UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~September 30, 2021~~March 31, 2022


			¨			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)


Delaware		46-1339639
State or Other Jurisdiction of		I.R.S. Employer Identification No.
Incorporation or Organization

10 S. Wacker Drive, Suite 2500, Chicago, Illinois		60606
Address of Principal Executive Offices		Zip 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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	OFS	~~The Nasdaq Global Select Market~~
~~5.95% Notes due 2026~~	~~OFSSI~~	The Nasdaq Global Select Market
4.95% Notes due 2028	OFSSH	The 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 filer	¨

Non-accelerated filer	☒	Smaller reporting company	¨

Emerging growth company	¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No ý

The number of shares of the issuer’s Common Stock, $0.01 par value, outstanding as of ~~November 4, 2021~~May 2, 2022 was ~~13,418,973.~~13,425,429.

OFS CAPITAL CORPORATION

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Statements of Assets and Liabilities as of ~~September 30, 2021~~March 31, 2022 (unaudited) and December 31, ~~2020~~2021	3
	Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2021~~March 31, 2022 (unaudited) and ~~2020~~2021 (unaudited)	4
	Consolidated Statements of Changes in Net Assets for the Three ~~and Nine~~ Months Ended ~~September 30, 2021~~March 31, 2022 (unaudited) and ~~2020~~2021 (unaudited)	5
	Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2021~~March 31, 2022 (unaudited) and ~~2020~~2021 (unaudited)	76
	Consolidated Schedules of Investments as of ~~September 30, 2021~~March 31, 2022 (unaudited) and December 31, ~~2020~~2021	87
	Notes to Consolidated Financial Statements (unaudited)	31
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5655
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7571
Item 4.	Controls and Procedures	7572

PART II. OTHER INFORMATION		7773
Item 1.	Legal Proceedings	7773
Item 1A.	Risk Factors	7773
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	7873
Item 3.	Defaults Upon Senior Securities	7974
Item 4.	Mine Safety Disclosures	7974
Item 5.	Other Information	7974
Item 6.	Exhibits	8075
SIGNATURES		8176

Defined Terms

We have used ~~"we," "us," "our," "our company"~~“we,” “us,” “our,” “our company” and ~~"the Company"~~“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:


Term			Explanation or Definition
1940 Act			Investment Company Act of 1940, as amended
Administration Agreement			Administration Agreement between the Company and OFS Services dated November 7, 2012
Affiliated Account			An account, other than the Company, managed by OFS Advisor or an affiliate of OFS Advisor
Affiliated Fund			Certain other funds, including other BDCs and registered investment companies managed by OFS Advisor or by registered investment advisers controlling, controlled by, or under common control with, OFS Advisor
ASC			Accounting Standards Codification, as issued by the FASB
ASU			Accounting Standards Updates, as issued by the FASB
BDC			Business Development Company under the 1940 Act
BLA			Business 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
Board			The Company's board of directors
CLO			Collateralized loan obligation
Code			Internal Revenue Code of 1986, as amended
Company			OFS Capital Corporation and its consolidated subsidiaries
DRIP			Distribution reinvestment plan
EBITDA			Earnings before interest, taxes, depreciation and amortization
Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
GAAP			Accounting principles generally accepted in the United States
HPCI			Hancock Park Corporate Income, Inc., a Maryland corporation and non-traded BDC for whom OFS Advisor serves as investment adviser
ICTI			Investment company taxable income, which is generally net ordinary income plus net short-term capital gains in excess of net long-term capital losses
Indicative Prices			Market quotations, prices from pricing services or bids from brokers or dealers
Investment Advisory Agreement			Investment Advisory and Management Agreement between the Company and OFS Advisor dated November 7, 2012
LIBOR			London Interbank Offered Rate
NAV			Net asset value. NAV is calculated as consolidated total assets less consolidated total liabilities and can be expressed in the aggregate or on a per share basis
Net Loan Fees			The 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
OCCI			OFS Credit Company, Inc., a Delaware corporation and a non-diversified, closed-end management investment company for whom OFS Advisor serves as investment adviser
OFS Advisor			OFS Capital Management, LLC, a wholly owned subsidiary of OFSAM and registered investment advisor under the Investment Advisers Act of 1940, as amended
OFS Services			OFS Capital Services, LLC, a wholly owned subsidiary of OFSAM and affiliate of OFS Advisor
OFSAM			Orchard First Source Asset Management, LLC, a full-service provider of capital and leveraged finance solutions to U.S. corporations
OFSCC-FS			OFSCC-FS, LLC, an indirect wholly owned subsidiary of the Company
~~OFSCC-FS Assets~~			~~Assets held by the Company through OFSCC-FS~~


Term	Explanation or Definition
OFSCC-FS Assets	Assets held by the Company through OFSCC-FS
OFSCC-MB	OFSCC-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
OID	Original issue discount
Order	An exemptive relief order from the SEC to permit us to co-invest in portfolio companies with 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
Parent	OFS Capital Corporation
PIK	Payment-in-kind, non-cash interest or dividends payable as an addition to the loan or equity security producing the income
Portfolio Company Investment	A debt or equity investment in a portfolio company. Portfolio Company Investments exclude Structured Finance Notes
Prime Rate	United States Prime interest rate
PWB Credit Facility	Senior secured revolving credit facility between the Company and Pacific Western Bank, as lender
~~Reunderwriting Analysis~~	~~A discount rate estimation method based upon a hypothetical recapitalization of the entity given its current operating performance and current market condition~~
RIC	Regulated investment company under the Code
SBA	United States Small Business Administration
SBIC	A fund licensed under the SBA Small Business Investment Company Program
SBIC Acquisition	The Company's acquisition of the remaining ownership interests in SBIC I LP and OFS SBIC I GP, LLC on December 4, 2013
SBIC Act	Small Business Investment Act of 1958, as amended
SBIC I LP	OFS SBIC I, LP, a wholly owned SBIC subsidiary of the Company
SBIC I GP	OFS SBIC I GP, LLC
SEC	United States Securities and Exchange Commission
Securities Act	Securities Act of 1933, as amended
SOFR	Secured ~~Revolver Amendment~~	~~The amended Business Loan Agreement with Pacific Western Bank, as lender, dated February 17, 2021~~Overnight Financing Rate
Stock Repurchase Program	The open market stock repurchase program for shares of the Company’s common stock under Rule 10b-18 of the Exchange Act
Structured Finance Notes	CLO mezzanine debt, CLO subordinated debt and CLO loan accumulation facility positions
~~Synthetic Rating Analysis~~	A discount rate estimation 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 Price	The price in an arm's length transaction involving the same security
Unsecured Notes	The Unsecured Notes Due September 2023, the Unsecured Notes Due April 2025, the Unsecured Notes Due October 2025, the Unsecured Notes Due October 2026, Unsecured Notes Due February 2026 and the Unsecured Notes Due October 2028
Unsecured Notes Due April 2025	The 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 2025	The Company’s $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 2026	The Company's $54.3 million aggregate principal amount of 5.95% notes due October 31, 2026, which ~~will be~~were redeemed on November 22, 2021
Unsecured Notes Due October 2028	The Company’s $55.0 million aggregate principal amount of 4.95% notes due October 31, 2028
Unsecured Notes Due September 2023	The Company’s $25.0 million aggregate principal amount of 6.25% notes due September 30, 2023, which were redeemed on November 1, 2021

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,” “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 investments due to access to material nonpublic information;~~

•restrictions on our ability to enter into transactions with our affiliates;

•the impact of interest and inflation rates on our business prospects and the prospects of our portfolio companies;

•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 1940 Act and the impact of such leverage on our net investment income and results of operations;

•~~expectation that we will recognize loss on extinguishment of debt related to charge-off of deferred borrowing costs on the redemption of notes;~~

•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"~~(“COVID-19”) pandemic;

•the percentage of investments that will bear interest on a floating rate or fixed rate basis;

•~~the impact of interest and 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~~transition from LIBOR to one or more alternative reference rate(s); the related potential disputes between market participants regarding the interpretation and enforceability of ~~LIBOR;~~provisions related to the economic floors in our LIBOR-based investments (or lack thereof), which may result in a loss or degradation of floor protection;

•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, including those caused by variants~~pandemic; the economic impact of the ~~virus,~~pandemic; the effect of the COVID-19 pandemic on our ~~ability to continue to effectively manage~~business, financial condition, results of operations and fair value of our ~~business~~portfolio investments;

•the impact of the ongoing conflict between Russia and Ukraine;

~~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~~long-dated financing affords us operational flexibility;

•the fluctuation of the fair value of our investments ~~can be restored to accrual status in the near term, or otherwise;~~

•uncertain valuations of our 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 relateddue to the ~~observed return~~inherent uncertainty of determining the fair value of investments that do not have a readily available market ~~liquidity and the historic correlative relationship between these markets;~~value; 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, ~~2020 and in "Part II, Item 1A. Risk Factors" in our Quarterly Reports~~2021, filed on ~~Form 10-Q for the quarters ended~~ March ~~31, 2021 and June 30, 2021,~~4, 2022, 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.

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)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(unaudited)					(unaudited)
Assets	Assets					Assets
Investments, at fair value:	Investments, at fair value:					Investments, at fair value:
Non-control/non-affiliate investments (amortized cost of $427,574 and $363,628, respectively)		$	413,674	$	328,665
Affiliate investments (amortized cost of $65,367 and $86,484, respectively)		99,460		102,846
Control investment (amortized cost of $11,160 and $10,911, respectively)		13,145		10,812
Total investments at fair value (amortized cost of $504,101 and $461,023, respectively)		526,279		442,323
Non-control/non-affiliate investments (amortized cost of $484,150 and $428,398 respectively)						Non-control/non-affiliate investments (amortized cost of $484,150 and $428,398 respectively)	$	472,538	$	421,567
Affiliate investments (amortized cost of $17,651 and $17,650, respectively)						Affiliate investments (amortized cost of $17,651 and $17,650, respectively)	84,376		72,584
Control investment (amortized cost of $0 and $11,264, respectively)						Control investment (amortized cost of $0 and $11,264, respectively)	—		12,948
Total investments at fair value (amortized cost of $501,801 and $457,312, respectively)						Total investments at fair value (amortized cost of $501,801 and $457,312, respectively)	556,914		507,099
Cash	Cash	6,999		37,708		Cash	10,473		43,048
Interest receivable	Interest receivable	1,193		1,298		Interest receivable	2,092		1,475

Receivable for investments sold						Receivable for investments sold	—		14,893
Prepaid expenses and other assets	Prepaid expenses and other assets	2,750		2,484		Prepaid expenses and other assets	2,256		2,533
Total assets	Total assets	$	537,221	$	483,813	Total assets	$	571,735	$	569,048

Liabilities	Liabilities					Liabilities
Revolving lines of credit	Revolving lines of credit	$	45,900	$	32,050	Revolving lines of credit	$	114,650	$	100,000
SBA debentures (net of deferred debt issuance costs of $599 and $1,088, respectively)		69,321		104,182
Unsecured notes (net of deferred debt issuance costs of $5,543 and $4,897 respectively)		198,782		172,953
SBA debentures (net of deferred debt issuance costs of $367 and $555, respectively)						SBA debentures (net of deferred debt issuance costs of $367 and $555, respectively)	50,553		69,365
Unsecured notes (net of deferred debt issuance costs of $4,414 and $4,554 respectively)						Unsecured notes (net of deferred debt issuance costs of $4,414 and $4,554 respectively)	175,586		175,446
Interest payable	Interest payable	1,927		3,176		Interest payable	1,657		3,685
Payable to adviser and affiliates (Note 3)	Payable to adviser and affiliates (Note 3)	2,612		3,252		Payable to adviser and affiliates (Note 3)	5,904		6,217
Payable for investments purchased	Payable for investments purchased	27,867		8,411		Payable for investments purchased	13,037		8,788
Accrued professional fees	Accrued professional fees	261		495		Accrued professional fees	489		452
Other liabilities	Other liabilities	574		338		Other liabilities	1,473		1,351
Total liabilities	Total liabilities	347,244		324,857		Total liabilities	363,349		365,304

Commitments and contingencies (Note 6)	Commitments and contingencies (Note 6)					Commitments and contingencies (Note 6)

Net assets	Net assets					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, 2021 and December 31, 2020, respectively		$	—	$	—
Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,418,973 and 13,409,559 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		134		134
Preferred stock, par value of $0.01 per share, 2,000,000 shares authorized, -0- shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively						Preferred stock, par value of $0.01 per share, 2,000,000 shares authorized, -0- shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	$	—	$	—
Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,425,429 and 13,422,413 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively						Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,425,429 and 13,422,413 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	134		134
Paid-in capital in excess of par	Paid-in capital in excess of par	187,218		187,124		Paid-in capital in excess of par	185,152		185,113
Total distributable earnings (losses)		2,625		(28,302)
Total distributable earnings						Total distributable earnings	23,100		18,497
Total net assets	Total net assets	189,977		158,956		Total net assets	208,386		203,744

Total liabilities and net assets	Total liabilities and net assets	$	537,221	$	483,813	Total liabilities and net assets	$	571,735	$	569,048

Number of shares outstanding	Number of shares outstanding	13,418,973		13,409,559		Number of shares outstanding	13,425,429		13,422,413
Net asset value per share	Net asset value per share	$	14.16	$	11.85	Net asset value per share	$	15.52	$	15.18

See Notes to Consolidated Financial Statements.

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 March 31,
		2021		2020		2021		2020				2022		2021
Investment income	Investment income									Investment income
Interest income:	Interest income:									Interest income:
Non-control/non-affiliate investments	Non-control/non-affiliate investments	$	8,953	$	8,289	$	27,162	$	26,119	Non-control/non-affiliate investments		$	9,647	$	8,845
Affiliate investments	Affiliate investments	864		1,735		2,724		5,938		Affiliate investments		—		928
Control investment	Control investment	327		292		1,016		884		Control investment		141		367
Total interest income	Total interest income	10,144		10,316		30,902		32,941		Total interest income		9,788		10,140

Dividend income:	Dividend income:									Dividend income:

Non-control/non-affiliate investments										Non-control/non-affiliate investments		713		—
Affiliate investments	Affiliate investments	37		45		143		488		Affiliate investments		—		47
Control investment	Control investment	33		—		169		—		Control investment		45		—
Total dividend income	Total dividend income	70		45		312		488		Total dividend income		758		47
Fee income:	Fee income:									Fee income:
Non-control/non-affiliate investments	Non-control/non-affiliate investments	50		80		920		844		Non-control/non-affiliate investments		394		267
Affiliate investments	Affiliate investments	325		3		362		16		Affiliate investments		—		37
Control investment	Control investment	—		43		—		49		Control investment		6		—
Total fee income	Total fee income	375		126		1,282		909		Total fee income		400		304
Total investment income	Total investment income	10,589		10,487		32,496		34,338		Total investment income		10,946		10,491
Expenses	Expenses									Expenses
Interest expense	Interest expense	4,234		4,448		13,300		14,301		Interest expense		3,624		4,825
Management fee	Management fee	1,950		1,871		5,660		5,759		Management fee		2,020		1,834
Incentive fee		102		234		911		1,332

Capital Gains Fee										Capital Gains Fee		1,072		—
Professional fees	Professional fees	354		422		1,230		1,530		Professional fees		407		387
Administration fee	Administration fee	335		436		1,342		1,456		Administration fee		451		568
Other expenses	Other expenses	379		364		1,033		1,110		Other expenses		367		327
Total expenses before incentive fee waiver		7,354		7,775		23,476		25,488
Incentive fee waiver (see Note 3)		—		—		—		(441)
Total expenses, net of incentive fee waiver		7,354		7,775		23,476		25,047
Total expenses										Total expenses		7,941		7,941
Net investment income	Net investment income	3,235		2,712		9,020		9,291		Net investment income		3,005		2,550

Net realized and unrealized gain (loss) on investments	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	Net realized gain (loss) on non-control/non-affiliate investments	7		(33)		(10,743)		(10,046)		Net realized gain (loss) on non-control/non-affiliate investments		(13)		91
Net realized gain on affiliate investments		3,246		—		3,246		—
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes		1,581		4,649		20,965		(10,965)

Net realized gain on control investments										Net realized gain on control investments		278		—
Income tax expense on net realized investment gains										Income tax expense on net realized investment gains		(48)		—
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments										Net unrealized appreciation (depreciation) on non-control/non-affiliate investments		(4,784)		1,584
Net unrealized appreciation on affiliate investments	Net unrealized appreciation on affiliate investments	4,340		10,120		17,731		6,316		Net unrealized appreciation on affiliate investments		11,792		1,926
Net unrealized appreciation (depreciation) on control investment	Net unrealized appreciation (depreciation) on control investment	980		577		2,084		(924)		Net unrealized appreciation (depreciation) on control investment		(1,684)		388

Net gain (loss) on investments		10,154		15,313		33,283		(15,619)
Deferred tax expense on investments net unrealized appreciation										Deferred tax expense on investments net unrealized appreciation		(41)		(66)
Net gain on investments										Net gain on investments		5,500		3,923
Loss on extinguishment of debt	Loss on extinguishment of debt	(224)		(187)		(2,523)		(336)		Loss on extinguishment of debt		(144)		(2,299)
Loss on impairment of goodwill		—		(1,077)		—		(1,077)
Net increase (decrease) in net assets resulting from operations		$	13,165	$	16,761	$	39,780	$	(7,741)
Net increase in net assets resulting from operations										Net increase in net assets resulting from operations		$	8,361	$	4,174

Net investment income per common share – basic and diluted	Net investment income per common share – basic and diluted	$	0.24	$	0.20	$	0.67	$	0.69	Net investment income per common share – basic and diluted		$	0.22	$	0.19
Net increase (decrease) in net assets resulting from operations per common share – basic and diluted		$	0.98	$	1.25	$	2.97	$	(0.58)
Net increase in net assets resulting from operations per common share – basic and diluted										Net increase in net assets resulting from operations per common share – basic and diluted		$	0.62	$	0.31
Distributions declared per common share	Distributions declared per common share	$	0.24	$	0.17	$	0.66	$	0.68	Distributions declared per common share		$	0.28	$	0.20
Basic and diluted weighted average shares outstanding	Basic and diluted weighted average shares outstanding	13,415,276		13,399,767		13,412,125		13,389,830		Basic and diluted weighted average shares outstanding		13,422,447		13,409,033

See Notes to Consolidated Financial Statements.

