Equity (1,485 Class A units), 8% PIK       7/14/2017     1,571
 984
 0.6
Preferred Equity (1,198 Class B units)       7/14/2017     1,198
 —
 —
Preferred Equity (335 Class Z units) 25% PIK       9/12/2018     325
 1,136
 0.7
Common Equity (64,149 units)       7/14/2017     —
 —
 —
              3,094
 2,120
 1.3
Online Tech Stores, LLC (4) Stationery and Office Supplies Merchant Wholesalers                
Subordinated Loan   10.50% cash / 3.00% PIK N/A 2/1/2018 8/1/2023 16,323
 16,113
 14,559
 8.7
                   
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 20192020
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above
Index (2)		Initial Acquisition DateMaturityPrincipal
Amount		Amortized CostFair Value (3)Percent of
Net Assets
Truck Hero, Inc. (15)Truck Trailer Manufacturing
Senior Secured Loan9.25%(L +8.25%)5/30/20174/21/2025$8,174 $8,118 $8,174 5.1 %
United Biologics Holdings, LLC (4) (10)Medical Laboratories
Preferred Equity (151,787 units)4/16/20139 26 — 
Warrants (29,374 units)7/26/20123/5/2022 (12)82 12 — 
91 38 — 
United Natural Foods (14) (15)General Line Grocery Merchant Wholesalers
Senior Secured Loan4.40%(L +4.25%)6/9/202010/22/2025286 275 284 0.2 
Wastebuilt Environmental Solutions, LLC (4)Industrial Supplies Merchant Wholesalers
Senior Secured Loan10.25%(L +8.75%)10/11/201810/11/20247,000 6,908 5,476 3.4 
Weight Watchers International, Inc. (14) (15)Diet and Weight Reducing Centers
Senior Secured Loan5.50%(L +4.75%)6/10/202011/29/2024477 477 479 0.3 
Xperi (14) (15)Semiconductor and Related Device Manufacturing
Senior Secured Loan4.15%(L +4.00%)6/1/20206/1/2025433 399 434 0.3 
Total Debt and Equity Investments$306,683 $307,768 $272,240 171.3 %
Structured Finance Note Investments
Apex Credit CLO 2020 (7)
Subordinated Notes14.16% (9)11/16/202011/19/2031 (17)11,080 9,461 (16)10,006 6.3 
Dryden 53 CLO, LTD. (7)
Income Notes16.68% (9)10/26/20201/15/2031 (17)2,700 1,779 1,967 1.2 
Subordinated Notes16.68% (9)10/26/20201/15/2031 (17)2,159 1,423 (16)1,573 1.0 
4,859 3,202 3,540 2.2 
Dryden 76 CLO, Ltd. (7)
Subordinated Notes18.68% (9)9/27/201910/20/2032 (17)2,750 2,282 (16)2,235 1.4 
25
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
OnSite Care, PLLC (4) (8) Home Health Care Services                
Senior Secured Loan   9.09% (L +7.78%) 8/10/2018 8/10/2023 $9,541
 $9,446
 $9,162
 5.5%
                   
Panther BF Aggregator 2 LP (14) (15) Other Commercial and Service Industry Machinery Manufacturing                
Senior Secured Loan   5.30% (L +3.50%) 11/19/2019 4/30/2026 1,995
 1,978
 2,006
 1.2
                   
Parfums Holding Company, Inc. Cosmetics, Beauty Supplies, and Perfume Stores                
Senior Secured Loan (14) (15)   6.16% (L +4.25%) 6/25/2019 6/30/2024 87
 87
 87
 0.1
Senior Secured Loan   10.70% (L +8.75%) 11/16/2017 6/30/2025 6,320
 6,332
 6,276
 3.8
            6,407
 6,419
 6,363
 3.9
Pelican Products, Inc. Unlaminated Plastics Profile Shape Manufacturing                
Senior Secured Loan   9.49% (L +7.75%) 9/24/2018 5/1/2026 6,055
 6,059
 5,969
 3.6
                   
Performance Team LLC (4) General Warehousing and Storage                
Senior Secured Loan   11.80% (L +10.00%) 5/24/2018 11/24/2023 13,889
 13,790
 14,165
 8.4
                   
PM Acquisition LLC All Other General Merchandise Stores                
Senior Secured Loan   11.50% cash / 2.50% PIK N/A 9/30/2017 10/29/2021 4,963
 4,903
 4,800
 2.9
Common Equity (499 units) (10) (13)       9/30/2017     499
 220
 0.1
            4,963
 5,402
 5,020
 3.0
Quest Software US Holdings Inc. (14) (15) Computer and Computer Peripheral Equipment and Software Merchant Wholesalers                
Senior Secured Loan   6.18% (L +4.25%) 6/25/2019 5/16/2025 1,990
 1,973
 1,978
 1.2
                   
Refinitiv (14) (15) Public Finance Activities                
Senior Secured Loan   5.05% (L +4.25%) 6/24/2019 10/1/2025 1,987
 1,941
 2,007
 1.2
                   
Resource Label Group, LLC Commercial Printing (except Screen and Books)                
Senior Secured Loan   10.60% (L +8.50%) 6/7/2017 11/26/2023 4,821
 4,777
 4,591
 2.8
                   
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 20192020
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above
Index (2)		Initial Acquisition DateMaturityPrincipal
Amount		Amortized CostFair Value (3)Percent of
Net Assets
Elevation CLO 2017-7, Ltd. (7)
Subordinated Notes12.32% (9)2/6/20197/15/2030 (17)$10,000 $ 6,955 (16)$6,226 3.9 %
Flatiron CLO 18, Ltd. (7)
Subordinated Notes20.73% (9)1/2/20194/17/2031 (17)9,680 7,265 (16)7,702 4.8 
Madison Park Funding XXIII, Ltd. (7)
Subordinated Notes21.99% (9)1/8/20207/27/2047 (17)10,000 6,654 (16)7,129 4.5 
Madison Park Funding XXIX, Ltd. (7)
Subordinated Notes14.22% (9)12/22/202010/18/2047 (17)9,500 7,529 (16)7,569 4.8 
Monroe Capital MML CLO X, LTD.
Mezzanine bond - Class E9.08%(L +8.85%)8/7/20208/20/2031 (17)863 802 838 0.5 
Octagon Investment Partners 39, Ltd. (7)
Subordinated Notes20.81% (9)1/23/202010/20/2030 (17)7,000 5,173 (16)5,493 3.5 
Park Avenue Institutional Advisers CLO 2017-1
Mezzanine bond - Class D6.44%(L +6.22%)6/5/202011/14/2029 (17)100 83 95 0.1 
Regatta II Funding
Mezzanine bond - Class DR27.19%(L +6.95%)6/5/20201/15/2029 (17)800 695 768 0.5 
THL Credit Wind River 2019‐3 CLO Ltd. (7)
Subordinated Notes14.69% (9)4/5/20194/15/2031 (17)7,000 5,759 (16)4,824 3.0 
Total Structured Finance Note Investments$73,632 $55,860 $56,425 35.5 %
Total Non-control/Non-affiliate Investments$380,315 $363,628 $328,665 206.8 %
26
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
Restaurant Technologies, Inc. (15) Other Grocery and Related Products Merchant Wholesalers                
Senior Secured Loan   5.05% (L +3.25%) 8/8/2019 10/1/2025 $1,990
 $1,994
 $2,003
 1.2%
                   
Rocket Software, Inc. (15) Software Publishers                
Senior Secured Loan   6.05% (L +4.25%) 11/20/2018 11/28/2025 665
 663
 649
 0.4
Senior Secured Loan   10.05% (L +8.25%) 11/20/2018 11/28/2026 6,275
 6,167
 6,094
 3.7
            6,940
 6,830
 6,743
 4.1
RPLF Holdings, LLC (10) (13) Software Publishers                
Common Equity (254,110 Class A units)       1/17/2018     254
 186
 0.1
                   
Sentry Centers Holdings, LLC (10) (13) Convention and Trade Show Organizers                
Common Equity (5,000 Series C units)       3/31/2014   —
 500
 1,490
 0.9
                   
Southern Technical Institute, LLC (4) (6) (10) Colleges, Universities, and Professional Schools                
Subordinated Loan   6.00% PIK N/A 6/27/2018 12/31/2021 1,611
 —
 —
 —
Other       6/27/2018   —
 —
 —
 —
            1,611
 —
 —
 —
Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.) Child Day Care Services                
Senior Secured Loan   6.19% (L +4.25%) 7/26/2018 7/30/2025 972
 970
 978
 0.6
Senior Secured Loan   10.19% (L +8.25%) 7/26/2018 7/30/2026 7,216
 7,157
 7,288
 4.4
            8,188
 8,127
 8,266
 5.0
Sprint Communications, Inc. (14) (15) Wired Telecommunications Carriers                
Senior Secured Loan   4.81% (L +3.00%) 6/24/2019 2/2/2024 1,985
 1,972
 1,980
 1.2
                   
SSJA Bariatric Management LLC (15) Offices of Physicians, Mental Health Specialists                
Senior Secured Loan   6.94% (L +5.00%) 8/26/2019 8/26/2024 9,975
 9,883
 9,861
 5.9
Senior Secured Loan (Revolver) (5)   n/m (18) (L +5.00%) 8/26/2019 8/26/2024 —
 (6) (14) —
            9,975
 9,877
 9,847
 5.9
Stancor, L.P. (4) (10) Pump and Pumping Equipment Manufacturing                
Preferred Equity (1,250,000 Class A units), 8% PIK       8/19/2014   —
 1,501
 1,607
 1.0
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 20192020
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above
Index (2)		Initial Acquisition DateMaturityPrincipal
Amount		Amortized CostFair Value (3)Percent of
Net Assets
Affiliate Investments
3rd Rock Gaming Holdings, LLC (20)Software Publishers
Senior Secured Loan (6)8.50% cash / 1.00% PIK(L +7.50%)3/13/20183/12/2023$20,858 $19,570 $9,258 5.8 %
Common Equity (2,547,250 units) (10) (13)3/13/20182,547 — — 
20,858 22,117 9,258 5.8 
Chemical Resources Holdings, Inc. (20)Custom Compounding of Purchased Resins
Senior Secured Loan (4)(8)9.22%(L +7.72%)1/25/20191/25/202413,743 13,630 13,744 8.6 
Common Equity (1,832 Class A shares) (10) (13)1/25/20191,814 3,420 2.2 
13,743 15,444 17,164 10.8 
Contract Datascan Holdings, Inc. (4)(20)Office Machinery and Equipment Rental and Leasing
Preferred Equity (3,061 Series A shares) 10% PIK8/5/20155,849 2,690 1.7 
Common Equity (11,273 shares) (10)6/28/2016104 46 — 
5,953 2,736 1.7 
DRS Imaging Services, LLC (20)Data Processing, Hosting, and Related Services
Common Equity (1,135 units) (10) (13)3/8/20181,135 1,749 1.1 
Master Cutlery, LLC (4) (10)(20)Sporting and Recreational Goods and Supplies Merchant Wholesalers
Subordinated Loan (6)13.00% (11)N/A4/17/20157/20/20226,759 4,764 346 0.2 
Preferred Equity (3,723 Series A units), 8% PIK4/17/20153,483 — — 
Common Equity (15,564 units)4/17/2015— — — 
6,759 8,247 346 0.2 
NeoSystems Corp. (4)(20)Other Accounting Services
Preferred Equity (521,962 convertible shares) 10% PIK8/14/20141,879 2,250 1.4 
Pfanstiehl Holdings, Inc. (4)(20)(21)Pharmaceutical Preparation Manufacturing
Common Equity (400 Class A shares)1/1/2014217 36,221 22.8 
27
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
Staples, Inc. (14) (15) Business to Business Electronic Markets                
Senior Secured Loan   6.69% (L +5.00%) 6/24/2019 4/16/2026 $1,990
 $1,920
 $1,960
 1.1%
                   
STS Operating, Inc. Industrial Machinery and Equipment Merchant Wholesalers                
Senior Secured Loan (14) (15)   6.05% (L +4.25%) 5/16/2018 12/11/2024 632
 631
 632
 0.4
Senior Secured Loan   9.80% (L +8.00%) 5/15/2018 4/30/2026 9,073
 9,070
 9,030
 5.4
            9,705
 9,701
 9,662
 5.8
Sunshine Luxembourg VII SARL (14) (15) Pharmaceutical Preparation Manufacturing                
Senior Secured Loan   6.19% (L +4.25%) 11/20/2019 9/25/2026 2,000
 2,010
 2,021
 1.2
                   
Tank Holding Corp. (14) (15) Unlaminated Plastics Profile Shape Manufacturing                
Senior Secured Loan   6.41% (L +4.00%) 6/24/2019 3/26/2026 1,995
 2,002
 2,005
 1.2
                   
The Escape Game, LLC (4) Other amusement and recreation industries                
Senior Secured Loan   8.80% (L +7.00%) 7/18/2019 3/31/2020 4,667
 4,642
 4,648
 2.8
Senior Secured Loan   10.55% (L +8.75%) 12/22/2017 12/22/2022 7,000
 6,969
 6,972
 4.2
Senior Secured Loan   10.55% (L +8.75%) 7/20/2018 12/22/2022 7,000
 7,000
 6,972
 4.2
            18,667
 18,611
 18,592
 11.2
Truck Hero, Inc. (15) Truck Trailer Manufacturing                
Senior Secured Loan   10.05% (L +8.25%) 5/30/2017 4/21/2025 7,014
 6,990
 6,690
 4.0
                   
United Biologics Holdings, LLC (4) (10) Medical Laboratories                
Preferred Equity (151,787 units)       4/16/2013   —
 9
 15
 —
Warrants (29,374 units)       7/26/2012 3/5/2022 —
 82
 7
 —
            —
 91
 22
 —
U.S. Anesthesia Partners (14) (15) Freestanding Ambulatory Surgical and Emergency Centers                
Senior Secured Loan   4.80% (L +3.00%) 6/24/2019 6/23/2024 2,980
 2,950
 2,976
 1.8
                   
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 20192020
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		IndustryInterest Rate (2)Spread Above
Index (2)		Initial Acquisition DateMaturityPrincipal
Amount		Amortized CostFair Value (3)Percent of
Net Assets
Professional Pipe Holdings, LLC (19)Plumbing, Heating, and Air-Conditioning Contractors
Senior Secured Loan9.75% cash / 1.50% PIK(L +8.75%)3/23/20183/23/2023$6,263 $6,193 $6,086 3.8 %
Common Equity (1,414 Class A units) (10)3/23/20181,414 1,208 0.8 
6,263 7,607 7,294 4.6 
TalentSmart Holdings, LLC (20)Professional and Management Development Training
Common Equity (1,595,238 Class A shares) (10) (13)10/11/20191,595 1,306 0.8 
TRS Services, LLC (4)(20)Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance
Preferred Equity (1,937,191 Class A units), 11% PIK12/10/2014— 915 0.6 
Common Equity (3,000,000 units) (10)12/10/2014572 — — 
572 915 0.6 
TTG Healthcare, LLC (20)Diagnostic Imaging Centers
Senior Secured Loan (4)8.50%(L +7.50%)3/1/201911/28/202519,603 19,409 19,530 12.3 
Preferred Equity ( 2,309 Class B units) (10) (13)3/1/20192,309 4,077 2.6 
19,603 21,718 23,607 14.9 
Total Affiliate Investments$67,226 $86,484 $102,846 64.7 %
Control Investment
MTE Holding Corp. (4)(19)Travel Trailer and Camper Manufacturing
Subordinated Loan (to Mirage Trailers, LLC, a controlled, consolidated subsidiary of MTE Holding Corp.)11.00% cash / 5.00% PIK(L +10.00%)11/25/201511/25/20217,842 7,842 7,822 4.9 
Common Equity (554 shares) (10)11/25/20153,069 2,990 1.9 
7,842 10,911 10,812 6.8 
Total Control Investment$7,842 $10,911 $10,812 6.8 %
Total Investments$455,383 $461,023 $442,323 278.3 %
(1)Equity ownership may be held in shares or units of companies affiliated with the portfolio company. The Company's investments are generally classified as "restricted securities" as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144.
28
Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
Verifone Intermediate Holdings, Inc. (14) (15) Other Commercial and Service Industry Machinery Manufacturing                
Senior Secured Loan   5.90% (L +4.00%) 6/24/2019 8/20/2025 $258
 $252
 $256
 0.2%
                   
Wastebuilt Environmental Solutions, LLC (4) Industrial Supplies Merchant Wholesalers                
Senior Secured Loan   10.69% (L +8.75%) 10/11/2018 10/11/2024 7,000
 6,883
 6,584
 4.0
                   
Total Debt and Equity Investments           $372,094
 $373,074
 $350,925
 210.7%
                   
      Structured Finance Note Investments (7)                  
Dryden 76 CLO, Ltd.                  
Subordinated Notes   15.37% (9)   9/27/2019 10/20/2032 2,750
 2,491
 2,509
 1.5
                   
Elevation CLO 2017-7, Ltd.                  
Subordinated Notes   15.71% (9)   2/6/2019 7/15/2030 10,000
 7,485
 6,559
 3.9
                   
Flatiron CLO 18, Ltd.                  
Subordinated Notes   16.68% (9)   1/2/2019 4/17/2031 9,680
 7,355
 7,345
 4.4
                   
THL Credit Wind River 2019‐3 CLO Ltd.                  
Subordinated Notes   12.33% (9)   4/5/2019 4/15/2031 7,000
 5,796
 5,197
 3.1
                   
Total Structured Finance Note Investments           $29,430
 $23,127
 $21,610
 12.9%
                   
Total Non-control/Non-affiliate Investments           $401,524
 $396,201
 $372,535
 223.6%
                   
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 20192020
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
Affiliate Investments                  
3rd Rock Gaming Holdings, LLC Software Publishers                
Senior Secured Loan   9.44% cash / 1.00% PIK (L +7.50%) 3/13/2018 3/12/2023 $21,373
 $21,176
 $20,099
 12.1%
Common Equity (2,547,250 units) (10) (13)       3/13/2018   —
 2,547
 1,044
 0.6
            21,373
 23,723
 21,143
 12.7
Chemical Resources Holdings, Inc. Custom Compounding of Purchased Resins                
Senior Secured Loan (4)(8)   9.82% (L +7.89%) 1/25/2019 1/25/2024 13,743
 13,592
 13,746
 8.2
Common Equity (1,832 Class A shares) (10) (13)       1/25/2019     1,813
 2,662
 1.6
            13,743
 15,405
 16,408
 9.8
Contract Datascan Holdings, Inc. (4) Office Machinery and Equipment Rental and Leasing                
Subordinated Loan   12.00% N/A 8/5/2015 2/5/2021 8,000
 7,995
 8,000
 4.8
Preferred Equity (3,061 Series A shares) 10% PIK (10)       8/5/2015     5,599
 5,671
 3.4
Common Equity (11,273 shares) (10)       6/28/2016     104
 671
 0.4
            8,000
 13,698
 14,342
 8.6
DRS Imaging Services, LLC Data Processing, Hosting, and Related Services                
Senior Secured Loan (4) (8)   11.21% (L +9.27%) 3/8/2018 11/20/2023 10,741
 10,670
 10,569
 6.3
Common Equity (1,135 units) (10) (13)       3/8/2018     1,135
 1,331
 0.8
            10,741
 11,805
 11,900
 7.1
Master Cutlery, LLC (4) (6) (10) Sporting and Recreational Goods and Supplies Merchant Wholesalers                
Subordinated Loan (11)   13.00% N/A 4/17/2015 4/17/2020 5,947
 4,764
 255
 0.2
Preferred Equity (3,723 Series A units), 8% PIK       4/17/2015   —
 3,483
 —
 —
Common Equity (15,564 units)       4/17/2015   —
 —
 —
 —
            5,947
 8,247
 255
 0.2
NeoSystems Corp. (4) (10) Other Accounting Services                
Preferred Equity (521,962 convertible shares) 10% PIK       8/14/2014   —
 1,698
 2,250
 1.4
                   
OFS Capital Corporation(2)Substantially all of the investments that bear interest at a variable rate are indexed to LIBOR (L), generally between 0.75% and Subsidiaries

Consolidated Schedule of Investments - Continued
1.0% at December 31, 2019
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
Pfanstiehl Holdings, Inc. (4) Pharmaceutical Preparation Manufacturing                
Subordinated Loan   10.50% N/A 1/1/2014 9/29/2022 $3,788
 $3,807
 $3,788
 2.3%
Common Equity (400 Class A shares)       1/1/2014   —
 217
 11,979
 7.2
            3,788
 4,024
 15,767
 9.5
Professional Pipe Holdings, LLC Plumbing, Heating, and Air-Conditioning Contractors                
Senior Secured Loan   10.55% cash / 1.50% PIK (L +9.27%) 3/23/2018 3/23/2023 7,099
 7,008
 7,170
 4.3
Common Equity (1,414 Class A units) (10)       3/23/2018   —
 1,414
 2,413
 1.4
            7,099
 8,422
 9,583
 5.7
TalentSmart Holdings, LLC Professional and Management Development Training                
Senior Secured Loan (4)   8.50% (L +6.75%) 10/11/2019 10/11/2024 10,000
 9,833
 9,833
 5.9
Senior Secured Loan (Revolver) (5) (18)   8.50% (L +6.75%) 10/11/2019 10/11/2024 250
 242
 242
 0.1
Common Equity (1,500 Class A shares) (10) (13)       10/11/2019   —
 1,500
 1,500
 0.9
            10,250
 11,575
 11,575
 6.9
TRS Services, LLC (4) (11) Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance                
Senior Secured Loan   10.55% cash / 1.00% PIK (L +8.75%) 12/10/2014 3/16/2020 14,624
 14,615
 14,623
 8.8
Preferred Equity (329,266 Class AA units), 15% PIK (10)       6/30/2016   —
 545
 547
 0.3
Preferred Equity (3,000,000 Class A units), 11% PIK (10)       12/10/2014   —
 3,374
 3,095
 1.9
Common Equity (3,000,000 units) (10)       12/10/2014   —
 572
 —
 —
            14,624
 19,106
 18,265
 11.0
TTG Healthcare, LLC Diagnostic Imaging Centers                
Senior Secured Loan (4)   10.71% (L +9.00%) 3/1/2019 3/1/2024 12,103
 11,938
 11,767
 7.1
Preferred Equity ( 2,309 Class B units) (10) (13)       3/1/2019     2,309
 2,424
 1.5
            12,103
 14,247
 14,191
 8.6
                   
Total Affiliate Investments           $107,668
 $131,950
 $135,679
 81.5%
                   
OFS Capital Corporation2020, and Subsidiaries

Consolidated Schedulereset monthly, quarterly, or semi-annually. Variable-rate loans with an aggregate cost of Investments - Continued
$328,736 include LIBOR reference rate floor provisions of generally 0.75% to 1.0% at December 31, 2019
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type		 Industry Interest Rate (2) 
Spread Above
Index (2)
 Initial Acquisition Date Maturity Principal
Amount		 Amortized Cost Fair Value (3) Percent of
Net Assets
Control Investment                  
MTE Holding Corp. (4) Travel Trailer and Camper Manufacturing                
Subordinated Loan (to Mirage Trailers, LLC, a controlled, consolidated subsidiary of MTE Holding Corp.)   10.26% cash / 4.50% PIK (L +8.50%) 11/25/2015 11/25/2020 $7,464
 $7,451
 $7,464
 4.5%
Common Equity (554 shares)       11/25/2015   —
 3,069
 1,253
 0.8
            7,464
 10,520
 8,717
 5.3
Total Control Investment           $7,464
 $10,520
 $8,717
 5.3%
                   
Total Investments           $516,656
 $538,671
 $516,931
 310.4%

(1)Equity ownership may be held in shares or units of companies affiliated with the portfolio company. The Company's investments are generally classified as "restricted securities" as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144.
(2)Substantially all of the investments that bear interest at a variable rate are indexed to LIBOR (L), generally between 1.7% and 2.1% at December 31, 2019, and reset monthly, quarterly, or semi-annually. Variable-rate loans with an aggregate cost of $420,410 include LIBOR reference rate floor provisions of generally 1% to 2%; at December 31, 2019, the reference rate on all such instruments was above the stated floors.2020, the reference rate on such instruments was generally below the stated floor provisions. For each investment, the Company has provided the spread over the reference rate and current interest rate in effect at December 31, 2019. Unless otherwise noted, all investments with a stated PIK rate require interest payments with the issuance of additional securities as payment of the entire PIK provision.
(3)Unless otherwise noted with footnote 14, fair value was determined using significant unobservable inputs for all of the Company's investments and are considered Level 3 under GAAP. See Note 5 for further details.
(4)Investments (or portion thereof) held by SBIC I LP. These assets (or a portion thereof) are held to support the SBA debentures and cannot be pledged under any debt obligation of the Company.
(5)Subject to unfunded commitments. See Note 6 for further details.
(6)Investment was on non-accrual status as of December 31, 2019, meaning the Company has suspended recognition of all or a portion of income on the investment. See Note 4 for further details.
(7)Structured Finance Notes are considered CLO subordinated debt positions. CLO subordinated debt positions are entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying securities less contractual payments to debt holders and fund expenses.
(8)The Company has entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it has agreed to receive its payment after the repayment of certain co‑lenders pursuant to a payment waterfall. The table below provides additional details as of December 31, 2019:
Portfolio CompanyReported Interest Rate Interest Rate per Credit Agreement Additional Interest per Annum
Carolina Lubes, Inc.9.83% 9.35% 0.48%
Chemical Resources Holdings, Inc.9.82% 7.93% 1.89%
DRS Imaging Services, LLC11.21% 9.94% 1.27%
Milrose Consultants, LLC8.14% 7.44% 0.70%
OnSite Care, PLLC9.49% 7.96% 1.53%
(9)The rate disclosed is the estimated effective yield, generally established at purchase and re-evaluated upon receipt of distributions, and based upon projected amounts and timing of future distributions the projected amount and timing of terminal principal payments at time of estimation. The estimated yield and investment cost may ultimately not be realized.
(10)Non-income producing.
OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 20192020. Unless otherwise noted, all investments with a stated PIK rate require interest payments with the issuance of additional securities as payment of the entire PIK provision.
(Dollar(3)Unless otherwise noted with footnote 14, fair value was determined using significant unobservable inputs for all of the Company's investments and are considered Level 3 under GAAP. See Note 5 for further details.
(4)Investments (or portion thereof) held by SBIC I LP. These assets are pledged as collateral of the SBA debentures and cannot be pledged under any debt obligation of the Company.
(5)Subject to unfunded commitments. See Note 6 for further details.
(6)Investment was on non-accrual status as of December 31, 2020, meaning the Company has suspended recognition of all or a portion of income on the investment. See Note 4 for further details.
(7)CLO subordinated debt positions are entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying securities less contractual payments to debt holders and fund expenses.
(8)The Company has entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it has agreed to receive its payment after the repayment of certain co‑lenders pursuant to a payment waterfall. The table below provides additional details as of December 31, 2020:
Portfolio CompanyReported Interest RateInterest Rate per Credit AgreementAdditional Interest per Annum
Chemical Resources Holdings, Inc.9.17%7.50%1.67%
Milrose Consultants, LLC7.62%7.00%0.62%
SourceHOV Tax, Inc.7.61%7.00%0.61%
(9)The rate disclosed is the estimated effective yield, generally established at purchase and re-evaluated upon receipt of distributions, and based upon projected amounts in thousands)and timing of future distributions and the projected amount and timing of terminal principal payments at the time of estimation. The estimated yield and investment cost may ultimately not be realized.


(10)Non-income producing.
(11)The interest rate on these investments contains a PIK provision, whereby the issuer has the option to make interest payments in cash or with the issuance of additional securities as payment of the entire PIK provision. The interest rate in the schedule represents the current interest rate in effect for these investments. The following table provides additional details on these PIK investments, including the maximum annual PIK interest rate allowed as of December 31, 2019:2020:
Portfolio CompanyInvestment Type
Range of PIK

Option
Range of Cash

Option
Maximum PIK

Rate Allowed
Community Intervention Services, Inc.Subordinated Loan0% or 6.00%13.00% or 7.00%6.00%
Eblens Holdings, Inc.Subordinated Loan0% or 1.00%13.00% or 12.00%1.00%
Master Cutlery, LLCSenior SecuredSubordinated Loan0% to 13.00%13.00% to 0%13.00%
TRS Services, LLCSenior Secured Loan0% or 1.00%12.65% or 1.00%1.00%
(12)Represents expiration date of the warrants.
(13)All or portion of investment held by a wholly-owned subsidiary of the Company subject to income tax.
(14)Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP. See Note 5 for further details.
(15)Investments (or portion thereof) held by OFSCC-FS. These assets are pledged as collateral of the BNP Facility and cannot be pledged under any other debt obligation of the Company.
(16)Amortized cost reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO subordinated debt investments.
(17)Maturity date represents the contractual maturity date of the Structured Finance Notes. Projected cash flows, including the projected amount and timing of terminal principal payments which may be projected to occur prior to the contractual maturity date, were utilized in deriving the effective yield of the investments.
(18)Not meaningful as there is no outstanding balance on the revolver. The Company earns unfunded commitment fees on undrawn revolving lines of credit balances, which are reported in fee income.
(19)The Company holds at least one seat on the portfolio company’s board of directors.
(20)The Company has an observer seat on the portfolio company’s board of directors.
(21)Portfolio company represents greater than 5% of total assets at December 31, 2020.