OFS Capital Corporation and Subsidiaries

Consolidated Statements of Changes in Net Assets (unaudited)

(Dollar amounts in thousands)

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, 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 nine month 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
Net increase in net assets resulting from operations:
  Net investment income — — — — — 2,712 2,712
  Net realized loss on investments — — — — — (33) (33)
Loss on extinguishment of debt — — — — — (187) (187)
Loss on impairment of goodwill — — — — — (1,077) (1,077)
  Net unrealized appreciation on investments, net of taxes — — — — — 15,346 15,346
  Tax reclassifications of permanent differences — — — — (490) 490 —
Distributions to stockholders:
  Common stock issued from reinvestment of stockholder distributions — — 6,708 — 32 — 32
  Dividends declared — — — — — (2,278) (2,278)
Net increase (decrease) for the three month 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

~~OFS Capital Corporation and Subsidiaries~~

~~Consolidated Statements of Changes in Net Assets (unaudited)~~

~~(Dollar amounts in thousands)~~


	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 December 31, 2020	—	$	—	13,409,559	$	134	$	187,124	$	(28,302)	$	158,956
Net increase in net assets resulting from operations:
Net investment income	—	—		—	—		—		2,550		2,550
Net realized gain on investments, net of taxes	—	—		—	—		—		91		91
Loss on extinguishment of debt	—	—		—	—		—		(2,299)		(2,299)
Net unrealized appreciation on investments, net of taxes	—	—		—	—		—		3,832		3,832

Distributions to stockholders:
Common stock issued from reinvestment of stockholder distributions	—	—		3,103	—		27		—		27
Dividends declared	—	—		—	—		—		(2,682)		(2,682)
Common stock repurchased under stock repurchase program	—	—		(700)	—		(5)		—		(5)
Net increase for the three month period ended March 31, 2021	—	—		2,403	—		22		1,492		1,514
Balances at March 31, 2021	—	$	—	13,411,962	$	134	$	187,146	$	(26,810)	$	160,470















Balances at December 31, 2021	—	$	—	13,422,413	$	134	$	185,113	$	18,497	$	203,744
Net increase in net assets resulting from operations:
Net investment income	—	—		—	—		—		3,005		3,005
Net realized gain on investments, net of taxes	—	—		—	—		—		217		217
Loss on extinguishment of debt	—	—		—	—		—		(144)		(144)
Net unrealized appreciation on investments, net of taxes	—	—		—	—		—		5,283		5,283

Distributions to stockholders:
Common stock issued from reinvestment of stockholder distributions	—	—		3,016	—		39		—		39
Dividends declared	—	—		—	—		—		(3,758)		(3,758)

Net increase for the three month period ended March 31, 2022	—	—		3,016	—		39		4,603		4,642
Balances at March 31, 2022	—	$	—	13,425,429	$	134	$	185,152	$	23,100	$	208,386

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, 2021 — $ — 13,409,559 $ 134 $ 187,124 $ (28,302) $ 158,956
Net increase in net assets resulting from operations:
  Net investment income — — — — — 9,020 9,020
  Net realized loss on investments — — — — — (7,497) (7,497)
  Loss on extinguishment of debt — — — — — (2,523) (2,523)
  Net unrealized appreciation on investments, net of taxes — — — — — 40,780 40,780
Distributions to stockholders:
  Common stock issued from reinvestment of stockholder distributions — — 10,114 — 99 — 99
  Dividends declared — — — — — (8,853) (8,853)
Common stock repurchased under stock repurchase program — — (700) — (5) — (5)
Net increase for the nine month period ended September 30, 2021 — — 9,414 — 94 30,927 31,021
Balances at September 30, 2021 — $ — 13,418,973 $ 134 $ 187,218 $ 2,625 $ 189,977
Balances at June 30, 2021 — $ — 13,415,235 $ 134 $ 187,179 $ (7,320) $ 179,993
Net increase in net assets resulting from operations:
Net investment income — — — — — 3,235 3,235
Net realized gain on investments — — — — — 3,253 3,253
Loss on extinguishment of debt — — — — — (224) (224)
Net unrealized appreciation on investments, net of taxes — — — — — 6,901 6,901
Distributions to stockholders:
  Common stock issued from reinvestment of stockholder distributions — — 3,738 — 39 — 39
Dividends declared — — — — — (3,220) (3,220)
Net increase for the three month period ended September 30, 2021 — — 3,738 — 39 9,945 9,984
Balances at September 30, 2021 — $ — 13,418,973 $ 134 $ 187,218 $ 2,625 $ 189,977
See Notes to Consolidated Financial Statements.

OFS Capital Corporation and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)

(Dollar amounts in thousands)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations		$	39,780	$	(7,741)
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 investments		7,497		10,046
Loss on impairment of goodwill		—		1,077
Net increase in net assets resulting from operations						Net increase in net assets resulting from operations	$	8,361	$	4,174
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:						Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Net realized gain on investments						Net realized gain on investments	(265)		(91)
Income tax expense on net realized investment gains						Income tax expense on net realized investment gains	48		—
Loss on extinguishment of debt	Loss on extinguishment of debt	2,523		336		Loss on extinguishment of debt	144		2,299
Net unrealized (appreciation) depreciation on investments, net of taxes		(40,780)		5,573
Net unrealized appreciation on investments, net of taxes						Net unrealized appreciation on investments, net of taxes	(5,283)		(3,832)
Amortization of Net Loan Fees	Amortization of Net Loan Fees	(1,835)		(1,006)		Amortization of Net Loan Fees	(284)		(401)
Amendment fees collected	Amendment fees collected	132		54		Amendment fees collected	90		97
Payment-in-kind interest and dividend income	Payment-in-kind interest and dividend income	(1,390)		(1,610)		Payment-in-kind interest and dividend income	(270)		(487)
Accretion of interest income on Structured Finance Notes	Accretion of interest income on Structured Finance Notes	(7,315)		(4,141)		Accretion of interest income on Structured Finance Notes	(2,282)		(2,278)
Amortization of debt issuance costs	Amortization of debt issuance costs	1,438		1,258		Amortization of debt issuance costs	375		446
Amortization of intangible asset	Amortization of intangible asset	166		152		Amortization of intangible asset	103		54
Purchase and origination of portfolio investments	Purchase and origination of portfolio investments	(193,285)		(80,990)		Purchase and origination of portfolio investments	(70,164)		(68,498)
Proceeds from principal payments on portfolio investments	Proceeds from principal payments on portfolio investments	125,085		60,071		Proceeds from principal payments on portfolio investments	19,606		48,609
Proceeds from sale or redemption of portfolio investments	Proceeds from sale or redemption of portfolio investments	17,840		67,409		Proceeds from sale or redemption of portfolio investments	3,143		566
Proceeds from distributions received from Structured Finance Notes	Proceeds from distributions received from Structured Finance Notes	9,468		4,614		Proceeds from distributions received from Structured Finance Notes	5,743		2,621
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Interest receivable	Interest receivable	105		559		Interest receivable	(617)		779
Interest payable	Interest payable	(1,249)		(1,450)		Interest payable	(2,028)		(1,316)
Payable to adviser and affiliates	Payable to adviser and affiliates	(640)		(1,333)		Payable to adviser and affiliates	(313)		(454)
Receivable for investment sold	Receivable for investment sold	—		(1,453)		Receivable for investment sold	14,893		(474)
Payable for investments purchased	Payable for investments purchased	19,456		(8,770)		Payable for investments purchased	4,249		24,516
Other assets and liabilities	Other assets and liabilities	(94)		(160)		Other assets and liabilities	367		(507)
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	(23,098)		42,495		Net cash provided by (used in) operating activities	(24,384)		5,823

Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Distributions paid to stockholders	Distributions paid to stockholders	(8,754)		(8,974)		Distributions paid to stockholders	(3,719)		(2,655)
Borrowings under revolving lines of credit	Borrowings under revolving lines of credit	64,250		78,800		Borrowings under revolving lines of credit	14,650		12,900
Repayments under revolving lines of credit	Repayments under revolving lines of credit	(50,400)		(110,600)		Repayments under revolving lines of credit	—		(25,400)
Repayments of SBA debentures	Repayments of SBA debentures	(35,350)		(21,110)		Repayments of SBA debentures	(19,000)		(9,765)
Redemption of unsecured notes	Redemption of unsecured notes	(98,525)		—		Redemption of unsecured notes	—		(98,525)
Proceeds from unsecured notes offering, net of discounts	Proceeds from unsecured notes offering, net of discounts	121,791		24,250		Proceeds from unsecured notes offering, net of discounts	—		121,791
Payment of deferred financing costs	Payment of deferred financing costs	(618)		(11)		Payment of deferred financing costs	(122)		(231)
Repurchases of common stock under Stock Repurchase Program	Repurchases of common stock under Stock Repurchase Program	(5)		—		Repurchases of common stock under Stock Repurchase Program	—		(5)
Net cash used in financing activities	Net cash used in financing activities	(7,611)		(37,645)		Net cash used in financing activities	(8,191)		(1,890)
Net increase (decrease) in cash	Net increase (decrease) in cash	(30,709)		4,850		Net increase (decrease) in cash	(32,575)		3,933
Cash at beginning of period	Cash at beginning of period	37,708		13,447		Cash at beginning of period	43,048		37,708
Cash at end of period	Cash at end of period	$	6,999	$	18,297	Cash at end of period	$	10,473	$	41,641

Supplemental Disclosure of Cash Flow Information:	Supplemental Disclosure of Cash Flow Information:					Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	Cash paid for interest	$	13,111	$	14,494	Cash paid for interest	$	5,277	$	5,695
Reinvestment of distributions to stockholders	Reinvestment of distributions to stockholders	99		128		Reinvestment of distributions to stockholders	39		27

See Notes to Consolidated Financial Statements.

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments (unaudited)

~~September 30, 2021~~March 31, 2022

(Dollar amounts in thousands)


Portfolio Company (1) Investment Type	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		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	Non-control/Non-affiliate Investments														Non-control/Non-affiliate Investments
Debt and Equity Investments	Debt and Equity Investments														Debt and Equity Investments
24 Seven Holdco, LLC (15)															24 Seven Holdco, LLC (15)	Temporary Help Services
Senior Secured Loan															Senior Secured Loan		7.00%	(L +6.00%)	1/28/2022	11/16/2027	$	8,978	$	8,912	$	8,912	4.3	%

AAdvantage Loyalty IP Ltd. and American Airlines, Inc. (14) (15) (22)	AAdvantage Loyalty IP Ltd. and American Airlines, Inc. (14) (15) (22)	Scheduled Passenger Air Transportation													AAdvantage Loyalty IP Ltd. and American Airlines, Inc. (14) (15) (22)	Scheduled Passenger Air Transportation
Senior Secured Loan	Senior Secured Loan		5.50%	(L +4.75%)	3/10/2021	4/20/2028	$	364	$	360	$	376	0.2	%	Senior Secured Loan		5.50%	(L +4.75%)	3/10/2021	4/20/2028	364		360		369		0.2

Aegion Corporation (15) (22)	Aegion Corporation (15) (22)	Water and Sewer Line and Related Structures Construction													Aegion Corporation (15) (22)	Water and Sewer Line and Related Structures Construction
Senior Secured Loan	Senior Secured Loan		5.50%	(L +4.75%)	4/1/2021	5/17/2028	632		629		629		0.3		Senior Secured Loan		5.50%	(L +4.75%)	4/1/2021	5/17/2028	2,432		2,400		2,392		1.1

Allen Media, LLC (14) (15)	Allen Media, LLC (14) (15)	Cable and Other Subscription Programming													Allen Media, LLC (14) (15)	Cable and Other Subscription Programming
Senior Secured Loan	Senior Secured Loan		5.63%	(L +5.50%)	3/2/2021	2/10/2027	2,912		2,912		2,916		1.5		Senior Secured Loan		5.73%	(SOFR +5.50%)	3/2/2021	2/10/2027	3,797		3,791		3,773		1.8

All Star Auto Lights, Inc. (4) (15)															All Star Auto Lights, Inc. (4) (15)	Motor Vehicle Parts (Used) Merchant Wholesalers
Senior Secured Loan	Senior Secured Loan		5.63%	(L +5.50%)	7/29/2021	2/10/2027	475		470		476		0.3		Senior Secured Loan		7.50%	(L +6.50%)	12/19/2019	8/20/2025	23,276		22,970		23,187		11.1
Senior Secured Loan (Delayed Draw) (5)			n/m (18)	(L +5.50%)	7/29/2021	2/10/2027	—		—		1		—
							3,387		3,382		3,393		1.8
All Star Auto Lights, Inc. (4)		Motor Vehicle Parts (Used) Merchant Wholesalers
Astro One Acquisition Corporation															Astro One Acquisition Corporation	Other Miscellaneous Nondurable Goods Merchant Wholesalers
Senior Secured Loan															Senior Secured Loan		9.51%	(L +8.50%)	1/31/2022	9/14/2029	3,000		2,644		2,644		1.3

Atlantis Holding, LLC (15)															Atlantis Holding, LLC (15)	Electronics and Appliance Stores
Senior Secured Loan	Senior Secured Loan		8.25%	(L +7.25%)	12/19/2019	8/20/2025	21,105		20,801		20,741		10.9		Senior Secured Loan		7.55%	(L +7.25%)	3/29/2022	3/29/2029	8,421		8,108		8,108		3.9

Autokiniton US Holdings, Inc. (14) (15)	Autokiniton US Holdings, Inc. (14) (15)	Automotive Parts and Accessories Stores													Autokiniton US Holdings, Inc. (14) (15)	Automotive Parts and Accessories Stores
Senior Secured Loan	Senior Secured Loan		5.00%	(L +4.50%)	3/26/2021	4/6/2028	2,710		2,701		2,713		1.4		Senior Secured Loan		5.00%	(L +4.50%)	3/26/2021	4/6/2028	2,696		2,688		2,665		1.3

A&A Transfer, LLC		Construction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers
Senior Secured Loan (15)			7.75%	(L +6.50%)	2/7/2020	2/7/2025	15,993		15,831		16,091		8.5
Senior Secured Loan (Revolver) (5)			n/m (18)	(L +6.50%)	2/7/2020	2/7/2025	—		(29)		—		—
							15,993		15,802		16,091		8.5
Ball Metalpack		Metal Can Manufacturing
Senior Secured Loan (14) (15)			4.62%	(L +4.50%)	9/22/2021	7/31/2025	323		322		323		0.2
Avison Young (15) (22)															Avison Young (15) (22)	Nonresidential Property Managers
Senior Secured Loan	Senior Secured Loan		9.75%	(L +8.75%)	6/8/2021	7/31/2026	2,167		2,142		2,165		1.1		Senior Secured Loan		6.05%	(L +5.75%)	11/25/2021	1/31/2026	3,977		3,960		3,977		1.9
							2,490		2,464		2,488		1.3
Banijay Entertainment S.A.S. (14) (15) (22)		Motion Picture and Video Production
Bass Pro Group, LLC (14) (15)															Bass Pro Group, LLC (14) (15)	Sporting Goods Stores
Senior Secured Loan	Senior Secured Loan		3.83%	(L +3.75%)	4/5/2021	3/3/2025	995		990		995		0.5		Senior Secured Loan		4.50%	(L +3.75%)	2/26/2021	3/6/2028	1,963		1,953		1,958		0.9

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)

March 31, 2022

(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
Baymark Health Services, Inc. (15)	Outpatient Mental Health & Sub. Abuse Centers
Senior Secured Loan		9.50%	(L +8.50%)	6/10/2021	6/11/2028	$	4,962	$	4,896	$	5,012	2.4	%
Senior Secured Loan (Delayed Draw) (5)		9.50%	(L +8.50%)	6/10/2021	6/11/2028	2,760		2,640		2,845		1.4
						7,722		7,536		7,857		3.8
Boca Home Care Holdings, Inc. (20)	Services for the Elderly and Persons with Disabilities
Senior Secured Loan (Delayed Draw) (5) (15)		7.50%	(SOFR +6.50%)	2/25/2022	2/25/2027	1,290		1,192		1,192		0.6
Senior Secured Loan (Revolver) (5)		n/m (18)	(SOFR +6.50%)	2/25/2022	2/25/2027	—		(13)		(13)		—
Common Equity (1,290 Class A units) (10) (13)				2/25/2022		—		1,290		1,290		0.6
						1,290		2,469		2,469		1.2
Constellis Holdings, LLC (10)	Other Justice, Public Order, and Safety Activities
Common Equity (20,628 common shares)				3/27/2020				703		29		—

Convergint Technologies Holdings, LLC	Security Systems Services (except Locksmiths)
Senior Secured Loan		7.50%	(L +6.75%)	9/28/2018	3/30/2029	4,838		4,827		4,887		2.3

Corel Inc. (14) (15)	Software Publishers
Senior Secured Loan		5.51%	(L +5.00%)	3/2/2021	7/2/2026	2,242		2,236		2,242		1.1

Creation Technologies (15) (22)	Bare Printed Circuit Board Manufacturing
Senior Secured Loan		6.00%	(L +5.50%)	9/24/2021	10/5/2028	2,000		1,985		1,979		0.9

Dessert Holdings	Ice Cream and Frozen Dessert Manufacturing
Senior Secured Loan (15)		5.01%	(Prime +4.00%)	2/2/2022	6/10/2028	963		958		958		0.5
Senior Secured Loan		8.26%	(Prime +7.25%)	2/2/2022	6/8/2029	1,667		1,638		1,638		0.8
						2,630		2,596		2,596		1.3
DHX Media Ltd. (14) (15) (22)	Motion Picture and Video Production
Senior Secured Loan		5.00%	(L +4.25%)	3/19/2021	3/18/2028	3,964		3,921		3,940		1.9

Diamond Sports Group, LLC (14) (15)	Television Broadcasting
Senior Secured Loan		9.00%	(SOFR +8.00%)	3/9/2022	5/25/2026	254		247		259		0.1
Senior Secured Loan		3.44%	(SOFR +3.25%)	11/19/2019	8/24/2026	1,950		1,950		676		0.3
						2,204		2,197		935		0.4

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)

~~September 30, 2021~~March 31, 2022

(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
Bass Pro Group, LLC (14) (15) Sporting Goods Stores
Senior Secured Loan 5.00% (L +4.25%) 2/26/2021 2/24/2028 $ 5,703 $ 5,695 $ 5,735 3.0 %
Baymark Health Services, Inc. (15) Outpatient Mental Health & Sub. Abuse Centers
Senior Secured Loan 9.50% (L +8.50%) 6/10/2021 6/11/2028 4,962 4,891 5,062 2.7
Senior Secured Loan (Delayed Draw) (5) n/m (18) (L +8.50%) 6/10/2021 6/11/2028 — (36) 50 —
4,962 4,855 5,112 2.7
Connect U.S. Finco LLC (14) (15) (22) Taxi Service
Senior Secured Loan 4.50% (L +3.50%) 11/20/2019 12/11/2026 1,970 1,970 1,974 1.0
Constellis Holdings, LLC (10) Other Justice, Public Order, and Safety Activities
Common Equity (20,628 common shares) 3/27/2020 703 287 0.2
Convergint Technologies Holdings, LLC (15) Security Systems Services (except Locksmiths)
Senior Secured Loan (14) 4.50% (L +3.75%) 3/18/2021 3/31/2028 2,006 1,996 2,015 1.1
Senior Secured Loan 7.50% (L +6.75%) 9/28/2018 3/30/2029 7,499 7,480 7,649 4.0
Senior Secured Loan (Delayed Draw) (5) (14) 4.50% (L +3.75%) 4/6/2021 3/31/2028 388 386 390 0.2
9,893 9,862 10,054 5.3
Corel Inc. (14) (15) Software Publishers
Senior Secured Loan 5.12% (L +5.00%) 3/2/2021 7/2/2026 2,286 2,280 2,296 1.2
Cornerstone OnDemand (15) Software Publishers
Senior Secured Loan 4.25% (L +3.75%) 9/21/2021 9/22/2028 785 781 781 0.4
Creation Technologies (15) (22) Bare Printed Circuit Board Manufacturing
Senior Secured Loan 6.00% (L +5.50%) 9/24/2021 9/1/2028 857 844 844 0.4
Dessert Holdings (15) Ice Cream and Frozen Dessert Manufacturing
Senior Secured Loan 4.75% (L +4.00%) 9/8/2021 6/10/2028 1,108 1,108 1,108 0.6
Senior Secured Loan (Delayed Draw) (5) n/m (18) (L +4.00%) 9/8/2021 6/4/2028 — — — —
1,108 1,108 1,108 0.6


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
Directv Financing, LLC (14) (15)	Wired Telecommunications Carriers
Senior Secured Loan		5.75%	(L +5.00%)	7/22/2021	8/2/2027	$	4,294	$	4,287	$	4,295	2.1	%

East West Manufacturing (15)	Fluid Power Pump and Motor Manufacturing
Senior Secured Loan		6.50%	(L +5.75%)	2/11/2022	12/22/2028	1,964		1,945		1,945		0.9
Senior Secured Loan (Delayed Draw) (5)		n/m (18)	(L +2.88%)	2/11/2022	12/22/2028	—		(3)		(3)		—
						1,964		1,942		1,942		0.9
Eblens Holdings, Inc. (20)	Shoe Store
Subordinated Loan (11)		12.00% cash / 1.00% PIK	N/A	7/13/2017	1/13/2023	9,230		9,210		8,917		4.3
Common Equity (71,250 Class A units) (10)				7/13/2017				713		240		0.1
						9,230		9,923		9,157		4.4
Electrical Components International, Inc.	Current-Carrying Wiring Device Manufacturing
Senior Secured Loan		8.95%	(L +8.50%)	4/8/2021	6/26/2026	3,679		3,293		3,569		1.7

EnergySolutions, LLC (14) (15)	Hazardous Waste Treatment and Disposal
Senior Secured Loan		4.76%	(L +3.75%)	7/8/2021	5/9/2025	1,832		1,828		1,800		0.9

Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4) (19)	Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan		7.50%	N/A	12/31/2021	12/31/2025	6,408		6,409		6,408		3.1
Senior Secured Loan		10.00% PIK	N/A	12/31/2021	12/31/2026	6,584		6,585		4,555		2.2
Senior Secured Loan (Revolver) (5)		n/m (18)	N/A	11/29/2021	12/31/2025	—		—		—		—
Equity Participation Rights (23)				12/31/2021		—		4,722		—		—

						12,992		17,716		10,963		5.3
Excelin Home Health, LLC (4)	Home Health Care Services
Senior Secured Loan		11.50%	(L +9.50%)	10/25/2018	9/30/2025	4,250		4,187		4,036		1.9

GGC Aerospace Topco L.P.	Other Aircraft Parts and Auxiliary Equipment Manufacturing
Common Equity (368,852 Class A units) (10)				12/29/2017				450		—		—
Common Equity (40,984 Class B units) (10)				12/29/2017				50		—		—
								500		—		—

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)

~~September 30, 2021~~March 31, 2022

(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
Dexko Global Inc. (15) Motor Vehicle Body Manufacturing
Senior Secured Loan 9.25% (L +8.25%) 1/28/2021 7/24/2025 $ 1,460 $ 1,465 $ 1,460 0.8 %
DHX Media Ltd. (14) (15) (22) Motion Picture and Video Production
Senior Secured Loan 5.00% (L +4.25%) 3/19/2021 3/18/2028 3,984 3,937 3,992 2.1
Diamond Sports Group, LLC (14) (15) Television Broadcasting
Senior Secured Loan 3.34% (L +3.25%) 11/19/2019 8/24/2026 1,960 1,962 1,229 0.6
Directv Financing, LLC (14) (15) Wired Telecommunications Carriers
Senior Secured Loan 5.75% (L +5.00%) 7/22/2021 8/2/2027 4,497 4,488 4,505 2.4
Eblens Holdings, Inc. (20) Shoe Store
Subordinated Loan (11) 12.00% cash / 1.00% PIK N/A 7/13/2017 1/13/2023 9,183 9,151 8,689 4.6
Common Equity (71,250 Class A units) (10) 7/13/2017 713 269 0.1
9,183 9,864 8,958 4.7
Electrical Components International, Inc. Current-Carrying Wiring Device Manufacturing
Senior Secured Loan (14) (15) 4.35% (L +4.25%) 4/8/2021 6/26/2025 2,952 2,915 2,935 1.5
Senior Secured Loan 8.60% (L +8.50%) 4/8/2021 6/26/2026 3,000 2,634 2,948 1.6
5,952 5,549 5,883 3.1
EnergySolutions, LLC (15) Hazardous Waste Treatment and Disposal
Senior Secured Loan 4.75% (L +3.75%) 7/8/2021 5/9/2025 1,842 1,837 1,837 1.0
Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4) Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan 7.50% cash / 3.50% PIK (L +9.00%) 6/30/2017 6/30/2022 17,222 17,091 11,473 6.0
Preferred Equity (238,095 Series B units) (10) 6/30/2017 300 — —
Preferred Equity (13,315 Series C units) (10) 8/13/2018 13 — —
17,222 17,404 11,473 6.0
Excelin Home Health, LLC (4) Home Health Care Services
Senior Secured Loan 11.50% (L +9.50%) 10/25/2018 4/25/2024 4,250 4,210 4,250 2.2


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
Honor HN Buyer Inc	Services for the Elderly and Persons with Disabilities
Senior Secured Loan (15)		7.01%	(L +6.00%)	10/15/2021	10/15/2027	$	6,582	$	6,460	$	6,443	3.1	%
Senior Secured Loan (Delayed Draw) (5) (15)		7.01%	(L +6.00%)	10/15/2021	10/15/2027	1,424		1,372		1,337		0.6
Senior Secured Loan (Revolver) (5)		n/m (18)	(L +6.00%)	10/15/2021	10/15/2027	—		(14)		(16)		—
						8,006		7,818		7,764		3.7
Idera	Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Senior Secured Loan		7.50%	(L +6.75%)	1/27/2022	3/2/2029	4,000		4,000		4,000		1.9

Inergex Holdings, LLC	Other Computer Related Services
Senior Secured Loan (11)		8.00% cash / 1.0% PIK	(L +8.00%)	10/1/2018	10/1/2024	15,260		14,972		15,260		7.3
Senior Secured Loan (Revolver) (5)		8.00%	(L +7.00%)	10/1/2018	10/1/2024	469		457		469		0.2
						15,729		15,429		15,729		7.5
Intouch Midco Inc. (15) (22)	All Other Professional, Scientific, and Technical Services
Senior Secured Loan		5.21%	(L +4.75%)	12/20/2019	8/24/2025	2,901		2,867		2,866		1.4

Ivanti Software, Inc. (14) (15)	Software Publishers
Senior Secured Loan		5.00%	(L +4.25%)	3/26/2021	12/1/2027	2,985		2,996		2,950		1.4

JP Intermediate B, LLC (15)	Drugs and Druggists' Sundries Merchant Wholesalers
Senior Secured Loan		6.50%	(L +5.50%)	1/14/2021	11/15/2025	5,644		5,454		5,362		2.6

Karman Buyer Corp (14) (15)	Advertising Agencies
Senior Secured Loan		5.25%	(L +4.50%)	3/2/2022	10/28/2027	2,302		2,268		2,285		1.1

KNS Acquisition Corp. (14) (15)	Electronic Shopping and Mail-Order Houses
Senior Secured Loan		7.26%	(L +6.25%)	4/16/2021	4/21/2027	6,913		6,872		6,773		3.3

Kreg LLC	Other Ambulatory Health Care Services
Senior Secured Loan (15)		7.26%	(L +6.25%)	12/20/2021	12/20/2026	20,372		20,228		20,153		9.7
Senior Secured Loan (Revolver) (5)		n/m (18)	(L +6.25%)	12/20/2021	12/20/2026	—		(16)		(24)		—
						20,372		20,212		20,129		9.7

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)

~~September 30, 2021~~March 31, 2022

(Dollar amounts in thousands)


Portfolio Company (1) Investment Type	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		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
Common Equity (368,852 Class A units) (10)					12/29/2017			$	450	$	78	—	%
Common Equity (40,984 Class B units) (10)					12/29/2017			50		3		—
								500		81		—
Hunter Fan Company (15)		Small Electrical Appliance Manufacturing
Senior Secured Loan			5.75%	(L +5.00%)	8/10/2021	5/8/2028	4,000	4,010		4,010		2.1

Inergex Holdings, LLC		Other Computer Related Services
Senior Secured Loan			8.00% cash / 1.0% PIK	(L +8.00%)	10/1/2018	10/1/2024	15,260	15,105		15,260		8.0
Senior Secured Loan (Revolver) (5) (18)			n/m (18)	(L +7.00%)	10/1/2018	10/1/2024	—	(14)		—		—
							15,260	15,091		15,260		8.0
Intouch Midco Inc. (15) (22)		All Other Professional, Scientific, and Technical Services
Senior Secured Loan			4.83%	(L +4.75%)	12/20/2019	8/24/2025	4,169	4,114		4,156		2.2

Ivanti Software, Inc. (14) (15)		Software Publishers
Senior Secured Loan			5.75%	(L +4.75%)	3/26/2021	12/1/2027	5,970	6,004		5,998		3.2

I&I Sales Group, LLC		Marketing Consulting Services
Senior Secured Loan (15)			9.50%	(L +8.50%)	12/30/2020	7/10/2025	5,245	5,169		5,211		2.7
Senior Secured Loan (Revolver) (5) (18)			n/m (18)	(L +8.50%)	12/30/2020	7/10/2025	—	(2)		(1)		—
							5,245	5,167		5,210		2.7
JP Intermediate B, LLC (15)		Drugs and Druggists' Sundries Merchant Wholesalers
Senior Secured Loan			6.50%	(L +5.50%)	1/14/2021	11/15/2025	5,828	5,601		5,683		3.0

KNS Acquisition Corp. (14) (15)		Electronic Shopping and Mail-Order Houses
Senior Secured Loan			7.00%	(L +6.25%)	4/16/2021	4/21/2027	7,000	6,955		6,982		3.7

LogMeIn, Inc. (14) (15)	LogMeIn, Inc. (14) (15)	Data Processing, Hosting, and Related Services												LogMeIn, Inc. (14) (15)	Data Processing, Hosting, and Related Services
Senior Secured Loan	Senior Secured Loan		4.83%	(L +4.75%)	3/26/2021	8/31/2027	6,476	6,471		6,481		3.4		Senior Secured Loan		5.22%	(L +4.75%)	3/26/2021	8/31/2027	$	2,969	$	2,967	$	2,922	1.4	%

Magenta Buyer LLC (14) (15)	Magenta Buyer LLC (14) (15)	Software Publishers												Magenta Buyer LLC (14) (15)	Software Publishers
Senior Secured Loan	Senior Secured Loan		5.75%	(L +5.00%)	7/28/2021	7/27/2028	4,863	4,848		4,869		2.6		Senior Secured Loan		5.75%	(L +5.00%)	7/28/2021	7/27/2028	4,850		4,837		4,821		2.3

McGraw Hill Global Education Holdings, LLC (14) (15)														McGraw Hill Global Education Holdings, LLC (14) (15)	All Other Publishers
Senior Secured Loan														Senior Secured Loan		5.55%	(L +4.75%)	4/1/2021	7/28/2028	2,304		2,283		2,284		1.1

Milrose Consultants, LLC (4)														Milrose Consultants, LLC (4)	Administrative Management and General Management Consulting Services
Senior Secured Loan (15)														Senior Secured Loan (15)		7.51%	(L +6.50%)	7/16/2019	7/16/2025	22,307		22,308		21,980		10.5
Senior Secured Loan (Revolver)														Senior Secured Loan (Revolver)		7.51%	(L +6.50%)	7/16/2019	7/16/2025	476		468		452		0.2
																				22,783		22,776		22,432		10.7
Molded Devices, Inc.														Molded Devices, Inc.	Other Industrial Machinery Manufacturing
Senior Secured Loan (15)														Senior Secured Loan (15)		7.00%	(L +6.00%)	11/1/2021	11/1/2026	8,049		7,975		7,929		3.8
Senior Secured Loan (Delayed Draw) (5) (15)														Senior Secured Loan (Delayed Draw) (5) (15)		n/m (18)	(Prime +6.00%)	11/1/2021	11/1/2026	—		(7)		(22)		—
Senior Secured Loan (Revolver) (5)														Senior Secured Loan (Revolver) (5)		7.00%	(Prime +6.00%)	11/1/2021	11/1/2026	340		331		326		0.2
																				8,389		8,299		8,233		4.0
Odyssey Logistics and Technology Corporation (14) (15)														Odyssey Logistics and Technology Corporation (14) (15)	Freight Transportation Arrangement
Senior Secured Loan														Senior Secured Loan		5.00%	(L +4.00%)	4/5/2021	10/12/2024	1,979		1,957		1,945		0.9

One GI LLC														One GI LLC	Offices of Other Holding Companies
Senior Secured Loan (Delayed Draw) (15)														Senior Secured Loan (Delayed Draw) (15)		7.75%	(L +6.75%)	12/13/2021	12/22/2025	7,564		7,423		7,383		3.5
Senior Secured Loan (Delayed Draw) (5) (15)														Senior Secured Loan (Delayed Draw) (5) (15)		n/m (18)	(L +6.75%)	12/13/2021	12/13/2023	—		(34)		(95)		—
Senior Secured Loan (Revolver) (5)														Senior Secured Loan (Revolver) (5)		n/m (18)	(L +6.75%)	12/13/2021	12/22/2025	—		(27)		(35)		—
																				7,564		7,362		7,253		3.5
Parfums Holding Company, Inc. (14) (15)														Parfums Holding Company, Inc. (14) (15)	Cosmetics, Beauty Supplies, and Perfume Stores
Senior Secured Loan														Senior Secured Loan		4.46%	(L +4.00%)	6/25/2019	6/30/2024	1,534		1,533		1,520		0.7

Peraton Inc. (14) (15)														Peraton Inc. (14) (15)	Management Consulting Services
Senior Secured Loan														Senior Secured Loan		4.50%	(L +3.75%)	4/2/2021	2/1/2028	818		819		814		0.4

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)

~~September 30, 2021~~March 31, 2022

(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
McGraw Hill Global Education Holdings, LLC (14) (15) All Other Publishers
Senior Secured Loan 5.25% (L +4.75%) 4/1/2021 7/28/2028 $ 1,789 $ 1,772 $ 1,797 0.9 %
Micro Holding Corp (14) Internet Publishing and Broadcasting and Web Search Portals
Senior Secured Loan 4.75% (L +3.75%) 3/26/2021 9/15/2024 1,985 1,987 1,992 1.0
Milrose Consultants, LLC (4) (8) Administrative Management and General Management Consulting Services
Senior Secured Loan 7.59% (L +6.59%) 7/16/2019 7/16/2025 22,574 22,400 22,800 12.0
Odyssey Logistics and Technology Corporation (14) (15) Freight Transportation Arrangement
Senior Secured Loan 5.00% (L +4.00%) 4/5/2021 10/12/2024 1,990 1,963 1,968 1.0
Online Tech Stores, LLC (4) (6) Stationary & Office Supply Merchant Wholesaler
Subordinated Loan 10.50% cash / 3.0% PIK N/A 2/1/2018 8/1/2023 19,975 16,179 — —
Panther BF Aggregator 2 LP (14) (15) (19) Other Commercial and Service Industry Machinery Manufacturing
Senior Secured Loan 3.33% (L +3.25%) 11/19/2019 4/30/2026 1,690 1,690 1,685 0.9
Parfums Holding Company, Inc. (14) (15) Cosmetics, Beauty Supplies, and Perfume Stores
Senior Secured Loan 4.08% (L +4.00%) 6/25/2019 6/30/2024 1,534 1,533 1,533 0.8
Pelican Products, Inc. Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan (15) 4.50% (L +3.50%) 9/22/2021 5/1/2025 997 994 994 0.5
Senior Secured Loan 8.75% (L +7.75%) 9/24/2018 5/1/2026 6,249 6,249 6,249 3.3
7,246 7,243 7,243 3.8
Peraton Inc. (14) (15) Management Consulting Services
Senior Secured Loan 4.50% (L +3.75%) 4/2/2021 2/1/2028 837 838 839 0.4


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

Planet Bingo, LLC (F/K/A 3rd Rock Gaming Holdings, LLC) (6) (10)	Software Publishers
Senior Secured Loan		4.00%	N/A	3/13/2018	3/12/2023	$	16,728	$	14,192	$	7,322	3.5	%

PM Acquisition LLC (20)	All Other General Merchandise Stores
Common Equity (499 units) (10) (13)				9/30/2017				499		1,212		0.6

Professional Pipe Holdings, LLC	Plumbing, Heating, and Air-Conditioning Contractors
Senior Secured Loan		9.75% cash / 1.50% PIK	(L +10.25%)	3/23/2018	3/24/2025	3,494		3,480		3,555		1.7

Resource Label Group, LLC (14) (15)	Commercial Printing (except Screen and Books)
Senior Secured Loan		5.00%	(L +4.25%)	7/2/2021	7/7/2028	3,429		3,419		3,407		1.6

RPLF Holdings, LLC (10) (13)	Software Publishers
Common Equity (345,339 Class A units)				1/17/2018				492		868		0.4

RSA Security (15)	Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Senior Secured Loan (14)		5.50%	(L +4.75%)	4/16/2021	4/27/2028	2,790		2,775		2,735		1.3
Senior Secured Loan		8.50%	(L +7.75%)	4/16/2021	4/27/2029	4,450		4,393		4,265		2.0
						7,240		7,168		7,000		3.3
RumbleOn, Inc. (15) (22)	Other Industrial Machinery Manufacturing
Senior Secured Loan		9.25%	(L +8.25%)	8/31/2021	8/31/2026	4,179		3,966		3,977		1.9
Senior Secured Loan (Delayed Draw) (5)		9.25%	(L +8.25%)	8/31/2021	2/23/2023	1,264		1,250		1,177		0.6
Warrants (warrants to purchase up to $600,000 in common stock)				8/31/2021	2/28/2023 (12)			200		163		0.1
						5,443		5,416		5,317		2.6
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)				9/4/2020				160		112		0.1
Common Equity (269 units)				9/4/2020				3		—		—
								214		112		0.1

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)

~~September 30, 2021~~March 31, 2022

(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
Pike Corp. (14) (15) Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan 3.09% (L +3.00%) 9/17/2020 1/21/2028 $ 131 $ 131 $ 131 0.1 %
PM Acquisition LLC (20) All Other General Merchandise Stores
Common Equity (499 units) (10) (13) 9/30/2017 499 1,624 0.9
Pretium Packaging (14) (15) Ice Cream and Frozen Dessert Manufacturing
Senior Secured Loan 4.50% (L +4.00%) 9/22/2021 9/22/2028 439 436 440 0.2
Resource Label Group, LLC (14) (15) Commercial Printing (except Screen and Books)
Senior Secured Loan 6.50% (L +3.25%) 7/2/2021 7/2/2028 243 241 245 0.1
Senior Secured Loan (Delayed Draw) (5) 5.00% (L +4.25%) 7/2/2021 7/2/2028 2,743 2,735 2,751 1.4
2,986 2,976 2,996 1.5
RPLF Holdings, LLC (10) (13) Software Publishers
Common Equity (254,110 Class A units) 1/17/2018 492 874 0.5
RSA Security (15) Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Senior Secured Loan (14) 5.50% (L +4.75%) 4/16/2021 4/27/2028 2,804 2,788 2,768 1.5
Senior Secured Loan 8.50% (L +7.75%) 4/16/2021 4/27/2029 3,266 3,220 3,243 1.7
Senior Secured Loan (Delayed Draw) (5) n/m (18) (L +7.75%) 4/16/2021 4/16/2029 — — (8) —
6,070 6,008 6,003 3.2
RumbleOn, Inc. (15) (22) Other Industrial Machinery Manufacturing
Senior Secured Loan 9.25% (L +8.25%) 8/31/2021 8/31/2026 4,200 3,962 3,962 2.1
Senior Secured Loan (Delayed Draw) (5) n/m (18) (L +8.25%) 8/31/2021 2/23/2023 — (18) (18) —
Warrants (warrants to purchase up to $600,000 in common stock) (10) 8/31/2021 2/28/2023 (12) 200 200 0.1
4,200 4,144 4,144 2.2
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) 9/4/2020 160 13 —
Common Equity (269 units) 9/4/2020 3 — —
214 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
Signal Parent, Inc. (14) (15)	New Single-Family Housing Construction (except For-Sale Builders)
Senior Secured Loan		4.25%	(L +3.50%)	3/25/2021	4/3/2028	$	1,836	$	1,819	$	1,654	0.8	%

SourceHOV Tax, Inc. (4)	Other Accounting Services
Senior Secured Loan		7.50%	(L +6.50%)	3/16/2020	3/17/2025	19,740		19,608		19,740		9.5
Senior Secured Loan (Revolver) (5)		n/m (18)	(L +6.50%)	5/17/2021	3/17/2025	—		(14)		—		—
						19,740		19,594		19,740		9.5
Southern Technical Institute, LLC (4) (23)	Colleges, Universities, and Professional Schools
Equity appreciation rights				6/27/2018				—		7,989		3.8

Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.,) (15)	Child Day Care Services
Senior Secured Loan		9.26%	(L +8.25%)	7/26/2018	7/30/2026	6,399		6,346		5,953		2.9

SSJA Bariatric Management LLC (15)	Offices of Physicians, Mental Health Specialists
Senior Secured Loan		6.01%	(L +5.00%)	8/26/2019	8/26/2024	9,750		9,703		9,750		4.7
Senior Secured Loan		6.01%	(L +5.00%)	12/31/2020	8/26/2024	1,053		1,046		1,053		0.5
Senior Secured Loan		6.01%	(L +5.00%)	12/8/2021	8/26/2024	2,653		2,630		2,653		1.3
Senior Secured Loan (Revolver) (5)		n/m (18)	(L +5.00%)	8/26/2019	8/26/2024	—		(3)		—		—
						13,456		13,376		13,456		6.5
SS Acquisition, LLC (15)	Sports and Recreation Instruction
Senior Secured Loan (8)		7.88%	(L +6.88%)	12/30/2021	12/30/2026	3,042		3,013		2,995		1.4
Senior Secured Loan (Delayed Draw) (5)		n/m (18)	(L +6.88%)	12/30/2021	12/30/2026	—		—		(28)		—
						3,042		3,013		2,967		1.4
Staples, Inc. (14) (15) (22)	Business to Business Electronic Markets
Senior Secured Loan		5.32%	(L +5.00%)	6/24/2019	4/16/2026	2,922		2,870		2,768		1.3

STS Operating, Inc.	Industrial Machinery and Equipment Merchant Wholesalers
Senior Secured Loan		9.00%	(L +8.00%)	5/15/2018	4/30/2026	9,073		9,071		9,073		4.4