(12)Represents expiration date of the warrants.
(13)All or portion of investment held by OFSCC-MB.
(14)Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP. See Note 5 for further details.
(15)Investments (or portion thereof) held by OFSCC-FS. These assets are pledged as collateral of the BNP Facility and cannot be pledged under any other debt obligation of the Company.
(16)Amortized cost reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO Structured Finance Note investments.
(17)Maturity date represents the contractual maturity date of the structured finance notes. Projected cash flows, including the projected amount and timing of terminal principal payments which may be projected to occur prior to the contractual maturity date, were utilized in deriving the effective yield of the investments.
(18)Not meaningful as there is no outstanding balance on the revolver. The Company earns unfunded commitment fees on undrawn revolving lines of credit balances, which are reported in fee income.
See Notes to Consolidated Financial Statements.
29
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)


Note 1. Organization
OFS Capital Corporation, a Delaware corporation, is an externally managed, closed-end, non-diversified management investment company. The Company has elected to be regulated as a BDC under the 1940 Act. In addition, for income tax purposes, the Company has elected to be treated as a RIC under Subchapter M of the Code.
The Company’s investment objective is to provide stockholders with both current income and capital appreciation primarily through debt investments and, to a lesser extent, equity investments. OFS Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company.
In addition, OFS Advisor serves as the investment adviser for HPCI, a non-traded BDC with an investment strategy and objective similar to that of the Company. OFS Advisor also serves as the investment adviser for OCCI, a non-diversified, externally managed, closed-end management investment company that has registered as an investment company under the 1940 Act, and that primarily invests in the equity trancheStructured Finance Notes. Additionally, OFS Advisor provides sub-advisory services to CMFT Securities Investments, LLC, a wholly owned subsidiary of CLOs.CIM Real Estate Finance Trust, Inc., a corporation that qualifies as a real estate investment trust and CIM Real Assets & Credit Fund, an externally managed registered investment company that operates as an interval fund that invests primarily in a combination of real estate, credit and related investments.
The Company may make investments directly or through one of its subsidiaries: SBIC I LP, OFSCC-FS or OFSCC-MB.
SBIC I LP is an investment company subsidiary licensed under the SBA's small business investment company program. The Company is limited to follow-on investments in current portfolio companies held through SBIC I LP. SBIC I LP is subject to SBA regulatory requirements, including: limitations on the businesses and industries in which it can invest; requirements to invest at least 25% of its regulatory capital in eligible smaller businesses, as defined under the SBIC Act; limitations on the financing terms of investments; and capitalization thresholds that may limit distributions to the Company. SBIC I LP is subject to periodic audits and examinations of its financial statements. SBIC I LP intends,is repaying over time to repay its outstanding SBA debentures prior to their scheduled maturity dates.
OFSCC-FS, an indirect wholly owned subsidiary of the Company, is a special-purpose vehicle formed in April 2019 for the purpose of acquiring senior secured loan investments. OFSCC-FS has debt financing through its BNP Facility, which provides OFSCC-FS with borrowing capacity of up to $150 million.$150,000.
OFSCC-MB is a wholly-owned subsidiary taxed under subchapter C of the Code and generally holds the Company's equity investments in portfolio companies that are taxed as pass-through entities.
Note 2. Summary of Significant Accounting Policies
Basis of presentation: The Company is an investment company as defined in the accounting and reporting guidance under ASC Topic 946, Financial Services–Investment Companies. The accompanying interim consolidated financial statements of the Company and related financial information have been prepared in accordance with GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q, and Articles 6, 10 and 12 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. However, in the opinion of management, the consolidated financial statements include all adjustments, consisting only of normal and recurring accruals and adjustments, necessary for fair presentation as of and for the periods presented. These consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.2020. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.
Significant Accounting Policies: The following information supplements the description of significant accounting policies contained in Note 2 to the Company's consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.2020.
Reclassifications:Certain prior period amounts have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes thereto. Reclassifications did not impact net increase in net assets resulting from operations, total assets, total liabilities or total net assets, or consolidated statements of changes in net assets and consolidated statements of cash flows classifications.
Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
30
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.
Concentration of credit risk: Aside from its debt instruments, including investments in Structured Finance Notes of CLOs, financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits at financial institutions. At various times during the year, the Company may exceed the federally insured limits. The Company
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

places cash deposits only with high credit quality institutions which OFS Advisor believes will mitigate the risk of loss due to credit risk. The amount of loss due to credit risk from debt investments, if borrowers completely fail to perform according to the terms of the contracts, is equal to the Company's recorded investment in debt instruments and the unfunded loan commitments as disclosed in Note 6. The collateral or other security for those instruments proved to be of no value to the Company.
Goodwill: The decline in the price of the Company’s common stock and the level at which it continues to trade relative to the broader stock indices for the BDC industry, led management to conclude in the third quarter of 2020 that an impairment in the value of the Company’s goodwill was more likely than not. Moreover, the discount at which the Company’s stock traded to its net asset value resulted in management's conclusion on the impairment of goodwillCompany, is equal to the full amount of its carrying value of $1,077 was appropriate.
Intangible asset: On December 4, 2013, in connection with the SBIC Acquisition, the Company recorded an intangible asset of $2,500 attributable to the SBIC license. The Company amortizes this intangible asset on a straight-line basis over its estimated useful life, initially 154 months ended September 30, 2026. Accumulated amortization recognized through June 30, 2020 was $1,284. The Company changed its estimate on the useful life to terminate on December 31, 2025. The Company recognized $54 for the three months ended September 30, 2020, which equates to $216 annually, and which the Company currently anticipates recognizing on a quarterly basis through December 31, 2025.
New accounting pronouncement issued: In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 840): Facilitationsum of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides companies with optional guidance to easeCompany's recorded investment in debt instruments and the potential accounting burden associated with transitioning away from reference rates (e.g., LIBOR) that are expected to be discontinued. ASU 2020-04 allows, among other things, certain contract modifications, such as those within the scope of Topic 310 on receivables, to be accounted as a continuation of the existing contract. This ASU was effective upon the issuance and its optional relief can be applied through December 31, 2022. The Company will consider this optional guidance prospectively, if applicable.unfunded loan commitments disclosed in Note 6.
Note 3. Related Party Transactions
Investment Advisory and Management Agreement: OFS Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company pursuant to the Investment Advisory Agreement. The continuation of the Investment Advisory Agreement was most recently approved by the Board on April 2, 2020.1, 2021. Under the terms of the Investment Advisory Agreement, which are in accordance with the 1940 Act and subject to the overall supervision of the Board, OFS Advisor is responsible for sourcing potential investments, conducting research and diligence on potential investments and equity sponsors, analyzing investment opportunities, structuring investments, and monitoring investments and portfolio companies on an ongoing basis.
OFS Advisor’s services under the Investment Advisory Agreement are not exclusive to the Company and OFS Advisor is free to furnish similar services to other entities, including other funds affiliated with OFS Advisor, so long as its services to the Company are not impaired. OFS Advisor also serves as the investment adviser or collateral manager to CLO funds and other companies, including HPCI and OCCI.
OFS Advisor receives fees for providing services, consisting of two components: a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 1.75% and based on the average value of the Company’s total assets (other than cash but including assets purchased with borrowed amounts and assets owned by any consolidated entity) at the end of the two most recently completed calendar quarters, adjusted for any share issuances or repurchases during the quarter. OFS Advisor has elected to exclude the value of the intangible asset and goodwill resulting from the SBIC Acquisition from the base management fee calculation.
OFS Advisor agreed to reduce a portion of its base management fee by reducing the portion of such fee from 0.4375% per quarter (1.75% annualized) to 0.25% per quarter (1.00% annualized) of the average value of the portion of the OFSCC-FS Assets, at the end of the two most recently completed calendar quarters to the extent that such portion of the OFSCC-FS Assets are financed using leverage (also calculated on an average basis) that causes the Company’s statutory asset coverage ratio to fall below 200%. When calculating its statutory asset coverage ratio, the Company excludes its SBA guaranteed debentures from its total outstanding senior securities as permitted pursuant to exemptive relief granted by the SEC dated November 26, 2013. Effective January 1, 2020, OFS Advisor agreed to further reduce the base management fee attributable to all of the OFSCC-FS Assets, without regard to the Company’s asset coverage. The agreement reduced the base management fee to 0.25% per quarter (1.00% annualized) of the average value of the portion of the OFSCC-FS Assets at the end of the two most recently completed calendar quarters without regard to the statutory asset coverage ratio. Thequarters. OFS Advisor’s base management fee reduction by OFS Advisor is renewable on an annual basis and OFS Advisor is not entitled to recoup the amount of the base management fee reduced with respect to the OFSCC-FS Assets shall not be subject to recoupment by OFS Advisor.
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Assets. This agreement was renewed for the 2021 calendar year on February 16, 2021.
The incentive fee has two parts. The first part ("Income Incentive Fee") is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination and sourcing, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies, but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement (defined below) and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest or dividend feature (such as OID, debt instruments with PIK interest, equity investments with accruing or PIK dividend and zero coupon securities), accrued income that the Company has not yet received in cash.
Pre-incentive fee net investment income is expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter and adjusted for any share issuances or repurchases during such quarter.
The incentive fee with respect to pre-incentive fee net income is 20.0% of the amount, if any, by which the pre-incentive fee net investment income for the immediately preceding calendar quarter exceeds a 2.0% hurdle rate (which is 8.0% annualized) and a “catch-up” provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, OFS Advisor receives no incentive fee until the net investment income equals the hurdle rate of 2.0%, but then receives, as a “catch-up,“catch-
31
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
up,” 100.0% of the pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.5%. The effect of this provision is that, if pre-incentive fee net investment income exceeds 2.5% in any calendar quarter, OFS Advisor will receive 20.0% of the pre-incentive fee net investment income.
Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter in which the Company incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the quarterly minimum hurdle rate, the Company will pay the applicable incentive fee even if the Company has incurred a loss in that quarter due to realized and unrealized capital losses. The Company’s net investment income used to calculate this part of the incentive fee is also included in the amount of the Company’s gross assets used to calculate the base management fee. These calculations are appropriately prorated for any period of less than three months.
The second part of the incentive fee (the “Capital Gain Fee”) is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 20.0% of the Company’s aggregate realized capital gains, if any, on a cumulative basis from the date of the election to be a BDC through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation through the end of such year, less all previous amounts paid in respect of the Capital Gain Fee.
The Company accrues the Capital Gain Fee if, on a cumulative basis, the sum of net realized capital gains and (losses) plus net unrealized appreciation and (depreciation) is positive. If, on a cumulative basis, the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation) decreases during a period, the Company will reverse any excess Capital Gain Fee previously accrued such that the amount of Capital Gains Fee accrued is no more than 20% of the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation).
On May 4, 2020, OFS Advisor agreed to irrevocably waive the receipt of $441 in Income Incentive Fees (based on net investment income) related to net investment income, that it would otherwise be entitled to receive under the Investment Advisory Agreement for the three months ended March 31, 2020. As a result of the voluntary fee waiver, the Company incurred Income Incentive Fee expense of $442 for the three months ended March 31, 2020, which is equal to half the Income Incentive Fee expense the Company would have incurred for the three months ended March 31, 2020. The voluntary fee waiver did not include Capital Gain Fees, which was $0 for the three months ended March 31, 2020.
License Agreement: The Company is party to a license agreement with OFSAM under which OFSAM has granted the Company a non-exclusive, royalty-free license to use the name “OFS.”
Administration Agreement: OFS Services furnishes the Company with office facilities and equipment, necessary software licenses and subscriptions, and clerical, bookkeeping and record keeping services at such facilities pursuant to the Administration Agreement. Under the Administration Agreement, OFS Services performs, or oversees the performance of, the Company’s required administrative services, which include being responsible for the financial records that the Company is required to maintain and preparing reports to its stockholders and all other reports and materials required to be filed with the SEC or any other regulatory authority. In addition, OFS Services assists the Company in determining and publishing its net
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

asset value, oversees the preparation and filing of its tax returns and the printing and dissemination of reports to its stockholders, and generally oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. Under the Administration Agreement, OFS Services also provides managerial assistance on the Company’s behalf to those portfolio companies that have accepted the Company’s offer to provide such assistance. Payment under the Administration Agreement is equal to an amount based upon the Company’s allocable portion of OFS Services’s overhead in performing its obligations under the Administration Agreement, including, but not limited to, rent, information technology services and the Company’s allocable portion of the cost of its officers, including its chief executive officer, chief financial officer, chief compliance officer, chief accounting officer and their respective staffs. To the extent that OFS Services outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to OFS Services.
Equity Ownership: As of SeptemberJune 30, 2020,2021, affiliates of OFS Advisor held 2,946,4743,037,349 shares of common stock, which is approximately 22%23% of the Company's outstanding shares of common stock.
Distributions paid to affiliates and expenses recognized under agreements with OFS Advisor and OFS Services for the three and nine months ended September 30, 2020 and 2019 are presented below:
32
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
Base management fees$1,871

$2,164

$5,759

$6,062
Incentive fees:       
Income Incentive Fee234
 1,214
 1,332
 3,622
Incentive fee waiver—

—

(441)
—
Administration fee expense436
 396
 1,456
 1,250
Distributions paid to affiliates501

1,002

2,004

3,005
Note 4. Investments
As of September 30, 2020, the Company had loans to 56 portfolio companies, of which 91% were senior secured loans and 9% were subordinated loans, at fair value, as well as equity investments in 14 of these portfolio companies. The Company also held equity investments in nineportfolio companies in which it did not hold a debt investment and nine investments in Structured Finance Notes. At September 30, 2020, the Company's investments consisted of the following:
   Percentage of Total   Percentage of Total
 Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Senior secured debt investments (1)
$356,599

73.7% 237.9% $336,960
 73.8% 224.7%
Subordinated debt investments57,103

11.8
 38.1
 31,564
 6.9
 21.1
Preferred equity18,878

3.9
 12.6
 11,875
 2.6
 7.9
Common equity, warrants and other15,220

3.1
 10.2
 43,398
 9.5
 28.9
  Total debt and equity investments447,800
 92.5
 298.8
 423,797
 92.8
 282.6
Structured Finance Notes36,260
 7.5
 24.2
 32,531
 7.2
 21.8
Total investments$484,060

100.0% 323.0% $456,328
 100.0% 304.4%
(1)Includes debt investments, typically referred to as unitranche, in which the Company has entered into contractual arrangements with co‑lenders whereby, subject to certain conditions, the Company has agreed to receive its principal payments after the repayment of certain co‑lenders pursuant to a payment waterfall. Amortized cost and fair value of these investments were $82,880 and $83,413, respectively.
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Expenses recognized under agreements with OFS Advisor and OFS Services and distributions paid to affiliates for the three and six months ended June 30, 2021 and 2020, are presented below:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Base management fees$1,876 $1,869 $3,710 $3,888 
Incentive fees:
Income Incentive Fee809 215 809 1,098 
Incentive fee waiver— — — (441)
Administration fee expense439 500 1,007 1,020 
Distributions paid to affiliates668 503 1,276 1,510 
Note 4. Investments
As of June 30, 2021, the Company had loans to 61 portfolio companies, of which 95% were senior secured loans and 5% were subordinated loans, at fair value, as well as equity investments in 8 of these portfolio companies. The Company also held equity investments in 14 portfolio companies in which it did not hold a debt investment and 16 investments in Structured Finance Notes. At June 30, 2021, the Company's investments consisted of the following:
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Senior secured debt investments (1)
$331,982 70.8 %184.4 %$317,648 65.6 %176.5 %
Subordinated debt investments37,944 8.1 21.1 17,207 3.6 9.6 
Preferred equity16,232 3.5 9.0 12,289 2.5 6.8 
Common equity, warrants and other14,887 3.2 8.3 68,637 14.2 38.1 
  Total debt and equity investments401,045 85.6 222.8 415,781 85.9 231.0 
Structured Finance Notes67,532 14.4 37.5 68,245 14.1 37.9 
Total investments$468,577 100.0 %260.3 %$484,026 100.0 %268.9 %
(1)    Includes debt investments, typically referred to as unitranche, in which the Company has entered into contractual arrangements with co‑lenders whereby, subject to certain conditions, the Company has agreed to receive its principal payments after the repayment of certain co‑lenders pursuant to a payment waterfall. Amortized cost and fair value of these investments were $36,036 and $36,982, respectively.
33
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Geographic composition is determined by the location of the corporate headquarters of the portfolio company. As of SeptemberJune 30, 2021 and December 31, 2020, the Company's investment portfolio was domiciled as follows:
September 30, 2020 December 31, 2019June 30, 2021December 31, 2020
Amortized Cost Fair Value Amortized Cost Fair ValueAmortized CostFair ValueAmortized CostFair Value
United States of America$441,902
 $418,055
 $505,235
 $484,946
United States of America$390,122 $404,749 $399,278 $380,004 
Canada1,923
 1,830
 3,559
 3,605
Canada5,980 6,072 1,921 1,905 
Cayman Islands1
36,260
 32,531
 23,127
 21,610
Cayman Islands1
67,532 68,245 55,860 56,425 
Ireland—
 —
 1,897
 1,906
FranceFrance993 995 — — 
Luxembourg1,981
 1,934
 2,843
 2,843
Luxembourg1,975 1,980 1,976 1,997 
Switzerland1,994
 1,978
 2,010
 2,021
Switzerland1,975 1,985 1,988 1,992 
Total investments$484,060
 $456,328
 $538,671
 $516,931
Total investments$468,577 $484,026 $461,023 $442,323 
(1) Cayman Island investments represent Structured Finance Notes held by the Company. These investments generally hold underlingrepresent beneficial interests in underlying portfolios of debt investments in companies domiciled in the United States of America.
As of SeptemberJune 30, 2020,2021, the industry composition of the Company’s investment portfolio was as follows:
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Administrative and Support and Waste Management and Remediation Services
Convention and Trade Show Organizers$214 — %0.1 %$28 — %— %
Landscaping Services4,639 1.0 2.6 4,639 1.0 2.6 
Security Systems Services (except Locksmiths)9,799 2.1 %5.4 9,945 2.1 5.6 
Arts, Entertainment, and Recreation
Other Amusement and Recreation Industries20,973 4.5 11.7 20,992 4.3 11.7 
Construction
Electrical Contractors and Other Wiring Installation Contractors17,793 3.8 9.9 12,563 2.6 7.0 
New Single-Family Housing Construction (except For-Sale Builders)842 0.2 0.5 835 0.2 0.5 
Plumbing, Heating, and Air-Conditioning Contractors7,106 1.5 3.9 6,367 1.3 3.5 
Water and Sewer Line and Related Structures Construction628 0.1 0.3 628 0.1 0.3 
Education Services
Colleges, Universities, and Professional Schools— — — 6,120 1.3 3.4 
Professional and Management Development Training1,595 0.3 0.9 1,011 0.2 0.6 
Finance and Insurance
Health Care and Social Assistance
Child Day Care Services6,318 1.3 3.5 5,823 1.2 3.2 
Diagnostic Imaging Centers21,627 4.6 12.0 23,652 4.8 13.1 
Home Health Care Services4,206 0.9 2.3 4,250 0.9 2.3 
Medical Laboratories91 — 0.1 17 — — 
Offices of Physicians, Mental Health Specialists10,810 2.3 6.0 10,886 2.2 6.0 
34
    Percentage of Total   Percentage of Total
  Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Administrative and Support and Waste Management and Remediation Services




  

 

  
Convention and Trade Show Organizers
$214

—% 0.1% $210

—% 0.1%
Security Systems Services (except Locksmiths)
6,533

1.3%
4.4
 4,657
 1.0
 3.2
Arts, Entertainment, and Recreation





 
 
 
Other Amusement and Recreation Industries
20,953

4.3
 14.0
 19,673

4.3
 13.2
Construction





 
 
 
Electrical Contractors and Other Wiring Installation Contractors
17,700

3.7

11.8
 14,457
 3.2
 9.6
Plumbing, Heating, and Air-Conditioning Contractors
8,525

1.8
 5.7
 7,860

1.7
 5.2
Education Services





 
 
 
Colleges, Universities, and Professional Schools
—

—

—
 3,356
 0.7
 2.2
Professional and Management Development Training
11,762

2.4
 7.8
 11,305

2.5
 7.5
Finance and Insurance





 
 
 
Direct Health and Medical Insurance Carriers
396

0.1
 0.3
 405
 0.1
 0.3
Insurance Agencies and Brokerages
9,537

2.0

6.4
 8,951
 2.0
 6.0
Health Care and Social Assistance








 

 

 

Child Day Care Services
5,180

1.1
 3.5
 4,948
 1.1
 3.3
Diagnostic Imaging Centers
14,278

2.9

9.5
 15,658

3.4
 10.4
Home Health Care Services
13,636

2.8
 9.1
 13,766
 3.0
 9.1
Medical Laboratories
91

—

0.1
 44
 —
 —
Offices of Physicians, Mental Health Specialists
20,721

4.3

13.8
 20,163
 4.4
 13.5
Outpatient Mental Health and Substance Abuse Centers
11,614

2.4

7.7
 3,951
 0.9
 2.6
Information








 

   

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Outpatient Mental Health and Substance Abuse Centers$4,851 1.0 %2.7 %$4,829 1.0 %2.7 %
Information
All Other Publishers1,994 0.4 1.1 2,001 0.4 1.1 
All Other Telecommunications872 0.2 0.5 862 0.2 0.5 
Cable and Other Subscription Programming2,922 0.6 1.6 2,926 0.6 1.6 
Data Processing, Hosting, and Related Services6,126 1.3 3.4 6,251 1.3 3.5 
Directory and Mailing List Publishers2,257 0.5 1.3 2,351 0.5 1.3 
Internet Publishing and Broadcasting and Web Search Portals2,003 0.4 1.1 2,007 0.4 1.1 
Motion Picture and Video Production3,439 0.7 1.9 3,483 0.7 1.9 
Software Publishers27,687 5.9 15.4 15,054 3.1 8.4 
Television Broadcasting1,967 0.4 1.1 1,199 0.2 0.7 
Manufacturing
Commercial Printing (except Screen and Books)4,795 1.0 2.7 4,821 1.0 2.7 
Current-Carrying Wiring Device Manufacturing5,526 1.2 3.1 5,537 1.1 3.1 
Custom Compounding of Purchased Resins15,462 3.3 8.6 17,356 3.6 9.6 
Other Aircraft Parts and Auxiliary Equipment Manufacturing500 0.1 0.3 87 — — 
Fabricated Pipe and Pipe Fitting Manufacturing2,544 0.5 1.4 2,584 0.5 1.4 
Metal Can Manufacturing1,225 0.3 0.7 1,225 0.3 0.7 
Motor Vehicle Body Manufacturing1,465 0.3 0.8 1,460 0.3 0.8 
Other Commercial and Service Industry Machinery Manufacturing1,817 0.4 1.0 1,803 0.4 1.0 
Pharmaceutical Preparation Manufacturing2,192 0.5 1.2 51,221 10.5 28.5 
Pump and Pumping Equipment Manufacturing1,501 0.3 0.8 1,300 0.3 0.7 
Travel Trailer and Camper Manufacturing11,057 2.4 6.1 12,062 2.5 6.7 
Truck Trailer Manufacturing747 0.2 0.4 749 0.2 0.4 
Unlaminated Plastics Profile Shape Manufacturing9,099 1.9 5.1 9,099 1.9 5.1 
Other Services (except Public Administration)
Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance572 0.1 0.3 867 0.2 0.5 
Professional, Scientific, and Technical Services
Administrative Management and General Management Consulting Services22,388 4.8 12.4 23,026 4.7 12.8 
All Other Professional, Scientific, and Technical Services2,241 0.5 1.2 2,297 0.5 1.3 
Management Consulting Services749 0.2 0.4 752 0.2 0.4 
Marketing Consulting Services5,201 1.1 2.9 5,286 1.1 2.9 
Other Accounting Services21,699 4.6 12.1 22,979 4.7 12.8 
35
    Percentage of Total   Percentage of Total
  Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Data Processing, Hosting, and Related Services
11,705

2.4
 7.8
 12,320

2.7
 8.2
Software Publishers
29,980

6.2

19.9
 18,041
 4.0
 12.1
Television Broadcasting
1,982

0.4
 1.3
 1,554

0.3
 1.0
Manufacturing








 

 

 

Commercial Printing (except Screen and Books)
4,786

1.0

3.2
 4,549
 1.0
 3.0
Custom Compounding of Purchased Resins
15,433

3.2

10.3
 16,332

3.6
 10.9
Other Aircraft Parts and Auxiliary Equipment Manufacturing
5,426

1.1

3.6
 4,696
 1.0
 3.1
Other Commercial and Service Industry Machinery Manufacturing
1,965

0.4
 1.3
 1,934

0.4
 1.3
Pharmaceutical Preparation Manufacturing
5,999

1.2

4.0
 37,698
 8.3
 25.2
Plastics Plumbing Fixture Manufacturing
1,473

0.3
 1.0
 1,479

0.3
 1.0
Pump and Pumping Equipment Manufacturing
1,501

0.3

1.0
 1,220
 0.3
 0.8
Semiconductor and Related Device Manufacturing
471

0.1
 0.3
 502

0.1
 0.3
Travel Trailer and Camper Manufacturing
10,811

2.2

7.2
 8,084
 1.8
 5.4
Truck Trailer Manufacturing
6,987

1.4

4.7
 6,915
 1.5
 4.6
Unlaminated Plastics Profile Shape Manufacturing
8,046

1.7
 5.4
 7,795
 1.7
 5.2
Other Services (except Public Administration)





 
 
 
Automotive Oil Change and Lubrication Shops
19,767

4.1

13.2
 19,575
 4.3
 13.2
Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance
851

0.2

0.6
 811
 0.2
 0.5
Diet and Weight Reducing Centers
485

0.1
 0.3
 485

0.1
 0.3
Professional, Scientific, and Technical Services








 

 

 

Administrative Management and General Management Consulting Services
25,134

5.2

16.8
 25,095

5.5
 16.8
All Other Professional, Scientific, and Technical Services
1,923

0.4
 1.3
 1,830

0.4
 1.2
Other Accounting Services
14,663

3.0

9.8
 15,422
 3.4
 10.3
Other Computer Related Services
16,746

3.5

11.2
 15,806
 3.5
 10.6
Public Administration








 

 

 

Other Justice, Public Order, and Safety Activities
703

0.1

0.5
 696
 0.2
 0.5
Real Estate and Rental and Leasing








 

 

 

Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing
499

0.1
 0.3
 497

0.1
 0.3
Office Machinery and Equipment Rental and Leasing
13,964

2.9

9.3
 10,265
 2.2
 6.8
Retail Trade








 

 

 

Cosmetics, Beauty Supplies, and Perfume Stores 7,868

1.6
 5.2
 7,796

1.7
 5.2
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Other Computer Related Services$15,076 3.2 %8.4 %$15,260 3.2 %8.5 %
Public Administration
Other Justice, Public Order, and Safety Activities703 0.2 0.4 342 0.1 0.2 
Real Estate and Rental and Leasing
Office Machinery and Equipment Rental and Leasing5,953 1.3 3.3 2,828 0.6 1.6 
Retail Trade
Automotive Parts and Accessories Stores1,710 0.4 1.0 1,730 0.4 1.0 
Cosmetics, Beauty Supplies, and Perfume Stores1,533 0.3 0.9 1,530 0.3 0.9 
Electronic Shopping and Mail-Order Houses4,958 1.1 2.8 4,998 1.0 2.8 
Shoe store9,784 2.1 5.4 8,552 1.8 4.8 
Sporting Goods Stores5,709 1.2 3.2 5,746 1.2 3.2 
All Other General Merchandise Stores499 0.1 0.3 1,308 0.3 0.7 
Transportation and Warehousing
Freight Transportation Arrangement1,966 0.4 1.1 1,972 0.4 1.1 
Scheduled Passenger Air Transportation360 0.1 0.2 380 0.1 0.2 
Taxi Service1,975 0.4 1.1 1,980 0.4 1.1 
Wholesale Trade
Business to Business Electronic Markets2,883 0.6 1.6 2,875 0.6 1.6 
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers4,706 1.0 2.6 4,698 1.0 2.6 
Construction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers16,424 3.5 9.1 16,566 3.4 9.2 
Drugs and Druggists' Sundries Merchant Wholesalers5,675 1.2 3.2 5,736 1.2 3.2 
General Line Grocery Merchant Wholesalers273 0.1 0.2 283 0.1 0.2 
Industrial Machinery and Equipment Merchant Wholesalers9,691 2.1 5.4 9,549 2.0 5.3 
Motor Vehicle Parts (Used) Merchant Wholesalers15,260 3.3 8.5 15,437 3.2 8.6 
Sporting and Recreational Goods and Supplies Merchant Wholesalers8,208 1.8 4.6 687 0.1 0.4 
Stationary & Office Supply Merchant Wholesaler16,160 3.4 9.0 94 — 0.1 
    Total debt and equity investments$401,045 85.5 %222.8 %$415,781 85.9 %231.0 %
Structured Finance Notes67,532 14.5 37.5 68,245 14.1 37.9 
Total investments$468,577 100.0 %260.3 %$484,026 100.0 %268.9 %
36
    Percentage of Total   Percentage of Total
  Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Shoe store
9,742

2.0

6.5
 5,351

1.2
 3.6
Sporting Goods Stores
2,911

0.6
 1.9
 2,942

0.6
 2.0
All Other General Merchandise Stores
5,292

1.1

3.5
 4,780

1.0
 3.2
Transportation and Warehousing






       
Scheduled Passenger Air Transportation
495

0.1
 0.3
 504

0.1
 0.3
Taxi Service
1,981

0.4
 1.3
 1,934

0.4
 1.3
Wholesale Trade








 

 

 

Business to Business Electronic Markets
2,895

0.6

1.9
 2,768

0.6
 1.8
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
1,959

0.4
 1.3
 1,939

0.4
 1.3
Construction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers
16,590

3.4
 11.1
 17,122

3.8
 11.5
General Line Grocery Merchant Wholesalers
460

0.1
 0.3
 468

0.1
 0.3
Industrial Machinery and Equipment Merchant Wholesalers
9,696

2.0

6.5
 9,060

2.0
 6.0
Industrial Supplies Merchant Wholesalers
6,901

1.4

4.6
 5,402

1.2
 3.6
Motor Vehicle Parts (Used) Merchant Wholesalers
14,194

2.9
 9.5
 13,633

3.0
 9.1
Sporting and Recreational Goods and Supplies Merchant Wholesalers
8,247

1.7

5.5
 —
 —
 —
Stationary & Office Supply Merchant Wholesaler 16,129

3.3
 10.8
 7,093

1.6
 4.7
   Total debt and equity investments
$447,800

92.2%
298.7% $423,797
 92.9% 282.7%
Structured Finance Notes 36,260
 7.8
 24.2
 32,531
 7.1
 21.7
Total investments $484,060
 100.0% 322.9% $456,328

100.0% 304.4%
As of December 31, 2019, the Company had loans to 79 portfolio companies, of which 90% were senior secured loans and 10% were subordinated loans, at fair value, as well as equity investments in 15 of these portfolio companies. The Company also held an equity investment in six portfolio companies in which it did not hold a debt investment, as well as four investments in Structured Finance Notes. At December 31, 2019, investments consisted of the following:
   Percentage of Total   Percentage of Total
 Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Senior secured debt investments$421,970
 78.3% 253.2% $408,724
 79.1% 245.3%
Subordinated debt investments56,731
 10.5
 34.0
 43,091
 8.3
 25.9
Preferred equity21,925
 4.1
 13.2
 17,729
 3.4
 10.6
Common equity, warrants and other14,919
 2.8
 9.0
 25,777
 5.0
 15.5
  Total debt and equity investments515,545
 95.7% 309.4% 495,321
 95.8% 297.3%
Structured Finance Notes23,126
 4.3
 14.0
 21,610
 4.2
 12.9
Total$538,671
 100.0% 323.4% $516,931
 100.0% 310.2%
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

As of December 31, 2020, the Company had loans to 49 portfolio companies, of which 95% were senior secured loans and 5% were subordinated loans, at fair value, as well as equity investments in 10 of these portfolio companies. The Company also held an equity investment in 13 portfolio companies in which it did not hold a debt investment, as well as 12 investments in Structured Finance Notes. At December 31, 2019,2020, investments consisted of the Company had international domiciled debt investments, all denominated in US dollars, with an amortized cost and fair valuefollowing:
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Senior secured debt investments$325,647 70.6 %204.9 %$306,304 69.2 %192.7 %
Subordinated debt investments45,409 9.8 28.6 15,067 3.4 9.5 
Preferred equity18,648 4.0 11.7 11,543 2.6 7.3 
Common equity, warrants and other15,459 3.4 9.7 52,984 12.0 33.3 
  Total debt and equity investments405,163 87.8 %254.9 %385,898 87.2 %242.8 %
Structured Finance Notes55,860 12.2 35.1 56,425 12.8 35.5 
Total$461,023 100.0 %290.0 %$442,323 100.0 %278.3 %
Geographic composition is determined by the location of $10,309 and $10,374, respectively, and debt and equity investments with an amortized cost and fair valuethe corporate headquarters of $505,232 and $484,945, respectively, domiciled in the United States. Theportfolio company. As of December 31, 2020, the industry compositions of the Company’s debt and equity investment portfolioinvestments were as follows:
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Administrative and Support and Waste Management and Remediation Services
Convention and Trade Show Organizers$214 — %0.1 %$210 — %0.1 %
Security Systems Services (except Locksmiths)6,531 1.4 4.1 3,487 0.8 2.2 
Arts, Entertainment, and Recreation
Other Amusement and Recreation Industries20,967 4.5 13.3 19,973 4.5 12.6 
Construction
Electrical Contractors and Other Wiring Installation Contractors17,837 3.9 11.2 13,137 3.0 8.3 
Plumbing, Heating, and Air-Conditioning Contractors7,607 1.7 4.8 7,294 1.6 4.6 
Education Services
Colleges, Universities, and Professional Schools— — — 4,295 1.0 2.7 
Professional and Management Development Training1,595 0.3 1.0 1,306 0.3 0.8 
Finance and Insurance
Insurance Agencies and Brokerages9,544 2.1 6.0 9,302 2.1 5.9 
Health Care and Social Assistance
Child Day Care Services5,178 1.1 3.3 4,656 1.1 2.9 
Diagnostic Imaging Centers21,718 4.8 13.8 23,607 5.3 14.9 
Home Health Care Services4,199 0.9 2.6 4,250 1.0 2.7 
Medical Laboratories91 — 0.1 38 — — 
Offices of Physicians, Mental Health Specialists21,013 4.6 13.2 20,802 4.7 13.1 
Outpatient Mental Health and Substance Abuse Centers11,615 2.5 7.3 4,105 0.9 2.6 
37
    Percentage of Total   Percentage of Total
  Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Administrative and Support and Waste Management and Remediation Services            
Convention and Trade Show Organizers $500
 0.1% 0.3% $1,490
 0.3% 0.9%
Security Systems Services (except Locksmiths) 8,158
 1.5
 4.9
 7,224
 1.4
 4.3
Temporary Help Services 13,866
 2.6
 8.3
 13,742
 2.7
 8.2
Arts, Entertainment, and Recreation   

     

  
Other Amusement and Recreation Industries 18,611
 3.5
 11.2
 18,592
 3.6
 11.2
Construction   

     

  
Electrical Contractors and Other Wiring Installation Contractors 16,520
 3.1
 9.9
 14,639
 2.8
 8.8
Plumbing, Heating, and Air-Conditioning Contractors 8,422
 1.6
 5.1
 9,583
 1.9
 5.8
Education Services   

     

  
Colleges, Universities, and Professional Schools —
 —
 —
 —
 —
 —
Professional and Management Development Training 11,574
 2.1
 6.9
 11,575
 2.2
 6.9
Finance and Insurance   

     