Teneo Global LLC (14) (15)	Management Consulting Services
Senior Secured Loan		6.25%	(SOFR +5.25%)	9/10/2021	7/11/2025	1,891		1,881		1,875		0.9

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)

~~September 30, 2021~~March 31, 2022

(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
Signal Parent, Inc. (15) New Single-Family Housing Construction (except For-Sale Builders)
Senior Secured Loan 4.25% (L +3.50%) 3/25/2021 4/3/2028 $ 2,345 $ 2,321 $ 2,341 1.2 %
SourceHOV Tax, Inc. Other Accounting Services
Senior Secured Loan (4) 7.50% (L +6.50%) 3/16/2020 3/16/2025 19,840 19,685 19,838 10.4
Senior Secured Loan (Revolver) (5) (18) n/m (18) (L +3.00%) 5/17/2021 3/17/2025 — (16) — —
19,840 19,669 19,838 10.4
Southern Technical Institute, LLC (4) (10) Colleges, Universities, and Professional Schools
Equity appreciation rights 6/27/2018 — 6,139 3.2
Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.,) (15) Child Day Care Services
Senior Secured Loan 8.38% (L +8.25%) 7/26/2018 7/30/2026 6,399 6,326 5,902 3.1
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 9,800 9,744 9,800 5.2
Senior Secured Loan 6.00% (L +5.00%) 12/31/2020 8/26/2024 1,059 1,050 1,059 0.6
Senior Secured Loan (Revolver) (5) (18) n/m (18) (L +4.00%) 8/26/2019 8/26/2024 — (4) — —
10,859 10,790 10,859 5.8
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 1,926 1.0
Staples, Inc. (14) (15) (22) Business to Business Electronic Markets
Senior Secured Loan 5.13% (L +5.00%) 6/24/2019 4/16/2026 2,937 2,879 2,808 1.5
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 621 620 621 0.3
Senior Secured Loan 9.00% (L +8.00%) 5/15/2018 4/30/2026 9,073 9,072 9,045 4.8
9,694 9,692 9,666 5.1


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
The Escape Game, LLC (4)	Other amusement and recreation industries
Senior Secured Loan		8.00%	(L +7.00%)	12/21/2021	12/22/2024	$	16,333	$	16,333	$	16,372	7.9	%
Senior Secured Loan (Revolver) (5)		8.00%	(L +7.00%)	12/21/2021	12/22/2024	933		891		933		0.4
						17,266		17,224		17,305		8.3
Thryv, Inc. (14) (15)	Directory and Mailing List Publishers
Senior Secured Loan		9.50%	(L +8.50%)	2/18/2021	3/1/2026	1,983		1,942		1,991		1.0

Tolemar Acquisition, INC.	Motorcycle, Bicycle, and Parts Manufacturing
Senior Secured Loan (15)		7.00%	(L +6.00%)	10/14/2021	10/14/2026	15,622		15,551		15,807		7.6
Senior Secured Loan (Revolver) (5)		7.45%	(L +6.00%)	10/14/2021	10/14/2026	1,029		1,018		1,029		0.5
						16,651		16,569		16,836		8.1
TruGreen Limited Partnership	Landscaping Services
Senior Secured Loan		9.46%	(L +8.50%)	5/13/2021	11/2/2028	4,500		4,625		4,590		2.2

United Biologics Holdings, LLC (4) (10)	Medical Laboratories
Preferred Equity (151,787 units)				4/16/2013				9		16		—
Warrants (3,976 units)				7/26/2012	4/16/2023 (12)			82		8		—
								91		24		—
West Corporation (14) (15)	All Other Telecommunications
Senior Secured Loan		4.50%	(L +3.50%)	2/26/2021	10/10/2024	871		860		791		0.4
Senior Secured Loan		5.00%	(L +4.00%)	7/29/2021	10/10/2024	2,564		2,514		2,351		1.1
						3,435		3,374		3,142		1.5
Yahoo / Verizon Media (14) (15)	Internet Publishing and Broadcasting and Web Search Portals
Senior Secured Loan		6.25%	(L +5.50%)	7/21/2021	9/1/2027	3,252		3,219		3,242		1.6

Total Debt and Equity Investments						$	387,857	$	390,575	$	382,161	183.5	%

Structured Finance Note Investments
Subordinated Notes and Mezzanine Debt (9) (16) (22)
Apex Credit CLO 2020 Ltd. (7)
Subordinated Notes		10.55%		11/16/2020	10/20/2031	$	11,080	$	9,262	$	9,226	4.4	%

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)

~~September 30, 2021~~March 31, 2022

(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
Sunshine Luxembourg VII SARL (14) (15) (22) Pharmaceutical Preparation Manufacturing
Senior Secured Loan 4.50% (L +3.75%) 11/20/2019 10/1/2026 $ 1,970 $ 1,970 $ 1,978 1.0 %
Tailwind Smith Cooper Intermediate Corporation (14) (15) Fabricated Pipe and Pipe Fitting Manufacturing
Senior Secured Loan 5.09% (L +5.00%) 2/23/2021 5/28/2026 2,580 2,541 2,571 1.4
Tank Holding Corp. (14) (15) Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan 4.92% (L +3.50%) 6/24/2019 3/26/2026 1,960 1,965 1,954 1.0
Senior Secured Loan 6.19% (L +5.00%) 12/18/2020 3/26/2026 855 844 858 0.5
2,815 2,809 2,812 1.5
Teneo Global LLC (14) (15) Management Consulting Services
Senior Secured Loan 6.25% (L +5.25%) 9/10/2021 7/11/2025 1,425 1,418 1,422 0.7
The Escape Game, LLC (4) Other amusement and recreation industries
Senior Secured Loan 9.75% (L +8.75%) 12/22/2017 12/31/2021 2,333 2,329 2,333 1.2
Senior Secured Loan 9.75% (L +8.75%) 2/14/2020 12/22/2022 7,000 6,983 7,000 3.7
Senior Secured Loan 9.75% (L +8.75%) 7/18/2019 12/22/2022 7,000 7,000 7,000 3.7
Senior Secured Loan (Delayed Draw) 8.00% (L +7.00%) 7/20/2018 12/31/2021 4,667 4,665 4,667 2.5
21,000 20,977 21,000 11.1
Thryv, Inc. (14) (15) Directory and Mailing List Publishers
Senior Secured Loan 9.50% (L +8.50%) 2/18/2021 3/1/2026 2,182 2,132 2,224 1.2
Truck Hero, Inc. (14) (15) Truck Trailer Manufacturing
Senior Secured Loan 4.00% (L +3.25%) 4/1/2021 1/31/2028 746 745 746 0.4
TruGreen Limited Partnership Landscaping Services
Senior Secured Loan 9.25% (L +8.50%) 5/13/2021 11/2/2028 4,500 4,634 4,590 2.4
United Biologics Holdings, LLC (4) (10) Medical Laboratories
Preferred Equity (151,787 units) 4/16/2013 9 16 —
Warrants (29,374 units) 7/26/2012 3/5/2022 (12) 82 7 —
91 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
Apex Credit CLO 2021 Ltd (7)
Subordinated Notes		13.29%		5/28/2021	7/18/2034	$	8,630	$	7,130	$	6,584	3.2	%

Ares L CLO
Mezzanine debt - Class E		5.89%	(L +5.65%)	2/17/2022	1/15/2032	6,000		5,687		5,687		2.7

Barings CLO 2019-I Ltd.
Mezzanine debt - Class E		7.10%	(L +6.86%)	2/23/2022	4/15/2035	8,000		7,885		7,885		3.8

Dryden 53 CLO, Ltd. (7)
Subordinated Notes - Income		20.75%		10/26/2020	1/15/2031	2,700		1,567		1,466		0.7
Subordinated Notes		20.73%		10/26/2020	1/15/2031	2,159		1,254		1,173		0.6
						4,859		2,821		2,639		1.3
Dryden 76 CLO, Ltd. (7)
Subordinated Notes		18.49%		9/27/2019	10/20/2032	2,750		2,090		2,175		1.0

Elevation CLO 2017-7, Ltd. (7) (24)
Subordinated Notes		0.0%		2/6/2019	7/15/2030	8,403		4,224		3,085		1.5

Flatiron CLO 18, Ltd. (7)
Subordinated Notes		18.69%		1/2/2019	4/17/2031	9,680		6,840		6,769		3.2

Madison Park Funding XXIII, Ltd. (7)
Subordinated Notes		23.34%		1/8/2020	7/27/2047	10,000		6,236		6,701		3.2

Madison Park Funding XXIX, Ltd. (7)
Subordinated Notes		15.48%		12/22/2020	10/18/2047	9,500		6,712		6,219		3.0

Monroe Capital MML CLO X, Ltd.
Mezzanine debt - Class E		9.33%	(L +8.85%)	8/7/2020	8/20/2031	1,000		952		990		0.5

Octagon Investment Partners 39, Ltd. (7)
Subordinated Notes		17.83%		1/23/2020	10/20/2030	7,000		4,634		4,135		2.0

Park Avenue Institutional Advisers CLO Ltd 2021-1
Mezzanine debt - Class E		7.55%	(L +7.30%)	1/26/2021	1/20/2034	1,000		975		973		0.5

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)

~~September 30, 2021~~March 31, 2022

(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
United Natural Foods (14) (15) (22) General Line Grocery Merchant Wholesalers
Senior Secured Loan 3.58% (L +3.50%) 6/9/2020 10/22/2025 $ 280 $ 272 $ 281 0.1 %
West Corporation (14) (15) All Other Telecommunications
Senior Secured Loan 4.50% (L +3.50%) 2/26/2021 10/10/2024 887 873 870 0.5
Senior Secured Loan 5.00% (L +4.00%) 7/29/2021 10/10/2024 2,611 2,549 2,577 1.4
3,498 3,422 3,447 1.9
Yahoo / Verizon Media (15) Internet Publishing and Broadcasting and Web Search Portals
Senior Secured Loan 6.25% (L +5.50%) 7/21/2021 9/1/2027 2,492 2,459 2,459 1.3
Total Debt and Equity Investments $ 353,409 $ 351,857 $ 337,048 177.2 %
Structured Finance Note Investments (22)
Subordinated Notes and Mezzanine Debt (9) (16)
Apex Credit CLO 2020 Ltd. (7)
Subordinated Notes 11.43% 11/16/2020 11/19/2031 $ 11,080 $ 9,390 $ 9,500 5.0 %
Apex Credit CLO 2021 Ltd (7)
Subordinated Notes 14.53% 5/28/2021 7/18/2034 8,630 7,532 7,327 3.9
Dryden 53 CLO, LTD. (7)
Income Notes 23.66% 10/26/2020 1/15/2031 2,700 1,667 1,762 0.9
Subordinated Notes 23.64% 10/26/2020 1/15/2031 2,159 1,334 1,409 0.7
4,859 3,001 3,171 1.6
Dryden 76 CLO, Ltd. (7)
Subordinated Notes 16.14% 9/27/2019 10/20/2032 2,750 2,181 2,364 1.2
Elevation CLO 2017-7, Ltd. (7)
Subordinated Notes 13.42% 2/6/2019 7/15/2030 10,000 6,386 5,619 3.0
Flatiron CLO 18, Ltd. (7)
Subordinated Notes 20.42% 1/2/2019 4/17/2031 9,680 7,036 7,352 3.9


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
Redding Ridge 4 (7)
Subordinated Notes		14.23%		3/4/2021	4/15/2030	$	1,300	$	1,081	$	1,026	0.5	%

Regatta II Funding
Mezzanine debt - Class DR2		7.19%	(L +6.95%)	6/5/2020	1/15/2029	800		747		791		0.4

THL Credit Wind River 2019‐3 CLO Ltd (7)
Subordinated Notes		13.67%		4/5/2019	4/15/2031	7,000		5,568		4,847		2.3

Trinitas CLO VIII (7)
Subordinated Notes		20.56%		3/4/2021	7/20/2117	5,200		3,082		3,010		1.4

Wellfleet CLO 2018-2 (7)
Subordinated Notes		19.53%		3/4/2021	10/20/2031	1,000		649		635		0.3

Total Subordinated Notes and Mezzanine Debt Investments						$	103,202	$	76,575	$	73,377	35.2	%

Loan Accumulation Facility (17) (22)
Apex Credit CLO 2021-II Ltd
Loan accumulation facility		13.50%		7/14/2021	7/14/2022	$	8,500	$	8,500	$	8,500	4.1	%

Brightwood Capital MM CLO 2022-1, LTD
Loan accumulation facility		13.50%		1/5/2022	12/31/2032	8,500		8,500		8,500		4.1

Total Loan Accumulation Facility Investments						$	17,000	$	17,000	$	17,000	8.2	%

Total Structured Finance Notes						$	120,202	$	93,575	$	90,377	43.4	%

Total Non-control/Non-affiliate Investments						$	508,059	$	484,150	$	472,538	226.9	%
Affiliate Investments
Contract Datascan Holdings, Inc. (4) (10) (20)	Office Machinery and Equipment Rental and Leasing
Preferred Equity (3,061 Series A shares), 10% PIK				8/5/2015				$	5,849	$	4,943	2.4	%
Common Equity (11,273 shares)				6/28/2016				104		209		0.1
								5,953		5,152		2.5

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)

~~September 30, 2021~~March 31, 2022

(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
Madison Park Funding XXIII, Ltd. (7)
Subordinated Notes 25.65% 1/8/2020 7/27/2047 $ 10,000 $ 6,494 $ 7,334 3.9 %
Madison Park Funding XXIX, Ltd. (7)
Subordinated Notes 16.75% 12/22/2020 10/18/2047 9,500 7,101 7,259 3.8
Monroe Capital MML CLO X, Ltd.
Mezzanine bond - Class E 9.09% (L +8.85%) 8/7/2020 8/20/2031 1,000 946 1,002 0.5
Park Avenue Institutional Advisers CLO Ltd 2021-1
Mezzanine bond - Class E 8.53% (L +7.30%) 1/26/2021 1/20/2034 1,000 973 997 0.5
Octagon Investment Partners 39, Ltd. (7)
Subordinated Notes 19.02% 1/23/2020 10/20/2030 7,000 4,861 5,060 2.7
Redding Ridge 4 (7)
Subordinated Notes 17.80% 3/4/2021 4/15/2030 1,300 1,134 1,191 0.6
Regatta II Funding
Mezzanine bond - Class DR2 13.64% (L +6.95%) 6/5/2020 1/15/2029 800 726 793 0.4
THL Credit Wind River 2019‐3 CLO Ltd (7)
Subordinated Notes 10.20% 4/5/2019 4/15/2031 7,000 5,613 5,131 2.7
Trinitas CLO VIII (7)
Subordinated Notes 21.72% 3/4/2021 7/20/2031 5,200 3,181 3,326 1.8
Wellfleet CLO 2018-2 (7)
Subordinated Notes 20.48% 3/4/2021 10/20/2031 1,000 662 700 0.4
Total Subordinated Notes and Mezzanine Debt $ 90,799 $ 67,217 $ 68,126 35.9 %
Loan Accumulation Facility (17)
Apex Credit CLO 2021-II Ltd
Loan accumulation facility 13.50% 7/14/2021 7/14/2022 $ 8,500 $ 8,500 $ 8,500 4.5 %
Total Structured Finance Notes $ 99,299 $ 75,717 $ 76,626 40.4 %

~~OFS Capital Corporation and Subsidiaries~~

~~Consolidated Schedule of Investments - Continued (unaudited)~~

~~September 30, 2021~~

~~(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
Total Non-control/Non-affiliate Investments $ 452,708 $ 427,574 $ 413,674 217.6 %
Affiliate Investments
3rd Rock Gaming Holdings, LLC (20) Software Publishers
Senior Secured Loan (6) 8.50% cash / 1.0% PIK (L +8.50%) 3/13/2018 3/12/2023 $ 19,354 $ 17,333 $ 7,001 3.7 %
Common Equity (2,547,250 units) (10) (13) 3/13/2018 2,547 — —
19,354 19,880 7,001 3.7
Contract Datascan Holdings, Inc. (4) (10) (20) Office Machinery and Equipment Rental and Leasing
Preferred Equity (3,061 Series A shares), 10% PIK 8/5/2015 5,849 3,272 1.7
Common Equity (11,273 shares) 6/28/2016 104 79 —
5,953 3,351 1.7
DRS Imaging Services, LLC (20) Data Processing, Hosting, and Related Services
Common Equity (1,135 units) (10) (13) 3/8/2018 1,135 1,499 0.8
Master Cutlery, LLC (4) (10) (20) Sporting and Recreational Goods and Supplies Merchant Wholesalers
Subordinated Loan (6) (11) 13.00% N/A 4/17/2015 7/20/2022 7,325 4,696 745 0.4
Preferred Equity (3,723 Series A units), 8% PIK 4/17/2015 3,483 — —
Common Equity (15,564 units) 4/17/2015 — — —
7,325 8,179 745 0.4
Pfanstiehl Holdings, Inc. (4) (20) (21) Pharmaceutical Preparation Manufacturing
Common Equity (400 Class A shares) 1/1/2014 217 55,602 29.3
Professional Pipe Holdings, LLC (19) Plumbing, Heating, and Air-Conditioning Contractors
Senior Secured Loan 9.75% cash / 1.50% PIK (L +10.25%) 3/23/2018 3/23/2023 4,880 4,843 4,880 2.6
Common Equity (1,414 Class A units) (10) 3/23/2018 1,414 1,340 0.7
4,880 6,257 6,220 3.3
TalentSmart Holdings, LLC (20) Professional and Management Development Training
Common Equity (1,595 Class A shares) (10) (13) 10/11/2019 1,595 1,321 0.7

~~OFS Capital Corporation and Subsidiaries~~

~~Consolidated Schedule of Investments - Continued (unaudited)~~

~~September 30, 2021~~

~~(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
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% PIK 12/10/2014 $ — $ 1,042 0.5 %
Common Equity (3,000,000 units) 12/10/2014 572 — —
572 1,042 0.5
TTG Healthcare, LLC (20) Diagnostic Imaging Centers
Senior Secured Loan (4) 8.50% (L +7.50%) 3/1/2019 11/28/2025 19,453 19,270 19,143 10.1
Preferred Equity ( 2,309 Class B units) (10) (13) 3/1/2019 2,309 3,536 1.9
19,453 21,579 22,679 12.0
Total Affiliate Investments $ 51,012 $ 65,367 $ 99,460 52.4 %
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%) 11/25/2015 4/30/2022 $ 8,091 $ 8,091 $ 8,091 4.3 %
Common Equity (554 shares) 11/25/2015 3,069 5,054 2.7
8,091 11,160 13,145 7.0
Total Control Investment $ 8,091 $ 11,160 $ 13,145 7.0 %
Total Investments $ 511,811 $ 504,101 $ 526,279 277.0 %


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
DRS Imaging Services, LLC (10) (13) (20)	Data Processing, Hosting, and Related Services
Common Equity (1,135 units)				3/8/2018				$	1,135	$	1,222	0.6	%

Master Cutlery, LLC (4) (10) (20)	Sporting and Recreational Goods and Supplies Merchant Wholesalers
Subordinated Loan (6) (11)		13.00%	N/A	4/17/2015	7/20/2022	7,793		4,696		436		0.2
Preferred Equity (3,723 Series A units), 8% PIK				4/17/2015				3,483		—		—
Common Equity (15,564 units)				4/17/2015				—		—		—
						7,793		8,179		436		0.2
Pfanstiehl Holdings, Inc. (4) (20) (21)	Pharmaceutical Preparation Manufacturing
Common Equity (400 Class A shares)				1/1/2014				217		75,308		36.1

TalentSmart Holdings, LLC (10) (13) (20)	Professional and Management Development Training
Common Equity (1,595,238 Class A shares)				10/11/2019				1,595		1,134		0.5

TRS Services, LLC (4) (10) (20)	Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance
Preferred Equity (1,937,191 Class A units), 11% PIK				12/10/2014				—		1,124		0.5
Common Equity (3,000,000 units)				12/10/2014				572		—		—
								572		1,124		0.5

Total Affiliate Investments						$	7,793	$	17,651	$	84,376	40.4	%

Total Investments						$	515,852	$	501,801	$	556,914	267.3	%

(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"~~“restricted securities” as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144.