  
Direct Health and Medical Insurance Carriers 395
 0.1
 0.2
 405
 0.1
 0.2
Insurance Agencies and Brokerages 11,487
 2.1
 6.9
 11,386
 2.2
 6.8
Health Care and Social Assistance   

     

  
All Other Outpatient Care Centers 2,001
 0.4
 1.2
 2,015
 0.4
 1.2
Child Day Care Services 8,126
 1.5
 4.9
 8,266
 1.6
 5.0
Diagnostic Imaging Centers 14,247
 2.6
 8.6
 14,191
 2.7
 8.5
Freestanding Ambulatory Surgical and Emergency Centers 2,950
 0.5
 1.8
 2,976
 0.6
 1.8
General Medical and Surgical Hospitals 2,612
 0.5
 1.6
 2,632
 0.5
 1.6
Home Health Care Services 16,627
 3.1
 10.0
 16,236
 3.1
 9.7
Medical Laboratories 91
 —
 0.1
 22
 —
 —
Offices of Physicians, Mental Health Specialists 20,047
 3.6
 12.0
 19,945
 3.8
 12.0
Outpatient Mental Health and Substance Abuse Centers 11,609
 2.2
 7.0
 4,000
 0.8
 2.4
Residential Intellectual and Developmental Disability Facilities 2,991
 0.6
 1.8
 3,006
 0.6
 1.8
Information   

     

  
Data Processing, Hosting, and Related Services 11,805
 2.2
 7.1
 11,900
 2.3
 7.1
Internet Publishing and Broadcasting and Web Search Portals 1,969
 0.4
 1.2
 1,992
 0.4
 1.2
Software Publishers 41,054
 7.5
 24.5
 38,373
 7.3
 22.9
Television Broadcasting 1,997
 0.4
 1.2
 1,997
 0.4
 1.1
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Information
Data Processing, Hosting, and Related Services$1,135 0.2 %0.7 %$1,749 0.4 %1.1 %
Software Publishers28,799 6.3 18.2 16,104 3.6 10.0 
Television Broadcasting1,977 0.4 1.2 1,758 0.4 1.1 
Manufacturing
Commercial Printing (except Screen and Books)4,789 1.0 3.0 4,812 1.1 3.0 
Custom Compounding of Purchased Resins15,444 3.3 9.7 17,164 3.9 10.8 
Other Aircraft Parts and Auxiliary Equipment Manufacturing5,431 1.2 3.4 4,275 1.0 2.7 
Other Commercial and Service Industry Machinery Manufacturing1,925 0.4 1.2 1,936 0.4 1.2 
Pharmaceutical Preparation Manufacturing2,205 0.5 1.4 38,213 8.7 24.1 
Pump and Pumping Equipment Manufacturing1,501 0.3 0.9 1,281 0.3 0.8 
Semiconductor and Related Device Manufacturing399 0.1 0.3 434 0.1 0.3 
Travel Trailer and Camper Manufacturing10,911 2.4 6.9 10,812 2.4 6.8 
Truck Trailer Manufacturing8,118 1.8 5.1 8,174 1.8 5.1 
Unlaminated Plastics Profile Shape Manufacturing8,922 1.9 5.6 8,818 2.0 5.5 
Other Services (except Public Administration)
Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance572 0.1 0.4 915 0.2 0.6 
Diet and Weight Reducing Centers477 0.1 0.3 479 0.1 0.3 
Professional, Scientific, and Technical Services
Administrative Management and General Management Consulting Services28,503 6.3 18.0 28,729 6.6 18.2 
All Other Professional, Scientific, and Technical Services1,921 0.4 1.2 1,905 0.4 1.2 
Marketing Consulting Services5,229 1.1 3.3 5,229 1.2 3.3 
Other Accounting Services21,621 4.7 13.7 22,238 5.0 14.0 
Other Computer Related Services16,247 3.5 10.2 16,000 3.6 10.1 
Public Administration
Other Justice, Public Order, and Safety Activities703 0.2 0.4 676 0.2 0.4 
Real Estate and Rental and Leasing
Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing496 0.1 0.3 499 0.1 0.3 
Office Machinery and Equipment Rental and Leasing5,953 1.3 3.7 2,736 0.6 1.7 
Retail Trade
Cosmetics, Beauty Supplies, and Perfume Stores6,738 1.5 4.2 6,701 1.5 4.2 
38
    Percentage of Total   Percentage of Total
  Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Wired Telecommunications Carriers 1,972
 0.4
 1.2
 1,980
 0.4
 1.2
Manufacturing         

  
Commercial Printing (except Screen and Books) $4,778
 0.9% 2.9% $4,591
 0.9% 2.8%
Custom Compounding of Purchased Resins 15,405
 2.9
 9.2
 16,408
 3.2
 9.8
Motor Vehicle Body Manufacturing 1,970
 0.4
 1.2
 1,997
 0.4
 1.2
Other Aircraft Parts and Auxiliary Equipment Manufacturing 5,412
 1.0
 3.2
 4,213
 0.8
 2.5
Other Commercial and Service Industry Machinery Manufacturing 2,229
 0.4
 1.3
 2,262
 0.4
 1.4
Pharmaceutical and Medicine Manufacturing 853
 0.2
 0.5
 853
 0.2
 0.5
Pharmaceutical Preparation Manufacturing 7,931
 1.5
 4.8
 19,694
 3.8
 11.8
Plastics Plumbing Fixture Manufacturing 1,484
 0.3
 0.9
 1,498
 0.3
 0.9
Pump and Pumping Equipment Manufacturing 1,501
 0.3
 0.9
 1,607
 0.3
 1.0
Travel Trailer and Camper Manufacturing 10,520
 2.0
 6.3
 8,717
 1.7
 5.2
Truck Trailer Manufacturing 6,990
 1.3
 4.2
 6,690
 1.3
 4.0
Unlaminated Plastics Profile Shape Manufacturing 10,046
 1.9
 6.0
 9,959
 1.9
 6.0
Other Services (except Public Administration)   

     

  
Automotive Oil Change and Lubrication Shops 20,165
 3.6
 12.1
 20,458
 3.9
 12.3
Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance 19,106
 3.4
 11.5
 18,265
 3.5
 11.0
Communication Equipment Repair and Maintenance 4,493
 0.8
 2.7
 4,512
 0.9
 2.7
Professional, Scientific, and Technical Services   

     

  
Administrative Management and General Management Consulting Services 17,496
 3.2
 10.5
 17,492
 3.4
 10.5
Advertising Agencies 1,987
 0.4
 1.2
 2,001
 0.4
 1.2
All Other Professional, Scientific, and Technical Services 1,925
 0.4
 1.2
 1,925
 0.4
 1.2
Other Accounting Services 1,698
 0.3
 1.0
 2,250
 0.4
 1.4
Other Computer Related Services 18,242
 3.4
 10.9
 18,353
 3.6
 11.0
Testing Laboratories 1,987
 0.4
 1.2
 2,004
 0.4
 1.2
Public Administration   

     

  
Other Justice, Public Order, and Safety Activities 9,846
 1.8
 5.9
 407
 0.1
 0.2
Public Finance Activities 1,941
 0.4
 1.2
 2,007
 0.4
 1.2
Real Estate and Rental and Leasing   

     

  
Office Machinery and Equipment Rental and Leasing 13,698
 2.5
 8.2
 14,342
 2.8
 8.6
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Percentage of TotalPercentage of Total
   Percentage of Total   Percentage of TotalAmortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
 Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Retail Trade   

     

  
Cosmetics, Beauty Supplies, and Perfume Stores $6,419
 1.2% 3.9% $6,363
 1.2% 3.8%
Shoe Store 9,675
 1.8
 5.8
 9,917
 1.9
 6.0
Shoe Store9,748 2.1 6.1 4,368 1.0 2.7 
Sporting Goods Stores 1,921
 0.4
 1.2
 1,983
 0.4
 1.2
Sporting Goods Stores$2,907 0.6 %1.8 %$2,968 0.7 %1.9 %
Supermarkets and Other Grocery (except Convenience) Stores 1,081
 0.2
 0.6
 1,094
 0.2
 0.7
All Other General Merchandise Stores 5,402
 1.0
 3.2
 5,020
 1.0
 3.0
All Other General Merchandise Stores5,252 1.1 3.3 5,060 1.1 3.2 
Transportation and Warehousing   

     

  Transportation and Warehousing
General Warehousing and Storage 13,790
 2.6
 8.3
 14,165
 2.7
 8.5
Scheduled Passenger Air TransportationScheduled Passenger Air Transportation495 0.1 0.3 520 0.1 0.3 
Taxi Service 1,990
 0.4
 1.2
 1,990
 0.4
 1.2
Taxi Service1,976 0.4 1.2 1,997 0.5 1.3 
Wholesale Trade   

     

  Wholesale Trade
Business to Business Electronic Markets 3,920
 0.7
 2.4
 3,960
 0.8
 2.4
Business to Business Electronic Markets2,891 0.6 1.8 2,875 0.6 1.8 
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 3,955
 0.7
 2.4
 3,976
 0.8
 2.4
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers1,955 0.4 1.2 1,942 0.4 1.2 
Construction and Mining (except Oil Well) Machinery and Equipment Merchant WholesalersConstruction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers16,392 3.6 10.3 16,777 3.8 10.6 
General Line Grocery Merchant WholesalersGeneral Line Grocery Merchant Wholesalers275 0.1 0.2 284 0.1 0.2 
Industrial Machinery and Equipment Merchant Wholesalers 9,700
 1.8
 5.8
 9,662
 1.9
 5.8
Industrial Machinery and Equipment Merchant Wholesalers9,696 2.1 6.1 9,179 2.1 5.8 
Industrial Supplies Merchant Wholesalers 6,883
 1.3
 4.1
 6,584
 1.3
 4.0
Industrial Supplies Merchant Wholesalers6,908 1.5 4.3 5,476 1.2 3.4 
Motor Vehicle Parts (Used) Merchant Wholesalers 13,119
 2.4
 7.9
 13,119
 2.5
 7.9
Motor Vehicle Parts (Used) Merchant Wholesalers14,167 3.1 8.9 13,581 3.1 8.5 
Other Grocery and Related Products Merchant Wholesalers 1,995
 0.4
 1.2
 2,003
 0.4
 1.2
Sporting and Recreational Goods and Supplies Merchant Wholesalers 8,247
 1.5
 4.9
 255
 —
 0.2
Sporting and Recreational Goods and Supplies Merchant Wholesalers8,247 1.8 5.2 346 0.1 0.2 
Stationery and Office Supplies Merchant Wholesalers 16,113
 3.0
 9.7
 14,559
 2.8
 8.7
Stationery and Office Supplies Merchant Wholesalers16,129 3.5 10.1 2,426 0.5 1.5 
Total debt and equity investments $515,545
 95.7% 309.4% $495,321
 95.8% 297.3%Total debt and equity investments$405,163 87.9 %254.9 %$385,898 87.2 %242.8 %
Structured Finance Notes 23,126
 4.3
 14.0
 21,610
 4.2
 12.9
Structured Finance Notes55,860 12.1 35.1 56,425 12.8 35.5 
Total investments $538,671
 100.0% 323.4% $516,931
 100.0% 310.2%Total investments$461,023 100.0 %290.0 %$442,323 100.0 %278.3 %
When there is reasonable doubt that principal, cash interest, or PIK interest will be collected, loan investments are placed on non-accrual status and the Company will generally cease recognizing cash interest, PIK interest, or Net Loan Fee amortization, as applicable. Interest accruals and Net Loan Fee amortization are resumed on non-accrual investments only when they are brought current with respect to principal, interest and when, in the judgment of management, the investments are estimated to be fully collectible as to all principal. The aggregate amortized cost and fair value of loans on non-accrual status with respect to all interest and Net Loan Fee amortization was $49,525$38,218 and $18,757,$7,756, respectively, at SeptemberJune 30, 2020,2021, and $22,249$48,102 and $662,$12,135 respectively, at December 31, 2019.2020.
On April 5, 2021, the Company sold its subordinated debt investment in Community Intervention Services, Inc. for $91. During the six months ended June 30, 2021, the Company recognized a realized loss of $7,548, of which $7,534 was recognized as an unrealized loss as of December 31, 2020.
On June 11, 2021, My Alarm Center, LLC’s bankruptcy plan became effective and our equity interests were cancelled. For the six months ended June 30, 2021, the Company recognized a realized loss of $3,094, of which $2,997 was recognized as an unrealized loss as of December 31, 2020.
On March 27, 2020, the Company's debt investment in Constellis Holdings, LLC was restructured, pursuant to which the Company converted its non-accrual debt investment into 20,628 common shares of common equity. The cost and fair value of the common shares received were $703 and $703, respectively, as of March 31, 2020. The Company recognized a realized loss on the restructuring of $9,145 for the ninesix months ended SeptemberJune 30, 2020, which was fully recognized as an unrealized loss as of December 31, 2019.
On September 4, 2020, the Company's equity investment in Sentry Centers Holdings, LLC was restructured, pursuant to which the Company converted its 500 Series C units into 269 shares of common equity. In addition, the Company invested $160 in a capital raise and received Series A and Series B preferred units. Accordingly, during the three months ended September 30, 2020, the Company recognized a realized loss of $446.

39
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

On September 30, 2020, the Company's debt investment in Southern Technical Institute, LLC was restructured, pursuant to which the Company received proceeds of $529, in full satisfaction of contractually due interest of $215 and principal of $1,660. This investment was carried at a cost of $-0-. Accordingly, during the three and nine months ended September 30, 2020, the Company fully recognized a realized gain of $314 as the investment was carried at cost as of December 31, 2019. As of September 30, 2020, the Company holds equity appreciation rights with a cost and fair value of $-0- and $3,356, respectively.
On January 31, 2019, Maverick Healthcare Equity, LLC was acquired in a purchase transaction. Proceeds from this transaction were insufficient to redeem the class of equity held by the Company. Accordingly, during the nine months ended September 30, 2019, the Company recognized a net loss of $89, which is comprised of $900 realized loss net of $811 unrealized loss reversal.

Note 5. Fair Value of Financial Instruments
The Company’s investments are carried at fair value as determined by the Board. These fair values are determined in accordance with a documented valuation policy and a consistently applied valuation process.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair values are determined with models or other valuation techniques, valuation inputs, and assumptions that market participants would use in pricing the subject asset or liability. Valuation inputs are organized in a hierarchy that gives the highest priority to prices for identical assets or liabilities quoted in active markets (Level 1) and the lowest priority to fair values based on unobservable inputs (Level 3). The three levels of inputs in the fair value hierarchy are described below:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
Level 2: Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include: (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, (iii) inputs other than quoted prices that are observable for the asset or liability, and (iv) inputs that are derived principally from or corroborated by observable market data. 
Level 3: Unobservable inputs for the asset or liability, and situations where there is little, if any, market activity for the asset or liability at the measurement date.
The inputs into the determination of fair value are based upon the best information under the circumstances and may require significant judgment or estimation by management. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. The Company generally categorizes its investment portfolio into Level 2 and Level 3 of the hierarchy.
The Company assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the measurement date. Senior securities with a fair value of $3,585$6,562 and $599$895 were transferred from Level 3 to Level 2 during the three and ninesix months ended SeptemberJune 30, 2020,2021, respectively. Senior securities with a fair value of $0$5,736 and $628$-0- were transferred from Level 2 to Level 3 during the three and six months ended June 30, 2021, respectively. Senior securities with a fair value of $-0- and $2,915 were transferred from Level 2 to Level 3 during the three and six months ended June 30, 2020, respectively, while senior securities with a fair value of $4,256 and $-0- were transferred from Level 3 to Level 2 during the three and ninesix months ended SeptemberJune 30, 2019,2020, respectively.
Due to the inherent uncertainty of determining the fair value of Level 3 investments, the fair value of the investments may differ significantly from the values that would have been used had a ready market or observable inputs existed for such investments and may differ materially from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions, or otherwise are less liquid than publicly traded instruments. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, the Company might realize significantly less than the value at which such investment had previously been recorded. The Company’s investments are subject to market risk, which is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments are traded.
The following tables present the Company's investment portfolio measured at fair value on a recurring basis as of SeptemberJune 30, 20202021, and December 31, 2019.2020.
SecurityLevel 1Level 2Level 3Fair Value at June 30, 2021
Debt investments$— $66,139 $268,716 $334,855 
Equity investments— — 80,926 80,926 
Structured Finance Notes— — 68,245 68,245 
$— $66,139 $417,887 $484,026 
40
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Security Level 1 Level 2 Level 3 Fair Value at September 30, 2020
Debt investments $—
 $23,547
 $344,977
 $368,524
Equity investments —
 —
 55,273
 55,273
Structured Finance Notes —
 —
 32,531
 32,531
  $—
 $23,547
 $432,781
 $456,328
Security Level 1 Level 2 Level 3 Fair Value at December 31, 2019
Debt investments $—
 $74,666
 $377,149
 $451,815
Equity investments —
 —
 43,506
 43,506
Structured Finance Notes —
 —
 21,610
 21,610
  $—
 $74,666
 $442,265
 $516,931
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

SecurityLevel 1Level 2Level 3Fair Value at December 31, 2020
Debt investments$— $22,226 $299,145 $321,371 
Equity investments— — 64,527 64,527 
Structured Finance Notes— — 56,425 56,425 
$— $22,226 $420,097 $442,323 
The following tables provide quantitative information about valuation techniques and the Company’s significant inputs to the Company’s Level 3 fair value measurements as of SeptemberJune 30, 20202021 and December 31, 2019.2020. In addition to the techniques and inputs noted in the tables below, according to the Company’s valuation policy, the Company may also use other valuation techniques and methodologies when determining the Company’s fair value measurements. The table below provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements.
 Fair Value at September 30, 2020 Valuation technique Unobservable inputs Range
(Weighted average)
Debt investments:       
Senior secured$287,788

Discounted cash flow
Discount rates
7.28% - 24.42% (10.43%)
Senior secured13,961
 Market approach EBITDA multiples 8.50x - 8.50x (8.50x)
Senior secured11,664
 Market approach Revenue multiples 1.27x - 1.27x (1.27x)
Subordinated19,120

Discounted cash flow
Discount rates
10.92% - 24.50% (19.61%)
Subordinated12,444

Market approach
EBITDA multiples
3.87x - 7.5x (5.94x)
Subordinated—
 Market approach Revenue multiples 0.10x - 0.18x (0.14x)









Structured Finance Notes







Subordinated notes (3)
30,925

Discounted cash flow
Discount rates
20.00% - 24.50% (21.92%)
     
Constant Default Rate(1)

2.00% - 2.00% (2.00%)
     
Constant Default Rate(2)
 3.00% - 3.00% (3.00%)
     Recovery Rate
60.00% - 60.00% (60.00%)
        
Mezzanine debt1,606

Discounted cash flow
Discount rates
8.60% - 10.50% (9.79%)
     
Constant Default Rate(1)
 0.00% - 2.00% (1.01%)
     
Constant Default Rate(2)
 3.00% - 3.00% (3.00%)
     Recovery Rate 60.00% - 60.00% (60.00%)
        
Equity investments:







Preferred equity10,827

Market approach
EBITDA multiples
6.50x - 8.50x (7.29x)
Preferred equity1,048

Market approach
Revenue multiples
0.18x - 1.42x (0.87x)
Common equity, warrants and other43,382

Market approach
EBITDA multiples
3.75x - 11.00x (7.98x)
Common equity, warrants and other16
 Market approach Revenue multiples 0.18x - 1.42x (0.39x)
 $432,781
      
Fair Value at June 30, 2021Valuation techniqueUnobservable inputsRange
(Weighted average)
Debt investments:
Senior secured$220,384  Discounted cash flowDiscount rates5.27% - 14.74% (9.18%)
Senior secured19,407  Market approachRevenue multiples0.52x - 0.70x (0.58x)
Senior secured11,718 Market approachTransaction Price
Subordinated16,426 Discounted cash flowDiscount rates17.49% - 20.69% (19.13%)
Subordinated94 Market approachEBITDA multiples3.86x - 3.86x (3.86x)
Subordinated687 Market approachRevenue multiples0.27x - 0.27x (0.27x)
Structured Finance Notes
Subordinated notes (3)
65,452 Discounted cash flowDiscount rates8.00% - 17.50% (13.41%)
Constant Default Rate(1)
0.00% - 2.00% (1.78%)
Constant Default Rate(2)
2.00% - 2.00% (2.00%)
Recovery rate60.00% - 60.00% (60.00%)
Mezzanine debt2,793 Discounted cash flowDiscount Margin7.25% - 8.70% (7.81%)
Constant Default Rate(1)
0.00% - 3.00% (1.65%)
Constant Default Rate(2)
2.00% - 3.00% (2.36%)
Recovery rate60.00% - 60.00% (60.00%)
Equity investments:
Preferred equity11,382 Market approachEBITDA multiples6.50x - 8.00x (7.30x)
Preferred equity907 Market approachRevenue multiples0.15x - 3.00x (0.95x)
Common equity, warrants and other68,545 Market approachEBITDA multiples3.75x - 12.27x (8.11x)
Common equity, warrants and other92 Market approachRevenue multiples0.15x - 3.25x (3.08x)
$417,887 
(1) Constant default rates for the next ninesix months.
(2) Constant default rates for the nine months following the next ninesix months.
(3) The cash flows utilized in the discounted cash flow calculations assume liquidation of (a) certain distressed investments and (b) all investments currently in default held by the issuing CLO at their current market prices, and redeployment of proceeds at the issuing CLO's assumed reinvestment rate.
41
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

 Fair Value at December 31, 2019 Valuation technique Unobservable inputs Range
(Weighted average)
Debt investments:       
 Senior secured$295,835
 Discounted cash flow Discount rates 5.64% - 17.42% (11.17%)
 Senior secured15,031
 Market approach EBITDA multiples 8.09x - 13.22x (13.08x)
 Senior secured23,193
 Market approach Transaction Price  
 Subordinated35,371
 Discounted cash flow Discount rates 6.38% - 18.86% (14.32%)
 Subordinated7,464
 Market approach EBITDA multiples 4.75x - 6.35x (6.35x)
 Subordinated255
 Market approach Revenue multiple  
        
Structured Finance Notes:       
 Subordinated Notes(2)
21,610
 Discounted cash flow Discount rates 14.50% - 19.50% (17.16%)
     
Constant default rate(1)
 1.26% - 1.40% (1.33%)
     Recovery rate 69.30% - 70.00% (69.70%)
        
Equity investments:       
 Preferred equity13,185
 Market approach EBITDA multiples 6.25x - 13.22x (4.96x)
 Preferred equity2,424
 Market approach Revenue multiples 0.23x - 9.58x (9.58x)
 Preferred equity2,120
 Market approach Recurring monthly revenue 40.00x - 40.00x (40.00x)
 Common equity, warrants and other22,788
 Market approach EBITDA multiples 4.50x - 13.22x (13.03x)
 Common equity, warrants and other1,489
 Market approach Revenue multiples 0.23x - 7.00x (7.00x)
 Common equity, warrants and other1,500
 Transaction Price    
 $442,265
      
Fair Value at December 31, 2020Valuation techniqueUnobservable inputsRange
(Weighted average)
Debt investments:
Senior secured$256,042 Discounted cash flowDiscount rates6.30% - 24.43% (10.18%)
Senior secured12,668 Market approachEBITDA multiples8.50x - 8.50x (8.50x)
Senior secured9,257 Market approachRevenue multiples0.86x - 0.86x (0.86x)
Senior secured6,111 Market approachTransaction Price
Subordinated7,822 Discounted cash flowDiscount rates17.83% - 17.83% (17.83%)
Subordinated6,794 Market approachEBITDA multiples7.05x - 9.10x (7.78x)
Subordinated451 Market approachRevenue multiples0.10x - 0.20x (0.18x)
Structured Finance Notes:
 Subordinated notes(1)
54,724 Discounted cash flowDiscount rates15.00% - 19.50% (17.79%)
Constant default rate0.00% - 2.00% (1.63%)
Constant default rate after 6 months2.00% - 2.00% (2.00%)
Recovery rate60.00% - 60.00% (60.00%)
Mezzanine debt1,701 Discounted cash flowDiscount Margin7.25% - 9.45% (8.58%)
Constant default rate0.00% - 2.00% (1.01%)
Constant default rate after 9 months2.00% - 3.00% (2.49%)
Recovery rate60.00% - 60.00% (60.00%)
Equity investments:
Preferred equity10,395 Market approachEBITDA multiples4.73x - 8.50x (7.37x)
Preferred equity1,148 Market approachRevenue multiples0.20x - 1.56x (0.96x)
Common equity and warrants52,969 Market approachEBITDA multiples3.75x - 11.50x (8.10x)
Common equity and warrants15 Market approachRevenue multiples0.20x - 1.56x (0.47x)
$420,097 
(1) Constant default rates for the next twelve months.
(2) The cash flows utilized in the discounted cash flow calculations assume liquidation at current market prices and redeployment of proceeds on all assets currently in default and all assets below specified fair value thresholds.
Averages in the preceding two tables were weighted by the fair value of the related instruments.
Changes in market credit spreads or events impacting the credit quality of the underlying portfolio company (both of which could impact the discount rate), as well as changes in EBITDA and/or EBITDA multiples, among other things, could have a significant impact on fair values, with the fair value of a particular debt investment susceptible to change in inverse relation to the changes in the discount rate. Changes in EBITDA and/or EBITDA multiples, as well as changes in the discount rate, could have a significant impact on fair values, with the fair value of an equity investment susceptible to change in tandem with the changes in EBITDA and/or EBITDA multiples, and in inverse relation to changes in the discount rate. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.
42
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

The following tables present changes in investments measured at fair value using Level 3 inputs for the ninesix months ended SeptemberJune 30, 20202021 and SeptemberJune 30, 2019.2020.
Six Months Ended June 30, 2021
Senior
Secured Debt
Investments		Subordinated
Debt
Investments		Preferred EquityCommon Equity, Warrants and OtherStructured Finance NotesTotal
Level 3 assets, January 1, 2021$284,078 $15,067 $11,543 $52,984 $56,425 $420,097 
Net realized loss on investments(321)(7,548)(3,093)— — (10,962)
Net unrealized appreciation on investments3,672 9,605 3,734 15,653 148 32,812 
Amortization of Net Loan Fees1,061 43 — — 46 1,150 
Accretion of interest income on structured-finance notes— — — — 4,670 4,670 
Capitalized PIK interest and dividends679 222 105 — — 1,006 
Amendment fees(97)— — — — (97)
Purchase and origination of portfolio investments53,718 — — — 21,912 75,630 
Proceeds from principal payments on portfolio investments(81,523)(91)— — (8,600)(90,214)
Sale and redemption of portfolio investments(8,863)(91)— — — (8,954)
Proceeds from distributions received from portfolio investments— — — — (6,356)(6,356)
Transfers out of Level 3(895)— — — — (895)
Level 3 assets, June 30, 2021$251,509 $17,207 $12,289 $68,637 $68,245 $417,887 
43
 Nine Months Ended September 30, 2020
 Senior
Secured Debt
Investments		 Subordinated
Debt
Investments		 Preferred Equity Common Equity, Warrants and Other Structured Finance Notes Total
Level 3 assets, January 1, 2020$334,059
 $43,090
 $17,729
 $25,777
 $21,610
 $442,265
            
Net realized gain (loss) on investments(9,396) —
 51
 (497) —
 (9,842)
Net unrealized appreciation (depreciation) on investments(5,039) (11,895) (2,808) 17,320
 (2,211) (4,633)
Amortization of Net Loan Fees854
 16
 —
 —
 —
 870
Accretion of interest income on structured-finance notes—
 —
 —
 —
 4,141
 4,141
Capitalized PIK interest and dividends859
 375
 388
 —
 —
 1,622
Amendment fees(9) (22) —
 —
 —
 (31)
Purchase and origination of portfolio investments57,261
 —
 160
 95
 13,605
 71,121
Proceeds from principal payments on portfolio investments(54,157) —
 —
 —
 —
 (54,157)
Sale and redemption of portfolio investments(9,717) —
 (3,645) —
 —
 (13,362)
Proceeds from distributions received from portfolio investments—
 —
 —
 —
 (4,614) (4,614)
Conversion from debt investment to equity investment (Note 4)(703) —
 —
 703
 —
 —
Transfers out of Level 3(599) —
 —
 —
 —
 (599)
            
Level 3 assets, September 30, 2020$313,413

$31,564

$11,875

$43,398

$32,531

$432,781
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Six Months Ended June 30, 2020
Nine Months Ended September 30, 2019Senior
Secured Debt
Investments		Subordinated
Debt
Investments		Preferred EquityCommon Equity, Warrants and OtherStructured Finance NotesTotal
Level 3 assets, January 1, 2020Level 3 assets, January 1, 2020$334,059 $43,090 $17,729 $25,777 $21,610 $442,265 
Senior
Secured Debt
Investments		 Subordinated
Debt
Investments		 Preferred Equity Common Equity, Warrants and Other Structured Finance Notes Total
Level 3 assets, January 1, 2019$319,017
 $44,540
 $14,613
 $18,627
 $—
 $396,797
           
Net realized gain (loss) on investments186
 —
 (900) —
 —
 (714)
Net realized loss on investmentsNet realized loss on investments(9,217)— — — — (9,217)
Net unrealized appreciation (depreciation) on investments(7,551) (709) 1,885
 3,025
 (1,172) (4,522)Net unrealized appreciation (depreciation) on investments(10,855)(7,590)(2,668)5,986 (3,707)(18,834)
Amortization of Net Loan Fees724
 64
 —
 —
 —
 788
Amortization of Net Loan Fees642 — — — — 642 
Accretion of interest income on structured-finance notes—
 —
 —
 —
 2,001
 2,001
Accretion of interest income on structured-finance notes— — — — 2,626 2,626 
Capitalized PIK interest and dividends338
 274
 659
 —
 —
 1,271
Capitalized PIK interest and dividends586 255 341 — — 1,182 
Amendment fees—
 (90) —
 —
 —
 (90)
Purchase and origination of portfolio investments90,782
 —
 2,309
 1,813
 23,341
 118,245
Purchase and origination of portfolio investments48,678 — — 95 12,791 61,564 
Proceeds from principal payments on portfolio investments(30,750) —
 —
 —
 —
 (30,750)Proceeds from principal payments on portfolio investments(50,158)— — — — (50,158)
Sale and redemption of portfolio investments(30,316) —
 —
 —
 —
 (30,316)Sale and redemption of portfolio investments(9,696)— (3,645)— — (13,341)
Proceeds from distributions received from portfolio investments—
 —
 —
 —
 (1,976) (1,976)Proceeds from distributions received from portfolio investments— — — — (3,290)(3,290)
Transfers out of Level 3(628) —
 —
 —
 —
 (628)
           
Level 3 assets, September 30, 2019$341,802
 $44,079
 $18,566
 $23,465
 $22,194
 $450,106
Conversion from debt investment to equity investment (Note 4)Conversion from debt investment to equity investment (Note 4)(703)— — 703 — — 
Transfers in to Level 3Transfers in to Level 32,915 — — — — 2,915 
Level 3 assets, June 30, 2020Level 3 assets, June 30, 2020$306,251 $35,755 $11,757 $32,561 $30,030 $416,354 
The net unrealized appreciation (depreciation) reported in the Company’s consolidated statements of operations for the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, attributable to the Company’s assets still held at those respective period ends was as follows:
Six Months Ended June 30,
20212020
Senior secured debt investments$2,796 $(22,112)
Subordinated debt investments2,071 (7,590)
Preferred equity737 (2,666)
Common equity, warrants and other15,653 5,986 
Structured Finance Notes160 (3,707)
Net unrealized appreciation (depreciation) on investments held$21,417 $(30,089)
44
 Nine Months Ended September 30,
 2020 2019
Senior secured debt investments$(15,145) $(7,993)
Subordinated debt investments(11,899) (709)
Preferred equity(2,801) 1,074
Common equity, warrants and other18,310
 3,025
Structured Finance Notes(2,212) (1,172)
Net unrealized depreciation on investments held$(13,747) $(5,775)

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Other Financial Assets and Liabilities
The Company provides disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying amounts of its other financial instruments such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments. The PWB Credit Facility and BNP Facility are variable rate instruments and fair value is approximately book value.
The following table sets forth carrying values and fair values of the Company’s debt as of SeptemberJune 30, 20202021 and December 31, 2019:2020:
As of September 30, 2020 As of December 31, 2019As of June 30, 2021As of December 31, 2020
DescriptionCarrying Value Fair Value Carrying Value Fair ValueDescriptionCarrying ValueFair ValueCarrying ValueFair Value
PWB Credit Facility$—
 $—
 $—
 $—
PWB Credit Facility$— $— $600 $600 
BNP Facility24,650
 24,650
 56,450
 56,450
BNP Facility24,050 24,050 31,450 31,450 
Unsecured Notes Due September 202324,035
 24,500
 —
 —
Unsecured Notes Due September 202324,269 25,500 24,106 25,100 
Unsecured Notes Due April 202548,826
 46,260
 48,634
 50,600
Unsecured Notes Due April 2025— — 48,891 48,800 
Unsecured Notes Due October 202547,277
 45,749
 47,093
 49,282
Unsecured Notes Due October 2025— — 47,339 47,069 
Unsecured Notes Due February 2026Unsecured Notes Due February 2026121,685 123,149 — — 
Unsecured Notes Due October 202652,544
 48,262
 52,325
 54,282
Unsecured Notes Due October 202652,764 54,977 52,617 51,066 
SBA-guaranteed debentures127,355
 142,003
 147,976
 155,562
SBA-guaranteed debentures94,640 99,857 104,182 116,172 
Total debt, at fair value$324,687
 $331,424
 $352,478
 $366,176
Total debt, at fair value$317,408 $327,533 $309,185 $320,257 
The following tables present the fair value measurements of the Company's debt and indicate the fair value hierarchy of the significant unobservable inputs utilized by the Company to determine such fair values as of SeptemberJune 30, 20202021 and December 31, 2019:2020:
June 30, 2021
DescriptionLevel 1Level 2
Level 3 (1)
Total
PWB Credit Facility$— $— $— $— 
BNP Facility— — 24,050 24,050 
Unsecured Notes Due September 202325,500 — — 25,500 
Unsecured Notes Due February 2026— — 123,149 123,149 
Unsecured Notes Due October 202654,977 — — 54,977 
SBA-guaranteed debentures— — 99,857 99,857 
Total debt, at fair value$80,477 $— $247,056 $327,533 
 September 30, 2020
DescriptionLevel 1 Level 2 
Level 3 (1)
 Total
PWB Credit Facility$—
 $—
 $—
 $—
BNP Facility—
 —
 24,650
 24,650
Unsecured Notes Due September 202324,500
 —
 —
 24,500
Unsecured Notes Due April 202546,260
 —
 —
 46,260
Unsecured Notes Due October 202545,749
 —
 —
 45,749
Unsecured Notes Due October 202648,262
 —
 —
 48,262
SBA-guaranteed debentures—
 —
 142,003
 142,003
Total debt, at fair value$164,771
 $—
 $166,653
 $331,424
December 31, 2019December 31, 2020
DescriptionLevel 1 Level 2 
Level 3 (1)
 TotalDescriptionLevel 1Level 2
Level 3 (1)
Total
PWB Credit Facility$—
 $—
 $—
 $—
PWB Credit Facility$— $— $600 $600 
BNP Facility—
 —
 56,450
 56,450
BNP Facility— — 31,450 31,450 
Unsecured Notes Due September 2023Unsecured Notes Due September 202325,100 — — 25,100 
Unsecured Notes Due April 202550,600
 —
 —
 50,600
Unsecured Notes Due April 202548,800 — — 48,800 
Unsecured Notes Due October 202549,282
 —
 —
 49,282
Unsecured Notes Due October 202547,069 — — 47,069 
Unsecured Notes Due October 202654,282
 —
 —
 54,282
Unsecured Notes Due October 202651,066 — — 51,066 
SBA-guaranteed debentures—
 —
 155,562
 155,562
SBA-guaranteed debentures— — 116,172 116,172 
Total debt, at fair value$154,164
 $—
 $212,012
 $366,176
Total debt, at fair value$172,035 $— $148,222 $320,257 
(1) For Level 3 measurements, fair value is estimated by discounting remaining payments at current market rates for similar instruments at the measurement date and considering such factors as the legal maturity date.
45
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

The following table sets forth the carrying values and fair values of the Company’s debt as of September 30, 2020 and December 31, 2019:
 As of September 30, 2020 As of December 31, 2019
DescriptionCarrying Value Fair Value Carrying Value Fair Value
PWB Credit Facility$—
 $—
 $—
 $—
BNP Facility24,650
 24,650
 56,450
 56,450
Unsecured Notes Due September 202324,035
 24,500
 —
 —
Unsecured Notes Due April 202548,826
 46,260
 48,634
 50,600
Unsecured Notes Due October 202547,277
 45,749
 47,093
 49,282
Unsecured Notes Due October 202652,544
 48,262
 52,325
 54,282
SBA-guaranteed debentures127,355
 142,003
 147,976
 155,562
Total debt, at fair value$324,687
 $331,424
 $352,478
 $366,176

Note 6. Commitments and Contingencies
The Company has the following unfunded commitments to portfolio companies as of SeptemberJune 30, 2020:2021:
Name of Portfolio Company Investment Type Commitment
A&A Transfer, LLC
Senior Secured Loan (Revolver)
$2,136
Carolina Lubes, Inc.
Senior Secured Loan (Revolver)
2,920
Inergex Holdings, LLC
Senior Secured Loan (Revolver)
2,344
    $7,400
Name of Portfolio CompanyInvestment TypeCommitment
A&A Transfer, LLCSenior Secured Loan (Revolver)$1,709 
Convergint TechnologiesSenior Secured Loan (Delayed Draw)101 
I&I Sales Group, LLCSenior Secured Loan (Revolver)156 
Inergex Holdings, LLCSenior Secured Loan (Revolver)2,813 
Baymark Health Services, Inc.Senior Secured Loan (Delayed Draw)2,481 
RSA SecuritySenior Secured Loan (Delayed Draw)1,898 
SourceHOV Tax, Inc.Senior Secured Loan (Revolver)1,196 
SSJA Bariatric Management LLCSenior Secured Loan (Revolver)667 
$11,021 
From time to time, the Company is involved in legal proceedings in the normal course of its business. Although the outcome of such litigation cannot be predicted with any certainty, management is of the opinion, based on the advice of legal counsel, that final disposition of any litigation should not have a material adverse effect on the financial position of the Company as of SeptemberJune 30, 2020.2021.
Additionally, the Company is subject to periodic inspection by regulators to assess compliance with applicable BDC regulations and SBIC I LP is subject to periodic inspections by the SBA.
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide for general indemnification. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company believes the risk of any material obligation under these indemnifications to be low.
Note 7. Borrowings
SBA Debentures: The SBA debentures issued by SBIC I LP and other SBA regulations generally restrict assets held by SBIC I LP. On a stand-alone basis, SBIC I LP held $239,575$219,541 and $249,576$223,795 in assets at SeptemberJune 30, 2020,2021 and December 31, 2019,2020, respectively, which accounted for approximately 50%42% and 49%46% of the Company’s total consolidated assets, respectively. The average dollar amount of borrowings outstanding during the nine months ended September 30, 2020 and 2019, were $136,130 and $149,880, respectively. These assets cannot be pledged under any debt obligation of the Company.
During the nine months ended September 30, 2020, SBIC I LP prepaid $21,110 of SBA debentures that were contractually due September 1, 2023, March 1, 2024 and September 1, 2024. The Company recognized losses on extinguishment of debt of $236 related to the charge-off of deferred borrowing costs on the prepaid debentures. As of SeptemberJune 30, 2020,2021, SBIC I LP had outstanding SBA debentures of $128,770.totaling $95,505.
BNP Facility: Under the BNP Facility maturing on June 20, 2024, OFSCC-FS has up to $150,000 of available credit, subject to borrowing base requirements, under the BNP Facility maturing on June 20, 2024, of which $24,650$24,050 was drawn as of SeptemberJune 30, 2020.2021. The effective interest rate on the BNP Facility was 6.66%6.06% at SeptemberJune 30, 2020. The average dollar amount of borrowings outstanding during the nine months ended September 30, 2020 and 2019, were $43,675 and $9,879, respectively. Borrowings under the BNP Facility are secured by
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

substantially all of the assets held by OFSCC-FS, which were $64,785, or 13%, of the Company's total consolidated assets at September 30, 2020.2021. The unused commitment under the BNP Facility was $125,350$125,950 as of SeptemberJune 30, 2020.2021.
PWB Credit Facility:The Under its PWB Credit Facility maturing February 28, 2023, the Company has up to $50,000$25,000 of available credit, subject to borrowing base requirements, under its PWB Credit Facility maturing February 28, 2021, of which $-0- was drawn as of SeptemberJune 30, 2020. The average dollar amount of borrowings outstanding during the nine months ended September 30, 2020 and 2019, were $20,237 and $35,158, respectively.2021. The effective interest rate on the PWB Credit Facility was 5.62%5.02% at SeptemberJune 30, 2020.2021. As of SeptemberJune 30, 20202021 the unused commitment under the PWB Credit Facility was $50,000.$25,000.
In June and July 2020,On February 17, 2021, the Company amended the BLA was amended to among other things: (i) increase the maximum amount available from $20,000 to $25,000; (ii) decrease the interest rate floor from 5.25% per annum to 5.00% per annum; (iii) modify certain financial performance covenantscovenants; and reduce(iv) extend the total commitmentmaturity date from $100,000February 28, 2021 to $50,000. The Company recognized a loss on extinguishment of debt of $100 related to the charge-off of deferred borrowing costs on the commitment reduction.
On October 7, 2020, the BLA was amended to reduce the total commitment under the PWB Credit Facility from $50,000 to $20,000. In October 2020, the Company expects to recognize a loss on extinguishment of debt of $42 related to the charge-off of deferred borrowing costs on this commitment reduction.February 28, 2023.
Unsecured Notes: As of SeptemberJune 30, 2020,2021, the Company had outstanding Unsecured Notes with an aggregate outstanding principal of $177,850. The average dollar amount of borrowings under the Unsecured Notes outstanding during the nine months ended September 30, 2020 and 2019, were $154,036 and $98,525, respectively.$204,325. The weighted average effective interest rate on the Unsecured Notes was 6.89%5.90% at SeptemberJune 30, 2020.2021.
In September 2020, the Company closed the public offering of the Unsecured Notes Due September 2023. The total net proceeds to the Company from the Unsecured Notes Due September 2023, after deducting underwriting discounts of $750 and estimated offering expenses of $226, were approximately $24,024. The Unsecured Notes Due September 2023 will mature on September 30, 2023 and bear an effective interest rate, including amortization of deferred debt issuance costs, of 7.54%. The Unsecured Notes Due September 2023 may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after September 30, 2021 at the redemption price of 100% of the aggregate principal amount thereof plus accrued and unpaid interest. The indenture governing the Unsecured Notes Due September 2023 contains covenants substantially identical to the other Unsecured Notes.
The Unsecured Notes are direct unsecured obligations and rank equal in right of payment with all current and future unsecured indebtedness of the Company. Because the Unsecured Notes are not secured by any of the Company's assets, they are effectively subordinated to all existing and future secured unsubordinated indebtedness (or any indebtedness that is initially
46
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
unsecured as to which the Company subsequently grants a security interest), to the extent of the value of the assets securing such indebtedness, including, without limitation, borrowings under the PWB Credit Facility.
Interest expense for the three and ninesix months ended SeptemberJune 30, 20202021 and 20192020 on the Company's outstanding borrowings is presented below:
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
2020 2019 2020 20192021202020212020
SBA Debentures$1,068

$1,295

$3,406

$3,843
SBA Debentures$761 $1,114 $1,595 $2,338 
PWB Credit Facility285

802

1,276

1,896
PWB Credit Facility13 702 53 991 
Unsecured Notes2,662

1,726

7,867

5,178
Unsecured Notes3,024 2,590 6,526 5,205 
BNP Facility433

641

1,752

647
BNP Facility443 525 892 1,319 
Total interest expense$4,448

$4,464

$14,301

$11,564
Total interest expense$4,241 $4,931 $9,066 $9,853 
       
Average dollar borrowings$332,733
 $325,127
 $354,078
 $293,442
Average dollar borrowings$336,929 $359,640 $344,005 $364,867 
Weighted average interest rate5.36% 4.93% 5.36% 4.92%Weighted average interest rate5.05 %5.26 %5.31 %5.23 %
Interest expense includes the stated interest on the outstanding balance, commitment fees on undrawn amounts, and the amortization of deferred financing costs.
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

The following table shows the scheduled maturities of the principal balances of the Company's outstanding borrowings as of June 30, 2021:
 Payments due by period
TotalLess than
year		1-3 years (1)4-5 years (1)After 5
years (1)
PWB Credit Facility$— $— $— $— $— 
Unsecured Notes204,325 — 25,000 125,000 54,325 
SBA Debentures95,505 — 7,000 88,505 — 
BNP Facility24,050 — — 24,050 — 
Total$323,880 $— $32,000 $237,555 $54,325 
(1)The SBA debentures are scheduled to mature between September 30, 2020:2022 and September 2025. The Unsecured Notes are scheduled to mature between September 2023 and October 2026.
47
 
Payments due by period
 
Total
Less than
year
1-3 years (1) 4-5 years (1) After 5
years (1)
PWB Credit Facility
$—
 $—
 $—
 $—
 $—
Unsecured Notes 177,850
 —
 25,000
 50,000
 102,850
SBA Debentures
128,770
 —
 14,000
 114,770
 —
BNP Facility 24,650
 —
 —
 24,650
 —
Total
$331,270
 $—
 $39,000
 $189,420
 $102,850
(1)The SBA debentures are scheduled to mature between September 2022 and September 2025. The Unsecured Notes are scheduled to mature between October 2023 and October 2026.
Note 8. Federal Income Tax
The Company has elected to be taxed as a RIC under Subchapter M of the Code. The determination of the tax attributes of the Company's distributions is made annually as of the end of its fiscal year based on its ICTI and distributions for the full year.
The Company records reclassifications to its capital accounts for permanent and temporary differences between the GAAP and tax treatment of components of income and the bases of assets and liabilities.
The tax-basis cost of investments and associated tax-basis gross unrealized appreciation (depreciation) inherent in the fair value of investments as of September 30, 2020 and December 31, 2019, were as follows:
 September 30, 2020 December 31, 2019
Tax-basis amortized cost of investments$478,907
 $531,781
Tax-basis gross unrealized appreciation on investments41,994
 24,326
Tax-basis gross unrealized depreciation on investments(64,573) (39,176)
Tax-basis net unrealized depreciation on investments(22,579) (14,850)
Fair value of investments$456,328
 $516,931
For further information, see the Company's Annual Report on Form 10-K for the year ended December 31, 2019.
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Note 9.8. Financial Highlights
The following is a schedule of financial highlights for the three and ninesix months ended SeptemberJune 30, 20202021 and 2019:2020:
Three Months Ended June 30,Six Months Ended
June 30,
2021202020212020
Per share operating performance:
Net asset value per share at beginning of period$11.96 $9.71 $11.85 $12.46 
Net investment income (4)
0.24 0.19 0.43 0.49 
Net realized loss on non-control/non-affiliate investments (4)
(0.81)(0.08)(0.80)(0.75)
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes (4)
1.34 0.52 1.44 (1.17)
Net unrealized appreciation (depreciation) on affiliate investments (4)
0.85 (0.07)1.00 (0.28)
Net unrealized appreciation (depreciation) on control investment (4)
0.05 0.01 0.08 (0.11)
Loss on extinguishment of debt (4)
— — (0.17)(0.01)
  Total from operations1.67 0.57 1.98 (1.83)
Distributions(0.22)(0.17)(0.42)(0.51)
Issuance of common stock (10)
0.01 (0.01)0.01 (0.02)
Net asset value per share at end of period$13.42 $10.10 $13.42 $10.10 
Per share market value, end of period$9.96 $4.52 $9.96 $4.52 
Total return based on market value (1)(9)
15.9 %15.2 %45.6 %(54.5)%
Total return based on net asset value (2)(9)
14.7 %7.9 %18.4 %(8.9)%
Shares outstanding at end of period13,415,235 13,399,694 13,415,235 13,399,694 
Weighted average shares outstanding13,411,998 13,392,608 13,410,524 13,384,808 
Ratio/Supplemental Data (in thousands except ratios)
Average net asset value (3)
$170,232 $132,690 $166,473 $144,002 
Net asset value at end of period$179,993 $135,397 $179,993 $135,397 
Net investment income$3,235 $2,607 $5,785 $6,579 
Ratio of total expenses, net to average net assets (5)(7)
19.2 %25.2 %19.4 %24.0 %
Ratio of total expenses and loss on extinguishment of debt to average net assets(5)(11)
19.2 %25.2 %20.7 %24.1 %
Ratio of net investment income to average net assets (5)(8)
7.6 %7.9 %7.0 %9.1 %
Ratio of loss on extinguishment of debt to average net assets(9)
— %— %1.4 %0.1 %
Portfolio turnover (6)
12.7 %1.6 %25.3 %15.0 %
(1)Calculated as ending market value less beginning market value, adjusted for distributions reinvested at prices based on the Company’s dividend reinvestment plan for the respective distributions.
(2)Calculated as ending net asset value less beginning net asset value, adjusted for distributions reinvested at the Company’s dividend reinvestment plan for the respective distributions.
(3)Based on the average of the net asset value at the beginning and end of the indicated period and if applicable the preceding calendar quarters.
(4)Calculated on the average share method.
(5)Annualized.
(6)Portfolio turnover rate is calculated using the lesser of period-to-date sales, Structured Finance Note distributions and principal payments or period-to-date purchases over the average of the invested assets at fair value.
(7)Ratio of total expenses before incentive fee waiver to average net assets was 24.6% for the six months ended June 30, 2020.
(8)Ratio of net investment income before incentive fee waiver to average net assets was 8.5% for the six months ended June 30, 2020.
48
 Three Months Ended September 30, Nine Months Ended
September 30,
 2020
2019 2020
2019
Per share operating performance:       
Net asset value per share at beginning of period$10.10
 $12.95
 $12.46
 $13.10
Net investment income (4)
0.20
 0.36
 0.69
 1.09
Net realized loss on non-control/non-affiliate investments (4)
—

—

(0.74)
(0.06)
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes (4)
0.35

(0.49)
(0.82)
(0.72)
Net unrealized appreciation on affiliate investments (4)
0.75

0.36

0.47

0.40
Net unrealized appreciation (depreciation) on control investment (4)
0.04

(0.10)
(0.07)
(0.05)
Loss on extinguishment of debt (4)
(0.01) —
 (0.03) —
Loss on impairment of goodwill (4)
(0.08) —
 (0.08) —
Total from operations1.25
 0.13
 (0.58) 0.66
Distributions(0.17) (0.34) (0.68) (1.02)
Issuance of common stock (10)
—
 —
 (0.02) —
Net asset value per share at end of period$11.18

$12.74

$11.18

$12.74
        
Per share market value, end of period$4.71
 $11.61
 $4.71
 $11.61
Total return based on market value (1)(9)
8.0% (0.4)% (50.9)% 19.3%
Total return based on net asset value (2)(9)
14.7% 1.3 % 4.5 % 5.9%
Shares outstanding at end of period13,406,402
 13,371,451
 13,406,402
 13,371,451
Weighted average shares outstanding13,399,767
 13,366,515
 13,389,830
 13,361,757
Ratio/Supplemental Data (in thousands except ratios)

 

 

 

Average net asset value (3)
$142,655
 $171,769
 $145,480
 $173,211
Net asset value at end of period$149,912
 $170,406
 $149,912
 $170,406
Net investment income$2,712
 $4,853
 $9,291
 $14,541
Ratio of total expenses, net to average net assets (5)(7)
21.8% 21.0 % 23.0 % 18.9%
Ratio of total expenses, and losses on impairment of goodwill and extinguishment of debt to average net assets(5)
22.7% — % 23.9 % —%
Ratio of net investment income to average net assets (5)(8)
7.6% 11.3 % 8.5 % 11.2%
Ratio of goodwill impairment loss to average net assets(9)
0.8% — % 0.7 % —%
Ratio of loss on extinguishment of debt to average net assets(9)
0.1% — % 0.2 % —%
Portfolio turnover (6)
1.6% 4.5 % 17.3 % 13.9%
(1)Calculated as ending market value less beginning market value, adjusted for distributions reinvested at prices based on the Company’s dividend reinvestment plan for the respective distributions.
(2)Calculated as ending net asset value less beginning net asset value, adjusted for distributions reinvested at the Company’s dividend reinvestment plan for the respective distributions.
(3)Based on the average of the net asset value at the beginning and end of the indicated period and if applicable the preceding calendar quarters.
(4)Calculated on the average share method.
(5)Annualized.
(6)Portfolio turnover rate is calculated using the lesser of period-to-date sales, Structured Finance Note distributions and principal payments or period-to-date purchases over the average of the invested assets at fair value.
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

(7)Ratio of total expenses before incentive fee waiver to average net assets was 23.4% for the nine months ended September 30, 2020.
(8)Ratio of net investment income before incentive fee waiver to average net assets was 8.1% for the nine months ended September 30, 2020.
(9)Not annualized.
(10)Common stock issued through DRIP.

(9)Not annualized.
(10)Common stock issued through DRIP.
(11)Ratio of total expenses and loss on extinguishment of debt before incentive fee waiver to average net assets was 24.7% for the six months ended June 30, 2020.

Note 10.9. Capital Transactions
Distributions: The Company intends to distribute to stockholders, on a quarterly basis, substantially all of its net investment income. In addition, although the Company intends to distribute at least annually net realized capital gains, net of taxes if any, out of assets legally available for such distribution, the Company may also retain such capital gains for investment through a deemed distribution.
The Company may be limited in its ability to make distributions due to the BDC asset coverage requirements of the 1940 Act. The Company’s ability to make distributions may be affected by SBIC I LP's distributions to the Company, which are governed by SBA regulations and currently require the prior approval of the SBA. In addition, distributions from OFSCC-FS to the Company are restricted by the terms and conditions of the BNP Facility. Net assets of SBIC I LP were $111,773,$123,913, and consolidated cash at SeptemberJune 30, 20202021 includes $5,102$15,747 held by SBIC I LP, of which $4,889$12,078 was available for distribution to the Company with the prior consent of the SBA. Net Assets of OFSCC-FS were $38,516,$89,133, and consolidated cash at SeptemberJune 30, 20202021 includes $945$5,875 held by OFSCC-FS, of which $-0- was available for distribution to the Company.
The following table summarizes distributions declared and paid for the ninesix months ended SeptemberJune 30, 20202021 and 2019:2020:
Date Declared Record Date Payment Date 
Amount
Per Share
 
Cash
Distribution
 
DRIP Shares
Issued
 
DRIP Shares
Value
Nine Months Ended September 30, 2019          
March 5, 2019 March 22, 2019 March 29, 2019 $0.34
 $4,497
 3,797
 $45
April 30, 2019 June 21, 2019 June 28, 2019 0.34
 4,479
 5,327
 64
August 2, 2019 September 23, 2019 September 30, 2019 0.34
 4,488
 4,990
 58
      $1.02
 $13,464
 $14,114

$167
Nine Months Ended September 30, 2020          
March 11, 2020 March 24, 2020 March 31, 2020 $0.34
 $4,484
 15,693
 $64
May 4, 2020
June 23, 2020
June 30, 2020
0.17

2,244

7,165

32
July 28, 2020
September 23, 2020
September 30, 2020
0.17

2,246

6,708

32
      $0.68
 $8,974
 $29,566
 $128
Date DeclaredRecord DatePayment DateAmount
Per Share		Cash
Distribution		DRIP Shares
Issued		DRIP Shares
Value
Six Months Ended June 30, 2020
March 11, 2020March 24, 2020March 31, 2020$0.34 $4,484 15,693 $64 
May 4, 2020June 23, 2020June 30, 20200.17 2,244 7,165 32 
$0.51 $6,728 $22,858 $96 
Six Months Ended June 30, 2021
March 2, 2021March 24, 2021March 31, 2021$0.20 $2,655 3,103 $27 
May 11, 2021June 23, 2021June 30, 20210.22 2,918 3,273 33 
$0.42 $5,573 $6,376 $60 
Distributions in excess of the Company’s current and accumulated ICTI would be treated first as a return of capital to the extent of the stockholder’s adjusted tax basis, and any remaining distributions would be treated as a capital gain. The determination of the tax attributes of the Company’s distributions is made annually as of the end of its fiscal year based upon its ICTI for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of the Company’s distributions for a full year. Each year, a statement on Form 1099-DIV identifying the tax character of distributions is mailed to the Company’s stockholders.
Stock repurchase program:
The Company maintains a Stock Repurchase Program under which the Company may acquire up to $10.0 million of its outstanding common stock. No shares of common stock were repurchased under the Stock Repurchase Program during the nine months ended September 30, 2020 and 2019, respectively.
On May 4, 2020, the Board extended the Stock Repurchase Program for an additional two-year period ending May 22, 2022, or until the approved dollar amount has been used to repurchase shares.
49
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

The following table summarizes shares of common stock repurchased under the Stock Repurchase Program during the six months ended June 30, 2021 and 2020, respectively.
Note 11. Consolidated Schedule of Investments In and Advances To Affiliates
Period
Total Number
of Shares Purchased
Cost of Shares PurchasedAverage Price Paid Per Share
Six Months Ended June 30, 2020
January 1, 2020 through March 31, 2020— $— $— 
April 1, 2020 through June 30, 2020— $— $— 
Six Months Ended June 30, 2021
January 1, 2021 through March 31, 2021700 $5 $6.70 
April 1, 2021 through June 30, 2021— $— $— 
50
    Period Ended September 30, 2020        
Name of Portfolio Company Investment Type (1) Net Realized Gain (Loss) Net change in unrealized appreciation/(depreciation) Interest & PIK Interest Dividends Fees Total Income (2) December 31, 2019, Fair Value Gross
Additions (3)		 Gross
Reductions (4)		 September 30, 2020, Fair Value (5)
Control Investment                      
MTE Holding Corp. Subordinated Loan $—
 $(129) $884
 $—
 $49
 $933
 $7,464
 $291
 $(129) $7,626
  Common Equity —
 (795) —
 —
 —
 —
 1,253
 —
 (795) 458
    —
 (924) 884
 —
 49
 933
 8,717
 291
 (924) 8,084
                       
Total Control Investment   —
 (924) 884
 —
 49
 933
 8,717
 291
 (924) 8,084
Affiliate Investments                      
3rd Rock Gaming Holdings, LLC Senior Secured Loan —
 (8,252) 572
 —
 —
 572
 20,099
 70
 (8,505) 11,664
  Common Equity (6) —
 (1,044) —
 —
 —
 —
 1,044
 —
 (1,044) —
    —
 (9,296) 572
 —
 —
 572
 21,143
 70
 (9,549) 11,664
                       
Chemical Resources Holdings, Inc. Senior Secured Loan —
 83
 1,024
 —
 —
 1,024
 13,746
 111
 

 13,857
  Common Equity (6) —
 (187) —
 —
 —
 —
 2,662
 —
 (187) 2,475
    —
 (104) 1,024
 —
 —
 1,024
 16,408
 111
 (187) 16,332
                       
Contract Datascan Holdings, Inc. Subordinated Loan —
 (311) 783
 —
 —
 783
 8,000
 17
 (311) 7,706
  Preferred Equity (7) —
 (3,397) 250
 —
 —
 250
 5,671
 250
 (3,398) 2,523
  Common Equity (6) —
 (635) —
 —
 —
 —
 671
 —
 (635) 36
    —
 (4,343) 1,033
 —
 —
 1,033
 14,342
 267
 (4,344) 10,265
                       
DRS Imaging Services, LLC Senior Secured Loan —
 157
 884
 —
 —
 884
 10,569
 172
 (115) 10,626
  Common Equity (6) —
 363
 —
 —
 —
 —
 1,331
 363
 

 1,694
    —
 520
 884
 —
 —
 884
 11,900
 535
 (115) 12,320
                       
Master Cutlery, LLC Subordinated Loan (6) —
 (255) —
 —
 —
 —
 255
 —
 (255) —
  Preferred Equity (6) —
 —
 —
 —
 —
 —
 —
 —
 —
 —
  Common Equity (6) —
 —
 —
 —
 —
 —
 —
 —
 —
 —
    —
 (255) —
 —
 —
 —
 255
 —
 (255) —
                       
NeoSystems Corp. Preferred Equity (7) —
 (133) 133
 —
 —
 133
 2,250
 133
 (133) 2,250
                       
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Note 10. Consolidated Schedule of Investments In and Advances To Affiliates
Period Ended June 30, 2021
Name of Portfolio CompanyInvestment Type (1)Net Realized Gain (Loss)Net change in unrealized appreciation/(depreciation)Interest & PIK InterestDividendsFeesTotal Income (2)December 31, 2020, Fair ValueGross
Additions (3)		Gross
Reductions (4)		June 30, 2021, Fair Value (5)
Control Investment
MTE Holding Corp.Subordinated Loan$— $20 $689 $— $— $689 $7,822 $218 $(52)$7,988 
Common Equity— 1,084 — 136 — 136 2,990 1,084 — 4,074 
— 1,104 689 136 — 825 10,812 1,302 (52)12,062 
Total Control Investment— 1,104 689 136 — 825 10,812 1,302 (52)12,062 
Affiliate Investments
3rd Rock Gaming Holdings, LLCSenior Secured Loan— (46)14 — — 14 9,258 13 (2,296)6,975 
Common Equity (6)— — — — — — — — — — 
— (46)14 — — 14 9,258 13 (2,296)6,975 
Chemical Resources Holdings, Inc.Senior Secured Loan— 194 644 — — 644 13,744 212 13,956 
Common Equity (6)— (20)— — — — 3,420 — (20)3,400 
— 174 644 — — 644 17,164 212 (20)17,356 
Contract Datascan Holdings, Inc.Preferred Equity (7)— 97 — — — — 2,690 97 — 2,787 
Common Equity (6)— (5)— — — — 46 — (5)41 
— 92 — — — — 2,736 97 (5)2,828 
DRS Imaging Services, LLCCommon Equity (6)— (490)— — — — 1,749 — (490)1,259 
Master Cutlery, LLCSubordinated Loan (6)— 380 — — — — 346 380 (39)687 
Preferred Equity (6)— — — — — — — — — — 
Common Equity (6)— — — — — — — — — — 
— 380 — — — — 346 380 (39)687 
NeoSystems Corp.Preferred Equity (7)— 899 — 106 — 106 2,250 1,005 — 3,255 
Pfanstiehl Holdings, IncCommon Equity— 13,015 — — — — 36,221 13,015 — 49,236 
51
    Period Ended September 30, 2020        
Name of Portfolio Company Investment Type (1) Net Realized Gain (Loss) Net change in unrealized appreciation/(depreciation) Interest & PIK Interest Dividends Fees Total Income (2) December 31, 2019, Fair Value Gross
Additions (3)		 Gross
Reductions (4)		 September 30, 2020, Fair Value (5)
Pfanstiehl Holdings, Inc Subordinated Loan $—
 $19
 $168
 $—
 $—
 $168
 $3,788
 $21
 $(21) $3,788
  Common Equity —
 19,953
 100
 100
 —
 200
 11,979
 19,953
 —
 31,932
    —
 19,972
 268
 100
 —
 368
 15,767
 19,974
 (21) 35,720
                       
Professional Pipe Holdings, LLC Senior Secured Loan —
 (424) 643
 

 

 643
 7,170
 103
 (424) 6,849
  Common Equity (6) —
 (1,402) —
 —
 —
 —
 2,413
 —
 (1,402) 1,011
    —
 (1,826) 643
 —
 —
 643
 9,583
 103
 (1,826) 7,860
                       
TalentSmart Holdings, LLC Senior Secured Loan —

227

668

—

—

668

9,833

256

(188)
9,901
  Senior Secured Loan (Revolver) —

11

33

—

—

33

242

262




504
  Common Equity (6) —

(695)
—

—

—

—

1,500

95

(695)
900
    —

(457)
701

—

—

701

11,575

613

(883)
11,305
                       
TRS Services, Inc. Senior Term Loan —
 (8) 81
 —
 7
 88
 14,623
 9
 (14,632) —
  Preferred Equity (Class AA units) (7) —
 (2) 6
 —
 —
 6
 547
 5
 (552) —
  Preferred Equity (Class A units) (6) —
 811
 —
 —
 —
 —
 3,095
 811
 (3,095) 811
  Common Equity (6) —
 —
 —
 —
 —
 —
 —
 

 

 —
    —
 801
 87
 —
 7
 94
 18,265
 825
 (18,279) 811
                       
TTG Healthcare, LLC Senior Secured Loan —
 397
 981
 —
 9
 990
 11,767
 427
 —
 12,194
  Preferred Equity (6) —
 1,040
 —
 —
 —
 —
 2,424
 1,040
 —
 3,464
    —
 1,437
 981
 —
 9
 990
 14,191
 1,467
 —
 15,658
                       