(2)~~Substantially all~~At March 31, 2022, 96% of the investments that bear interest at a variable rate are indexed to LIBOR (L) ~~at September 30, 2021,~~, and reset monthly, quarterly, or semi-annually. ~~Variable-rate~~As of March 31, 2022, variable-rate loans with an aggregate ~~cost~~principal amount of ~~$370,838 include~~$189,530 were subject to LIBOR reference rate floor provisions, of generally 0.75% toor 1.00%~~; at September 30, 2021, the reference rate on such instruments was generally below the stated floor provisions.~~. For each variable-rate investment, the Company has provided the spread over the reference rate and current interest rate in effect at ~~September 30, 2021.~~March 31, 2022. 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 by 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.

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)

March 31, 2022

(Dollar amounts in thousands)

(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, 2021,~~March 31, 2022, 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~~residual cash flow of payments ~~made by~~received on underlying securities less contractual payments to debt holders and fund expenses.

~~OFS Capital Corporation and Subsidiaries~~

~~Consolidated Schedule of Investments - Continued (unaudited)~~

~~September 30, 2021~~

~~(Dollar amounts in thousands)~~

Portfolio Company

Reported Interest Rate

Interest Rate per Credit Agreement

Additional Interest per Annum

Portfolio Company

Reported Interest Rate

Interest Rate per Credit Agreement

Additional Interest per Annum

Milrose Consultants, LLC

7.59%

7.00%

0.59%

SS Acquisition, LLC

7.88%

7.50%

0.38%

(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.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 ~~September 30, 2021:~~March 31, 2022:

Portfolio Company

Investment Type

Range of PIK
Option

Range of Cash
Option

Maximum PIK
Rate Allowed

Eblens Holdings, Inc.

Subordinated Loan

0% or 1.00%

13.00% or 12.00%

1.00%

Inergex Holdings, LLC

Senior Loan

0% or 1.00%

9.01% to 8.01%

1.00%

Master Cutlery, LLC

Subordinated 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 ~~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)Loan accumulation facilities are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle. Reported yields represent ~~the realized yield since acquisition.~~an estimated yield. Income notes associated with loan accumulation facilities generally pay returns equal to the actual income earned on facility assets less costs of senior ~~financing.~~financing and manager costs. As of ~~September 30, 2021,~~March 31, 2022, the fair value of loan accumulation facilities were determined by reference to Transaction ~~Price.~~Price as an approximation of fair value.

(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 ~~September 30, 2021.~~March 31, 2022.

(22)Non-qualifying assets under Section 55(a) of the 1940 Act. AsQualifying assets as defined ~~under~~in Section 55 of the 1940 Act ~~qualifying assets~~ must represent at least 70% of the Company's assets atimmediately following the ~~time of~~ acquisition of any additional non-qualifying assets. As of ~~September 30, 2021,~~March 31, 2022, approximately ~~83%~~81% of the Company's assets were qualifying assets.

(23)Equity participation rights issued by unaffiliated third party fully covered with underlying positions in the portfolio company.

(24)As of March 31, 2022, the effective accretable yield has been estimated to be 0%, as the aggregate amount of projected distributions, including projected distributions related to liquidation of the underlying portfolio upon the security's anticipated optional redemption, is less than current amortized cost. Projected distributions are periodically monitored and re-evaluated. All actual distributions will be recognized as reductions to amortized cost until such time, if and when occurring, a future aggregate amount of then-projected distributions exceeds the security's then-current amortized cost.

See Notes to Consolidated Financial Statements.

2018

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, ~~2020~~2021

(Dollar amounts in thousands)


Portfolio Company (1) Investment Type	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		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	Non-control/Non-affiliate Investments														Non-control/Non-affiliate Investments
All Star Auto Lights, Inc. (4)		Motor Vehicle Parts (Used) Merchant Wholesalers
AAdvantage Loyalty IP Ltd. and American Airlines, Inc. (14) (15) (22)															AAdvantage Loyalty IP Ltd. and American Airlines, Inc. (14) (15) (22)	Scheduled Passenger Air Transportation
Senior Secured Loan	Senior Secured Loan		8.50%	(L +7.50%)	12/19/2019	8/20/2024	$	14,293	$	14,167	$	13,581	8.5	%	Senior Secured Loan		5.50%	(L +4.75%)	3/10/2021	4/20/2028	$	364	$	360	$	377	0.2	%

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	16,632		16,427		16,798		10.6
Senior Secured Loan (Revolver) (5)			n/m (18)	(L +6.50%)	2/7/2020	2/7/2025	—		(35)		(21)		—
Aegion Corporation (15) (22)															Aegion Corporation (15) (22)	Water and Sewer Line and Related Structures Construction
Senior Secured Loan															Senior Secured Loan		5.50%	(L +4.75%)	4/1/2021	5/17/2028	630		627		628		0.3

Allen Media, LLC (14) (15)															Allen Media, LLC (14) (15)	Cable and Other Subscription Programming
Senior Secured Loan															Senior Secured Loan		5.72%	(L +5.50%)	3/2/2021	2/10/2027	3,807		3,801		3,810		1.8

All Star Auto Lights, Inc. (4) (15)															All Star Auto Lights, Inc. (4) (15)	Motor Vehicle Parts (Used) Merchant Wholesalers
Senior Secured Loan															Senior Secured Loan		8.25%	(L +7.25%)	12/19/2019	8/20/2025	23,335		23,005		23,052		11.3

Autokiniton US Holdings, Inc. (14) (15)															Autokiniton US Holdings, Inc. (14) (15)	Automotive Parts and Accessories Stores
Senior Secured Loan															Senior Secured Loan		5.00%	(L +4.50%)	3/26/2021	4/6/2028	2,696		2,688		2,704		1.3

Avison Young (15)															Avison Young (15)	Nonresidential Property Managers
Senior Secured Loan															Senior Secured Loan		5.97%	(L +5.75%)	11/25/2021	1/31/2026	2,987		2,972		2,972		1.5

Ball Metalpack															Ball Metalpack	Metal Can Manufacturing
Senior Secured Loan															Senior Secured Loan		9.75%	(L +8.75%)	6/8/2021	7/31/2026	2,167		2,143		2,167		1.1
							16,632		16,392		16,777		10.6
Bass Pro Group, LLC (14) (15)	Bass Pro Group, LLC (14) (15)	Sporting Goods Stores													Bass Pro Group, LLC (14) (15)	Sporting Goods Stores
Senior Secured Loan	Senior Secured Loan		5.75%	(L +5.00%)	6/24/2019	9/25/2024	2,954		2,907		2,968		1.9		Senior Secured Loan		4.50%	(L +3.75%)	2/26/2021	3/6/2028	1,967		1,958		1,972		1.0

BayMark Health Services, Inc.		Outpatient Mental Health and Substance Abuse Centers
BayMark Health Services, Inc. (15)															BayMark Health Services, Inc. (15)	Outpatient Mental Health and Substance Abuse Centers
Senior Secured Loan	Senior Secured Loan		9.25%	(L +8.25%)	3/22/2018	3/1/2025	4,000		3,976		4,000		2.5		Senior Secured Loan		9.50%	(L +8.50%)	6/10/2021	6/11/2028	4,962		4,893		5,061		2.5

Community Intervention Services, Inc. (4) (6) (11)		Outpatient Mental Health and Substance Abuse Centers
Subordinated Loan			7.00% cash / 6.00% PIK	N/A	7/16/2015	1/16/2021	10,225		7,639		105		0.1

Confie Seguros Holdings II Co.		Insurance Agencies and Brokerages
Senior Secured Loan			8.73%	(L +8.50%)	7/7/2015	11/1/2025	9,678		9,544		9,302		5.9

Connect U.S. Finco LLC (14) (15)		Taxi Service
Senior Secured Loan			5.50%	(L +4.50%)	11/20/2019	12/11/2026	1,985		1,976		1,997		1.3
Senior Secured Loan (Delayed Draw) (5)															Senior Secured Loan (Delayed Draw) (5)		n/m (18)	(L +8.50%)	6/10/2021	6/11/2028	—		(124)		170		0.1
																					4,962		4,769		5,231		2.6
Constellis Holdings, LLC (10)	Constellis Holdings, LLC (10)	Other Justice, Public Order, and Safety Activities													Constellis Holdings, LLC (10)	Other Justice, Public Order, and Safety Activities
Common Equity (20,628 common shares)	Common Equity (20,628 common shares)				3/27/2020				703		676		0.4		Common Equity (20,628 common shares)				3/27/2020				703		29		—

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		3,437		3,390		2.1

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	497		496		499		0.3

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2021

(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

Convergint Technologies Holdings, LLC	Security Systems Services (except Locksmiths)
Senior Secured Loan		7.50%	(L +6.75%)	9/28/2018	3/30/2029	$	4,838	$	4,827	$	4,887	2.4	%

Corel Inc. (14) (15)	Software Publishers
Senior Secured Loan		5.18%	(L +5.00%)	3/2/2021	7/2/2026	2,271		2,265		2,270		1.1

Creation Technologies (15) (22)	Bare Printed Circuit Board Manufacturing
Senior Secured Loan		6.00%	(L +5.50%)	9/24/2021	10/5/2028	2,000		1,985		1,977		1.0

DHX Media Ltd. (14) (15) (22)	Motion Picture and Video Production
Senior Secured Loan		5.00%	(L +4.25%)	3/19/2021	3/18/2028	3,974		3,929		3,970		1.9

Diamond Sports Group, LLC (14) (15)	Television Broadcasting
Senior Secured Loan		3.36%	(L +3.25%)	11/19/2019	8/24/2026	1,955		1,957		918		0.5

DIRECTV Financing, LLC (14) (15)	Wired Telecommunications Carriers
Senior Secured Loan		5.75%	(L +5.00%)	7/22/2021	8/2/2027	4,395		4,388		4,405		2.2

Eblens Holdings, Inc. (20)	Shoe Store
Subordinated Loan (11)		12.00% cash / 1.00% PIK	N/A	7/13/2017	1/13/2023	9,207		9,181		9,049		4.4
Common Equity (71,250 Class A units) (10)				7/13/2017				713		292		0.1
						9,207		9,894		9,341		4.5
Electrical Components International, Inc.	Current-Carrying Wiring Device Manufacturing
Senior Secured Loan		8.60%	(L +8.50%)	4/8/2021	6/26/2026	3,000		2,653		2,954		1.4

EnergySolutions, LLC (14) (15)	Hazardous Waste Treatment and Disposal
Senior Secured Loan		4.75%	(L +3.75%)	7/8/2021	5/9/2025	1,837		1,833		1,837		0.9

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2021

(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
Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4)	Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan		7.50%	N/A	12/31/2021	12/31/2025	$	6,424	$	6,424	$	6,424	3.2	%
Senior Secured Loan		10.00% PIK	N/A	12/31/2021	12/31/2026	6,424		6,424		4,645		2.3
Senior Secured Loan (Revolver) (5)		7.50%	N/A	11/29/2021	12/31/2025	563		563		563		0.3
Equity Participation Rights (23)				12/31/2021		—		4,722		—		—

						13,411		18,133		11,632		5.8
Excelin Home Health, LLC (4)	Home Health Care Services
Senior Secured Loan		11.50%	(L +9.50%)	10/25/2018	9/30/2025	4,250		4,182		4,250		2.1

GGC Aerospace Topco L.P.	Other Aircraft Parts and Auxiliary Equipment Manufacturing
Common Equity (368,852 Class A units) (10)				12/29/2017				450		77		—
Common Equity (40,984 Class B units) (10)				12/29/2017				50		3		—
								500		80		—
Honor HN Buyer Inc (15)	Services for the Elderly and Persons with Disabilities
Senior Secured Loan		7.00%	(L +6.00%)	10/15/2021	10/15/2027	6,598		6,471		6,471		3.2
Senior Secured Loan (Delayed Draw) (5)		n/m (18)	(L +6.00%)	10/15/2021	10/15/2027	—		(40)		(40)		—
Senior Secured Loan (Revolver) (5)		n/m (18)	(L +6.00%)	10/15/2021	10/15/2027	—		(15)		(15)		—
						6,598		6,416		6,416		3.2
Hunter Fan Company (14) (15)	Small Electrical Appliance Manufacturing
Senior Secured Loan		5.75%	(L +5.00%)	8/10/2021	5/8/2028	4,988		4,997		4,997		2.5

Inergex Holdings, LLC	Other Computer Related Services
Senior Secured Loan		8.00% cash / 1.00% PIK	(L +8.00%)	10/1/2018	10/1/2024	15,260		15,030		15,260		7.5
Senior Secured Loan (Revolver) (5)		n/m (18)	(L +7.00%)	10/1/2018	10/1/2024	—		(13)		—		—
						15,260		15,017		15,260		7.5
Intouch Midco Inc. (15) (22)	All Other Professional, Scientific, and Technical Services
Senior Secured Loan		4.85%	(L +4.75%)	12/20/2019	8/24/2025	2,909		2,872		2,865		1.4

Ivanti Software, Inc. (14) (15)	Software Publishers
Senior Secured Loan		5.00%	(L +4.25%)	3/26/2021	12/1/2027	2,985		2,996		2,993		1.5

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments ~~- Continued~~

December 31, ~~2020~~2021

(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
Diamond Sports Group, LLC (14) (15) Television Broadcasting
Senior Secured Loan 3.40% (L +3.25%) 11/19/2019 8/24/2026 $ 1,975 $ 1,977 $ 1,758 1.1 %
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 10,159 10,098 6.4
Eblens Holdings, Inc. (20) Shoe Store
Subordinated Loan (11) 12.00% cash / 1.00% PIK N/A 7/13/2017 1/13/2023 9,114 9,035 4,368 2.7
Common Equity (71,250 Class A units) (10) 7/13/2017 713 — —
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 Loan 7.50% cash / 3.50% PIK (L +7.50%) 6/30/2017 6/30/2022 17,150 17,055 12,668 8.0
Preferred Equity (238,095 Series B units) (10) 6/30/2017 300 — —
Preferred Equity (13,315 Series C units) (10) 8/13/2018 13 — —
17,150 17,368 12,668 8.0
Excelin Home Health, LLC Home Health Care Services
Senior Secured Loan 11.50% (L +9.50%) 10/25/2018 4/25/2024 4,250 4,199 4,250 2.7
GGC Aerospace Topco L.P. Other Aircraft Parts and Auxiliary Equipment Manufacturing
Senior Secured Loan 9.75% (L +9.50%) 12/29/2017 9/8/2024 5,000 4,931 4,102 2.6
Common Equity (368,852 Class A units) (10) 12/29/2017 450 166 0.1
Common Equity (40,984 Class B units) (10) 12/29/2017 50 7 —
5,000 5,431 4,275 2.7
Inergex Holdings, LLC Other Computer Related Services
Senior Secured Loan 8.00% (L +7.00%) 10/1/2018 10/1/2024 16,422 16,265 15,913 9.9
Senior Secured Loan (Revolver) (5) n/m (18) (L +7.00%) 10/1/2018 10/1/2024 — (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 Loan 8.75% (L +8.50%) 3/4/2019 3/5/2027 6,244 6,099 6,244 3.9
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 1,980 1,921 1,905 1.2


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
JP Intermediate B, LLC (15)	Drugs and Druggists' Sundries Merchant Wholesalers
Senior Secured Loan		6.50%	(L +5.50%)	1/14/2021	11/15/2025	$	5,736	$	5,529	$	5,550	2.7	%

KNS Acquisition Corp. (14) (15)	Electronic Shopping and Mail-Order Houses
Senior Secured Loan		7.00%	(L +6.25%)	4/16/2021	4/21/2027	6,956		6,913		6,870		3.4

Kreg LLC (15)	Other Ambulatory Health Care Services
Senior Secured Loan		7.25%	(L +6.25%)	12/20/2021	12/20/2026	20,500		20,347		20,347		10.0
Senior Secured Loan (Revolver) (5)		n/m (18)	(L +6.25%)	12/20/2021	12/20/2026	—		(17)		(17)		—
						20,500		20,330		20,330		10.0
LogMeIn, Inc. (14) (15)	Data Processing, Hosting, and Related Services
Senior Secured Loan		4.86%	(L +4.75%)	3/26/2021	8/31/2027	2,979		2,977		2,966		1.5

Magenta Buyer LLC (14) (15)	Software Publishers
Senior Secured Loan		5.75%	(L +5.00%)	7/28/2021	7/27/2028	4,850		4,836		4,845		2.4

McGraw Hill Global Education Holdings, LLC (14) (15)	All Other Publishers
Senior Secured Loan		4.85%	(L +4.75%)	4/1/2021	7/28/2028	2,310		2,288		2,303		1.1

Milrose Consultants, LLC (4)	Administrative Management and General Management Consulting Services
Senior Secured Loan (15)		7.50%	(L +6.50%)	7/16/2019	7/16/2025	22,364		22,364		22,024		10.8
Senior Secured Loan (Revolver)		7.50%	(L +6.50%)	7/16/2019	7/16/2025	634		626		610		0.3
						22,998		22,990		22,634		11.1
Molded Devices, Inc. (15)	Other Industrial Machinery Manufacturing
Senior Secured Loan		8.25%	(Prime + 5.00%)	11/1/2021	11/1/2026	8,069		7,991		7,991		3.9
Senior Secured Loan (Delayed Draw) (5)		n/m (18)	(Prime + 5.00%)	11/1/2021	11/1/2026	—		(7)		(7)		—
Senior Secured Loan (Revolver) (5)		n/m (18)	(Prime + 5.00%)	11/1/2021	11/1/2026	—		(9)		(9)		—
						8,069		7,975		7,975		3.9

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments ~~- Continued~~

December 31, ~~2020~~2021

(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
I&I Sales Group, LLC Marketing Consulting Services
Senior Secured Loan (15) 9.50% (L +8.50%) 12/30/2020 7/10/2025 $ 5,325 $ 5,232 $ 5,232 3.3 %
Senior Secured Loan (Revolver) (5) n/m (18) (L +8.50%) 12/30/2020 7/10/2025 — (3) (3) —
5,325 5,229 5,229 3.3
Milrose Consultants, LLC (4) (8) Administrative Management and General Management Consulting Services
Senior Secured Loan 7.62% (L +6.62%) 7/16/2019 7/16/2025 22,574 22,404 22,485 14.0
My Alarm Center, LLC (10) Security Systems Services (except Locksmiths)
Preferred Equity (335 Class Z units) (13) 9/12/2018 325 97 0.1
Preferred Equity (1,485 Class A units), 8% PIK (4) (13) 7/14/2017 1,571 — —
Preferred Equity (1,198 Class B units) (4) 7/14/2017 1,198 — —
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 Loan 13.50% PIK N/A 2/1/2018 8/1/2023 18,360 16,129 2,426 1.5
Panther BF Aggregator 2 LP (14) (15) (19) Other Commercial and Service Industry Machinery Manufacturing
Senior Secured Loan 3.65% (L +3.50%) 11/19/2019 4/30/2026 1,939 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%) 6/25/2019 6/30/2024 1,537 1,536 1,530 1.0
Senior Secured Loan 9.75% (L +8.75%) 11/16/2017 6/30/2025 5,171 5,202 5,171 3.3
6,708 6,738 6,701 4.3
Pelican Products, Inc. Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan 8.75% (L +7.75%) 9/24/2018 5/1/2026 6,055 6,059 5,994 3.8
Pike Corp. (14) (15) Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan 3.14% (L +3.00%) 9/17/2020 7/24/2026 469 469 469 0.3


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
Odyssey Logistics and Technology Corporation (14) (15)	Freight Transportation Arrangement
Senior Secured Loan		5.00%	(L +4.00%)	4/5/2021	10/12/2024	$	1,985	$	1,960	$	1,970	1.0	%

One GI LLC (15)	Offices of Other Holding Companies
Senior Secured Loan (Delayed Draw)		7.75%	(L +6.75%)	12/13/2021	3/13/2022	5,515		5,403		5,403		2.7
Senior Secured Loan (Delayed Draw) (5)		n/m (18)	(L +6.75%)	12/13/2021	12/13/2023	—		(39)		(39)		—
Senior Secured Loan (Revolver) (5)		n/m (18)	(L +6.75%)	12/13/2021	12/22/2025	—		(29)		(29)		—
						5,515		5,335		5,335		2.7
Parfums Holding Company, Inc. (14) (15)	Cosmetics, Beauty Supplies, and Perfume Stores
Senior Secured Loan		4.10%	(L +4.00%)	6/25/2019	6/30/2024	1,534		1,533		1,531		0.8