Total Affiliate Investments   —
 6,316
 6,326
 100
 16
 6,442
 135,679
 24,098
 (35,592) 124,185
Total Control and Affiliate Investments   $—
 $5,392
 $7,210
 $100
 $65
 $7,375
 $144,396
 $24,389
 $(36,516) $132,269
(1)Principal balance, interest rate and maturity of debt investments, and ownership detail for equity investments are presented in the consolidated schedule of investments. The Company's investments are generally classified as "restricted securities" as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144.
(2)Represents the total amount of interest, fees or dividends included in income for the nine months ended September 30, 2020, during which an investment was included in the Control Investment or Affiliate Investment categories.
(3)Gross additions include increases in cost basis resulting from a new portfolio investment; PIK interest, fees and dividends; accretion of OID; and net positive change in unrealized appreciation or depreciation.
OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Period Ended June 30, 2021
Name of Portfolio CompanyInvestment Type (1)Net Realized Gain (Loss)Net change in unrealized appreciation/(depreciation)Interest & PIK InterestDividendsFeesTotal Income (2)December 31, 2020, Fair ValueGross
Additions (3)		Gross
Reductions (4)		June 30, 2021, Fair Value (5)
Professional Pipe Holdings, LLCSenior Secured Loan$— $(67)$358 $— $— $358 $6,086 $65 $(633)$5,518 
Common Equity (6)— (359)— — — — 1,208 — (359)849 
— (426)358 — — 358 7,294 65 (992)6,367 
TalentSmart Holdings, LLCCommon Equity (6)— (295)— — — — 1,306 — (295)1,011 
TRS Services, Inc.Preferred Equity (6)— (48)— — — — 915 — (48)867 
Common Equity (6)— — — — — — — — — — 
— (48)— — — — 915 — (48)867 
TTG Healthcare, LLCSenior Secured Loan— 173 844 — 37 881 19,530 180 (98)19,612 
Preferred Equity (6)— (37)— — — — 4,077 — (37)4,040 
— 136 844 — 37 881 23,607 180 (135)23,652 
Total Affiliate Investments— 13,391 1,860 106 37 2,003 102,846 14,967 (4,320)113,493 
Total Control and Affiliate Investments$— $14,495 $2,549 $242 $37 $2,828 $113,658 $16,269 $(4,372)$125,555 
(4)Gross reductions include decreases in the cost basis of investments resulting from principal repayments and sales, if any, and net negative change in unrealized appreciation or depreciation.
(5)Fair value was determined using significant unobservable inputs. See Note 5 for further details.
(6)Non-income producing.
(7)Dividends credited to income include dividends contractually earned but not declared.
(1)Principal balance, interest rate and maturity of debt investments, and ownership detail for equity investments are presented in the consolidated schedule of investments. The Company's investments are generally classified as "restricted securities" as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144.
(2)Represents the total amount of interest, fees or dividends included in income for the six months ended June 30, 2021, during which an investment was included in the Control Investment or Affiliate Investment categories.
(3)Gross additions include increases in cost basis of investments resulting from a new portfolio investment, PIK interest, fees and dividends; accretion of OID, and net increases in unrealized appreciation or decreases in net depreciation.
(4)Gross reductions include decreases in the cost basis of investments resulting from principal repayments and sales, if any, and net decreases in net unrealized appreciation or net increases in net depreciation.
(5)Fair value was determined using significant unobservable inputs. See Note 5 for further details.
(6)Non-income producing.
(7)Dividends credited to income include dividends contractually earned but not declared.
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OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Note 12.11. Subsequent Events Not Disclosed Elsewhere
On NovemberAugust 3, 2020,2021, the Board declared a distribution of $0.18$0.24 per share for the fourththird quarter of 2020,2021, payable on December 31, 2020September 30, 2021 to stockholders of record as of December 24, 2020.
On October 7, 2020, the Company executed an amendment to its BLA with Pacific Western Bank in order to reduce the total commitment under the PWB Credit Facility from $50,000 to $20,000. In October 2020, the Company expects to recognize a loss on extinguishment of debt of $42 related to the charge-off of deferred borrowing costs on this commitment reduction.September 23, 2021.
COVID-19
The Company evaluated events subsequent to SeptemberJune 30, 20202021 through NovemberAugust 5, 2020. On March 11, 2020,2021. The Company is continuing to closely monitor the World Health Organization declared the novel coronavirus as a pandemic, and on March 13, 2020 the United States declared a national emergency with respect toimpact of the COVID-19 pandemic.pandemic on all aspects of our business, including how it impacts its portfolio companies, employees, due diligence and underwriting processes, and financial markets. The U.S. capital markets experienced extreme volatility and disruption following the outbreak of the COVID-19 pandemic, has severely impacted globalwhich appear to have subsided and returned to pre-COVID-19 levels. Nonetheless, certain economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a prolonged period of world-wide economic activity and caused significant volatility and negative pressure indownturn.
On March 27, 2020, the U.S. government enacted the CARES Act, which contains provisions intended to mitigate the adverse economic effects of the coronavirus pandemic. On December 27, 2020, the U.S. government enacted the December 2020 COVID Relief Package. Additionally, on March 11, 2021, the U.S. government enacted the American Rescue Plan, which included additional funding to mitigate the adverse economic effects of the COVID-19 pandemic. It is uncertain whether, or to what extent, our portfolio companies will be able to benefit from the CARES Act, the December 2020 COVID Relief Package, the American Rescue Plan, or any other subsequent legislation intended to provide financial markets. The COVID-19 pandemicrelief or assistance. As a result of this disruption and the preventative measures takenpressures on their liquidity, certain of its portfolio companies have been, or may continue to contain or mitigate its spread have caused, and are continuingbe, incentivized to cause, business shutdowns, cancellations of events and travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions, and overall economic and financial market instability both globally and in the United States. Such effects will likely continue for the durationdraw on most, if not all, of the pandemic, which is uncertain, and for some period thereafter. unfunded portion of any revolving or delayed draw term loans made by the Company, subject to availability under the terms of such loans.
The outbreak could have a continued adverse impact on economic and market conditions on a global scale. The rapid development and fluidityextent of this situation precludes any prediction as to the ultimate adverse impact of the COVID-19 pandemic. Nevertheless, the ongoing COVID-19 pandemic presents material uncertainty and risks with respect to the underlying value of the Company’s portfolio companies, the Company’s business, financial condition, results of operations and cash flows, such as the potential negative impact to financing arrangements, increased costs of operations, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. Further, theon our operational and financial performance, ofincluding our ability to execute our business strategies and initiatives in the portfolio companies in which the Company makes investments have been, and may continue to be, significantly impacted by the COVID-19 pandemic, which in turn has, and may continue to have, an impact on the valuation of the Company’s investments.
Accordingly, the Company cannot predict the extent to which its business, financial condition, results of operations and cash flows will be affected at this time. The potential impact to the Company’s resultsexpected time frame, will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of the COVID-19 pandemiccoronavirus, effectiveness of vaccination deployment and the actions taken by authoritiesgovernments (including stimulus measures or the lack thereof) and other entitiestheir citizens to contain the coronavirus or treat its impact, all of which are beyond our control. An extended period of global supply chain and economic disruption could materially affect its business, results of operations, access to sources of liquidity and financial condition. Given the Company’s control.

fluidity of the situation, the Company cannot estimate the long-term impact of COVID-19 on its business, future results of operations, financial position, or cash flows at this time.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. For additional overview information on the Company, see "Item 1. Business" in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
Overview
Key performance metrics are presented below:
June 30, 2021March 31, 2021
Net asset value per common share$13.42 $11.96 
  September 30, 2020 December 31, 2019
Net asset value per common share $11.18
 $12.46
 Three Months Ended September 30, Nine Months Ended September 30,Three Months EndedSix Months Ended June 30,
 2020 2019 2020 2019June 30, 2021March 31, 202120212020
Net investment income per common share $0.20
 $0.36
 $0.69

$1.09
Net investment income per common share$0.24 $0.19 $0.43 $0.49 
Net increase (decrease) in net assets resulting from operations per common share 1.25
 0.13
 (0.58)
0.66
Net increase (decrease) in net assets resulting from operations per common share1.67 0.31 1.98 (1.83)
Distributions paid per common share 0.17
 0.34
 0.68

1.02
Distributions paid per common share0.22 0.2 0.42 0.51 
Net investment income per share declined $0.16increased $0.05 from the correspondingprior quarter in the prior year primarily due to an approximate $0.24 decline$0.08 increase in net interest margin—total interest income less interest expense—per share due to higher interest income, which accounted for $0.03 of the increase, and lower interest expense, which accounted for $0.05 of the increase. The growth in interest income was principally attributable to our investments in Structured Finance Notes, which contributed $0.03 to the increase in net interest margin per share, resulting from the deployment of $21.9 million into these investments in the first half of the year. The remainder of the increase in interest income is attributable to accelerations of Net Loan Fees from loan prepayments. Our prior quarter net investment income included interest costs of approximately $564,000, or $0.04 per share, incurred for both the newly issued $125.0 million of Unsecured Notes Due February 2026 and the $98.5 million of redeemed Unsecured Notes Due April 2025 and October 2025. The increase in net interest margin during the quarter ended June 30, 2021 was partially offset by increases in management and incentive fees of $0.04 per share. Weighted
As of June 30, 2021 and December 31, 2020, floating rate loans at fair value, excluding Structured Finance Notes, were 97% and 96% of our debt portfolio, respectively, and fixed rate loans at fair value were 3% and 4% of this portfolio, respectively. Structured Finance Notes generally do not carry a stated rate of interest, but the loan portfolios underlying these investments are generally variable rate debt. The weighted average yield on debt and Structured Finance Notes for the three months ended September 30, 2020,investments, declined to 8.99%8.91% as of June 30, 2021 from 10.51% in the quarter ended September 30, 2019,9.01% as of March 31, 2021, due to the Company's continuing shift toour continued focus on lower-yielding, first lien senior secured loans ofto larger borrowers, as well as the placement ofwhich we believe will improve our loans to Online Tech Stores, LLC and 3rd Rock Gaming Holding, LLC, with an aggregate cost of $37.1 million, on non-accrual status. The decline in net interest margin was partially offset by declines in management and incentive fees of $0.10 per share as a result of the declines in our net interest margin and the fair value of our portfolio. For the three months ended September 30, 2020, our weighted-average interest costs increased to 5.36% from 4.93% in the quarter ended September 30, 2019, principally due to borrowings under our Unsecured Notes Due October 2026 and the BNP Facility, as well as an increase in uninvested cash.overall risk profile. As of SeptemberJune 30, 2020,2021, approximately 93% of our debt is fixed rate.rate and bears a weighted-average interest cost of 5.07%.
OurDuring the three months ended June 30, 2021, our portfolio experienced net gains of $15.3$19.2 million, or $1.14$1.43 per share, during the three months ended September 30, 2020, principally on the strength ofdue to a $18.3 million, or a6.8%, improvement in the fair values of $10.3 million, or 3.2%, on our directly originated debt and equity investments. We also had net appreciation of $5.0 million in our Structured Finance Note and broadly syndicated loan investments, due in part, to the continued increase in liquidity in the broadly syndicated market. The net appreciation in our directly originated investments was primarily dueattributable to a $12.1 million improvement on our investment in the common equity ofin Pfanstiehl Holdings, Inc., a pharmaceutical ingredients manufacturer, which appreciated $7.9 million in the quarteras well as a result of performance improvements and expansion of the valuation multiple. Excluding Pfanstiehl Holdings, Inc., the remainder of or equity investments experienced net appreciation of $3.3$3.5 million led by Southern Technical Institute, LLC, which appreciated $2.4 million. These investment valuation increases were partially offset by a decrease in the fair value ofimprovement on our subordinated debt investment in Eblens Holdings, Inc., in each case, as a result of $3.4 million. Despite the continued recovery from the first quarter,improved operating results. Pfanstiehl Holdings, Inc., a a global manufacturer of high-purity pharmaceutical ingredients, accounted for 10.2% of our portfolio declined $13.7at fair value, and 27.4% of our consolidated net assets as of June 30, 2021. We also experienced net appreciation of $0.7 million or $1.0 per share, forin our Structured Finance Note investments, due to the nine months ended September 30, 2020.increase in the value of our Apex Credit CLO 2020 Ltd. and Madison Park Funding XXIII, Ltd. investments. The fair value of our investments in broadly syndicated loans were relatively unchanged, consistent with major syndicated loan indices.
Since OFS Advisor implemented its business continuity plan in mid-March 2020, theOFS Advisor's entire team has effectively transitioned to remote work and we are currently capable of maintaining our normal functionality to complete our operational requirements.
We haveOFS Advisor has actively monitored our portfolio companies throughout this period of economic uncertainty, which has included assessments of our portfolio companies' operational and liquidity outlook. During the three months ended SeptemberJune 30, 2020,2021, we extended the maturity date on one subordinated debt investment, rescheduled the due dateprovided revolving and delayed draw term facilities with total commitments of one$6.0 million to four portfolio company's third quarter 2020 interest payment until the fourth quarter of 2020,
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companies and amended three debt investments thata senior secured loan, which resulted in an increased all-in interest rates. However, 98% of our performing loans asspread. As of June 30, 2020, satisfied their third quarter 2020 interest payments. As of September 30, 2020,2021, we have unfunded commitments of $7.4 million. We believe new loan activity in the market in which we operate is below historical levels and we observed a decrease in origination and underwriting activity during the second and third quarters; however, the number of deals currently being reviewed and

evaluated has increased$11.0 million to its highest level since the beginning of the COVID-19 pandemic.eight portfolio companies. During the three months ended SeptemberJune 30, 2020,2021, we purchased three broadly syndicated loans and a Structured Finance NoteNotes for an aggregate cost of $2.3$15.7 million and completed a $7.6$44.6 million add-on in a Portfolio Company Investment.Investments.
At SeptemberJune 30, 2020,2021, our asset coverage ratio of 174%179% was within minimum asset coverage requirements under the 1940 Act, and we remained in compliance with all applicable financial thresholds under our outstanding debt. On June 26, 2020, we amended the PWB Credit Facility to provide greater flexibility with financial covenants and thresholds. On October 7, 2020, we executed an amendment to our BLA with Pacific Western Bank in order to reduce the total commitment under the PWB Credit Facility from $50.0 million to $20.0 million. As of SeptemberJune 30, 2020,2021, we had an unused commitment of $50.0$25.0 million under our PWB Credit Facility, as well as an unused commitment of $125.4$125.9 million under our BNP Facility, both subject to a borrowing base and other covenants. Based on our portfolio's fair valuesvalue and our equity capital at SeptemberJune 30, 2020,2021, we could access these available lines of credit for $100$129.0 million and remain in compliance with our asset coverage requirements. We continue to believe that we have sufficient levels of liquidity to support our existing portfolio companies and willexpect to continue to selectively deploy capital in new investment opportunities in this challenging environment. As of November 5, 2020, after giving effect to the reduction, our PWB Credit Facility had an unused commitment of $20.0 million, subject to a borrowing base and other covenants.
On NovemberAugust 3, 2020,2021, the Board declared a distribution of $0.18$0.24 per share for the fourththird quarter of 2020,2021, payable on December 31, 2020September 30, 2021 to stockholders of record as of December 24, 2020.September 23, 2021.
We cannot predict the full impact of the COVID-19 pandemic, including its duration in the United States and worldwide, and the magnitude of the economic impact of the outbreak, including the impact of travel restrictions, business closures and other quarantine measures imposed on service providers and other individuals by various local, state, and federal governmental authorities, as well as non-U.S. governmental authorities. As such, we are unable to predict the duration of any business and supply-chain disruptions, the extent to which the COVID-19 pandemic will negatively affect our portfolio companies’ operating results, or the impact that such disruptions may have on our results of operations and financial condition. Depending on the duration and extent of the disruption to the operations of our portfolio companies, we expect that certain portfolio companies will experience financial distress and possibly default on their financial obligations to us and their other capital providers. We also expect that some of our portfolio companies may significantly curtail business operations, furlough or lay-off employees and terminate service providers, and defer capital expenditures if subjected to prolonged and severe financial distress, which would likely impair their business on a permanent basis. These developments would likely result in a decrease in the value of our investment in any such portfolio company.
We are also subject to financial risks, including changes in market interest rates. As of September 30, 2020, approximately $346 million (principal amount) of our debt investments bore interest at variable rates, which are generally LIBOR-based, and many of which are subject to reference-rate floors. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased, primarily in the second quarter of 2020. A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on our portfolio investments, a decrease in our operating expenses, including with respect to our income incentive fee, or a decrease in the interest rate of our floating interest rate liabilities indexed to LIBOR. As of September 30, 2020, the majority of our variable rate debt investments are subject to the base rate floor, partially mitigating the impact of the recent decrease in LIBOR on our gross investment income.
We will continue to monitor the rapidly evolving situation relating to the COVID-19 pandemic and guidance from U.S. and international authorities, including federal, state and local public health authorities, and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our plan of operation. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of the COVID-19 pandemic on our financial condition, results of operations or cash flows in the future. However, to the extent our portfolio companies continue to be adversely impacted by the COVID-19 pandemic, our future net investment income, financial condition, results of operations and the fair value of our portfolio investments may be materially adversely impacted.
We are also subject to financial risks, including changes in market interest rates. As of June 30, 2021, approximately $345 million (principal amount) of our debt investments bore interest at variable rates, which are generally LIBOR-based, and many of which are subject to reference-rate floors. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased, primarily in the second quarter of 2020. A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on our portfolio investments, a decrease in our operating expenses, including with respect to our Income Incentive Fee, or a decrease in the interest rate of our floating interest rate liabilities indexed to LIBOR. As of June 30, 2021, the majority of our variable rate debt investments are subject to the base rate floor, partially mitigating the impact of the recent decrease in LIBOR on our gross investment income.
Critical Accounting Policies and Significant Estimates
Our critical accounting policies and estimates are those relating to revenue recognition and fair value estimates. Management has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board. For descriptions of our revenue recognition and fair value policies, see "Item 8. Financial Statements - Notes to Financial Statements - Note 2" and "Management's Discussion and Analysis - Critical Accounting Policies and Significant Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
Fair value estimates. Our approach to fair value estimates was significantly adjusted in response to the economic uncertainty associated with the spread of the COVID-19 pandemic. Ourpandemic, principally through adjustments to the weights given the various methodologies we utilize to estimate discount rates, greater use of NBIP includes an assessment of whether a sufficient number of market quotations are available or whether a sufficient number of indicative prices from pricing services

or brokers or dealers have been received,pandemic-adjusted forward-looking information, and whethershortening the depth ofevaluation periods used to assess the markets from which those quotes were received is sufficient to transact at those prices in amounts approximating our positions in such assets. Moreover, these assessments are generally based on a 90-day moving average of our depth and liquidity metrics. The 90-day moving average generally counters the effects of intermittent quoting activity observed at month- and quarter-ends, irregular quoting activity that tends to artificially inflate our market depth and liquidity metrics. Weassociated with Indicative Prices. These adjustments resulted from observed significant declines in market liquidity beginning in the middle of March and concluded the 90-day moving average was not representative of current market conditions given the significant market dislocation during this period. Accordingly, we adjusted our depth and liquidity assessment to one based on a 5-day moving average of the metrics in our liquidity assessments as of March 31, 2020, and partially reverted, utilizing a 60-day moving average, in our September 30, 2020, assessments, as liquidity continued to return to the loan market. One measure of liquidity in the broadly syndicated loan market is the average bid-ask spread on the Refinitiv Market Overall (North America) Loan Index which narrowed to 1.53 points at September 30, 2020, from 3.41 points at March 31, 2020, but has not yet returned to its long-term historic average of 1.0. These changes to our depth and liquidity metrics, as well as changes in the level of the metrics themselves, led to the transfer of three instruments with an aggregate amortized cost of $3.6 million from a fair value estimate based on models and Level 3 inputs to estimates based on NBIP inputs to estimates based on models and Level 3 inputs for the three months ended September 30, 2020.
We also adjusted our Level 3 fair value models throughout this period of heightened economic uncertainty. Our processes included assessments of the impact of the COVID-19 pandemic on the financial condition, results of operations or cash flows of our portfolio companies. Initially, such forward-looking assessments were fragmentary; however as such forward-looking estimates became more reliable, such information was directly incorporated into our fair value models. In circumstances in which reliable forward-looking information was unavailable, we considered the market impact on performance-metric multiples and related impact on enterprise values. Additionally, management observed a decreasedecreases in the historic correlation between market spreads used inobservable inputs utilized on our synthetic debt rating method and those used in our reunderwriting analysis. These market spreads, though highly correlated before the on setvaluation
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models. However, as of COVID-19, relate to different segments of the lending market primarily on the basis of borrower size. The synthetic debt rating method is based on market spreads for larger borrowers with rated debt, while the reunderwring analysis market spreads are used for what are considered middle-market borrowers. Management concluded, given the break-down in this relationship, the relative weight given to each of these methods required adjustment to correspond to the market most closely associated with the subject investment. Accordingly, we decreased the weighting for the synthetic debt rating method and increased the weighting for the reunderwriting analysis in the current period year, from a weighting of 50/50 to a weighting of 10/90, at MarchDecember 31, 2020, we had reverted all of our methodologies to their pre-pandemic weightings as financial markets stabilized and partially reverted to generally 25/75 at June 30, 2020. We believed the overweighting to the reunderwriting analysis during this period more accurately captured thecorrelations between observable market in which these instruments are exchanged. As of September 30, 2020, we have fully reverted to an equal weighting of these models as we have observed a return, in all significant respects, of the historic correlative relationship between these markets.factors returned.
The following table illustrates the impact of our fair value measures if we selected the low or high end of the range of values for all investments at SeptemberJune 30, 20202021 (dollar amounts in thousands):
Investment TypeFair Value at June 30, 2021Range of Fair Value
Low-endHigh-end
Debt investments:   
Senior secured$305,930 $302,945 $309,024 
Senior secured (valued at Transaction Prices)11,718 11,718 11,718 
Subordinated17,207 16,701 17,713 
Structured Finance Notes:
Subordinated notes65,452 $63,588 67,318 
Mezzanine debt2,793 2,746 2,840 
Equity investments:
Preferred equity12,289 10,877 13,648 
Common equity, warrants and other68,637 64,369 74,436 
$484,026 $472,944 $496,697 
Investment Type Fair Value at September 30, 2020 Range of Fair Value
  Low-end High-end
Debt investments:  
  
  
Senior secured $336,960
 $331,668
 $342,307
Subordinated 31,564
 29,486
 33,725
       
Structured Finance Notes:      
Subordinated notes 30,925
 $28,914
 32,936
Mezzanine debt 1,606
 1,564
 1,648
       
Equity investments:      
Preferred equity 11,875
 10,555
 13,005
Common equity, warrants and other 43,398
 39,635
 47,330
  $456,328
 $441,822
 $470,951
The SEC issued a final rule in 2020 modifying Rule 2a-5 under the 1940 Act to establish requirements for determining fair value in good faith for purposes of the 1940 Act. We are evaluating the impact of adopting Rule 2a-5 on the consolidated financial statements and intend to comply with the new rule’s requirements on or before the compliance date in September 2022.

Related Party Transactions
We have entered into a number of business relationships with affiliated or related parties, including the following:
•The Investment Advisory Agreement with OFS Advisor to manage our operating and investment activities. Under the Investment Advisory Agreement we have agreed to pay OFS Advisor an annual base management fee based on the average value of our total assets (other than cash but including assets purchased with borrowed amounts and including assets owned by any consolidated entity) as well as an incentive fee based on our investment performance. See “Item 1–Financial Statements–Note 3”3”.
•The Administration Agreement with OFS Services, an affiliate of OFS Advisor, to provide us with the office facilities and administrative services necessary to conduct our operations. See “Item 1–Financial Statements–Note 3.
•Note 3.
A license agreement with OFSAM, the parent company of OFS Advisor, under which OFSAM has agreed to grant us a non-exclusive, royalty-free license to use the name “OFS.” Under this agreement, we have a right to use the “OFS” name for so long as OFS Advisor or one of its affiliates remains our investment adviser. Other than with respect to this limited license, we have no legal right to the “OFS” name. This license agreement will remain in effect for so long as the Investment Advisory Agreement with OFS Advisor is in effect.
OFS Advisor’s services under the Investment Advisory Agreement are not exclusive to us and OFS Advisor is free to furnish similar services to other entities, including other funds affiliated with OFS Advisor, so long as its services to us are not impaired. OFS Advisor also serves as the investment adviser to CLO funds and other assets, including HPCI and OCCI. Additionally, OFS Advisor provides sub-advisory services to CMFT Securities Investments, LLC, a wholly owned subsidiary of CIM Real Estate Finance Trust, Inc., a corporation that qualifies as a real estate investment trust. Additionally, OFS Advisor serves as sub-adviser to CIM Real Assets & Credit Fund, a newly organizedan externally managed registered investment company that operates as an interval fund that invests primarily in a combination of real estate, credit and related investments. 
OFS Advisor agreed to reduce a portion of its base management fee by reducing the portion of such fee from 0.4375% per quarter (1.75% annualized) to 0.25% per quarter (1.00% annualized) of the OFSCC-FS Assets at the end of the two most recently completed quarters to the extent that such portion of the OFSCC-FS Assets are financed using leverage (also calculated on an average basis) that causes the Company’s statutory asset coverage ratio to fall below 200%. When calculating its statutory asset coverage ratio, the Company excludes its SBA guaranteed debentures from its total outstanding senior securities as permitted pursuant to exemptive relief granted by the SEC dated November 26, 2013.    Effective January 1, 2020, OFS Advisor agreed to further reduce the base management fee attributable to all of the OFSCC-FS Assets, without regard to the Company’s asset coverage. The agreement reduced the base management fee to 0.25% per quarter (1.00% annualized) of the average value of the portion of OFSCC-FS Assets at the end of the two most recently completed calendar quarters without regard to the statutory asset coverage ratio. Thequarters. OFS Advisor’s base management fee reduction by OFS Advisor is renewable on an annual basis and OFS Advisor is not entitled to recoup the amount of the base management fee reductionreduced with respect to the OFSCC-FS Assets shall not be subject to recoupment by OFS Advisor.Assets. This agreement was renewed for the 2021 calendar year on February 16, 2021.
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The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with certain affiliates absent an order from the SEC permitting the BDC to do so. On August 4, 2020, we received exemptive relief from the SEC to permit us to co-invest in portfolio companies with certain other funds, including other BDCs and registered investment companies, managed by OFS Advisor (the “Affiliated Funds”) in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). The Order, which superseded a previous order we received on October 12, 2016 and provides us with greater flexibility to enter into co-investment transactions with Affiliated Funds. Pursuant to the Order, weWe are generally permitted to co-invest with Affiliated Funds if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.
In addition, pursuant to an exemptive order issued by the SEC on April 8, 2020 and applicable to all BDCs, through at least December 31, 2020, the Company may,we were permitted, subject to the satisfaction of certain conditions, to co-invest in itsour existing portfolio companies with certain other funds managed by the Advisor or its affiliates, even if such other fund hasfunds had not previously invested in such existing portfolio company. Without this order, the Company generallyaffiliated funds would not be able to participate in such co-investments with us unless the affiliated fundfunds had previously acquired securities of the portfolio company in a co-investment transaction with us. Although the Company.conditional exemptive order expired on December 31, 2020, the SEC’s Division of Investment Management has indicated that until March 31, 2022, it will not recommend enforcement action, to the extent that any BDC with an existing co-investment order continues to engage in certain transactions described in the conditional exemptive order, pursuant to the same terms and conditions described therein.
Conflicts may arise when we make an investment in conjunction with an investment being made by an Affiliated Account, or in a transaction where an Affiliated Account has already made an investment. Investment opportunities are, from time to time, appropriate for more than one account in the same, different or overlapping securities of a portfolio company’s capital structure. Conflicts arise in determining the terms of investments, particularly where these accounts may invest in

different types of securities in a single portfolio company. Potential conflicts arise when addressing, among other things, questions as to whether payment obligations and covenants should be enforced, modified or waived, or whether debt should be restructured, modified or refinanced. For a discussion of the risks associated with conflicts of interest, see "Item 1A. Business — Conflicts of Interest", "Item 1A. Risk Factors — Risks Related to OFS Advisor and its Affiliates —We have potential conflicts of interest related to the purchases and sales that OFS Advisor makes on our behalf and/or on behalf of Affiliated Accounts" and "Item 1A. Risk Factors — Regulations — Conflicts of Interest - Conflicts Related to Portfolio Investments" in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
Portfolio Composition and Investment Activity
Portfolio Composition
As of SeptemberJune 30, 2020,2021, the fair value of our debt investment portfolio totaled $368.5$334.9 million in 5661 portfolio companies, of which 91%95% and 9%5% were senior secured loans and subordinated loans, respectively. As of SeptemberJune 30, 2020,2021, we had equity investments in 2322 portfolio companies with a fair value of approximately $55.3$80.9 million. We also have ninesixteen investments in Structured Finance Notes with a fair value of $32.5$68.2 million. We had unfunded commitments of $7.4$11.0 million to threeeight portfolio companies at SeptemberJune 30, 2020.2021. Set forth in the tables and charts below is selected information with respect to our portfolio as of SeptemberJune 30, 20202021 and December 31, 2019.2020.
The following table presents our investment portfolio by each wholly owned legal entity within the consolidated group as of SeptemberJune 30, 2020,2021, and December 31, 20192020 (dollar amounts in thousands):
June 30, 2021December 31, 2020
Amortized CostFair ValueAmortized CostFair Value
OFS Capital Corporation (Parent)$172,281 $160,426 $190,627 $172,249 
SBIC I LP176,405 203,295 191,192 190,573 
OFSCC-FS109,785 109,776 67,781 68,037 
OFSCC-MB10,106 10,529 11,423 11,464 
Total investments$468,577 $484,026 $461,023 $442,323 
57

 September 30, 2020 December 31, 2019
 Amortized Cost Fair Value Amortized Cost Fair Value
OFS Capital Corporation (Parent)$175,926
 $152,578

$181,980
 $169,230
SBIC I LP235,639
 232,218

256,858
 246,371
OFSCC-FS61,525
 61,090

88,458
 88,936
OFSCC-MB10,970
 10,442
 11,375
 12,394
Total investments$484,060
 $456,328
 $538,671
 $516,931

Portfolio Yields
The weighted average yield on total investments1(1) was 8.39%8.36% and 9.59%8.56% at SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively. The following table displays the composition of our performing debt investment and Structured Finance Note portfolio by yield range and its weighted average yields as of SeptemberJune 30, 2020,2021, and December 31, 2019:2020:
September 30, 2020 December 31, 2019June 30, 2021December 31, 2020
Yield Range
Senior
Secured
SubordinatedStructured Finance  
Senior
Secured
SubordinatedStructured Finance Yield RangeSenior
Secured		SubordinatedStructured FinanceSenior
Secured		SubordinatedStructured Finance
DebtNotesTotal DebtNotesTotalDebtDebtNotesTotalDebtDebtNotesTotal
Less than 8%15.0%—%—%12.6% 20.1%—%—%17.3%Less than 8%45.5 %— %— %35.8 %29.5 %— %1.4 %24.0 %
8% - 10%62.2
—
4.3
52.5
 21.5
—
—
18.5
8% - 10%40.9 — 1.4 32.5 52.0 — 1.4 42.2 
10% - 12%20.2
13.3
—
17.8
 48.8
8.6
—
42.7
10% - 12%10.5 — 9.8 9.9 13.5 — — 10.9 
12% - 14%1.2
59.6
19.8
7.1
 8.4
38.3
25.1
12.0
12% - 14%3.1 53.2 24.5 8.9 3.4 53.6 12.5 7.0 
Greater than 14%1.4
27.1
75.9
10.0
 1.2
53.1
74.9
9.5
Greater than 14%— 46.8 64.3 12.9 1.6 46.4 84.7 15.9 
Total100.0%100.0%100.0%100.0% 100.0%100.0%100.0%100.0%Total100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %
Weighted average yield - performing debt and Structured Finance Note investments (2)
9.05%12.97%17.62%10.10% 9.80%13.52%15.13%10.40%
Weighted average yield - performing debt and Structured Finance Note investments (2)
8.08 %14.06 %16.52 %9.77 %8.92 %14.88 %16.56 %10.27 %
Weighted average yield - total debt and Structured Finance Note investments (3)
8.51%6.49%17.62%8.99% 9.57%10.57%15.13%9.94%
Weighted average yield - total debt and Structured Finance Note investments (3)
7.66 %6.32 %16.52 %8.91 %8.38 %5.53 %16.56 %9.15 %
(1) Weighted average yield on total investments is computed as (a) the sum of (i) the annual stated accruing interest on our debt investments at the balance sheet date plus the annualized accretion of Net Loan Fees, (ii) the effective yield on our performing preferred equity investments, and (iii) the annual effective yield on Structured Finance Notes, divided by (b) amortized cost of our total investment portfolio, including assets in non-accrual status as of the balance sheet date.
(2) The weighted average yield on our performing debt and Structured Finance Note investments is computed as (a) the sum of (i) the annual stated accruing interest on debt investments plus the annualized accretion of Net Loan Fees; and (ii) the annual effective yield on Structured Finance Notes divided by (b) amortized cost of our debt and Structured Finance Note investments, excluding debt investments in non-accrual status as of the balance sheet date.
(3) The weighted average yield on our total debt and Structured Finance Note investments is computed as (a) the sum of (i) the annual stated accruing interest plus the annualized accretion of Net Loan Fees and (ii) plus the annual effective yield on Structured Finance Notes divided by (b) amortized cost of our debt and Structured Finance Note investments, including debt investments in non-accrual status as of the balance sheet date.
The weighted average yield on performing portfolio company debt securities, including Structured Finance Notes, decreased to 10.10%9.77% at SeptemberJune 30, 20202021 from 10.40%10.27% at December 31, 2019,2020, primarily due to the recent decrease in LIBOR, offset by the 11.4%8.0% weighted average yield on new debt investments and Structured Finance Notes. During the six months ended June 30, 2021, we purchased approximately $75.3 million in debt securities, primarily in lower-yielding, first lien senior secured loans to larger borrowers, with a weighted average yield of 6.4%. The weighted average yield on total debt, including Structured Finance Notes, decreased to 8.99%8.91% at SeptemberJune 30, 20202021 from 9.94%9.15% at December 31, 2019, primarily due to the change to non-accrual status of our investments in Online Tech Stores, LLC and 3rd Rock Gaming Holding, LLC.2020.
As of SeptemberJune 30, 2020,2021 and December 31, 2019,2020, floating rate loans at fair value, excluding Structured Finance Notes, were 88%97% and 93%96% of our debt portfolio, excluding Structured Finance Notes, respectively, and fixed rate loans at fair value were 12%3% and 7%4% of this portfolio, respectively.
The weighted average yield of our investments is not the same as a return on investment for our stockholders, but rather the gross investment income from our investment portfolio before the payment of all of our fees and expenses. There can be no assurance that the weighted average yield will remain at its current level.
58

Portfolio Company Investments
The following table summarizes the composition of our Portfolio Company Investments as of SeptemberJune 30, 20202021 and December 31, 20192020 (dollar amounts in thousands):
June 30, 2021December 31, 2020
Amortized CostFair ValueAmortized CostFair Value
Senior secured debt investments (1)
$331,982 $317,648 $325,647 $306,304 
Subordinated debt investments37,944 17,207 45,409 15,067 
Preferred equity16,232 12,289 18,648 11,543 
Common equity, warrants and other14,887 68,637 15,459 52,984 
  Total Portfolio Company Investments$401,045 $415,781 $405,163 $385,898 
Total number of portfolio companies75 75 62 62 
 September 30, 2020 December 31, 2019
 Amortized Cost Fair Value Amortized Cost Fair Value
Senior secured debt investments (1)
$356,599

$336,960
 $421,970
 $408,724
Subordinated debt investments57,103

31,564
 56,731
 43,091
Preferred equity18,878

11,875
 21,925
 17,729
Common equity, warrants and other15,220

43,398
 14,919
 25,777
  Total Portfolio Company Investments$447,800
 $423,797
 $515,545
 $495,321
Total number of portfolio companies65
 65
 85
 85
(1)    Includes debt investments in which we have entered into contractual arrangements with co‑lenders whereby, subject to certain conditions, we have agreed to receive our principal payments after the repayment of certain co‑lenders pursuant to a payment waterfall. The aggregate amortized cost and fair value of these investments was $36,036 and $36,982, respectively, at June 30, 2021, and $55,776 and $56,217, respectively, at December 31, 2020.
(1)Includes debt investments in which we have entered into contractual arrangements with co‑lenders whereby, subject to certain conditions, we have agreed to receive our principal payments after the repayment of certain co‑lenders pursuant to a payment waterfall. The aggregate amortized cost and fair value of these investments was $82,880 and $83,413, respectively, at September 30, 2020, and $66,300 and $65,337, respectively, at December 31, 2019.
    At June 30, 2021, 95% and 66% of our loan portfolio and total portfolio, respectively, consisted of senior secured loans, based on fair value. Approximately 80%76% of our Portfolio Company Investments at fair value are senior securities of the borrower, rather than in the subordinated securities, preferred equity or common equity. We believe the seniority of our debt investments in the borrowers' capital structures may provide greater downside protection against the impact ofadverse economic changes, including those caused by the COVID-19 pandemic.
As of SeptemberJune 30, 2020,2021, the three largest industries of our Portfolio Company Investments by fair value, were (1) Manufacturing (21.5%(26.3%), (2) Health Care and Social Assistance (13.8%), and (3) Professional, Scientific, and Technical Services (13.7%(16.7%), and (3) Wholesale Trade (13.5%), totaling approximately 49.1%56.5% of the investmentour Portfolio Company Investment portfolio. We have limited exposure to the Retail Trade industry (4.9%), which has been significantly impacted by the COVID-19 pandemic.For a full summary of our investment portfolio by industry, see “Item 1–Financial Statements–Note 4."”
As of June 30, 2021, our common equity in Pfanstiehl Holdings, Inc. based on its fair value of $49.2 million, $49.0 million of which representing an unrealized gain, accounts for 10.2% of our total portfolio at fair value, or 27.4% of total net assets. Since December 31, 2020 and December 31, 2019, Pfanstiehl Holdings, Inc., a global manufacturer of high-purity pharmaceutical ingredients, has appreciated $13.0 million and $37.3 million, respectively, primarily due to improved operating results, as well as multiple expansion in the pharmaceutical industry.
The following table presents our debt investment portfolio by investment size as of SeptemberJune 30, 20202021 and December 31, 20192020 (dollar amounts in thousands):
Amortized CostFair Value
June 30, 2021December 31, 2020June 30, 2021December 31, 2020
Up to $4,000$49,367 13.3 %$30,427 8.2 %$49,644 14.8 %$33,149 10.3 %
$4,001 to $7,00079,557 21.5 72,030 19.4 81,400 24.3 68,939 21.5 
$7,001 to $10,00036,549 9.9 51,874 14.0 35,920 10.7 43,735 13.6 
$10,001 to $13,00010,810 2.9 21,013 5.7 23,318 7.0 33,470 10.4 
Greater than $13,000193,643 52.4 195,711 52.7 144,573 43.2 142,078 44.2 
Total$369,926 100.0 %$371,055 100.0 %$334,855 100.0 %$321,371 100.0 %
59

 Amortized Cost Fair Value
 September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019
Up to $4,000$35,578
 8.6% $77,809
 16.3% $34,702
 9.4% $75,033
 16.6%
$4,001 to $7,00060,870
 14.7
 71,558
 14.9
 65,175
 17.7
 68,806
 15.2
$7,001 to $10,00076,075
 18.4
 95,567
 20.0
 67,664
 18.4
 77,978
 17.3
$10,001 to $13,00066,259
 16.0
 54,273
 11.3
 55,136
 15.0
 53,903
 11.9
Greater than $13,000174,920
 42.3
 179,494
 37.5
 145,847
 39.5
 176,095
 39.0
Total$413,702
 100.0% $478,701
 100.0% $368,524
 100.0% $451,815
 100.0%

Investment Activity
The following is a summary of our Portfolio Company Investment activity for the three and ninesix months ended SeptemberJune 30, 20202021 (dollar amounts in millions):
 Three Months Ended
September 30, 2020		 Nine Months Ended September 30, 2020 Three Months Ended
June 30, 2021		Six Months Ended June 30, 2021
 
Debt
Investments
 
Equity
Investments
 
Debt
Investments
 
Equity
Investments
 Debt
Investments		Equity
Investments		Debt
Investments		Equity
Investments
Investments in new portfolio companies $1.5
 $—
 $43.8
 $—
Investments in new portfolio companies$26.5 $— $62.8 $— 
Investments in existing portfolio companies 

 

 

 

Investments in existing portfolio companies
Follow-on investments 7.6
 —
 17.7
 0.1
Follow-on investments18.0 — 44.2 — 
Restructured investments —
 0.2
 —
 0.9
Restructured investments— — — — 
Delayed draw and revolver funding —
 —
 5.7
 —
Delayed draw and revolver funding— — — — 
Total investments in existing portfolio companies 7.6
 0.2
 23.4
 1.0
Total investments in existing portfolio companies18.0 — 44.2 — 
Total investments in new and existing portfolio
companies
 $9.1
 $0.2
 $67.2
 $1.0
Total investments in new and existing portfolio
companies
$44.5 $— $107.0 $— 
Number of new portfolio company investments 3
 —
 13
 —
Number of new portfolio company investments13 — 31 — 
Number of existing portfolio company
investments
 1
 3
 16
 6
Number of existing portfolio company
investments
8 — 17 — 
        
Proceeds/redemptions from principal payments/
equity investments
 3.8
 —
 60.1
 —
Proceeds/redemptions from principal payments/
equity investments
52.2 — 100.8 — 
Proceeds from investments sold or redeemed 1.9
 —
 63.8
 3.6
Proceeds from investments sold or redeemed9.7 — 10.3 — 
Total proceeds from principal payments, equity
distributions and investments sold
 $5.7
 $—
 $123.9
 $3.6
Total proceeds from principal payments, equity
distributions and investments sold
$61.9 $— $111.1 $— 
Notable investments in new portfolio companies during the ninesix months ended SeptemberJune 30, 2021, include KNS Acquisition Corp. ($5.0 million senior secured loan), Baymark Health Services, Inc. ($4.9 million senior secured loan), Electrical Components International, Inc. ($5.6 million senior secured loan), and TruGreen Limited Partnership ($4.7 million senior secured loan).
During the six months ended June 30, 2021, the weighted-average yield of new debt in Portfolio Company Investment companies was 6.4%.
During the six months ended June 30, 2021, we also invested $21.9 million in Structured Finance Notes with a weighted average annual effective yield of 16.8%.
60

The following is a summary of our Portfolio Company Investment activity for the three and six months ended June 30, 2020 (dollar amounts in millions):
 Three Months Ended
June 30, 2020		Six Months Ended
June 30, 2020
 Debt
Investments		Equity
Investments		Debt
Investments		Equity
Investments
Investments in new portfolio companies$2.4 $— $42.3 $— 
Investments in existing portfolio companies
Follow-on investments0.5 — 10.1 0.1 
Restructured investments— — — 0.7 
Delayed draw and revolver funding4.3 — 5.7 — 
Total investments in existing portfolio companies4.8 — 15.8 0.8 
Total investments in new and existing portfolio
companies
$7.2 $— $58.1 $0.8 
Number of new portfolio company investments5 — 10 — 
Number of existing portfolio company
investments
4 1 15 3 
Proceeds/distributions from principal payments/
equity investments
19.1 — 56.3 — 
Proceeds from investments sold or redeemed23.4 — 61.9 3.6 
Total proceeds from principal payments, equity
distributions and investments sold
$42.5 $— $118.2 $3.6 
Notable investments in new portfolio companies during the six months ended June 30, 2020, include A&A Transfer, LLC ($23.7 million senior secured loan and $1.6 million revolver) and SourceHOV Tax, Inc. ($12.8 million senior secured loan).
TheDuring the six months ended June 30, 2020, the weighted-average yield of direct debt investments in new debt in Portfolio Company Investmentportfolio companies duringwas 8.5%.
During the ninesix months ended SeptemberJune 30, 2020, was 8.4%.
Wewe also invested $13.6$12.8 million in StructuredStructure Finance Notes with a weighted average annual effective yield of 18.9% during the nine months ended September 30, 2020.19.6%.
Non-cash investment activity
On June 11, 2021, My Alarm Center, LLC’s bankruptcy plan became effective and our equity interests were cancelled. For the six months ended June 30, 2021, the Company recognized a realized loss of $3.1 million, of which $3.0 million was recognized as an unrealized loss as of December 31, 2020.
On March 27, 2020, our debt investment in Constellis Holdings, LLC was restructured. We converted our non-accrual debt investment into 20,628 common shares of common equity. The cost and fair value of the 20,628 common shares of common equity received was $0.7 million, and $0.7 million, respectively, which we recognized as the investment's cost.

The following is a summary of our Portfolio Company Investment activity for the three and nine months ended September 30, 2019 (dollar amounts in millions):
61
  Three Months Ended
September 30, 2019		 Nine Months Ended
September 30, 2019
  
Debt
Investments
 
Equity
Investments
 
Debt
Investments
 
Equity
Investments
Investments in new portfolio companies $25.5
 $—
 $97.7
 $4.1
Investments in existing portfolio companies        
Follow-on investments 13.2
 —
 36.1
 —
Delayed draw and revolver funding 0.2
 —
 8.4
 —
Total investments in existing portfolio companies 13.4
 —
 44.5
 —
Total investments in new and existing portfolio
companies
 $38.9
 $—
 $142.2
 $4.1
Number of new portfolio company investments 4
 —
 29
 2
Number of existing portfolio company
investments
 10
 —
 24
 —
         
Proceeds/distributions from principal payments/
equity investments
 21.5
 —
 30.8
 —
Proceeds from investments sold or redeemed 0.1
 —
 30.4
 —
Total proceeds from principal payments, equity
distributions and investments sold
 $21.6
 $—
 $61.2
 $—

Notable investments in new portfolio companies during the nine months ended September 30, 2019, included Chemical Resources Holdings, Inc. ($13.6 million senior secured loan and $1.8 million in common equity), TTG Healthcare, LLC ($11.9 million senior secured loan and $2.3 million preferred equity). Notable investments in new portfolio companies during the three months ended September 30, 2019 included Milrose Consultants, LLC ($11.5 million senior secured loan) and SSJA Bariatric ($10.1 million senior secured loan).
The weighted-average yield of direct debt investments in new portfolio companies was 8.5% during the nine months ended September 30, 2019.
We also invested $23.4 million in Structured Finance Notes with a weighted average annual effective yield of 15.94% during the nine months ended September 30, 2019.
Our level of investment activity may vary substantially from period to period depending on various factors, including, but not limited to, the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity, the general economic environment and the competitive environment for the types of investments we make. We believe new loan activity in the market in which we operate is below historical levels and we observed a decrease in origination and underwriting activity during the second and third quarters. However, the number of deals currently being reviewed and evaluated has increased since the beginning of the COVID-19 pandemic.

Risk Monitoring
We categorize direct investments in the debt securities of portfolio companies into seven risk categories based on relevant information about the ability of borrowers to service their debt. For additional information regarding our risk categories, see “Item 1. Business–Portfolio Review/Risk Monitoring” in our Annual Report on Form 10-K for the year ended December 31, 2019.2020. The following table shows the classification of our debt securities of portfolio companies, excluding Structured Finance Notes, by credit risk rating as of SeptemberJune 30, 2020,2021 and December 31, 20192020 (dollar amounts in thousands):
 Debt Investments, at Fair ValueDebt Investments, at Fair Value
Risk Category September 30, 2020 December 31, 2019Risk CategoryJune 30, 2021December 31, 2020
1 (Low Risk) $—
 —% $—
 —%1 (Low Risk)$— — %$— — %
2 (Below Average Risk) 3,788
 1.0
 17,953
 4.0
2 (Below Average Risk)— — — — 
3 (Average) 290,014
 78.7
 387,654
 85.8
3 (Average)309,149 92.3 263,934 82.2 
4 (Special Mention) 55,965
 15.2
 45,546
 10.1
4 (Special Mention)17,950 5.4 45,302 14.1 
5 (Substandard) 18,757
 5.1
 —
 —
5 (Substandard)6,975 2.1 11,684 3.6 
6 (Doubtful) —
 —
 662
 0.1
6 (Doubtful)781 0.2 451 0.1 
7 (Loss) —
 —
 —
 —
7 (Loss)— — — — 
 $368,524
 100.0% $451,815
 100.0%$334,855 100.0 %$321,371 100.0 %
Changes in the distribution of our debt investments across risk categories were a result of new debt investments, the receipt of amortization payments on existing debt investments, repayment of certain debt investments in full, changes in the fair value of our existing debt investments, realized gains on the sale of investments, as well as changes in risk categories. DebtDuring the six months ended June 30, 2021, debt investments with an aggregate cost and fair value of $17.1 million and $16.4 million, respectively, had risk rating upgrades from risk category 4 to risk category 3, and a debt investment with a cost and fair value of $31,053$16.1 million and $25,308, respectively, had risk rating downgrades from risk category 3 to risk category 4 during the nine months ended September 30, 2020. Debt investments with a cost and fair value of $37,122 and $18,757,$0.1 million, respectively, had a risk rating downgrade from risk category 45 to risk category 5 during the nine months ended September 30, 2020.6.
Non-Accrual Loans
When there is reasonable doubt that principal, cash interest, or PIK interest will be collected, loan investments are placed on non-accrual status and the Company will generally cease recognizing cash interest, PIK interest, or Net Loan Fee amortization, as applicable. Interest accruals and Net Loan Fee amortization are resumed on non-accrual investments only when they are brought current with respect to principal, interest and when, in the judgment of management, the investments are estimated to be fully collectible as to all principal. During the nine months ended September 30, 2020, our debt investments in Online Tech Stores, LLC and 3rd Rock Gaming Holding, LLCNo new loans were placed on non-accrual status due toduring the reasonable doubt that principal and interest will be collected, while our debt investments in Constellis Holdings, LLC and Southern Technical Institute, LLC were restructured and removed from non-accrual status.six months ended June 30, 2021. The aggregate amortized cost and fair value of loans on non-accrual status with respect to all interest and Net Loan Fee amortization was $49,525$38.2 million and $18,757,$7.8 million, respectively, at SeptemberJune 30, 2020,2021, and $22,249$48.1 million and $662,$12.1 million, respectively, at December 31, 2019.
On March 27, 2020, our debt investment in Constellis Holdings, LLC was restructured. We converted our2020. During the six months ended June 30, 2021, Community Intervention Services, Inc., a non-accrual debt investment into 20,628 common shares of equity. The cost and fair value of the common shares received were $0.7 million and $0.7 million, respectively as ofloan since September 30, 2020. We recognized a realized loss on the restructuring of $9.1 million for the nine months ended September 30, 2020, which was fully recognized as unrealized losses as of December 31, 2019.
On September 30, 2020, our debt investment in Southern Technical Institute, LLC was restructured, pursuant to which we received proceeds of $529, in full satisfaction of contractually due interest of $215 and principal of $1,660. The investment was carried at2016 with a cost of $-0-. Accordingly, during the three months ended September 30, 2020, we recognized a realized gain of $314. As of September 30, 2020, we hold equity appreciation rights with a cost and fair value of $-0- and $3,356, respectively.

$7.6 million was sold for $0.1 million.
Structured Finance Notes
The following table summarizes the composition of our Structured Finance Notes as of SeptemberJune 30, 20202021, and December 31, 2019 (dollar amounts in2020 (in thousands):
June 30, 2021December 31, 2020
Amortized CostFair ValueAmortized CostFair Value
Subordinated notes$64,901 $65,452 $54,280 $54,724 
Mezzanine bonds2,631 2,793 1,580 1,701 
Total Structured Finance Notes$67,532 $68,245 $55,860 $56,425 
 September 30, 2020 December 31, 2019
 Amortized Cost Fair Value Amortized Cost Fair Value
Subordinated notes$34,694
 $30,925
 $23,127
 $21,610
Mezzanine bonds1,566
 1,606
 —
 —
Total Structured Finance Notes$36,260
 $32,531
 $23,127
 $21,610
TheAs of June 30, 2021, the weighted average yield on Structured Finance Notes increasedremained stable at 16.52%, compared to 17.62% at September 30, 2020, from 15.13%16.56% at December 31, 2019 primarily due to investments of $13.6 million in Structured Finance Notes with a weighted average annual effective yield of 18.9% during the nine months ended September 30, 2020.
Results of Operations
Our key financial measures are described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations–Results of Operations–Key Financial Measures" in our Annual Report on Form 10-K for the year ended December 31, 2019.2020. The following is a discussion of the key financial measures that management employs in reviewing the performance of our operations.
62

We do not believe that our historical operating performance is necessarily indicative of our future results of operations. We are primarily focused on debt investments in middle-market and larger companies in the United States and, to a lesser extent, equity investments, including warrants and other minority equity securities and Structured Finance Notes, which differs to some degree from our historical investment concentration, in that we now also focus on the debt of larger U.S. companies and Structured Finance Notes. Moreover, as a BDC and a RIC, we will also be subject to certain constraints on our operations, including, but not limited to, limitations imposed by the 1940 Act and the Code. In addition, SBIC I LP is subject to regulation and oversight by SBA. For the reasons described above, the results of operations described below may not necessarily be indicative of the results we expect to report in future periods.
Net increase (decrease) in net assets resulting from operations can vary substantially from period to period for various reasons, including the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, annual comparisons of net increase (decrease) in net assets resulting from operations may not be meaningful.

The following analysis compares our quarterly results of operations to the preceding quarter, as well as our year-to-date results of operations to the corresponding period in the prior year. We believe a comparison of our current quarterly results to the preceding quarter is more meaningful and transparent than a comparison to the corresponding prior-year quarter as our results of operations are not influenced by seasonal factors the latter comparison is designed to elicit and highlight.
Comparison of the three and nine months ended SeptemberJune 30, 20202021 and 2019March 31, 2021 and comparison of the six months ended June 30, 2021 and 2020
Consolidated operating results for the three and nine months ended SeptemberJune 30, 20202021 and 2019March 31, 2021 and the six months ended June 30, 2021 and 2020 are as follows (in thousands):
Three Months EndedSix Months Ended June 30,
June 30, 2021March 31, 202120212020
Investment income
Interest income:
Cash interest income$6,972 $6,837 $13,809 $18,299 
Net Loan Fee amortization857 573 1430 817 
Accretion of interest income on Structured Finance Notes2,392 2,278 4,670 2,626 
Other interest income— 12 12 54 
Total interest income10,221 9,700 19,921 21,796 
PIK income:
PIK interest income397 440 837 829 
Preferred equity PIK dividends59 47 106 343 
Total PIK income456 487 943 1,172 
Dividend income:
Common and preferred equity cash dividends136 — 136 100 
Total dividend income136 — 136 100 
Fee income:
Syndication fees439 217 656 378 
Prepayment and other fees164 86 251 405 
Total fee income603 304 907 783 
Total investment income11,416 10,491 21,907 23,851 
Total expenses, net8,181 7,941 16,122 17,272 
Net investment income3,235 2,550 5,785 6,579 
Net gain (loss) on investments19,206 3,923 23,129 (30,932)
Loss on extinguishment of debt— (2,299)(2,299)(149)
Net increase (decrease) in net assets resulting from operations$22,441 $4,174 $26,615 $(24,502)
63
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
Investment income       
Interest income:       
Cash interest income (including accretion of interest on Structured Finance Notes)$9,781

$12,698

$30,706

$35,639
Net Loan Fee amortization142

382

959

788
Other interest income—

10

54

107
Total interest income9,923

13,090

31,719

36,534
PIK income:










PIK interest income393

245

1,222

611
Preferred equity PIK dividends45

226

388

660
Total PIK income438

471

1,610

1,271
Dividend income:










Common and preferred equity cash dividends—

—

100

262
Total dividend income—

—

100

262
Fee income:










Management and syndication89

122

467

772
Prepayment and other fees37

175

442

264
Total fee income126

297

909

1,036
Total investment income10,487

13,858

34,338

39,103
Total expenses, net incentive fee waiver7,775

9,005

25,047

24,562
Net investment income2,712

4,853

9,291

14,541
Net gain (loss) on investments15,313

(3,091)
(15,619)
(5,694)
Loss on extinguishment of debt(187) —
 (336) —
Loss on impairment of goodwill(1,077) —
 (1,077) —
Net increase (decrease) in net assets resulting from operations$16,761

$1,762

$(7,741)
$8,847

Interest and PIK income by debt investment type for the three and nine months ended SeptemberJune 30, 20202021 and 2019,March 31, 2021 and six months ended June 30, 2021 and 2020, is summarized below (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,Three Months EndedSix Months Ended June 30,
2020 2019 2020 2019June 30, 2021March 31, 202120212020
Interest income and PIK interest income:       Interest income and PIK interest income:
Senior secured debt investments$7,583

$11,013

$25,667

$30,946
Senior secured debt investments$7,580 $7,202 $14,782 $18,084 
Subordinated debt investments1,181

1,418

3,092

4,198
Subordinated debt investments646 660 1,306 1,911 
Structured Finance Notes1,553
 904
 4,183
 2,001
Structured Finance Notes2,392 2,278 4,670 2,630 
Total interest income and PIK interest income10,317
 13,335
 32,942
 37,145
Total interest income and PIK interest income10,618 10,140 20,758 22,625 
Plus purchased premiums (less Net Loan Fees) accelerations38
 (130) (196) (118)
Less Net Loan Fees accelerations Less Net Loan Fees accelerations(551)(342)(893)(235)
Recurring interest income and PIK interest income$10,355
 $13,205
 $32,746
 $37,027
Recurring interest income and PIK interest income$10,067 $9,798 $19,865 $22,390 
Investment Income
WeOther than acceleration of Net Loan Fees (PIK interest income and the accretable yield on Structured Finance Notes) recognized upon the repayment of a loan, we consider our interest income on direct debt investments to portfolio companies—other than acceleration of Net Loan Fees recognized upon the repayment of a loan—PIK interest income, and the accretable yield on Structured Finance Notescompanies to be recurring in nature. Such recurring interest income and PIK interest income decreased by $2.8increased $0.3 million forduring the three months ended SeptemberJune 30, 2020,2021 compared to the three months ended September 30, 2019,prior quarter, primarily due to a $1.8$10.9 million increase in the average outstanding performing loan balance. Recurring interest income decreased $2.5 million during the six months ended June 30, 2021 compared to the corresponding period in the prior year, primarily due to a $3.1 million decrease in the average outstanding performing loan balance, andpartly offset by a $1.0$0.6 million decrease resultingincrease from a 10030 basis point reductionincrease in the recurring earned yield on our portfolio primarily due to declines in LIBOR.yield.

Due to the COVID-19 pandemic and the impact to our borrowers, we experienced a partial shift from cash interest to PIK interest resulting from concessions granted to support the borrowers' liquidity. Total PIK income on debt securities was $1.2 million and $0.6 million for the nine months ended September 30, 2020, and September 30, 2019, respectively. During the three months ended SeptemberJune 30, 2020, we amended two loans to increase the PIK rate, and amended one loan to convert third quarter cash interest due of $0.52021, dividend income increased $0.1 million to PIK interest; however, this interest was not recognized in income in the third quarter due to reasonable doubt whether it will be collected. We collected approximately $41,000a distribution from our equity investment in fees related to the aforementioned amendments.MTE Holding Corp.
Syndication fees, prepayment fees and the acceleration of Net Loan Fees are considered non-recurring and generally result from periodic transactions rather than from holding portfolio investments and are considered non-recurring.investments. Syndication fees, which are recognized when OFS Advisor sources, structures, and arranges the lending group, and for which we wereare additionally compensated, declinedincreased to $0.1$0.4 million for the three months ended SeptemberJune 30, 2020,2021 compared to $0.4$0.2 million infor the first sixthree months of 2020. This decline is attributable to the decrease in direct loan originations from approximately $33.4 million in the first six months of 2020 to $2.0 million in the third quarter of 2020, primarily due to the impacts of the COVID-19 pandemic.ended March 31, 2021. Total fee income for the ninesix months ended SeptemberJune 30, 2020,2021 compared to the corresponding period in the prior year, remained consistentincreased from $0.8 million to $0.9 million primarily due to an increase in prepayment fees, which offset a decrease in syndication fees.
Expenses
Operating expenses for the three and nine months ended SeptemberJune 30, 20202021 and 2019,March 31, 2021 and six months ended June 30, 2021 and 2020, are presented below (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,Three Months EndedSix Months Ended June 30,
2020 2019 2020 2019June 30, 2021March 31, 202120212020
Interest expense$4,448

$4,464
 $14,301
 $11,564
Interest expense$4,241 $4,825 $9,066 $9,853 
Management fee1,871

2,164
 5,759
 6,062
Management fee1,876 1,834 3,710 3,888 
Incentive fee234

1,214
 1,332
 3,622
Incentive fee809 — 809 1,098 
Professional fees422

510
 1,530
 1,413
Professional fees489 387 876 1,108 
Administration fee436

396
 1,456
 1,250
Administration fee439 568 1,007 1,020 
Other expenses364

257
 1,110
 651
General and administrative expensesGeneral and administrative expenses327 327 654 746 
Total expenses before incentive fee waiver$7,775

$9,005

$25,488

$24,562
Total expenses before incentive fee waiver8,181 7,941 16,122 17,713 
Incentive fee waiver—
 —
 (441) —
Incentive fee waiver— — — (441)
Total expenses, net of incentive fee waiver$7,775
 $9,005
 $25,047
 $24,562
Total expenses, net of incentive fee waiver$8,181 $7,941 $16,122 $17,272 
Interest expense for the three months ended SeptemberJune 30, 2020, remained consistent over2021 decreased $0.6 million compared to the corresponding prior year period. Interest expense for the nine months ended September 30, 2020, increased over the corresponding prior year periodpreceding quarter, primarily due to an increase in our average borrowings related tointerest costs of approximately $564,000 incurred for both the issuancenewly issued $125.0 million of the Unsecured Notes Due OctoberFebruary 2026 and borrowings under the BNP Facility.$98.5 million of redeemed Unsecured Notes Due April 2025 and October 2025. Interest expense incurred on our debt during for
64

the three and ninesix months ended SeptemberJune 30, 2020 and 2019, is summarized below (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
SBA Debentures$1,068
 $1,295
 $3,406
 $3,843
PWB Credit Facility285
 802
 1,276
 1,896
Unsecured Notes2,662
 1,726
 7,867
 5,178
BNP Facility433
 641
 1,752
 647
Total interest expense (1)
$4,448
 $4,464
 $14,301
 $11,564
(1) Interest expense is inclusive of interest on2021 decreased $0.8 million compared to the outstanding balance, commitment fees on undrawn amounts, andcorresponding period in the amortization of deferred financing costs.prior year, primarily due to a $20.9 million decrease in the weighted average debt balance.
Management fee expense for the three and nine months ended SeptemberJune 30, 2020,2021 remained stable compared to the prior quarter consistent with changes in total assets. Management fee expense for the six months ended June 30, 2021 decreased $0.3$0.2 million and $0.3 million, respectively, overcompared to the corresponding period in the prior year period due to a decreaseconsistent with changes in the size of our portfolio.total assets.
The $1.0 million decrease in incentive fee expense duringfees earned by OFS Advisor for the three months ended SeptemberJune 30, 2020, and the $2.32021 increased $0.8 million decrease in incentive fee expense prior to the Income Incentive Fee waiver of $0.4 million during the nine months ended September 30, 2020, compared to the prior year corresponding periods were attributablequarter due to a decrease in net investment income resulting from a declinean increase in net interest margin. On May 4, 2020, OFS Advisor agreed to irrevocably waive the receipt of

$0.4 million in Income Incentive Fees (based on net investment income) related toPre-incentive fee net investment income that it would otherwise be entitled to receive underdid not exceed the Investment Advisory Agreementperformance hurdle for incentives in the three months ended March 31, 2020. As a result of2021. Incentive fee expense for the voluntarysix months ended June 30, 2021 before taking into account the incentive fee waiver we incurred Income Incentive Fee expense of $0.4 million forduring the three months ended March 31, 2020, which is equaldecreased $0.3 million compared to half the Income Incentive Fee expense we would have incurred for such period.
The $0.1 millioncorresponding period in the prior year, primarily due to the decrease in professionalnet interest margin during the first quarter of 2021.
Professional fees for the three months ended SeptemberJune 30, 2020,2021 increased $0.1 million compared to the prior quarter. Professional fees for the six months ended June 30, 2021 decreased $0.2 million compared to the corresponding prior year period was attributable to a reduction in valuation and accounting services. The $0.1 million increase in professional fees for the nine months ended September 30, 2020, compared to the corresponding prior year period was attributable to additional costs related to the prior year audit.due to a decrease in valuation services.
Administration fee expense for the three and nine months ended SeptemberJune 30, 2020, increased $40,000 and $0.22021 decreased $0.1 million respectively, overcompared to the corresponding prior year periods,quarter due to an increase in our allocable portion of OFS Services’s personnel and software costs.
Other expenses for the nine months ended September 30, 2020, increased $0.5 million, over the corresponding prior year period, primarily dueallocations related to the write-off of deferred offering costs relating to our prior shelf registration and an excise tax accrual, as well as a reversal of an excise tax accrual inyear-end administrative services, including audit support during the first quarter of 2019.2021. Administration fee expense for the six months ended June 30, 2021 remained stable with the corresponding period in the prior year.
General and administrative expenses for the three months ended June 30, 2021 remained stable with the prior quarter. General and administrative expenses decreased $0.1 million over the prior year primarily due to tax expenses in the corresponding period in the prior year.
Net realized and unrealized gain (loss) on investments
Net gain (loss), inclusive of realized and unrealized gains (losses), by investment type for the three and nine months ended SeptemberJune 30, 20202021 and 2019,March 31, 2021 and six months ended June 30, 2021 and 2020, were as follows (in thousands):
Three Months EndedSix Months Ended June 30,
June 30, 2021March 31, 202120212020
Senior secured debt$918 $3,880 4,796 $(23,368)
Subordinated debt3,513 (1,442)2,071 (7,590)
Preferred equity(81)721 640 (2,669)
Common equity, warrants and other14,371 1,373 15,744 5,986 
Structured Finance Notes690 (543)147 (3,707)
Deferred income tax benefit (expense)(205)(66)(269)416 
Total net gain (loss) on investments$19,206 $3,923 $23,129 $(30,932)
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
Senior secured debt$7,066