Peraton Inc. (14) (15)	Management Consulting Services
Senior Secured Loan		4.50%	(L +3.75%)	4/2/2021	2/1/2028	835		836		837		0.4

Plnet Bingo, LLC (F/K/A 3rd Rock Gaming Holdings, LLC (6) (10)	Software Publishers
Senior Secured Loan		4.00%	N/A	3/13/2018	3/12/2023	16,728		14,358		7,027		3.3

PM Acquisition LLC (20)	All Other General Merchandise Stores
Common Equity (499 units) (10) (13)				9/30/2017				499		1,698		0.8

Professional Pipe Holdings, LLC	Plumbing, Heating, and Air-Conditioning Contractors
Senior Secured Loan		9.75% cash / 1.00% PIK	(L +9.75%)	3/23/2018	3/24/2025	5,367		5,344		5,378		2.6

Resource Label Group, LLC (14) (15)	Commercial Printing (except Screen and Books)
Senior Secured Loan		5.00%	(L +4.25%)	7/2/2021	7/7/2028	694		692		694		0.3
Senior Secured Loan (Delayed Draw)		5.00%	(L +4.25%)	7/2/2021	7/2/2028	2,743		2,735		2,742		1.3
						3,437		3,427		3,436		1.6
RPLF Holdings, LLC (10) (13)	Software Publishers
Common Equity (345,339 Class A units)				1/17/2018				492		794		0.4

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments ~~- Continued~~

December 31, ~~2020~~2021

(Dollar amounts in thousands)


Portfolio Company (1) Investment Type	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		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
PM Acquisition LLC (20)		All Other General Merchandise Stores
Senior Secured Loan			11.50% cash / 2.50% PIK	N/A	9/30/2017	10/29/2021	$	4,780	$	4,753	$	4,780	3.0	%
Common Equity (499 units) (10) (13)					9/30/2017				499		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
RSA Security (15)															RSA Security (15)	Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Senior Secured Loan (14)															Senior Secured Loan (14)		5.50%	(L +4.75%)	4/16/2021	4/27/2028	$	2,797	$	2,782	$	2,680	1.3	%
Senior Secured Loan	Senior Secured Loan		4.46%	(L +4.25%)	6/25/2019	5/16/2025	1,970		1,955		1,942		1.2		Senior Secured Loan		8.50%	(L +7.75%)	4/16/2021	4/27/2029	4,450		4,392		4,223		2.1
																					7,247		7,174		6,903		3.4
Resource Label Group, LLC		Commercial Printing (except Screen and Books)
RumbleOn, Inc. (15) (22)															RumbleOn, Inc. (15) (22)	Other Industrial Machinery Manufacturing
Senior Secured Loan	Senior Secured Loan		9.50%	(L +8.50%)	6/7/2017	11/26/2023	4,821		4,789		4,812		3.0		Senior Secured Loan		9.25%	(L +8.25%)	8/31/2021	8/31/2026	4,190		3,964		4,006		2.0

Rocket Software, Inc. (15)		Software Publishers
Senior Secured Loan			8.46%	(L +8.25%)	11/20/2018	11/28/2026	6,275		6,190		6,241		3.9

RPLF Holdings, LLC (10) (13)		Software Publishers
Common Equity (254,110 Class A units)					1/17/2018				492		605		0.4
Senior Secured Loan (Delayed Draw) (5)															Senior Secured Loan (Delayed Draw) (5)		n/m (18)	(L +8.25%)	8/31/2021	2/23/2023	—		(18)		(79)		—
Warrants (warrants to purchase up to $600,000 in common stock)															Warrants (warrants to purchase up to $600,000 in common stock)				8/31/2021	2/28/2023 (12)	—		200		274		0.1
																					4,190		4,146		4,201		2.1
Sentry Centers Holdings, LLC (10) (13)	Sentry Centers Holdings, LLC (10) (13)	Other Professional, Scientific, and Technical Services													Sentry Centers Holdings, LLC (10) (13)	Other Professional, Scientific, and Technical Services
Preferred Equity (2,248 Series A units)	Preferred Equity (2,248 Series A units)				9/4/2020				51		47		—		Preferred Equity (2,248 Series A units)				9/4/2020				51		—		—
Preferred Equity (1,603 Series B units)	Preferred Equity (1,603 Series B units)				9/4/2020				160		160		0.1		Preferred Equity (1,603 Series B units)				9/4/2020				160		12		—
Common Equity (269 units)	Common Equity (269 units)				9/4/2020				3		3		—		Common Equity (269 units)				9/4/2020				3		—		—
									214		210		0.1										214		12		—
SkyMiles IP Ltd. and Delta Air Lines, Inc. (14) (15)		Scheduled Passenger Air Transportation
Signal Parent, Inc. (14) (15)															Signal Parent, Inc. (14) (15)	New Single-Family Housing Construction (except For-Sale Builders)
Senior Secured Loan	Senior Secured Loan		4.75%	(L +3.75%)	9/15/2020	10/20/2027	500		495		520		0.3		Senior Secured Loan		4.25%	(L +3.50%)	3/25/2021	4/3/2028	1,840		1,823		1,794		0.9

SourceHOV Tax, Inc. (4) (8)		Other Accounting Services
SourceHOV Tax, Inc. (4)															SourceHOV Tax, Inc. (4)	Other Accounting Services
Senior Secured Loan															Senior Secured Loan		7.50%	(L +6.50%)	3/16/2020	3/16/2025	19,790		19,648		19,935		9.8
Senior Secured Loan (Revolver) (5)															Senior Secured Loan (Revolver) (5)		n/m (18)	(L +6.50%)	5/17/2021	3/17/2025	—		(15)		—		—
																					19,790		19,633		19,935		9.8
Southern Technical Institute, LLC (4) (10)(23)															Southern Technical Institute, LLC (4) (10)(23)	Colleges, Universities, and Professional Schools
Equity Participation Rights															Equity Participation Rights				6/27/2018				—		7,408		3.6

Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.) (15)															Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.) (15)	Child Day Care Services
Senior Secured Loan	Senior Secured Loan		7.61%	(L +6.11%)	3/16/2020	3/16/2025	19,892		19,742		19,988		12.6		Senior Secured Loan		8.47%	(L +8.25%)	7/26/2018	7/30/2026	6,399		6,336		5,916		2.9

Southern Technical Institute, LLC (4) (10)		Colleges, Universities, and Professional Schools
Equity appreciation rights					6/27/2018				—		4,295		2.7

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments ~~- Continued~~

December 31, ~~2020~~2021

(Dollar amounts in thousands)


Portfolio Company (1) Investment Type	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		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
Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.)		Child Day Care Services
SSJA Bariatric Management LLC (15)															SSJA Bariatric Management LLC (15)	Offices of Physicians, Mental Health Specialists
Senior Secured Loan	Senior Secured Loan		8.50%	(L +8.25%)	7/26/2018	7/30/2026	$	5,216	$	5,178	$	4,656	2.9	%	Senior Secured Loan		6.00%	(L +5.00%)	8/26/2019	8/26/2024	$	9,775	$	9,723	$	9,775	4.8	%

SSJA Bariatric Management LLC (15)		Offices of Physicians, Mental Health Specialists
Senior Secured Loan	Senior Secured Loan		6.00%	(L +5.00%)	8/26/2019	8/26/2024	9,875		9,803		9,647		6.1		Senior Secured Loan		6.00%	(L +5.00%)	12/31/2020	8/26/2024	1,056		1,048		1,056		0.5
Senior Secured Loan	Senior Secured Loan		6.25%	(L +5.25%)	12/31/2020	8/26/2024	1,067		1,056		1,042		0.7		Senior Secured Loan		6.00%	(L +5.00%)	12/8/2021	8/26/2024	2,660		2,634		2,660		1.3
Senior Secured Loan (Revolver) (5)	Senior Secured Loan (Revolver) (5)		n/m (18)	(L +5.00%)	8/26/2019	8/26/2024	—		(5)		15		—		Senior Secured Loan (Revolver) (5)		n/m (18)	(L +5.00%)	8/26/2019	8/26/2024	—		(4)		—		—
							10,942		10,854		10,704		6.8								13,491		13,401		13,491		6.6
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		1,281		0.8
SS Acquisition, LLC (15)															SS Acquisition, LLC (15)	Sports and Recreation Instruction
Senior Secured Loan (8)															Senior Secured Loan (8)		7.88%	(L +6.88%)	12/30/2021	12/30/2026	3,042		3,011		3,011		1.5
Senior Secured Loan (Delayed Draw) (5)															Senior Secured Loan (Delayed Draw) (5)		n/m (18)	(L +6.88%)	12/30/2021	12/30/2026	—		—		—		—
																					3,042		3,011		3,011		1.5
Staples, Inc. (14) (15)		Business to Business Electronic Markets
Staples, Inc. (14) (15) (22)															Staples, Inc. (14) (15) (22)	Business to Business Electronic Markets
Senior Secured Loan	Senior Secured Loan		5.21%	(L +5.00%)	6/24/2019	4/16/2026	2,960		2,891		2,875		1.8		Senior Secured Loan		5.13%	(L +5.00%)	6/24/2019	4/16/2026	2,930		2,875		2,838		1.4

STS Operating, Inc.	STS Operating, Inc.	Industrial Machinery and Equipment Merchant Wholesalers													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	625		626		601		0.4
Senior Secured Loan	Senior Secured Loan		9.00%	(L +8.00%)	5/15/2018	4/30/2026	9,073		9,070		8,578		5.4		Senior Secured Loan		9.00%	(L +8.00%)	5/15/2018	4/30/2026	9,073		9,071		9,073		4.5
							9,698		9,696		9,179		5.8
Sunshine Luxembourg VII SARL (14) (15)		Pharmaceutical Preparation Manufacturing
Senior Secured Loan			5.00%	(L +4.00%)	11/20/2019	9/25/2026	1,980		1,988		1,992		1.3

Tank Holding Corp. (15)		Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan (14)			5.50%	(L +4.00%)	6/24/2019	3/26/2026	1,975		1,981		1,942		1.2
Teneo Global LLC (14) (15)															Teneo Global LLC (14) (15)	Management Consulting Services
Senior Secured Loan	Senior Secured Loan		3.40%	(L +3.25%)	12/18/2020	3/26/2026	896		882		882		0.6		Senior Secured Loan		6.25%	(L +5.25%)	9/10/2021	7/11/2025	1,421		1,415		1,427		0.7
							2,871		2,863		2,824		1.8
The Escape Game, LLC (4)	The Escape Game, LLC (4)	Other amusement and recreation industries													The Escape Game, LLC (4)	Other amusement and recreation industries
Senior Secured Loan	Senior Secured Loan		9.75%	(L +8.75%)	7/18/2019	12/22/2022	7,000		6,973		6,647		4.2		Senior Secured Loan		8.00%	(L +7.00%)	12/21/2021	12/22/2024	16,333		16,333		16,382		8.0
Senior Secured Loan (Revolver) (5)															Senior Secured Loan (Revolver) (5)		n/m (18)	(L +7.00%)	12/21/2021		—		(46)		14		—
																					16,333		16,287		16,396		8.0
Thryv, Inc. (14) (15)															Thryv, Inc. (14) (15)	Directory and Mailing List Publishers
Senior Secured Loan	Senior Secured Loan		9.75%	(L +8.75%)	12/22/2017	12/31/2021	2,333		2,329		2,216		1.4		Senior Secured Loan		9.50%	(L +8.50%)	2/18/2021	3/1/2026	2,050		2,004		2,085		1.0

Tolemar Acquisition, INC. (15)															Tolemar Acquisition, INC. (15)	Motorcycle, Bicycle, and Parts Manufacturing
Senior Secured Loan	Senior Secured Loan		8.00%	(L +7.00%)	7/20/2018	12/31/2021	4,667		4,665		4,463		2.8		Senior Secured Loan		7.00%	(L +6.00%)	10/14/2021	10/14/2026	14,889		14,818		14,818		7.3
Senior Secured Loan (Delayed Draw)			9.75%	(L +8.75%)	7/20/2018	12/22/2022	7,000		7,000		6,647		4.2
Senior Secured Loan (Revolver) (5)															Senior Secured Loan (Revolver) (5)		7.00%	(L +6.00%)	10/14/2021	10/14/2026	360		348		348		0.2
							21,000		20,967		19,973		12.6								15,249		15,166		15,166		7.5
TruGreen Limited Partnership															TruGreen Limited Partnership	Landscaping Services
Senior Secured Loan															Senior Secured Loan		9.25%	(L +8.50%)	5/13/2021	11/2/2028	4,500		4,630		4,590		2.3

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments ~~- Continued~~

December 31, ~~2020~~2021

(Dollar amounts in thousands)


Portfolio Company (1) Investment Type	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		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
Truck Hero, Inc. (15)		Truck Trailer Manufacturing
Senior Secured Loan			9.25%	(L +8.25%)	5/30/2017	4/21/2025	$	8,174	$	8,118	$	8,174	5.1	%

United Biologics Holdings, LLC (4) (10)	United Biologics Holdings, LLC (4) (10)	Medical Laboratories													United Biologics Holdings, LLC (4) (10)	Medical Laboratories
Preferred Equity (151,787 units)	Preferred Equity (151,787 units)				4/16/2013				9		26		—		Preferred Equity (151,787 units)				4/16/2013				$	9	$	17	—	%
Warrants (29,374 units)	Warrants (29,374 units)				7/26/2012	3/5/2022 (12)			82		12		—		Warrants (29,374 units)				7/26/2012	3/5/2022 (12)			82		8		—
									91		38		—										91		25		—
United Natural Foods (14) (15)		General Line Grocery Merchant Wholesalers
West Corporation (14) (15)															West Corporation (14) (15)	All Other Telecommunications
Senior Secured Loan															Senior Secured Loan		4.50%	(L +3.50%)	2/26/2021	10/10/2024	887		874		838		0.4
Senior Secured Loan	Senior Secured Loan		4.40%	(L +4.25%)	6/9/2020	10/22/2025	286		275		284		0.2		Senior Secured Loan		5.00%	(L +4.00%)	7/29/2021	10/10/2024	2,611		2,555		2,485		1.2
																					3,498		3,429		3,323		1.6
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		6,908		5,476		3.4

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	477		477		479		0.3

Xperi (14) (15)		Semiconductor and Related Device Manufacturing
Yahoo / Verizon Media (14) (15)															Yahoo / Verizon Media (14) (15)	Internet Publishing and Broadcasting and Web Search Portals
Senior Secured Loan	Senior Secured Loan		4.15%	(L +4.00%)	6/1/2020	6/1/2025	433		399		434		0.3		Senior Secured Loan		6.25%	(L +5.50%)	7/21/2021	9/1/2027	3,294		3,249		3,299		1.6

Total Debt and Equity Investments	Total Debt and Equity Investments						$	306,683	$	307,768	$	272,240	171.3	%	Total Debt and Equity Investments						$	350,939	$	353,447	$	346,366	170.1	%

Structured Finance Note Investments
Structured Finance Note Investments (22)															Structured Finance Note Investments (22)
Subordinated Notes and Mezzanine Debt (9) (16)															Subordinated Notes and Mezzanine Debt (9) (16)
Apex Credit CLO 2020 (7)	Apex Credit CLO 2020 (7)														Apex Credit CLO 2020 (7)
Subordinated Notes	Subordinated Notes		14.16% (9)		11/16/2020	11/19/2031 (17)	11,080		9,461 (16)		10,006		6.3		Subordinated Notes		10.20%		11/16/2020	10/20/2031	$	11,080	$	9,297	$	9,090	4.5	%

Apex Credit CLO 2021 Ltd (7)															Apex Credit CLO 2021 Ltd (7)
Subordinated Notes															Subordinated Notes		14.53%		5/28/2021	7/18/2034	8,630		7,797		7,442		3.7

Dryden 53 CLO, LTD. (7)	Dryden 53 CLO, LTD. (7)														Dryden 53 CLO, LTD. (7)
Income Notes			16.68% (9)		10/26/2020	1/15/2031 (17)	2,700		1,779		1,967		1.2
Subordinated Notes - Income															Subordinated Notes - Income		23.72%		10/26/2020	1/15/2031	2,700		1,611		1,672		0.8
Subordinated Notes	Subordinated Notes		16.68% (9)		10/26/2020	1/15/2031 (17)	2,159		1,423 (16)		1,573		1.0		Subordinated Notes		23.69%		10/26/2020	1/15/2031	2,159		1,289		1,337		0.7
							4,859		3,202		3,540		2.2								4,859		2,900		3,009		1.5
Dryden 76 CLO, Ltd. (7)	Dryden 76 CLO, Ltd. (7)														Dryden 76 CLO, Ltd. (7)
Subordinated Notes	Subordinated Notes		18.68% (9)		9/27/2019	10/20/2032 (17)	2,750		2,282 (16)		2,235		1.4		Subordinated Notes		15.73%		9/27/2019	10/20/2032	2,750		2,119		2,374		1.2

Elevation CLO 2017-7, Ltd. (7)															Elevation CLO 2017-7, Ltd. (7)
Subordinated Notes															Subordinated Notes		11.96%		2/6/2019	7/15/2030	10,000		6,137		5,357		2.6

Flatiron CLO 18, Ltd. (7)															Flatiron CLO 18, Ltd. (7)
Subordinated Notes															Subordinated Notes		19.09%		1/2/2019	4/17/2031	9,680		6,942		7,331		3.6

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments ~~- Continued~~

December 31, ~~2020~~2021

(Dollar amounts in thousands)


Portfolio Company (1) Investment Type	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		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
Elevation CLO 2017-7, Ltd. (7)
Subordinated Notes			12.32% (9)		2/6/2019	7/15/2030 (17)	$	10,000	$ 6,955 (16)		$	6,226	3.9	%

Flatiron CLO 18, Ltd. (7)
Subordinated Notes			20.73% (9)		1/2/2019	4/17/2031 (17)	9,680		7,265 (16)		7,702		4.8

Madison Park Funding XXIII, Ltd. (7)	Madison Park Funding XXIII, Ltd. (7)														Madison Park Funding XXIII, Ltd. (7)
Subordinated Notes	Subordinated Notes		21.99% (9)		1/8/2020	7/27/2047 (17)	10,000		6,654 (16)		7,129		4.5		Subordinated Notes		24.21%		1/8/2020	7/27/2047	$	10,000	$	6,370	$	7,211	3.5	%

Madison Park Funding XXIX, Ltd. (7)	Madison Park Funding XXIX, Ltd. (7)														Madison Park Funding XXIX, Ltd. (7)
Subordinated Notes	Subordinated Notes		14.22% (9)		12/22/2020	10/18/2047 (17)	9,500		7,529 (16)		7,569		4.8		Subordinated Notes		15.88%		12/22/2020	10/18/2047	9,500		6,899		7,001		3.4

Monroe Capital MML CLO X, LTD.	Monroe Capital MML CLO X, LTD.														Monroe Capital MML CLO X, LTD.
Mezzanine bond - Class E			9.08%	(L +8.85%)	8/7/2020	8/20/2031 (17)	863		802		838		0.5
Mezzanine debt - Class E															Mezzanine debt - Class E		10.92%	(L +8.85%)	8/7/2020	8/20/2031	1,000		949		996		0.5

Octagon Investment Partners 39, Ltd. (7)	Octagon Investment Partners 39, Ltd. (7)														Octagon Investment Partners 39, Ltd. (7)
Subordinated Notes	Subordinated Notes		20.81% (9)		1/23/2020	10/20/2030 (17)	7,000		5,173 (16)		5,493		3.5		Subordinated Notes		17.69%		1/23/2020	10/20/2030	7,000		4,733		4,845		2.4

Park Avenue Institutional Advisers CLO 2017-1
Mezzanine bond - Class D			6.44%	(L +6.22%)	6/5/2020	11/14/2029 (17)	100		83		95		0.1
Park Avenue Institutional Advisers CLO Ltd 2021-1															Park Avenue Institutional Advisers CLO Ltd 2021-1
Mezzanine debt - Class E															Mezzanine debt - Class E		8.63%	(L +7.30%)	1/26/2021	1/20/2034	1,000		974		988		0.5

Redding Ridge 4 (7)															Redding Ridge 4 (7)
Subordinated Notes															Subordinated Notes		18.02		3/4/2021	4/15/2030	1,300		1,104		1,106		0.5

Regatta II Funding	Regatta II Funding														Regatta II Funding
Mezzanine bond - Class DR2			7.19%	(L +6.95%)	6/5/2020	1/15/2029 (17)	800		695		768		0.5
Mezzanine debt - Class DR2															Mezzanine debt - Class DR2		13.42%	(L +6.95%)	6/5/2020	1/15/2029	800		737		795		0.4

THL Credit Wind River 2019‐3 CLO Ltd. (7)	THL Credit Wind River 2019‐3 CLO Ltd. (7)														THL Credit Wind River 2019‐3 CLO Ltd. (7)
Subordinated Notes	Subordinated Notes		14.69% (9)		4/5/2019	4/15/2031 (17)	7,000		5,759 (16)		4,824		3.0		Subordinated Notes		13.09%		4/5/2019	4/15/2031	7,000		5,710		5,231		2.6

Total Structured Finance Note Investments							$	73,632	$	55,860	$	56,425	35.5	%
Trinitas CLO VIII (7)															Trinitas CLO VIII (7)
Subordinated Notes															Subordinated Notes		21.34%		3/4/2021	7/20/2117	5,200		3,128		3,229		1.6

Total Non-control/Non-affiliate Investments							$	380,315	$	363,628	$	328,665	206.8	%
Wellfleet CLO 2018-2 (7)															Wellfleet CLO 2018-2 (7)
Subordinated Notes															Subordinated Notes		19.74%		3/4/2021	10/20/2031	1,000		655		696		0.3

Total Subordinated Notes and Mezzanine Debt Investments															Total Subordinated Notes and Mezzanine Debt Investments						$	90,799	$	66,451	$	66,701	32.8	%

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments ~~- Continued~~

December 31, ~~2020~~2021

(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 (20) Software Publishers
Senior Secured Loan (6) 8.50% cash / 1.00% PIK (L +7.50%) 3/13/2018 3/12/2023 $ 20,858 $ 19,570 $ 9,258 5.8 %
Common Equity (2,547,250 units) (10) (13) 3/13/2018 2,547 — —
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%) 1/25/2019 1/25/2024 13,743 13,630 13,744 8.6
Common Equity (1,832 Class A shares) (10) (13) 1/25/2019 1,814 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% PIK 8/5/2015 5,849 2,690 1.7
Common Equity (11,273 shares) (10) 6/28/2016 104 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) 3/8/2018 1,135 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/A 4/17/2015 7/20/2022 6,759 4,764 346 0.2
Preferred Equity (3,723 Series A units), 8% PIK 4/17/2015 3,483 — —
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% PIK 8/14/2014 1,879 2,250 1.4
Pfanstiehl Holdings, Inc. (4)(20)(21) Pharmaceutical Preparation Manufacturing
Common Equity (400 Class A shares) 1/1/2014 217 36,221 22.8


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
Loan Accumulation Facility (17) (22)
Apex Credit CLO 2021-II Ltd
Loan accumulation facility		13.50%		7/14/2021	7/14/2022	$	8,500	$	8,500	$	8,500	4.2	%

Total Structured Finance Notes						$	99,299	$	74,951	$	75,201	37.0	%

Total Non-control/Non-affiliate Investments						$	450,238	$	428,398	$	421,567	207.1	%

Affiliate Investments
Contract Datascan Holdings, Inc. (4) (10) (20)	Office Machinery and Equipment Rental and Leasing
Preferred Equity (3,061 Series A shares) 10% PIK				8/5/2015				$	5,849	$	2,748	1.3	%
Common Equity (11,273 shares)				6/28/2016				104		25		—
								5,953		2,773		1.3
DRS Imaging Services, LLC (20)	Data Processing, Hosting, and Related Services
Common Equity (1,135 units) (10) (13)				3/8/2018				1,135		1,289		0.6

Master Cutlery, LLC (4) (10)(20)	Sporting and Recreational Goods and Supplies Merchant Wholesalers
Subordinated Loan (6) (11)		13.00% (11)	N/A	4/17/2015	7/20/2022	7,563		4,696		699		0.3
Preferred Equity (3,723 Series A units), 8% PIK				4/17/2015				3,483		—		—
Common Equity (15,564 units)				4/17/2015				—		—		—
						7,563		8,179		699		0.3
Pfanstiehl Holdings, Inc. (4) (20) (21)	Pharmaceutical Preparation Manufacturing
Common Equity (400 Class A shares)				1/1/2014				217		65,740		32.3

TalentSmart Holdings, LLC (20)	Professional and Management Development Training
Common Equity (1,595,238 Class A shares) (10) (13)				10/11/2019				1,595		1,095		0.5

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments ~~- Continued~~

December 31, ~~2020~~2021

(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
TRS Services, LLC (4) (10) (20)	Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance
Preferred Equity (1,937,191 Class A units), 11% PIK				12/10/2014				$	—	$	988	0.5	%
Common Equity (3,000,000 units)				12/10/2014				572		—		—
								572		988		0.5

Total Affiliate Investments						$	7,563	$	17,650	$	72,584	35.5	%

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%)	11/25/2015	4/30/2022	$	8,195	$	8,195	$	8,195	4.0	%
Common Equity (554 shares)				11/25/2015				3,069		4,753		2.3
						8,195		11,264		12,948		6.3
Total Control Investment						$	8,195	$	11,264	$	12,948	6.3	%

Total Investments						$	465,995	$	457,312	$	507,099	248.9	%

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
Professional Pipe Holdings, LLC (19) Plumbing, Heating, and Air-Conditioning Contractors
Senior Secured Loan 9.75% cash / 1.50% PIK (L +8.75%) 3/23/2018 3/23/2023 $ 6,263 $ 6,193 $ 6,086 3.8 %
Common Equity (1,414 Class A units) (10) 3/23/2018 1,414 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) 10/11/2019 1,595 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% PIK 12/10/2014 — 915 0.6
Common Equity (3,000,000 units) (10) 12/10/2014 572 — —
572 915 0.6
TTG Healthcare, LLC (20) Diagnostic Imaging Centers
Senior Secured Loan (4) 8.50% (L +7.50%) 3/1/2019 11/28/2025 19,603 19,409 19,530 12.3
Preferred Equity ( 2,309 Class B units) (10) (13) 3/1/2019 2,309 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%) 11/25/2015 11/25/2021 7,842 7,842 7,822 4.9
Common Equity (554 shares) (10) 11/25/2015 3,069 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.

~~OFS Capital Corporation and Subsidiaries~~

~~Consolidated Schedule of Investments - Continued~~

~~December 31, 2020~~

~~(Dollar amounts in thousands)~~

(2)Substantially all of the investments that bear interest at a variable rate are indexed to LIBOR (L), generally between 0.75% and ~~1.0%~~1.00% at December 31, ~~2020,~~2021, and reset monthly, quarterly, or semi-annually. Variable-rate loans with an aggregate cost of ~~$328,736~~$316,558 include LIBOR reference rate floor provisions of generally 0.75% to ~~1.0%~~1.00% at December 31, ~~2020,~~2021, the reference ~~rate~~rates on such instruments ~~was~~were 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, ~~2020.~~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.

(6)Investment was on non-accrual status as of December 31, ~~2020,~~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~~residual cash flow of payments ~~made by~~received on underlying securities less contractual payments to debt holders and fund expenses.

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2021

(Dollar amounts in thousands)

(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:~~2021:
Portfolio Company Reported Interest Rate Interest Rate per Credit Agreement Additional Interest per Annum
Chemical Resources Holdings, Inc. 9.17% 7.50% 1.67%
Milrose Consultants, LLC 7.62% 7.00% 0.62%
SourceHOV Tax, Inc. 7.61% 7.00% 0.61%

Portfolio Company

Reported Interest Rate

Interest Rate per Credit Agreement

Additional Interest per Annum

SS Acquisition, LLC

7.88%

7.50%

0.38%

(10)Non-income producing.

Portfolio Company

Investment Type

Range of PIK
Option

Range of Cash
Option

Maximum PIK
Rate Allowed

~~Community Intervention Services, Inc.~~

~~Subordinated Loan~~

~~0% or 6.00%~~

~~13.00% or 7.00%~~

~~6.00%~~

Eblens Holdings, Inc.

Subordinated Loan

0% or 1.00%

13.00% or 12.00%

1.00%

Master Cutlery, LLC

~~Subordinated~~Senior Secured 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~~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~~Loan accumulation facilities are financing structures intended to aggregate loans that may be ~~projected~~used to ~~occur prior~~form the basis of a CLO vehicle. Reported yields represent the realized yield since acquisition. Income notes associated with loan accumulation facilities generally pay returns equal to the ~~contractual maturity date,~~actual income earned on facility assets less costs of senior financing. As of December 31, 2021, the fair value of loan accumulation facilities were ~~utilized in deriving the effective yield of the investments.~~determined by reference to Transaction Price.

(18)Not meaningful as there is no outstanding balance on the ~~revolver.~~revolver or delayed draw loan. 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 at fair value represents greater than 5% of total assets at December 31, ~~2020.~~2021.

(22)Non-qualifying assets under Section 55(a) of the 1940 Act. Qualifying assets as defined in Section 55 of the 1940 Act must represent at least 70% of the Company's assets immediately following the acquisition of any additional non-qualifying assets. As of December 31, 2021, approximately 85% of the Company's assets were qualifying assets.

(23)Equity participation rights issued by unaffiliated third party fully covered with underlying positions in the portfolio company.

See Notes to Consolidated Financial Statements.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(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 Structured Finance Notes. Additionally, OFS Advisor ~~provides sub-advisory services~~serves as the collateral manager to ~~CMFT Securities Investments, LLC, a wholly owned subsidiary of CIM Real Estate Finance Trust, Inc., a corporation that qualifies as a real estate~~CLOs, adviser to separately-managed accounts and sub-advisor to investment ~~trust, and CIM Real Assets & Credit Fund,~~companies managed by 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.~~affiliate.

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~~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~~regulations and policies, including periodic examinations by 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.SBA. SBIC I LP intends to repay over time its outstanding SBA debentures prior to their scheduled maturity dates.

OFSCC-FS, an indirect wholly owned and consolidated 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 $150,000.

OFSCC-MB is a wholly-owned and consolidated subsidiary taxed under subchapter C of the Code ~~and~~that generally holds the ~~Company's~~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 hereto 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, ~~2020.~~2021, filed on March 4, 2022. 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, ~~2020.~~

~~Revenue recognition:~~

~~Structured Finance Notes - loan accumulation facilities~~. Recognition of interest income on our loan accumulation facilities generally take the form of mandatorily redeemable instruments that mature upon the earlier closing of the CLO securitization or stated expiration date of the instrument. Interest income is recognized on an accrual basis as earned in accordance with the settlement terms of the instrument.2021.

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

~~OFS Capital Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Dollar amounts in thousands, except per share data)~~

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 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.

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. During the first quarter of 2022, the Company changed its estimate of the useful life to terminate on March 1, 2024 due to continued early redemptions of SBA debentures.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

Concentration of credit risk: Aside from its debt instruments, including investments in Structured Finance Notes, 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 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, and the collateral or other security for those instruments proved to be of no value to the Company, is equal to the sum of the Company's recorded investment in debt instruments and the 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 ~~1, 2021.~~5, 2022. 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 to the Company, 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.

Effective January 1, ~~2020,~~2022, OFS Advisor agreed to ~~further~~ reduce ~~the~~its 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 OFSCC-FS Assets (excluding cash) at the end of the two most recently completed calendar quarters. OFS Advisor’s base management fee reduction 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. This agreement was renewed for the ~~2021~~2022 calendar year on February ~~16, 2021.~~4, 2022.

The incentive fee has two parts. The first part ("of the incentive fee (“Income Incentive ~~Fee"~~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 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.

~~OFS Capital Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Dollar amounts in thousands, except per share data)~~

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,” 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.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

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~~Gains 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~~at the end of such year, less all previous amounts paid in respect of the Capital ~~Gain~~Gains Fee. Since inception through December 31, 2021, the Company has not made a Capital Gains Fee payment.

The Company accrues the Capital ~~Gain~~Gains Fee if, on a cumulative basis, the sum of net realized capital gains ~~and~~ (losses) plus net unrealized appreciation ~~and~~ (depreciation) is positive. An accrued Capital Gains Fee relating to net unrealized appreciation is deferred, and not due to OFS Advisor, until the close of the year in which such gains are realized. 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~~Gains 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~~ As 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~~2022 and December 31, 2021, Capital Gains Fees of $2,988 and $1,916, respectively, were deferred and are included in the ~~voluntary fee waiver,~~amounts payable to the ~~Company incurred Income Incentive Fee expense~~investment adviser and affiliates as listed on the consolidated statements 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.assets and liabilities.

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. The Administration Agreement was most recently approved by the Board on April 5, 2022. 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 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 ~~September 30, 2021,~~March 31, 2022, affiliates of OFS Advisor held approximately ~~3,037,349~~3,019,694 shares of common stock, which is approximately ~~23%~~22.5% of the Company's outstanding shares of common stock.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(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 nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ are presented below:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Base management fees	Base management fees	$	1,950	$	1,871	$	5,660	$	5,759	Base management fees		$	2,020	$	1,834
Incentive fees:	Incentive fees:									Incentive fees:
Income Incentive Fee	Income Incentive Fee	—		234		809		1,332		Income Incentive Fee		—		—

Incentive fee waiver		—		—		—		(441)
Capital Gain Fee		102		—		102		—
Capital Gains Fee										Capital Gains Fee		1,072		—
Administration fee expense	Administration fee expense	335		436		1,342		1,456		Administration fee expense		451		568
Distributions paid to affiliates	Distributions paid to affiliates	729		501		2,005		2,004		Distributions paid to affiliates		846		607

Note 4. Investments

As of ~~September 30, 2021,~~March 31, 2022, the Company had loans to 7063 portfolio companies, of which ~~95%~~97% were senior secured loans and 5%3% were subordinated loans, at fair value, as well as equity investments in 8five of these portfolio companies. The Company also held equity investments in 1312 portfolio companies in which it did not hold a debt investment and 1720 investments in Structured Finance Notes. At ~~September 30, 2021,~~March 31, 2022, the ~~Company's~~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)
$ 362,747 71.9 % 190.9 % $ 347,947 66.0 % 183.0 %
Subordinated debt investments 38,117 7.6 20.1 17,525 3.3 9.2
Preferred equity 13,675 2.7 7.2 9,805 1.9 5.2
Common equity, warrants and other 13,845 2.7 7.3 74,376 14.1 39.2
Total Portfolio Company Investments 428,384 84.9 225.5 449,653 85.3 236.6
Structured Finance Notes 75,717 15.1 39.9 76,626 14.7 40.4
Total investments $ 504,101 100.0 % 265.4 % $ 526,279 100.0 % 277.0 %

(1) Includes a debt investment, typically referred to as unitranche, in which the Company has entered into a contractual arrangement 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 this investment was $22,400 and $22,800, respectively.

~~OFS Capital Corporation and Subsidiaries~~


			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Senior secured debt investments	$	371,941	74.2	%	178.4	%	$	361,317	64.7	%	173.4	%
Subordinated debt investments	13,906		2.8		6.7		9,353		1.7		4.5
Preferred equity	9,552		1.9		4.6		6,195		1.1		3.0
Common equity, warrants and other	12,827		2.6		6.2		89,672		16.1		43.0
Total Portfolio Company Investments	408,226		81.5		195.9		466,537		83.6		223.9
Structured Finance Notes	93,575		18.5		44.9		90,377		16.4		43.4
Total investments	$	501,801	100.0	%	240.8	%	$	556,914	100.0	%	267.3	%

~~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. All international investments are denominated in US dollars. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company's investment portfolio was domiciled as follows:

September 30, 2021 December 31, 2020
Amortized Cost Fair Value Amortized Cost Fair Value
United States of America $ 421,623 $ 442,762 $ 399,278 $ 380,004
Canada 10,331 10,444 1,921 1,905
Cayman Islands1
67,217 68,126 55,860 56,425
France 990 995 — —
Luxembourg 1,970 1,974 1,976 1,997
Switzerland 1,970 1,978 1,988 1,992
Total investments $ 504,101 $ 526,279 $ 461,023 $ 442,323


	March 31, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
United States	$	395,242	$	453,512	$	378,823	$	428,321
Canada	21,484		21,525		12,038		12,077
Cayman Islands1	85,075		81,877		66,451		66,701




Total investments	$	501,801	$	556,914	$	457,312	$	507,099

(1) Cayman Island investments represent certain Structured Finance ~~Notes~~Note securities held by the Company. These investments generally represent beneficial interests in underlying portfolios of debt investments in companies domiciled in the United ~~States of America.~~States.

As of ~~September 30, 2021,~~March 31, 2022, the industry composition of the Company’s investment portfolio was as follows:

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 % $ 13 — % — %
Hazardous Waste Treatment and Disposal 1,837 0.4 1.0 1,837 0.3 1.0
Landscaping Services 4,634 0.9 2.4 4,590 0.9 2.4
Security Systems Services (except Locksmiths) 9,862 2.0 5.2 10,054 1.9 5.3
Arts, Entertainment, and Recreation
Other Amusement and Recreation Industries 20,977 4.2 11.0 21,000 4.0 11.1
Construction
Electrical Contractors and Other Wiring Installation Contractors 17,535 3.5 9.2 11,604 2.2 6.1
New Single-Family Housing Construction (except For-Sale Builders) 2,321 0.5 1.2 2,341 0.4 1.2
Plumbing, Heating, and Air-Conditioning Contractors 6,257 1.2 3.3 6,220 1.2 3.3
Water and Sewer Line and Related Structures Construction 629 0.1 0.3 629 0.1 0.3
Education Services
Colleges, Universities, and Professional Schools — — — 6,139 1.2 3.2
Professional and Management Development Training 1,595 0.3 0.8 1,321 0.3 0.7
Health Care and Social Assistance
Child Day Care Services 6,326 1.3 3.3 5,902 1.1 3.1
Diagnostic Imaging Centers 21,579 4.3 11.5 22,679 4.3 12.0
Home Health Care Services 4,210 0.8 2.2 4,250 0.8 2.2
Medical Laboratories 91 — — 23 — —
Offices of Physicians, Mental Health Specialists 10,790 2.1 5.7 10,859 2.1 5.7


			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	%	$	112	—	%	0.1	%
Hazardous Waste Treatment and Disposal	1,828		0.4		0.9		1,800		0.3		0.9

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)


			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Landscaping Services	$	4,625	0.9	%	2.2	%	$	4,590	0.8	%	2.2	%

Security Systems Services (except Locksmiths)	4,827		1.0		2.3		4,887		0.9		2.3
Temporary Help Services	8,912		1.8		4.3		8,912		1.6		4.3

Arts, Entertainment, and Recreation

Other Amusement and Recreation Industries	17,224		3.4		8.3		17,305		3.1		8.3
Construction
Electrical Contractors and Other Wiring Installation Contractors	17,716		3.5		8.5		10,963		2.0		5.3
New Single-Family Housing Construction (except For-Sale Builders)	1,819		0.4		0.9		1,654		0.3		0.8
Plumbing, Heating, and Air-Conditioning Contractors	3,480		0.7		1.7		3,555		0.6		1.7
Water and Sewer Line and Related Structures Construction	2,400		0.5		1.2		2,392		0.4		1.1
Education Services
Colleges, Universities, and Professional Schools	—		—		—		7,989		1.4		3.8
Professional and Management Development Training	1,595		0.3		0.8		1,134		0.2		0.5
Sports and Recreation Instruction	3,013		0.6		1.4		2,967		0.5		1.4





Health Care and Social Assistance

Child Day Care Services	6,346		1.3		3.0		5,953		1.1		2.9



Home Health Care Services	4,187		0.8		2.0		4,036		0.7		1.9
Medical Laboratories	91		—		—		24		—		—
Offices of Physicians, Mental Health Specialists	13,376		2.7		6.4		13,456		2.4		6.5
Other Ambulatory Health Care Services	20,212		4.0		9.7		20,129		3.6		9.7

Outpatient Mental Health and Substance Abuse Centers	7,536		1.5		3.6		7,857		1.4		3.8

Services for the Elderly and Persons with Disabilities	10,287		2.1		4.9		10,233		1.8		4.9
Information
All Other Publishers	2,283		0.5		1.1		2,284		0.4		1.1
All Other Telecommunications	3,374		0.7		1.6		3,142		0.6		1.5
Cable and Other Subscription Programming	3,791		0.8		1.8		3,773		0.7		1.8
Data Processing, Hosting, and Related Services	4,102		0.8		2.0		4,144		0.7		2.0
Directory and Mailing List Publishers	1,942		0.4		0.9		1,991		0.4		1.0
Internet Publishing and Broadcasting and Web Search Portals	3,219		0.6		1.5		3,242		0.6		1.6
Motion Picture and Video Production	3,921		0.8		1.9		3,940		0.7		1.9