$(3,981)
$(16,428)
$(7,364)
Subordinated debt(3,995)
(921)
(11,585)
(709)
Preferred equity, net of taxes(88)
2,396

(2,336)
804
Common equity, warrants and other10,837

797

16,942

2,747
Structured Finance Notes1,495
 (1,382) (2,212) (1,172)
Total net gain (loss) on investments$15,315
 $(3,091) $(15,619) $(5,694)
Net gain on investments for the three months ended June 30, 2021 and March 31, 2021
Three and nine months ended SeptemberJune 30, 20202021
Our portfolio experienced net gains of $15.3$19.2 million in the thirdsecond quarter of 20202021, principally due to a $18.3 million, or 6.8%, improvement in the fair values of our directly originated debt and equity investments. Net gains for the quarter include realized losses of $10.8 million primarily on the sale of our subordinated debt investment in Community Intervention Services, LLC and the write-off of equity interests in My Alarm Center, LLC, which were substantially recognized as unrealized losses in prior fiscal years.
During the three months ended June 30, 2021, our senior secured debt remained stable with the prior quarter and experienced net gains of $0.9 million.
The net appreciation of $3.5 million on our subordinated debt investments in the second quarter of 2021 was primarily attributable to a $3.5 million improvement on our debt investment in Eblens Holdings, Inc. .
The net gains on our common equity in the second quarter of 2021 was primarily attributable to the $12.1 million improvement in Pfanstiehl Holdings, Inc.
65

Three months ended March 31, 2021
In the first quarter of 2021, our portfolio experienced net gains of $3.9 million, primarily as a result of performance improvements in our directly originated debt and expansionequity investments, resulting in net unrealized appreciation.
In the first quarter of 2021, the valuation multiplenet appreciation on our senior secured debt investments was primarily attributable to a $1.5 million improvement on our debt investment in Wastebuilt Environmental Solutions LLC. We also experienced general appreciation in our senior secured investments as a result of credit spread tightening observed in the market, leading to a 31 basis point reduction in the weighted average discount rates utilized in our discounted cash flow fair value models.
First quarter 2021 net losses in our subordinated debt investments was principally due to a decrease of $2.3 million in the fair value of our subordinated debt investment in Online Tech Stores LLC, resulting from further degradation of performance at that company.
Net gain on investments for the six months ended June 30, 2021 and 2020
Six months ended June 30, 2021
Our portfolio experienced net gains of $23.1 million during the six months ended June 30, 2021, principally due to a $22.6 million net gain on our directly originated debt and equity investments. During the six months ended June 30, 2021, our common equity investment in Pfanstiehl Holdings, Inc., which appreciated $7.9 million. We also experienced net gains from the return of liquidity to the broadly syndicated loan market, which contributed to the improvement in the fair values of $5.0 million of our Structured Finance Note investments and our broadly syndicated loan investments. One measuresubordinated debt investment in Eblens Holdings, Inc. had unrealized appreciation of liquidity in the broadly syndicated loan market is the average bid-ask spread on the Refinitiv Market Overall (North America) Loan Index which narrowed to 1.53 points at September 30, 2020, from 1.98 points at$13.0 million and $4.0 million, respectively.
Six months ended June 30, 2020 but has not yet returned to its long-term historic average of 1.0. These net gains were partially offset by $5.7 million in
Our portfolio experienced net unrealized losses on our debt investments in Envocore Holding, LLC, Inc., Eblens Holdings, Inc., and 3rd Rock Gaming Holding, LLC.
Duringof $20.9 million during the ninesix months ended SeptemberJune 30, 2020, our portfolio experienced net losses of $15.6 million, primarily due to the adverse economic effects of the COVID-19 pandemic on market conditions and the overall economy, and the related declines in quoted loan prices that have not yet fully recovered from their pre-pandemic levels.prices. Additionally, we incurred realized losses of $10.0 million, primarily due to the loss of $9.1 million on the restructuring of our debt investment in Constellis Holdings, LLC, which was fully recognized as an unrealized loss as of December 31, 2019.
During the three months ended September 30, 2020, we recognized net gains of $7.1 million on our senior debt investments, primarily as a result of unrealized appreciation of $3.5 million and $3.4 million on broadly syndicated loans and directly originated loans, respectively.
During the three months ended September 30, 2020, we recognized net losses of $4.0 million on our subordinated debt investments, primarily as a result of unrealized depreciation of $3.4 million on our investment in Eblens Holdings, Inc.
For the three months ended September 30, 2020, we recognized net gains of $10.8 million on our common equity, warrants and other investments, primarily as a result of unrealized appreciation of $7.8 million on Pfanstiehl Holdings, Inc. and $2.4 million on our equity appreciation rights in Southern Technical Institute, LLC.
For the three months ended September 30, 2020, we recognized unrealized appreciation of $1.5 million on our Structured Finance Note investments, primarily due to the continued return of liquidity to the broadly syndicated loan market.

Three and nine months ended September 30, 2019
We recognized net losses of $4.0 million on senior secured debt during the three months ended September 30, 2019, primarily as a result of the unrealized depreciation of $4.1 million on Constellis Holdings, LLC and $0.8 million on MAI Holdings, Inc, offset by unrealized appreciation of $0.6 million on TRS Services, LLC. Additional net unrealized losses on senior secured debt of $3.4 million for the nine months ended September 30, 2019, were primarily a result of additional unrealized depreciation on Constellis Holdings, LLC and MAI Holdings, Inc. We also recognized a realized gain of $0.2 million primarily as a result of the partial sale of our investment in Cenexel Clinical Research Holdings, Inc. and the sale of our investment in Davis Vision, Inc.
We recognized net losses of $0.9 million on subordinated debt during the three months ended September 30, 2019, primarily as a result of unrealized depreciation of $0.9 million on Online Tech Stores, LLC. Net gains of $0.2 million for the nine months ended September 30, 2019 were primarily a result of net positive impact of portfolio company-specific performance factors.
We recognized net gains of $2.4 million on preferred equity investments for the three months ended September 30, 2019, primarily as a result of unrealized appreciation of $2.9 million on TRS Services, LLC Class A units, offset by unrealized depreciation of $0.5 million on Contract Datascan Series A units. We recognized net gains of $0.8 million on preferred equity securities for the nine months ended September 30, 2019, primarily due to unrealized appreciation of $1.7 million on our preferred equity portfolio as a result of net positive impact of portfolio company-specific performance factors, offset by a realized loss of $0.9 million on Maverick Healthcare Equity, LLC.
We recognized net gains of $0.8 million on common equity and warrant investments for the three months ended September 30, 2019, primarily as a result of unrealized appreciation of $1.3 million on Pfanstiehl Holdings, Inc. and $0.9 million on Professional Pipe Holdings, LLC, offset by unrealized depreciation of $1.5 million on MTE Holdings Corp. We recognized net gains of $2.7 million on common equity and warrant investments for the nine months ended September 30, 2019, primarily due to unrealized appreciation of $6.1 million across several portfolio company investments from the positive impact of portfolio company-specific performance factors, offset primarily by unrealized depreciation of $2.3 million in Contract Datascan Holdings, Inc. as a result of negative portfolio company-specific performance factors.
We recognized unrealized depreciation of $1.4 million on Structured Finance Notes for the three months ended September 30, 2019, and unrealized depreciation of $1.2 million for the nine months ended September 30, 2019, primarily as a result of negative impact of mark-to-market adjustments since our investment purchases.
Loss on Impairment of Goodwill
The decline in the price of our common stock and the level at which it continues to trade relative to the broader stock indices for the BDC industry, led us to conclude in the third quarter of 2020 that an impairment in the value of our goodwill was more likely than not. Moreover, the discount at which our stock traded to its net asset value resulted in our conclusion on the impairment of goodwill equal to the full amount of its carrying value of $1.1 million was appropriate. The loss on impairment of goodwill did not impact our third quarter management or incentive fees.
Loss on Extinguishment of Debt
During the ninesix months ended SeptemberJune 30, 2020,2021, we prepaid $21.1$9.8 million of SBA debentures that were contractually due September 1, 2023, March 1, 2024 and September 1, 2024. Weredeemed $98.5 million of unsecured notes, and, as a result, we recognized losses on extinguishment of debt of $0.24$2.3 million related to the charge-off of deferred borrowing costs on the prepaid debentures.these instruments.
During the threesix months ended SeptemberJune 30, 2020, the BLA was amended to reduce the total commitment from $100.0we prepaid $16.1 million to $50.0 million. Weof SBA debentures, and recognized a losslosses on extinguishment of debt of $0.1 million related to the charge-off of deferred borrowing costs on the commitment reduction.costs.
Liquidity and Capital Resources
At SeptemberJune 30, 2020,2021, we held cash of $18.3$35.2 million, which includes $5.1$15.7 million held by SBIC I LP, our wholly owned SBIC, and $0.9$5.9 million held by OFSCC-FS. Our use of cash held by SBIC I LP may be restricted by SBA regulation, including limitations on the amount of cash SBIC I LP can distribute to the Parent. Any such distributions to the Parent from SBIC I LP are generally restricted under SBA regulations to a statutory measure of undistributed accumulated earnings or regulatory capital of SBIC I LP, and require the prior approval of the SBA. During the ninesix months ended SeptemberJune 30, 2020,2021, the Parent received distributionsa return of $8.1capital distribution of $19.1 million from SBIC I LP. The Company is limited to follow-on investments in current portfolio companies held through SBIC I LP. Distributions from OFSCC-FS to the Parent are restricted by the terms and conditions of the BNP Facility. During the ninesix months ended SeptemberJune 30, 2020,2021, the Parent received $1.7$1.9 million in cash distributions from OFSCC-FS. As of SeptemberJune 30, 2020,2021, cash available to be distributed from SBIC I LP and OFSCC-FS were $4.9$12.1 million and $-0-, respectively.

At SeptemberJune 30, 2020,2021, we had an unused commitment of $50.0$25.0 million under our PWB Credit Facility, as well as an unused commitment of $125.4$125.9 million under our BNP Facility, both subject to a borrowing base requirements and other covenants. Based on fair values and equity capital at June 30, 2021, we could access available lines of credit for $129.0 million and remain in compliance with our asset coverage requirements. As of August 2, 2021, we had cash on hand of approximately $29.6 million. We continue to believe that we have sufficient levels of liquidity to support our existing portfolio companies and selectively deploy capital in new investment opportunities in this challenging environment.
The Parent may make unsecured loans to SBIC I LP, the aggregate which cannot exceed $35 million at any given time, and no interest may be charged on the unpaid principal balance. There were no intercompany loans between the Parent and SBIC I LP as of SeptemberJune 30, 2020. On October 7, 2020, we amended our BLA with Pacific Western Bank to reduce the total commitment under the PWB Credit Facility from $50.0 million to $20.0 million. As of November 5, 2020, after giving effect to the reduction, our PWB Credit Facility had an unused commitment of $20.0 million, subject to a borrowing base requirements and other covenants.2021.
Based on fair values and equity capital at September 30, 2020, we could access available lines of credit for $100 million and remain in compliance with our asset coverage requirements. As of November 4, 2020, we had cash on hand of approximately $48.5 million. We continue to believe that we have sufficient levels of liquidity to support our existing portfolio companies and selectively deploy capital in new investment opportunities in this challenging environment.
66

Sources and Uses of Cash
We generate operating cash flows from net investment income and the net liquidation of portfolio investments, and use cash in our operations in the net purchase of portfolio investments and payment of expenses. Significant variations may exist between net investment income and cash from net investment income, primarily due to the recognition of non-cash investment income, including certain Net Loan Fee amortization, PIK interest, and PIK dividends, which generally will not be fully realized in cash until we exit the investment.investment, as well as accreted interest income on Structured Finance Notes, which may not coincide with cash distributions from these investments. As discussed in "Item 1.–Financial Statements–Note 3," we pay OFS Advisor a quarterly incentive fee with respect to our pre-incentive fee net investment income, which may include investment income that we have not received in cash. In addition, we must distribute substantially all of our taxable income, which approximates, but will not always equal, the cash we generate from net investment income to maintain our RIC tax treatment. Historically, our distributions have been in excess of taxable income, and we have limited history of net taxable gains. We also obtain cash to fund investments or general corporate activities from the issuance of securities and our revolving line of credit. These principal sources and uses of cash and liquidity are presented below (in thousands):
 Six Months Ended June 30,
 20212020
Cash from net investment income(1)
$5,925 $4,245 
Net (purchases and originations)/repayments and sales of portfolio investments(1)
(8,099)41,627 
Net cash provided by (used in) operating activities(2,174)45,872 
Distributions paid to stockholders(2)
(5,573)(6,728)
Net payments under lines of credit(8,000)(4,700)
Repayment of SBA debentures(9,765)(16,110)
Proceeds from unsecured notes offering, net of discounts121,791 — 
Redemption of unsecured notes(98,525)— 
Other financing activities(303)— 
Net cash used in financing activities(375)(27,538)
Increase (decrease) in cash$(2,549)$18,334 
  Nine Months Ended September 30,
  2020 2019
Cash from net investment income $1,614
 $10,270
Net (purchases and originations)/repayments and sales of portfolio investments 40,881
 (105,619)
Net cash provided by (used in) operating activities 42,495
 (95,349)
     
Distributions paid to stockholders(1)
 (8,974) (13,464)
Net borrowings under lines of credit (31,800) 80,475
Repayment of SBA debentures (21,110) —
Proceeds from unsecured notes offering, net of discounts 24,250
 —
Other financing activities (11) (1,860)
Net cash provided by (used in) financing activities (37,645) 65,151
Increase (decrease) in cash $4,850
 $(30,198)
(1)The determination of the tax attributes of our distributions is made annually as of the end of our fiscal year based upon our ICTI for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of our distributions for a full year. See "Item 1–Financial Statements–Note 10."
Cash from net investment income
Cash from net investment income decreased $8.7 million for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, principally due to an decrease in collected net interest and fee income of $7.5 million and an increase in interest expense paid of $3.1 million, offset by an decrease in fees paid to OFS Advisor and affiliates of $1.1 million, as well as a decrease in other expenses paid of $0.4 million.
Cash flow from net investment income was reduced by $2.8 million during the nine months ended September 30, 2020 as a result of amendments that converted cash interest to PIK interest, loans that have been placed on non-accrual status and deferrals of interest payments to the fourth quarter of 2020. However, 98% of our performing loans as of September 30, 2020 paid interest for the third quarter of 2020.

(1)    Net (purchases and originations)/repayments and sales of portfolio investments includes purchase and origination of portfolio investments, proceeds from principal payments on portfolio investments, proceeds from sale or redemption of portfolio investments, changes in receivable for investments sold, payable form investments purchased as reported in our statements of cash flows, as well as the excess of proceeds from distributions received from structured finance notes over accretion of interest income on structured finance notes. Cash from net investment income includes all other cash flows from operating activities reported in our statements of cash flows. Certain amounts in the prior year have been reclassified to conform with the current year presentation.
(2)    The determination of the tax attributes of our distributions is made annually as of the end of our fiscal year based upon our ICTI for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of our distributions for a full year.
Cash from net investment income
Cash from net investment income increased $1.7 million for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, principally due to a $1.0 million increase in the excess distributions received from our investments in Structured Finance Notes over the accretion of interest income on such Structured Finance Note investments.
Net (purchases and originations)/repayments and sales of portfolio investments
During the ninesix months ended SeptemberJune 30, 2020,2021, net purchases and originations of portfolio investments of $40.98.1 million were primarily due to $89.8$120.9 million of cash we used to purchase portfolio investments, offset by $130.6$117.5 million of cash we received from amortized cost repayments which includes $41.1 in the full loan repayments on TRS Services, LLC, Performance Team LLC, and Cirrus Medical Staffing, Inc., as well as sales on our portfolio investments. During the ninesix months ended SeptemberJune 30, 2019,2020, net purchases and originations of $105.6portfolio investments of $41.6 million were primarily due to $168.7$80.2 million of cash we used to purchase portfolio investments, offset by $63.1$124.5 million of cash we received from principal paymentsamortized cost repayments and sales on our portfolio investments. See "—Portfolio Composition and Investment Activity–Investment Activity."
Borrowings
SBA Debentures
SBIC I LP has aLP’s SBIC license that allowed it to obtain leverage by issuing SBA-guaranteed debentures, subject to issuance of a capital commitment by the SBA and customary procedures. These debentures are non-recourse to us, and bear interest payable
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semi-annually, and each debenture has a maturity date that is ten years following issuance. The interest rate was fixed at the first pooling date after issuance, which was March and September of each year, at a market-driven spread over U.S. Treasury Notes with ten-year maturities. As of SeptemberJune 30, 20202021 and 2019,2020, SBIC I LP had outstanding debentures of $128.8$95.5 million and $149.9$133.8 million, respectively.
On a stand-alone basis, SBIC I LP held $239.6$219.5 million and $249.6$223.8 million in total assets at SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively, which accounted for approximately 50%42% and 46% of the Company’s total consolidated assets, respectively.
As part of our plans to focus on lower-yielding, first lien senior secured loans to larger borrowers, which we believe will improve our overall risk profile, SBIC I LP intends, over time, to repaypay its outstanding SBA debentures prior to thetheir scheduled maturity dates of its debentures.dates. Under a plan approved by the SBA, we will only make follow-on investments in current portfolio companies held by SBIC I LP. We believe that investing in more senior loans to larger borrowers is consistent with our view of the private loan market and will reduce our overall leverage on a consolidated basis. During the ninesix months ended SeptemberJune 30, 2020,2021, SBIC I LP prepaid $21.1$9.8 million of SBA debentures that were contractually due September 1, 2023, March 1, 20242022 and September 1, 2024. We recognized lossesa loss on extinguishment of debt of $0.24$0.1 million related to the charge-off of deferred borrowing costs on the prepaid debentures.
SBIC I LP is periodically examined and audited by the SBA’s staff to determine its compliance with SBA regulations. If SBIC I LP fails to comply with applicable SBA regulations, the SBA could, depending on the severity of the violation, limit or prohibit SBIC I LP’s use of debentures, declare outstanding debentures immediately due and payable, and/or limit SBIC I LP from making distributions.
We have received exemptive relief from the SEC effective November 26, 2013, which permits us to exclude SBA guaranteed debentures from the definition of senior securities in the statutory 150% asset coverage ratio under the 1940 Act.
PWB Credit Facility
We are party to a BLA with Pacific Western Bank, as lender, to provide us with a senior secured revolving credit facility, or the PWB Credit Facility, which is available for general corporate purposes including investment funding. The maximum availability of the PWB Credit Facility is equal to 50% of the aggregate outstanding principal amount of eligible loans included in the borrowing base, which excludes subordinated loan investments (as defined in the BLA) and as otherwise specified in the BLA. The PWB Credit Facility is guaranteed by OFSCC-MB, Inc. and secured by all of our current and future assets, excluding assets held by SBIC I LP, OFSCC-FS and the Company’s partnership interests in SBIC I LP and OFS SBIC I, GP.
In June and July 2020,    On February 17, 2021, we amended the BLA was amended to among other things,things: (i) increase the maximum amount available from $20.0 million to $25.0 million; (ii) decrease the interest rate floor from 5.25% per annum to 5.00% per annum; (iii) modify certain financial performance covenantscovenants; and reduce(iv) extend the total commitmentmaturity date from $100.0 millionFebruary 28, 2021 to $50.0 million. We recognized a loss on extinguishment of debt of $0.1 million related to the charge-off of deferred borrowing costs on the commitment reduction. On October 7, 2020, we executed an amendment to our BLA with Pacific Western Bank in order to reduce the total commitment under the PWB Credit Facility from $50.0 million to $20.0 million. In October 2020, the Company expects to recognize a loss on extinguishment of debt of $42,000 related to the charge-off of deferred borrowing costs on this commitment reduction.February 28, 2023.
As of SeptemberJune 30, 2020,2021, we had no outstanding balance and an unused commitment of $50.0$25.0 million under the PWB Credit Facility. As of November 5, 2020, after giving effect to the reduction, our PWB Credit Facility, had an unused commitment of $20.0 million, subject to a borrowing base and other covenants.
The BLA contains customary terms and conditions, including, without limitation, affirmative and negative covenants, such as information reporting requirements, a minimum tangible net asset value, a minimum quarterly net investment income

after incentive fees, a debt/worth ratio and a net loss restriction. The BLA also contains customary events of default, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-default to other indebtedness, bankruptcy, change in investment advisor, and the occurrence of a material adverse change in our financial condition. As of SeptemberJune 30, 2020,2021, we were in compliance with the applicable covenants under the PWB Credit Facility.
Unsecured Notes
In OctoberOn February 10, 2021, we closed the public offering of $100.0 million aggregate principal amount of our 4.75% notes due 2026, and November 2019,on March 18, 2021, we publicly offered the Unsecuredclosed an additional public offering of $25.0 million aggregate principal amount of our 4.75% notes due 2026 (the "Unsecured Notes Due October 2026 with an aggregate principal of $54.3 million, which included a partial exercise of the underwriters' overallotment option.February 2026"). The total net proceeds to us from the Unsecured Notes Due OctoberFebruary 2026, after deducting underwriting discountsfees of $3.2 million and offering expenses of $0.3 million, was approximately $121.5 million. The Unsecured Notes Due February 2026 bear an effective interest rate, including amortization of deferred debt issuance costs, of $2.0 million were $52.3 million. In September 2020,5.32%. The Unsecured Notes Due February 2026 will mature on February 10, 2026, and we publicly offeredmay redeem the Unsecured Notes Due September 2023 with aggregate principal of $25.0 million.February 2026 in whole or in part at any time, or from time to time, at our option at par plus a "make-whole" premium, if applicable. The total net proceeds to us from the Unsecured Notes Due September 2023, after deducting underwriting discountsFebruary 2026 bear interest at a rate of 4.75% per year payable semi-annually in arrears on February 10 and offering costsAugust 10 of approximately $1.0 million, were approximately $24.0. Theeach year, commencing on August 10, 2021.
In connection with, and using the proceeds from, the issuance of the Unsecured Notes totaled $177.9Due February 2026, on March 12, 2021, we redeemed all $50.0 million in aggregate principal amount of the Unsecured Notes Due April 2025 and all
68

$48.5 million in aggregate principal amount of the Unsecured Notes Due October 2025. The Unsecured Notes Due April 2025 and the Unsecured Notes Due October 2025 were redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid interest thereon from January 31, 2021, through, but excluding, March 12, 2021. We recognized a loss on extinguishment of debt with net proceeds of $171.4$2.2 million related to us.the charge-off of deferred borrowing costs on the redemption of the notes.
The Unsecured Notes are direct unsecured obligations and rank equal in right of payment with all of our current and future unsecured indebtedness. Because the Unsecured Notes are not secured by any of our assets, they are effectively subordinated to all existing and future secured unsubordinated indebtedness (or any indebtedness that is initially unsecured as to which we subsequently grant a security interest), to the extent of the value of the assets securing such indebtedness, including, without limitation, borrowings under the PWB Credit Facility.
In order to, among other things, reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may, from time to time, purchase the Unsecured Notes for cash in open market purchases and/or privately negotiated transactions. We will evaluate any such transactions in light of then-existing market conditions, taking into account our current liquidity, prospects for future access to capital, contractual restrictions and other factors. The amounts involved in any such transactions, individually or in the aggregate, may be material.
BNP Facility
    On June 20, 2019, OFSCC-FS entered into the BNP Facility, which provides for borrowings in an aggregate principal amount up to $150.0 million, of which $24.7$24.1 million was drawn as of SeptemberJune 30, 2020.2021. Borrowings under the BNP Facility bear interest based on LIBOR for the relevant interest period, plus an applicable spread. The effective interest rate on the BNP Facility was 6.66%6.06% at SeptemberJune 30, 2020.2021. The BNP Facility will mature on the earlier of June 20, 2024 or upon certain other events defined in the credit agreement which result in accelerated maturity. Borrowings under the BNP Facility are secured by substantially all of the assets held by OFSCC-FS. The unused commitment under the BNP Facility was $125.4$125.9 million as of SeptemberJune 30, 2020.2021. As of SeptemberJune 30, 2020,2021, we were in compliance with the applicable covenants.
On a stand-alone basis, OFSCC-FS held approximately $64.8$116.9 million and $92.5$72.4 million in total assets at SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively, which accounted for approximately 13.4%22% and 17%15% of our total consolidated assets, respectively.
Other Liquidity Matters 
We expect to fund the growth of our investment portfolio utilizing our current borrowings, follow-on equity offerings, and issuances of senior securities or future borrowings to the extent permitted by the 1940 Act. We cannot assure stockholders that our plans to raise capital will be successful. In addition, we intend to distribute to our stockholders substantially all of our taxable income in order to satisfy the requirements applicable to RICs under Subchapter M of the Code. Consequently, we may not have the funds or the ability to fund new investments or make additional investments in our portfolio companies. The illiquidity of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded value.
In addition, asAs a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our assets, as defined by the 1940 Act, are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Under the relevant SEC rules, the term “eligible portfolio company” includes all private companies, companies whose securities are not listed on a national securities exchange, and certain public companies that have listed their securities on a national securities exchange and have a market capitalization of less than $250 million, in each case organized in the United States. Conversely, we may invest up to 30% of our portfolio in opportunistic investments not otherwise eligible under BDC regulations. Specifically, as part of this 30% basket, we may consider investments in investment funds that are operating pursuant to certain exceptions to the 1940 Act and in advisers to similar investment funds, as well as in debt or equity of middle-market portfolio companies located outside of the United States and debt and equity of public companies that do not meet the definition of eligible portfolio companies because their market capitalization of publicly traded equity securities exceeds the levels provided for in the 1940 Act. As of June 30, 2021, approximately 85% of our investments were qualifying assets.
BDCs generally will beare required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities (including SBIC I LP’s SBA-guaranteed debt), to total senior securities, which include all of our borrowings (excluding SBA-guaranteed debt) and any outstanding preferred stock, (of which we had none at September 30, 2020), of at least 150%200% (150% if certain requirements are met). We received an exemptive order from the SEC to permit us to exclude the debt of SBIC I LP guaranteed by the SBA from the definition of Senior Securities in the statutory asset coverage ratio under the 1940 Act. This requirement limits the amount that we may borrow. To fund growth in our investment portfolio in the future, we anticipate the need to raise additional capital from various sources, including the equity markets and the securitization or other debt-related markets, which may or may not be available on favorable terms, if at all.
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On May 3, 2018, our Board, including a required majority (as such term is defined in Section 57(o) of the 1940 Act) thereof, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as

amended by the SBCAA.Act. As a result, our minimum required asset coverage ratio decreased from 200% to 150%, effective May 3, 2019.
On May 22, 2018, the Board authorized the Stock Repurchase Program under which we could acquire up to $10.0 million of our outstanding common stock through the two-year period ending May 22, 2020. On May 4, 2020, the Board extended the Stock Repurchase Program for an additional two-year period. Under the extended Stock Repurchase Program, we are authorized to repurchase shares in open-market transactions, including through block purchases, depending on prevailing market conditions and other factors. We expect the Stock Repurchase Program to be in place through May 22, 2022, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program does not obligate us to acquire any specific number of shares, and all repurchases will be made in accordance with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases. The Stock Repurchase Program may be extended, modified or discontinued at any time for any reason. We have provided our stockholders with notice of our intention to repurchase shares of our common stock in accordance with 1940 Act requirements. We retire all shares of common stock that we purchased in connection with the Stock Repurchase Program. No
The following table summarizes shares of common stock were repurchased under the Stock Repurchase Program during the threesix months ended SeptemberJune 30, 2020.2021 (in thousands).
Period
Total Number
of Shares Purchased
Cost of Shares PurchasedAverage Price Paid Per Share
January 1, 2021 through March 31, 2021700 $5 $6.70 
April 1, 2021 through June 30, 2021— $— $— 
As of SeptemberJune 30, 2020,2021, the aggregate amount outstanding of the senior securities issued by us was $202.5$228.4 million, for which our asset coverage was 174%179%. The Small Business Administration Debentures are not subject to the asset coverage requirements of the 1940 Act as a result of exemptive relief granted to us by the SEC effective November 26, 2013. The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness.
As a BDC, we are generally not permitted to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if the Board determines that such sale is in the best interests of us and our stockholders, and if our stockholders approve such sale. On June 23, 2020,15, 2021, our stockholders approved a proposal to authorize us, with approval of our Board, to sell or otherwise issue shares of our common stock (during a twelve-month period) at a price below our then-current net asset value per share in one or more offerings, subject to certain limitations (including that the cumulative number of shares sold pursuant to such authority does not exceed 25% of our then outstanding common stock immediately prior to each such sale).
Contractual Obligations and Off-Balance Sheet Arrangements
The following table shows our contractual obligations as of SeptemberJune 30, 20202021 (in thousands):
 Payments due by period
Contractual Obligation (1)
TotalLess than
year		1-3 years (2)4-5 years (2)After 5
years (2)
PWB Credit Facility$— $— $— $— $— 
Unsecured Notes204,325 — 25,000 125,000 54,325 
SBA Debentures95,505 — 7,000 88,505 — 
BNP Facility24,050 — — 24,050 — 
Total(3)
$323,880 $— $32,000 $237,555 $54,325 
 
Payments due by period
Contractual Obligation (1)

Total
Less than
year
1-3 years (2)
4-5 years (2)
After 5
years (2)
PWB Credit Facility
$—
 $—
 $—
 $—
 $—
Unsecured Notes 177,850
 —
 25,000
 50,000
 102,850
SBA Debentures
128,770
 —
 14,000
 114,770
 —
BNP Facility 24,650
 —
 —
 24,650
 —
Total
$331,270
 $—
 $39,000
 $189,420
 $102,850
(1)Excludes commitments to extend credit to our portfolio companies.
(1)Excludes commitments to extend credit to our portfolio companies.
(2)The PWB Credit Facility is scheduled to mature on February 28, 2021. The SBA debentures are scheduled to mature between September 2022 and September 2025. SBIC I LP intends, over time, to repay outstanding SBA debentures prior to the scheduled maturity dates of its debentures. The Unsecured Notes are scheduled to mature between October 2023 and October 2026. The BNP Facility is scheduled to mature on June 20, 2024.
(2)The PWB Credit Facility is scheduled to mature on February 28, 2023. The SBA debentures are scheduled to mature between September 2022 and September 2025. SBIC I LP is repaying over time its outstanding SBA debentures prior to the scheduled maturity dates of its debentures. The Unsecured Notes are scheduled to mature between September 2023 and October 2026. The BNP Facility is scheduled to mature on June 20, 2024.
(3)63% of the outstanding debt is unsecured.
We continue to believe our long-dated financing, with approximately 88%90% of our total debt contractually maturing in 2024 and beyond, affords us operational flexibility.
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We have entered into contracts with third parties under which we have material future commitments—the Investment Advisory Agreement, pursuant to which OFS Advisor has agreed to serve as our investment adviser, and the Administration Agreement, pursuant to which OFS Services has agreed to furnish us with the facilities and administrative services necessary to conduct our day-to-day operations.
We may become 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. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. WeAt June 30, 2021, we had $7.4$11.0 million in unfunded commitments to threeeight portfolio companies at September 30, 2020.companies. We continue to believe that we have

sufficient levels of liquidity to support our existing portfolio companies and will meet these unfunded commitments by using our cash on hand or utilizing our available borrowings under the PWB Credit Facility.
Distributions
We are taxed as a RIC under the Code. In order to maintain our statustax treatment as a RIC, we are required to distribute annually to our stockholders at least 90% of our ICTI, as defined by the Code. Additionally, to avoid a 4% excise tax on undistributed earnings we are required to distribute each calendar year the sum of (i) 98% of our ordinary income for such calendar year (ii) 98.2% of our net capital gains for the one-year period ending October 31 of that calendar year and (iii) any income recognized, but not distributed, in preceding years and on which we paid no federal income tax. Maintenance of our RIC status also requires adherence to certain source of income and asset diversification requirements. Generally, a RIC is entitled to deduct dividends it pays to its stockholders from its income to determine “taxable income.” Taxable income includes our taxable interest, dividend and fee income, and taxable net capital gains. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as gains or losses are not included in taxable income until they are realized. In addition, gains realized for financial reporting purposes may differ from gains included in taxable income as a result of our election to recognize gains using installment sale treatment, which generally results in the deferment of gains for tax purposes until notes or other amounts, including amounts held in escrow, received as consideration from the sale of investments are collected in cash. Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, which includes contractual PIK interest, and the amortization of discounts and fees. Cash collections of income resulting from contractual PIK interest and dividends or the amortization of discounts and fees generally occur upon the repayment of the loans or debt securities that include such items. Non-cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation, and amortization expense.
Our Board maintains a variable dividend policy with the objective of distributing four quarterly distributions in an amount not less than 90-100% of our taxable quarterly income or potential annual income for a particular year. In addition, at the end of the year, we may also pay an additional special dividend, or fifth dividend, such that we may distribute approximately all of our annual taxable income in the year it was earned, while maintaining the option to spill over our excess taxable income to a following year. Each year, a statement on Form 1099-DIV identifying the source of the distribution is mailed to the Company’s stockholders. Generally, a RIC is entitled to deduct dividends it pays to its stockholders from its income to determine “taxable income.” Taxable income includes our taxable interest, dividend and fee income, and taxable net capital gains. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as gains or losses are not included in taxable income until they are realized. In addition, gains realized for financial reporting purposes may differ from gains included in taxable income as a result of our election to recognize gains using installment sale treatment, which generally results in the deferment of gains for tax purposes until notes or other amounts, including amounts held in escrow, received as consideration from the sale of investments are collected in cash. Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, which includes contractual PIK interest, and the amortization of discounts and fees. Cash collections of income resulting from contractual PIK interest and dividends or the amortization of discounts and fees generally occur upon the repayment of the loans or debt securities that include such items. Non-cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation, and amortization expense.
Recent Developments
On NovemberAugust 3, 2020,2021, our Board declared a distribution of $0.18$0.24 per share for the fourththird quarter of 2020,2021, payable on December 31, 2020September 30, 2021 to stockholders of record as of December 24, 2020.September 23, 2021.
We evaluated events subsequent to SeptemberJune 30, 20202021 through NovemberAugust 5, 2020. On March 11, 2020,2021. We are continuing to closely monitor the World Health Organization declared the novel coronavirus as a pandemic, and on March 13, 2020 the United States declared a national emergency with respect toimpact of the COVID-19 pandemic.pandemic on all aspects of our business, including how it impacts our portfolio companies, employees, due diligence and underwriting processes, and financial markets. The U.S. capital markets experienced extreme volatility and disruption following the outbreak of the COVID-19 pandemic, has severely impacted globalwhich appear to have subsided and returned to
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pre-COVID-19 levels. Nonetheless, certain economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a prolonged period of world-wide economic activity and caused significant volatility and negative pressure indownturn.
On March 27, 2020, the U.S. government enacted the CARES Act, which contains provisions intended to mitigate the adverse economic effects of the coronavirus pandemic. On December 27, 2020, the U.S. government enacted the December 2020 COVID Relief Package. Additionally, on March 11, 2021, the U.S. government enacted the American Rescue Plan, which included additional funding to mitigate the adverse economic effects of the COVID-19 pandemic. It is uncertain whether, or to what extent, our portfolio companies will be able to benefit from the CARES Act, the December 2020 COVID Relief Package, the American Rescue Plan, or any other subsequent legislation intended to provide financial markets. The COVID-19 pandemicrelief or assistance. As a result of this disruption and the preventative measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns, cancellations of events and travel, significant reductions in demand forpressures on their liquidity, certain goods and services, reductions in business activity and financial transactions, supply chain interruptions, and overall economic and financial market instability both globally and in the United States. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter. The outbreak could have a continued adverse impact on economic and market conditions on a global scale. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of the ongoing COVID-19 pandemic. Nevertheless, the COVID-19 pandemic presents material uncertainty and risks with respect to the underlying value of our portfolio companies our business, financial condition, resultshave been, or may continue to be, incentivized to draw on most, if not all, of operations and cash flows,the unfunded portion of any revolving or delayed draw term loans made by us, subject to availability under the terms of such asloans.
The extent of the potential negative impact to financing arrangements, increased costs of operations, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. Further, the COVID-19 pandemic on our operational and financial performance, of the portfolio

companies in which we make investments have been, and may continueincluding our ability to be, significantly impacted by the COVID-19 pandemic, which in turn has, and may continue to have, an impact on the valuation of our investments.
Accordingly, we cannot predict the extent to whichexecute our business financial condition, results of operationsstrategies and cash flows will be affected at this time. The potential impact to our resultsinitiatives in the expected time frame, will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of the COVID-19 pandemiccoronavirus, effectiveness of vaccination deployment and the actions taken by authoritiesgovernments (including stimulus measures or the lack thereof) and other entitiestheir citizens to contain the coronavirus or treat its impact, all of which are beyond our control. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition. Given the fluidity of the situation, we cannot estimate the long-term impact of COVID-19 on our business, future results of operations, financial position, or cash flows at this time.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
The economic effects of the COVID-19 outbreakpandemic has introduced significant volatility in the financial markets. The U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased. In addition, in a prolonged low interest rate environment, including a reduction of LIBOR to zero, our net interest margin will be compressed and adversely affect our operating results. For additional information concerning the COVID-19 outbreakpandemic and its potential impact on our business and our operating results, see"Part II - Other information,I, Item 1A. Risk FactorsFactors”. in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
As of SeptemberJune 30, 2020, 88%2021, 97% of our debt investments bore interest at floating interest rates, at fair value. The interest rates on our debt investments bearing floating interest rates are usually based on a floating LIBOR, and the debt investments typically contain interest rate re-set provisions that adjust applicable interest rates to current market rates on a periodic basis. A significant portion of our loans that are subject to the floating LIBOR rates are also subject to a minimum base rate, or floor, that we charge on our loans if the current market rates are below the respective floors. As of SeptemberJune 30, 2020,2021, a majority of our floating rate loans were based on a floating LIBOR, subject to its floor.
Our outstanding SBA debentures and Unsecured Notes bear interest at fixed rates. Our PWB Credit Facility and BNP Facility have floating interest rate provisions based on the Prime Rate and LIBOR, respectively, with effective interest rates of 5.62%5.02% and 6.66%6.06%, respectively, as of SeptemberJune 30, 2020.2021.
Assuming that the interim and unaudited consolidated balance sheet as of SeptemberJune 30, 20202021 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following tables show the annualized impact of hypothetical changes in interest rate indices (in thousands).
Basis point increaseInterest incomeInterest expenseNet change
25$48 $(64)$(16)
50121 (125)(4)
75231 (186)45 
100609 (247)362 
1251,254 (308)946 
Basis point increase
Interest income
Interest expense
Net change
25
$16

$(58)
$(42)
50
123

(121)
2
75
262

(183)
79
100
821

(246)
575
125
1,476

(308)
1,168
Basis point decrease
Interest income
Interest expense
Net change
25
$(518)
$63

$(455)
50
n/m (1)

n/m (1)

n/m (1)
75
n/m (1)

n/m (1)

n/m (1)
100
n/m (1)

n/m (1)

n/m (1)
125
n/m (1)

n/m (1)

n/m (1)
Basis point decrease(1)
Interest incomeInterest expenseNet change
25$(65)$41 $(24)
(1) Not meaningful.Decreases in LIBOR beyond that presented would not result in a change to interest income or interest expense due to current LIBOR rates and a minimum base rate, or floor, that our debt investments and the PWB Credit Facility contain.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures 
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of SeptemberJune 30, 2020.2021. The term “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under 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 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 principal executive and principal financial officers, 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 cost-benefit relationship of possible controls and procedures. Based on the foregoing evaluation of our disclosure controls and procedures as of SeptemberJune 30, 2020,2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting 
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended SeptemberJune 30, 2020,2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We, OFS Advisor and OFS Services, are not currently subject to any material pending legal proceedings threatened against us as of SeptemberJune 30, 2020.2021. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our business, financial condition, results of operations or cash flows.
Item 1A. Risk Factors
Investing in our common stock may be speculative and involves a high degree of risk. In addition to the other information contained in this Quarterly Report on Form 10-Q, including our financial statements, and the related notes, schedules and exhibits, you should carefully consider the risk factors described in "Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2020, and in "Part II, Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K and Quarterly Report on Form 10-Q are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Other than the risksrisk described below, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019. However, the risks below2020 and disclosed in our AnnualQuarterly Report on Form 10-K, may be, and will continue to be, heightened or exacerbated by10-Q for the COVID-19 pandemic and any worsening of the economic environment.quarter ended March 31, 2021. The risks previously disclosed in our Annual Report on Form 10-K and Quarterly Report on Form 10-Q should be read together with the other information disclosed elsewhere in this Quarterly Report on Form 10-Q and our other reports filed with the SEC.
Events outsideThe interest rates of our control, including public health crises such as the COVID-19 pandemic, have and will continueloans to negatively affect the results of our operations.
Periods of market volatility may continue in response to pandemics, such as the COVID-19 pandemic, or other events outside of our control. These types of events have and will continue to adversely affect our operating results. In December 2019, COVID-19, caused by a novel strain of the coronavirus, surfaced in Wuhan, China. In March 2020, the outbreak of COVID-19 was recognized as a pandemic by the World Health Organization. Shortly thereafter, the President of the United States declared a National Emergency throughout the United States attributable to such outbreak. The outbreak has become increasingly widespread globally and in the United States, including in the markets in which we operate. We have been and continue to assess the effects of the COVID-19 pandemic on our borrowers and are taking steps to help mitigate the adverse consequences to each of their businesses. As a result of the COVID-19 pandemic, we have and may continue to experience difficulty collecting timely interest and principal payments from our borrowers, our asset values have and may continue to decline, and certain of our outstanding loans may need to be extended or restructured. We have held discussions with our borrowers and they have expressed their general concern about the uncertain economic condition. The impact to our results will depend to a large extent on future developments and new information that may emerge regarding the duration of the COVID-19 pandemic and the actions taken by authorities and other entities to contain the COVID-19 pandemic or treat its impact, all of which are beyond our control. Though the magnitude of the impact remains to be seen, our borrowers and by extension our operating results will be adversely impacted by the COVID-19 pandemic.
In addition to adverse United States domestic and global macroeconomic effects, including the adverse impacts on our portfolio companies and investment assets, the COVID-19 pandemic has caused, and will continue to cause, a reduction in our ability to access capital through the capital markets and through our credit facilities, and has otherwise adversely impacted, and will continue to impact, the operation of our business. The COVID-19 pandemic has also caused, and will continue to cause, substantial disruption to our employees, investors, business partners, referral sources, borrowers and prospective borrowers through self-isolation, travel limitations, business restrictions, and otherwise. Many areas within the United States have imposed mandatory closures for businesses not deemed to be essential, and it is currently unclear for how long such closures will last. Though all of OFS Advisor's employees are able to work remotely, these closures have nevertheless affected many of our borrowers and many businesses through which we seek new borrowers, resulting in significant declines in new loans and investments. These effects, individually or in the aggregate, have, and will continue to, adversely impact our business, financial condition, operating results and cash flows and such adverse impacts may be material.
Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially increase our costs, negatively impact our investment income and damage our results of operations and our liquidity position, possibly to a significant degree. The duration of any such impacts cannot be predicted.

The effects of the outbreak of COVID-19 have negatively affected the global economy, the United States economy and the global financial markets, and have and may continue to disrupt our operations and our borrowers' operations, which have and may continue to adversely impact our business, financial condition and results of operations. 
The ongoing COVID-19 global and national health emergency has caused significant disruption in the international and United States economies and financial markets. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability. The United States now has the world’s most reported COVID-19 cases, and all 50 states and the District of Columbia have reported cases of infected individuals. A majority of states, including Illinois, where we are headquartered, have declared states of emergency. This has resulted in an unprecedented slow-down in economic activity and a related increase in unemployment. Since the beginning of the COVID-19 pandemic, more than 55 million people have filed claims for unemployment, and stock markets have experienced increased volatility and, in particular, BDC stocks have significantly declined in value. In response to the COVID-19 pandemic, the Federal Reserve Board has reduced the benchmark fed funds rate to a target range of 0% to 0.25%, and the yields on 10 and 30-year treasury notes have declined to historic lows. The federal banking agencies have encouraged financial institutions to prudently work with affected borrowers. Certain industries have been particularly hard-hit, including the travel and hospitality industry, the restaurant industry and the retail industry. Finally, the spread of the coronavirus has caused OFS Advisor to modify its business practices, including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences. OFS Advisor may take further actions as may be required by government authorities or that it determines are in the best interests of its employees, customers and business partners.
Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened.
As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we couldextend beyond 2021 might be subject to anychange based on recent regulatory changes, including the decommissioning of LIBOR.
LIBOR is the following risks, anybasic rate of which could haveinterest used in lending transactions between banks on the London interbank market and is widely used as a material, adverse effectreference for setting the interest rate on our business, financial condition, liquidity, and results of operations:
demand for our services may decline, making it difficultloans globally. We typically use LIBOR as a reference rate in loans we extend to grow assets and income;
ifportfolio companies such that the economy is unableinterest due to substantially reopen, and high levels of unemployment continue for anus pursuant to a loan extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase, resulting in increased charges and reduced income;
collateral for loans may decline in value, which could cause loan losses to increase;
our fair values may continue to decrease if borrowers experience financial difficulties, which will adversely affect our net income;
increased amendments and/or restructuring to the terms or oura portfolio company loan agreements, which may increase the amount of PIK interest, and defer the collection of cash interest and/or increase the risk of default;
the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;
as the result of the decline in the Federal Reserve Board’s target federal funds rate, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income;
a material decrease in net income or a net loss over several quarters could result in a decrease in the rateis calculated using LIBOR. The terms of our quarterly cash dividend;
we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and
reduction in our ability to access the capital markets or credit facilities may cause a distressed liquidity position and result in a decrease or inability to pay dividends.

Moreover, our future success and profitability substantially depends on the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years. The unanticipated loss or unavailability of our executive officers or directors or key employees of OFS Advisor due to the outbreak could harm our ability to operate our business or execute our business strategy. We may not be successful in finding and integrating suitable successors in the event of key employee loss or unavailability.
Any one or a combination of the factors identified above has and could continue to negatively impact our business, financial condition and results of operations and prospects.

Ourdebt investments in Structured Finance Notes are more likely to suffer a loss of all or a portion of their value in the event of a default.
From time to time, we invest in Structured Finance Notes that comprise the equity tranche of CLOs,generally include minimum interest rate floors which are junior in priority of payment and are subject to certain payment restrictions generally set forth in an indenture governing the notes. In addition, Structured Finance Notes generally do not benefit from any creditors’ rights or ability to exercise remedies under the indenture governing the notes. Structured Finance Notes are not guaranteed by another party and are subject to greater risk than the secured notes issued by the CLO. CLOs are typically highly levered, utilizing up to approximately 9-13 times leverage, and therefore Structured Finance Notes are subject to a risk of total loss. There can be no assurance that distributionscalculated based on the assets held by the CLO will be sufficient to make any distributions or that the yield on the Structured Finance Notes will meet our expectations.
CLOs generally may make payments on Structured Finance Notes only to the extent permitted by the payment priority provisions of an indenture governing the notes issued by the CLO. CLO indentures generally provide that principal payments on Structured Finance Notes may not be made on any payment date unless all amounts owing under secured notes are paid in full. In addition, if a CLO does not meet the asset coverage tests or the interest coverage test set forth in the indenture governing the notes issued by the CLO, cash would be diverted from the Structured Finance Notes to first pay the secured notes in amounts sufficient to cause such tests to be satisfied.
We will have no influence on management of underlying investments managed by non-affiliated third-party CLO collateral managers.
We are not responsible for, and have no influence over, the asset management of the portfolios underlying the Structured Finance Notes we hold as those portfolios are managed by non-affiliated third-party CLO collateral managers. Similarly, we are not responsible for and have no influence over the day-to-day management, administration or any other aspect of the issuers of the individual securities. As a result, the values of the portfolios underlying our Structured Finance Notes could decrease as a result of decisions made by third-party CLO collateral managers.
Due to the COVID-19 pandemic or other disruptions in the economy, we may not be able to increase our dividends and may reduce or defer our dividends and choose to incur US federal excise tax in order preserve cash and maintain flexibility.
As a BDC, we are not required to make any distributions to stockholders other than in connection with our election to be taxed as a RIC under subchapter M of the Code. In order to maintain our tax treatment as a RIC, we must distribute to stockholders for each taxable year at least 90% of our investment company taxable income (i.e., net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses). If we qualify for taxation as a RIC, we generally will not be subject to corporate-level US federal income tax on our investment company taxable income and net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) that we timely distribute to stockholders. We will be subject to a 4% US federal excise tax on undistributed earnings of a RIC unless we distribute each calendar year at least the sum of (i) 98.0% of our ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year, and (iii) any ordinary income and net capital gains for preceding years that were not distributed during such years and on which we paid no federal income tax.
Under the Code, we may satisfy certain of our RIC distributions with dividends paid after the end of the current year. In particular, if we pay a distribution in January of the following year that was declared in October, November, or December of the current year and is payable to stockholders of record in the current year, the dividend will be treated for all US federal tax purposes as if it were paid on December 31 of the current year. In addition, under the Code, we may pay dividends, referred to as “spillover dividends,” that are paid during the following taxable year that will allow us to maintain our qualification for taxation as a RIC and eliminate our liability for corporate-level U.S. federal income tax. Under these spillover dividend procedures, we may defer distribution of income earned during the current year until December of the following year. For example, we may defer distributions of income earned during 2020 until as late as December 31, 2021. However, if we choose to pay a spillover dividend, we will still incur the 4% U.S. federal excise tax on some or all of the distribution.
Due to the COVID-19 pandemic or other disruptions in the economy, we anticipate that we may take certain actions with respect to the timing and amounts of our distributions in order to preserve cash and maintain flexibility. For example, we anticipate that we will not be able to increase our dividends. In addition, we may reduce our dividends and/or defer our dividends to the following taxable year. If we defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4% U.S. federal excise tax on such amounts. To further preserve cash, we may combine these reductions or deferrals of dividends with one or more distributions that are payable partially in our stock as discussed above under the risk factor “We may in the future choose to pay distributions in our own stock, in which case stockholders may be

required to pay tax in excess of the cash they receive” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
We have been, and will continue to be, adversely impacted by the outbreak of COVID-19 and a potential worsening of the pandemic.
The COVID-19 pandemic has caused a sharp global slowdown of economic activity resulting in a recession, a steep increase in unemployment in the U.S., and significant volatility and disruption of financial markets. Health advisors warn that “subsequent waves” of the pandemic are possible if reopening is pursued too soon or in the wrong manner or if measures to contain the COVID-19 pandemic are inadequate, which may negatively affect or exacerbate the global economy, the U.S. economy and the global financial markets. The pandemic had a significant adverse impact on us during the first and second quarters of 2020, continued to have an adverse impact on us during the third quarter of 2020 and is expected to continue to adversely impact our company beyond third-quarter 2020. Because the pandemic is unprecedented in recent history, and its severity, duration and future economic consequences are difficult to predict, we cannot predict or assess its future impact on us with any certainty.
Uncertainty relating to the LIBOR calculation process and transition timing may adversely affect the value of any portfolio of LIBOR-indexed, floating-rate debt securities.
Uncertainty relating to the LIBOR calculation process may adversely affect the value of any portfolio of LIBOR-indexed, floating-rate debt securities. Concerns have been publicized that some of the member banks surveyed by the British Bankers' Association (“BBA”) in connection with the calculation of LIBOR across a range of maturities and currencies may have been under-reporting or otherwise manipulating the inter-bank lending rate applicable to them in order to profit on their derivatives positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have resulted from reporting inter-bank lending rates higher than those they actually submitted. A number of BBA member banks have entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and investigations by regulators and governmental authorities in various jurisdictions are ongoing. Actions by the BBA, regulators or law enforcement agencies may result in changes to the manner in which LIBOR is determined. Uncertainty as to the nature of such potential changes may adversely affect the market for LIBOR-based securities, including our potential portfolio of LIBOR-indexed, floating-rate debt securities. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities or the value of our potential portfolio of LIBOR indexed, floating-rate debt securities.LIBOR.
On July 27, 2017,March 5, 2021, the United Kingdom’sKingdom's Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that it intendswill not compel panel banks to phase outcontribute to the overnight 1, 3, 6 and 12 months U.S. LIBOR by the end oftenors after June 30, 2023 and all other tenors after December 31, 2021. It is expected that a transition away from the widespread use of LIBOR to alternative rates will occur over the course of the next several years. As a result of this transition, interest rates on financial instruments tied to LIBOR rates, as well as the revenue and expenses associated with those financial instruments, may be adversely affected. Further, any uncertainty regarding the continued use and reliability of LIBOR as a benchmark interest rate could adversely affect the value of our financial instruments tied to LIBOR rates. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short term repurchase agreements, backed by Treasury securities, called the Secured Overnight Financing Rate (“SOFR”). The first publication of SOFR was released in April 2018. Whether or not SOFR attains market traction as a LIBOR replacement remains a question and the future of LIBOR at this time is uncertain.
Additionally, on July 12, 2019 the Staff of the SEC’s Division of Corporate Finance, Division of Investment Management, Division of Trading and Markets, and Office of the Chief Accountant issued a statement about the potentially significant effects on financial markets and market participants when LIBOR is discontinued in 2021 and no longer available as a reference benchmark rate. The Staff encouraged all market participants to identify contracts that reference LIBOR and begin transitions to alternative rates. On December 30, 2019, the SEC’s Chairman, Division of Corporate Finance and Office of the Chief Accountant issued a statement to encourage audit committees in particular to understand management’s plans to identify and address the risks associated with the elimination of LIBOR, and, specifically, the impact on accounting and financial reporting and any related issues associated with financial products and contracts that reference LIBOR, as the risks associated with the discontinuation of LIBOR and transition to an alternative reference rate will be exacerbated if the work is not completed in a timely manner.
In addition, on March 25, 2020, the FCA stated that although the central assumption that firms cannot rely on LIBOR being published after the end of 2021 has not changed, the outbreak of COVID-19 has impacted the timing of many firms’ transition planning, and the FCA will continue to assess the impact of the COVID-19 pandemic on transition timelines and

update the marketplace as soon as possible. It is unclear if after 2021at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. Central banks and regulators in a number of major jurisdictions (for example, United States, United Kingdom, European Union, Switzerland and Japan) have convened working groups to find, and implement the transition to, suitable replacements for interbank offered rates (“IBORs”). To identify a successor rate for U.S. dollar LIBOR, the Alternative Reference Rates Committee (“ARRC”), a U.S.-based group convened by the U.S. Federal Reserve Board and the Federal Reserve Bank of New York, was formed. The ARRC has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. Although SOFR appears to be the preferred replacement rate for U.S. dollar LIBOR, at this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or other reforms to LIBOR that may be enacted in the United States, United Kingdom or elsewhere or, whether the COVID-19 outbreak will have further effect on LIBOR transition plans.
The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market for value of and/or valuetransferability of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. If
Recently, the CLOs we have invested in have included, or have been amended to include, language permitting the CLO investment manager to implement a market replacement rate (like those proposed by the ARRC of the Federal Reserve Board and the Federal Reserve Bank of New York) upon the occurrence of certain material disruption events. However, we cannot ensure that all CLOs in which we are invested will have such provisions, nor can we ensure the CLO investment managers will undertake the suggested amendments when able. We believe that because CLO managers and other CLO market participants have been preparing for an eventual transition away from LIBOR, ceaseswe do not anticipate such a transition to exist,have a material impact on the liquidity or value of any of our LIBOR-referenced CLO investments. However, because the future of LIBOR at this time is uncertain and the specific effects of a transition away from LIBOR cannot be determined with certainty as of the date of this filing, a transition away from LIBOR could:
74

•    adversely impact the pricing, liquidity, value of, return on and trading for a broad array of financial products, including any LIBOR-linked CLO investments;
•    require extensive changes to documentation that governs or references LIBOR or LIBOR-based products, including, for example, pursuant to time-consuming renegotiations of existing documentation to modify the terms of outstanding investments;
•    result in inquiries or other actions from regulators in respect of our preparation and readiness for the replacement of LIBOR with one or more alternative reference rates;
•    result in disputes, litigation or other actions with CLO investment managers, regarding the interpretation and enforceability of provisions in our LIBOR-based CLO investments, such as fallback language or other related provisions, including, in the case of fallbacks to the alternative reference rates, any economic, legal, operational or other impact resulting from the fundamental differences between LIBOR and the various alternative reference rates;
•    require the transition and/or development of appropriate systems and analytics to effectively transition our risk management processes from LIBOR-based products to those based on one or more alternative reference rates, which may prove challenging given the limited history of the proposed alternative reference rates; and
•    cause us to incur additional costs in relation to any of the above factors.
In addition, the effect of a phase out of LIBOR on U.S. senior secured loans, the underlying assets of the CLOs in which we invest, is currently unclear. To the extent that any replacement rate utilized for senior secured loans differs from that utilized for a CLO that holds those loans, the CLO would experience an interest rate mismatch between its assets and liabilities which could have an adverse impact on our net investment income and portfolio returns.
Many underlying corporate borrowers can elect to pay interest based on 1-month LIBOR, 3-month LIBOR and/or other rates in respect of the loans held by CLOs in which we are invested, in each case plus an applicable spread, whereas CLOs generally pay interest to holders of the CLO’s debt tranches based on 3-month LIBOR plus a spread. The 3-month LIBOR currently exceeds the 1-month LIBOR by a historically high amount, which may needresult in many underlying corporate borrowers electing to renegotiatepay interest based on 1-month LIBOR. This mismatch in the credit agreements extending beyond 2021rate at which CLOs earn interest and the rate at which they pay interest on their debt tranches negatively impacts the cash flows on a CLO’s equity tranche, which may in turn adversely affect our cash flows and results of operations. Unless spreads are adjusted to account for such increases, these negative impacts may worsen as the amount by which the 3-month LIBOR exceeds the 1-month LIBOR increases.
The senior secured loans underlying the CLOs in which we invest typically have floating interest rates. A rising interest rate environment may increase loan defaults, resulting in losses for the CLOs in which we invest. In addition, increasing interest rates may lead to higher prepayment rates, as corporate borrowers look to avoid escalating interest payments or refinance floating rate loans. Further, a general rise in interest rates will increase the financing costs of the CLOs. However, since many of the senior secured loans within CLOs have LIBOR floors, if LIBOR is below the average LIBOR floor, there may not be corresponding increases in investment income resulting in smaller distributions to equity investors in these CLOs.
We cannot predict how new tax legislation will affect us, our investments, or our stockholders, and any such legislation could adversely affect our business.
Legislative or other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. The Biden Administration has proposed significant changes to the existing U.S. tax rules, and there are a number of proposals in Congress that would similarly modify the existing U.S. tax rules. The likelihood of any such legislation being enacted is uncertain, but new legislation and any U.S. Treasury regulations, administrative interpretations or court decisions interpreting such legislation could significantly and negatively affect our portfolio companies that utilize LIBORability to qualify for tax treatment as a factorRIC or the U.S. federal income tax consequences to us and our investors of such qualification, or could have other adverse consequences. Investors are urged to consult with their tax advisor regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in determining the interest rate to replace LIBOR with the new standard that is established.our common stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three month period ended SeptemberJune 30, 2020,2021, we issued 6,7083,273 shares of common stock to stockholders in connection with our DRIP. These issuances were not subject to the registration requirements of the Securities Act. The aggregate value of the shares of our common stock issued under our distribution reinvestment plan was approximately $31,593.$32,596.
Issuer Purchases of Equity Securities
On May 22, 2018, the Board authorized the Company to initiate the Stock Repurchase Program under which the Company could acquire up to $10.0 million of its outstanding common stock through the two-year period ending May 22, 2020.
75

On May 4, 2020, the Board extended the Stock Repurchase Program for an additional two-year period. Under the extended Stock Repurchase Program, the Company is authorized to repurchase shares in open-market transactions, including through block purchases, depending on prevailing market conditions and other factors. The Company expects the Stock Repurchase Program to be in place through May 22, 2022, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program does not obligate the Company to acquire any specific number of shares, and all repurchases will be made in accordance with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases. The Stock Repurchase Program may be extended, modified or discontinued at any time for any reason. The Company retires all shares of common stock that it purchases in connection with the Stock Repurchase Program.
During the three months ended SeptemberJune 30, 2020, we repurchased -0-2021, no shares of common stock were repurchased on the open market for under the Stock Repurchase Program. The following table provides information regarding the Stock Repurchase Program (amount in thousands except shares)shares and per share amounts):
Period
Total Number
of Shares Purchased (1)
Cost of Shares PurchasedAverage Price Paid Per ShareMaximum Number (or Appropriate Dollar Value) of Shares that May Yet Be Purchased Under the Stock Repurchase Program
May 22, 2018 through June 30, 2018— $— $— $10,000 
July 1, 2018 through September 30, 2018— — — 10,000 
October 1, 2018 through December 31, 2018300 3 10.29 9,997 
January 1, 2019 through March 31, 2019— — — 9,997 
April 1, 2019 through June 30, 2019— — — 9,997 
July 1, 2019 through September 30, 2019— — — 9,997 
October 1, 2019 through December 31, 2019— — — 9,997 
January 1, 2020 through March 31, 2020— — — 9,997 
April 1, 2020 through June 30, 2020— — — 9,997 
July 1, 2020 through September 30, 2020— — — 9,997 
October 1, 2020 through December 31, 2020— — — 9,997 
January 1, 2021 through March 31, 2021700 5 6.70 9,992 
April 1, 2021 through June 30, 2021— — — 9,992 
Period 
Total Number of Shares Purchased (1)
 Cost of Shares Purchased Average Price Paid Per Share Maximum Number (or Appropriate Dollar Value) of Shares that May Yet Be Purchased Under the Stock Repurchase Program
May 22, 2018 through June 30, 2018 —
 $—
 $—
 $10,000
July 1, 2018 through September 30, 2018 —
 $—
 $—
 $10,000
October 1, 2018 through December 31, 2018 300
 $3
 $10.29
 $9,997
January 1, 2019 through March 31, 2019 —
 $—
 $—
 $9,997
April 1, 2019 through June 30, 2019 —
 $—
 $—
 $9,997
July 1, 2019 through September 30, 2019 —
 $—
 $—
 $9,997
October 1, 2019 through December 31, 2019 —
 $—
 $—
 $9,997
January 1, 2020 through March 31, 2020 —
 $—
 $—
 $9,997
April 1, 2020 through June 30, 2020 —
 $—
 $—
 $9,997
July 1, 2020 through September 30, 2020 —
 $—
 $—
 $9,997
(1)    Excludes shares purchased on the open market and reissued in order to satisfy the DRIP obligation.
(1)Excludes shares purchased on the open market and reissued in order to satisfy the DRIP obligation.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.


Item 5. Other Information
Not applicable.
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Item 6. Exhibits
Listed below are the exhibits that are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):
Incorporated by Reference
Exhibit

Number
 DescriptionForm and SEC File No.Filing Date with SECFiled with this 10-Q
3.1
4.1Form 8-K 814-00813N-2/A
(333-166363)		SeptemberMarch 18, 20202011
3.2
4.2Form 8-K 814-0081310-KSeptember 18, 2020March 26, 2013
3.3
10.1Form 8-K 814-00813N-2/A
(333-166363)		October 9, 2020March 18, 2011
31.1 *
31.2 *
32.1 †
32.2 †
*Filed herewith
†Furnished 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.
 
Dated: NovemberAugust 6, 20202021OFS CAPITAL CORPORATION
   
 By:/s/ Bilal Rashid
 Name:Bilal Rashid
 Title:Chief Executive Officer
   
 By:/s/ Jeffrey A. Cerny
 Name:Jeffrey A. Cerny
 Title:Chief Financial Officer

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78