Software Publishers	24,753		4.9		11.9		18,203		3.3		8.7
Television Broadcasting	2,197		0.4		1.1		935		0.2		0.4
Wired Telecommunications Carriers	4,287		0.9		2.1		4,295		0.8		2.1

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

Percentage of Total Percentage of Total
Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Outpatient Mental Health and Substance Abuse Centers $ 4,855 1.0 % 2.6 % $ 5,112 1.0 % 2.7 %
Information
All Other Publishers 1,772 0.4 0.9 1,797 0.3 0.9
All Other Telecommunications 3,422 0.7 1.8 3,447 0.7 1.8
Cable and Other Subscription Programming 3,382 0.7 1.8 3,393 0.6 1.8
Data Processing, Hosting, and Related Services 7,606 1.5 4.0 7,980 1.5 4.2
Directory and Mailing List Publishers 2,132 0.4 1.1 2,224 0.4 1.2
Internet Publishing and Broadcasting and Web Search Portals 4,446 0.9 2.3 4,451 0.8 2.3
Motion Picture and Video Production 4,927 1.0 2.6 4,987 0.9 2.6
Software Publishers 34,285 6.8 18.1 21,819 4.1 11.5
Television Broadcasting 1,962 0.4 1.0 1,229 0.2 0.6
Wired Telecommunications Carriers 4,488 0.9 2.4 4,505 0.9 2.4
Manufacturing
Bare Printed Circuit Board Manufacturing 844 0.2 0.4 844 0.2 0.4
Commercial Printing (except Screen and Books) 2,976 0.6 1.6 2,996 0.6 1.6
Current-Carrying Wiring Device Manufacturing 5,549 1.1 2.9 5,883 1.1 3.1
Other Aircraft Parts and Auxiliary Equipment Manufacturing 500 0.1 0.3 81 — —
Fabricated Pipe and Pipe Fitting Manufacturing 2,541 0.5 1.3 2,571 0.5 1.4
Ice Cream and Frozen Dessert Manufacturing 1,544 0.3 0.8 1,548 0.3 0.8
Metal Can Manufacturing 2,464 0.5 1.3 2,488 0.5 1.3
Motor Vehicle Body Manufacturing 1,465 0.3 0.8 1,460 0.3 0.8
Other Commercial and Service Industry Machinery Manufacturing 1,690 0.3 0.9 1,685 0.3 0.9
Other Industrial Machinery Manufacturing 4,144 0.8 2.2 4,144 0.8 2.2
Pharmaceutical Preparation Manufacturing 2,187 0.4 1.2 57,580 10.9 30.3
Pump and Pumping Equipment Manufacturing 1,501 0.3 0.8 1,926 0.4 1.0
Small Electrical Appliance Manufacturing 4,010 0.8 2.1 4,010 0.8 2.1
Travel Trailer and Camper Manufacturing 11,160 2.2 5.9 13,145 2.5 6.9
Truck Trailer Manufacturing 745 0.1 0.4 746 0.1 0.4
Unlaminated Plastics Profile Shape Manufacturing 10,052 2.0 5.3 10,055 1.9 5.3
Other Services (except Public Administration)
Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance 572 0.1 0.3 1,042 0.2 0.5
Professional, Scientific, and Technical Services
Administrative Management and General Management Consulting Services 22,400 4.4 11.9 22,800 4.3 12.1
All Other Professional, Scientific, and Technical Services 4,114 0.8 2.2 4,156 0.8 2.2


			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Management of Companies and Enterprises
Offices of Other Holding Companies	$	7,362	1.5	%	3.5	%	$	7,253	1.3	%	3.5	%
Manufacturing
Bare Printed Circuit Board Manufacturing	1,985		0.4		1.0		1,979		0.4		0.9

Commercial Printing (except Screen and Books)	3,419		0.7		1.6		3,407		0.6		1.6
Current-Carrying Wiring Device Manufacturing	3,293		0.7		1.6		3,569		0.6		1.7

Other Aircraft Parts and Auxiliary Equipment Manufacturing	500		0.1		0.2		—		—		—

Fluid Power Pump and Motor Manufacturing	1,942		0.4		0.9		1,942		0.3		0.9
Ice Cream and Frozen Dessert Manufacturing	2,596		0.5		1.2		2,596		0.5		1.2
Motorcycle, Bicycle, and Parts Manufacturing	16,569		3.3		8.0		16,836		3.0		8.1




Other Industrial Machinery Manufacturing	13,715		2.7		6.6		13,550		2.4		6.5


Pharmaceutical Preparation Manufacturing	217		—		0.1		75,308		13.5		36.1









Other Services (except Public Administration)


Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance	572		0.1		0.3		1,124		0.2		0.5


Professional, Scientific, and Technical Services
Administrative Management and General Management Consulting Services	22,776		4.5		10.9		22,432		4.0		10.8
Advertising Agencies	2,268		0.5		1.1		2,285		0.4		1.1
All Other Professional, Scientific, and Technical Services	2,867		0.6		1.4		2,866		0.5		1.4


Management Consulting Services	2,700		0.5		1.3		2,689		0.5		1.3

Other Accounting Services	19,594		3.9		9.4		19,740		3.5		9.5
Other Computer Related Services	15,429		3.1		7.4		15,729		2.8		7.5




Public Administration
Other Justice, Public Order, and Safety Activities	703		0.1		0.3		29		—		—

Real Estate and Rental and Leasing


Nonresidential Property Managers	3,960		0.8		1.9		3,977		0.7		1.9
Office Machinery and Equipment Rental and Leasing	5,953		1.2		2.9		5,152		0.9		2.5

Retail Trade
Automotive Parts and Accessories Stores	2,688		0.5		1.3		2,665		0.5		1.3
Cosmetics, Beauty Supplies, and Perfume Stores	1,533		0.3		0.7		1,520		0.3		0.7
Electronics and Appliance Stores	8,108		1.6		3.9		8,108		1.5		3.9
Electronic Shopping and Mail-Order Houses	6,872		1.4		3.3		6,773		1.2		3.3
Shoe store	9,923		2.0		4.8		9,157		1.6		4.4
Sporting Goods Stores	1,953		0.4		0.9		1,958		0.4		0.9


All Other General Merchandise Stores	499		0.1		0.2		1,212		0.2		0.6
Transportation and Warehousing

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

Percentage of Total Percentage of Total
Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Management Consulting Services $ 2,256 0.4 % 1.2 % $ 2,261 0.4 % 1.2 %
Marketing Consulting Services 5,167 1.0 2.7 5,210 1.0 2.7
Other Accounting Services 19,669 3.9 10.4 19,838 3.8 10.4
Other Computer Related Services 15,091 3.0 7.9 15,260 2.9 8.0
Public Administration
Other Justice, Public Order, and Safety Activities 703 0.1 0.4 287 0.1 0.2
Real Estate and Rental and Leasing
Office Machinery and Equipment Rental and Leasing 5,953 1.2 3.1 3,351 0.6 1.8
Retail Trade
Automotive Parts and Accessories Stores 2,701 0.5 1.4 2,713 0.5 1.4
Cosmetics, Beauty Supplies, and Perfume Stores 1,533 0.3 0.8 1,533 0.3 0.8
Electronic Shopping and Mail-Order Houses 6,955 1.4 3.7 6,982 1.3 3.7
Shoe store 9,864 2.0 5.2 8,958 1.7 4.7
Sporting Goods Stores 5,695 1.1 3.0 5,735 1.1 3.0
All Other General Merchandise Stores 499 0.1 0.3 1,624 0.3 0.9
Transportation and Warehousing
Freight Transportation Arrangement 1,963 0.4 1.0 1,968 0.4 1.0
Scheduled Passenger Air Transportation 360 0.1 0.2 376 0.1 0.2
Taxi Service 1,970 0.4 1.0 1,974 0.4 1.0
Wholesale Trade
Business to Business Electronic Markets 2,879 0.6 1.5 2,808 0.5 1.5
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 6,008 1.2 3.2 6,003 1.1 3.2
Construction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers 15,802 3.1 8.3 16,091 3.1 8.5
Drugs and Druggists' Sundries Merchant Wholesalers 5,601 1.1 2.9 5,683 1.1 3.0
General Line Grocery Merchant Wholesalers 272 0.1 0.1 281 0.1 0.1
Industrial Machinery and Equipment Merchant Wholesalers 9,692 1.9 5.1 9,666 1.8 5.1
Motor Vehicle Parts (Used) Merchant Wholesalers 20,801 4.1 10.9 20,741 3.9 10.9
Sporting and Recreational Goods and Supplies Merchant Wholesalers 8,179 1.6 4.3 745 0.1 0.4
Stationary & Office Supply Merchant Wholesaler 16,179 3.2 8.5 — — —
Total Portfolio Company Investments $ 428,384 84.9 % 225.5 % $ 449,653 85.3 % 236.6 %
Structured Finance Notes 75,717 15.1 39.9 76,626 14.7 40.4
Total investments $ 504,101 100.0 % 265.4 % $ 526,279 100.0 % 277.0 %

~~OFS Capital Corporation and Subsidiaries~~


			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Freight Transportation Arrangement	$	1,957	0.4	%	0.9	%	$	1,945	0.3	%	0.9	%

Scheduled Passenger Air Transportation	360		0.1		0.2		369		0.1		0.2

Wholesale Trade
Business to Business Electronic Markets	2,870		0.6		1.4		2,768		0.5		1.3
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers	11,168		2.2		5.4		11,000		2.0		5.3

Drugs and Druggists' Sundries Merchant Wholesalers	5,454		1.1		2.6		5,362		1.0		2.6


Industrial Machinery and Equipment Merchant Wholesalers	9,071		1.8		4.4		9,073		1.6		4.4


Motor Vehicle Parts (Used) Merchant Wholesalers	22,970		4.6		11.0		23,187		4.2		11.1

Other Miscellaneous Nondurable Goods Merchant Wholesalers	2,644		0.5		1.3		2,644		0.5		1.3
Sporting and Recreational Goods and Supplies Merchant Wholesalers	8,179		1.6		3.9		436		0.1		0.2

Total Portfolio Company Investments	$	408,226	81.5	%	195.9	%	$	466,537	83.6	%	223.9	%
Structured Finance Notes	93,575		18.5		44.9		90,377		16.4		43.4
Total investments	$	501,801	100.0	%	240.8	%	$	556,914	100.0	%	267.3	%

~~Notes to Consolidated Financial Statements~~

~~(Dollar amounts in thousands, except per share data)~~

As of December 31, ~~2020,~~2021, the Company had loans to 4958 portfolio companies, of which 95% were senior secured loans and 5% were subordinated loans, at fair value, as well as equity investments in 10five of these portfolio companies. The Company also held an equity investment in 1312 portfolio companies in which it did not hold a debt investment, as well as 1217 investments in Structured Finance Notes. At December 31, ~~2020,~~2021, 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	$	336,132	73.3	%	165.0	%	$	326,704	64.9	%	160.4	%
Subordinated debt investments	22,071		4.8		10.8		17,943		3.5		8.8
Preferred equity	9,552		2.1		4.7		3,765		0.7		1.8
Common equity, warrants and other	14,606		3.2		7.2		83,486		16.5		41.0
Total debt and equity investments	$	382,361	83.4	%	187.7	%	$	431,898	85.6	%	212.0	%
Structured Finance Notes	74,951		16.6		36.8		75,201		14.4		36.9
Total	$	457,312	100.0	%	224.5	%	$	507,099	100.0	%	248.9	%

Percentage of Total Percentage of Total
Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Senior secured debt investments $ 325,647 70.6 % 204.9 % $ 306,304 69.2 % 192.7 %
Subordinated debt investments 45,409 9.8 28.6 15,067 3.4 9.5
Preferred equity 18,648 4.0 11.7 11,543 2.6 7.3
Common equity, warrants and other 15,459 3.4 9.7 52,984 12.0 33.3
Total debt and equity investments 405,163 87.8 % 254.9 % 385,898 87.2 % 242.8 %
Structured Finance Notes 55,860 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 the corporate headquarters of the portfolio company.~~ As of December 31, ~~2020,~~2021, the industry compositions of the Company’s debt and equity investments were as follows:


			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	%	$	12	—	%	—	%
Hazardous Waste Treatment and Disposal	1,833		0.4		0.9		1,837		0.4		0.9
Landscaping Services	4,630		1.0		2.3		4,590		0.9		2.3

Security Systems Services (except Locksmiths)	4,827		1.1		2.4		4,887		1.0		2.4

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) 6,531 1.4 4.1 3,487 0.8 2.2
Arts, Entertainment, and Recreation
Other Amusement and Recreation Industries 20,967 4.5 13.3 19,973 4.5 12.6
Construction
Electrical Contractors and Other Wiring Installation Contractors 17,837 3.9 11.2 13,137 3.0 8.3
Plumbing, Heating, and Air-Conditioning Contractors 7,607 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 Training 1,595 0.3 1.0 1,306 0.3 0.8
Finance and Insurance
Insurance Agencies and Brokerages 9,544 2.1 6.0 9,302 2.1 5.9
Health Care and Social Assistance
Child Day Care Services 5,178 1.1 3.3 4,656 1.1 2.9
Diagnostic Imaging Centers 21,718 4.8 13.8 23,607 5.3 14.9
Home Health Care Services 4,199 0.9 2.6 4,250 1.0 2.7
Medical Laboratories 91 — 0.1 38 — —
Offices of Physicians, Mental Health Specialists 21,013 4.6 13.2 20,802 4.7 13.1
Outpatient Mental Health and Substance Abuse Centers 11,615 2.5 7.3 4,105 0.9 2.6

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)


			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Arts, Entertainment, and Recreation

Other Amusement and Recreation Industries	$	16,287	3.6	%	8.0	%	$	16,396	3.2	%	8.0	%
Construction
Electrical Contractors and Other Wiring Installation Contractors	18,132		4.0		8.9		11,632		2.3		5.7
New Single-Family Housing Construction (except For-Sale Builders)	1,823		0.4		0.9		1,794		0.4		0.9
Plumbing, Heating, and Air-Conditioning Contractors	5,344		1.2		2.6		5,378		1.1		2.6
Water and Sewer Line and Related Structures Construction	627		0.1		0.3		628		0.1		0.3
Education Services
Colleges, Universities, and Professional Schools	—		—		—		7,408		1.5		3.6
Professional and Management Development Training	1,595		0.3		0.8		1,095		0.2		0.5
Sports and Recreation Instruction	3,011		0.7		1.5		3,011		0.6		1.5





Health Care and Social Assistance

Child Day Care Services	6,336		1.4		3.1		5,916		1.2		2.9



Home Health Care Services	4,182		0.9		2.1		4,250		0.8		2.1
Medical Laboratories	92		—		—		25		—		—
Offices of Physicians, Mental Health Specialists	13,402		2.9		6.6		13,491		2.7		6.6
Other Ambulatory Health Care Services	20,331		4.4		10.0		20,331		4.0		10.0

Outpatient Mental Health and Substance Abuse Centers	4,770		1.0		2.3		5,231		1.0		2.6

Services for the Elderly and Persons with Disabilities	6,416		1.4		3.1		6,416		1.3		3.1
Information
All Other Publishers	2,288		0.5		1.1		2,303		0.5		1.1
All Other Telecommunications	3,429		0.7		1.7		3,323		0.7		1.6
Cable and Other Subscription Programming	3,801		0.8		1.9		3,810		0.8		1.9
Data Processing, Hosting, and Related Services	4,112		0.9		2.0		4,255		0.8		2.1
Directory and Mailing List Publishers	2,004		0.4		1.0		2,085		0.4		1.0
Internet Publishing and Broadcasting and Web Search Portals	3,249		0.7		1.6		3,299		0.7		1.6
Motion Picture and Video Production	3,929		0.9		1.9		3,970		0.8		1.9


Software Publishers	24,948		5.5		12.2		17,929		3.5		8.8
Television Broadcasting	1,957		0.4		1.0		918		0.2		0.5
Wired Telecommunications Carriers	4,388		1.0		2.2		4,405		0.9		2.2
Management of Companies and Enterprises
Offices of Other Holding Companies	5,336		1.2		2.6		5,336		1.1		2.6
Manufacturing
Bare Printed Circuit Board Manufacturing	1,985		0.4		1.0		1,977		0.4		1.0

Commercial Printing (except Screen and Books)	3,427		0.7		1.7		3,436		0.7		1.7
Current-Carrying Wiring Device Manufacturing	2,653		0.6		1.3		2,954		0.6		1.4

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)


				Percentage of Total						Percentage of Total							Percentage of Total						Percentage of Total
		Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets			Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Information
Data Processing, Hosting, and Related Services		$	1,135	0.2	%	0.7	%	$	1,749	0.4	%	1.1	%

Software Publishers		28,799		6.3		18.2		16,104		3.6		10.0
Television Broadcasting		1,977		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 Resins		15,444		3.3		9.7		17,164		3.9		10.8
Motorcycle, Bicycle, and Parts Manufacturing														Motorcycle, Bicycle, and Parts Manufacturing	$	15,166	3.3	%	7.4	%	$	15,166	3.0	%	7.4	%
Metal Can Manufacturing														Metal Can Manufacturing	2,143		0.5		1.1		2,167		0.4		1.1

Other Aircraft Parts and Auxiliary Equipment Manufacturing	Other Aircraft Parts and Auxiliary Equipment Manufacturing	5,431		1.2		3.4		4,275		1.0		2.7		Other Aircraft Parts and Auxiliary Equipment Manufacturing	500		0.1		0.2		80		—		—
Other Commercial and Service Industry Machinery Manufacturing		1,925		0.4		1.2		1,936		0.4		1.2

Other Industrial Machinery Manufacturing														Other Industrial Machinery Manufacturing	12,121		2.7		5.9		12,176		2.4		6.0

Pharmaceutical Preparation Manufacturing	Pharmaceutical Preparation Manufacturing	2,205		0.5		1.4		38,213		8.7		24.1		Pharmaceutical Preparation Manufacturing	217		—		0.1		65,740		13.0		32.3

Pump and Pumping Equipment Manufacturing		1,501		0.3		0.9		1,281		0.3		0.8
Semiconductor and Related Device Manufacturing		399		0.1		0.3		434		0.1		0.3

Small Electrical Appliance Manufacturing														Small Electrical Appliance Manufacturing	4,997		1.1		2.5		4,997		1.0		2.5

Travel Trailer and Camper Manufacturing	Travel Trailer and Camper Manufacturing	10,911		2.4		6.9		10,812		2.4		6.8		Travel Trailer and Camper Manufacturing	11,264		2.5		5.5		12,948		2.6		6.4
Truck Trailer Manufacturing		8,118		1.8		5.1		8,174		1.8		5.1
Unlaminated Plastics Profile Shape Manufacturing		8,922		1.9		5.6		8,818		2.0		5.5

Other Services (except Public Administration)	Other Services (except Public Administration)													Other Services (except Public Administration)

Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance	Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance	572		0.1		0.4		915		0.2		0.6		Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance	572		0.1		0.3		988		0.2		0.5

Diet and Weight Reducing Centers		477		0.1		0.3		479		0.1		0.3

Professional, Scientific, and Technical Services	Professional, Scientific, and Technical Services													Professional, Scientific, and Technical Services
Administrative Management and General Management Consulting Services	Administrative Management and General Management Consulting Services	28,503		6.3		18.0		28,729		6.6		18.2		Administrative Management and General Management Consulting Services	22,990		5.0		11.3		22,634		4.5		11.1

All Other Professional, Scientific, and Technical Services	All Other Professional, Scientific, and Technical Services	1,921		0.4		1.2		1,905		0.4		1.2		All Other Professional, Scientific, and Technical Services	2,872		0.6		1.4		2,865		0.6		1.4
Marketing Consulting Services		5,229		1.1		3.3		5,229		1.2		3.3

Management Consulting Services														Management Consulting Services	2,251		0.5		1.1		2,264		0.4		1.1

Other Accounting Services	Other Accounting Services	21,621		4.7		13.7		22,238		5.0		14.0		Other Accounting Services	19,631		4.3		9.6		19,927		3.9		9.8
Other Computer Related Services	Other Computer Related Services	16,247		3.5		10.2		16,000		3.6		10.1		Other Computer Related Services	15,017		3.3		7.4		15,260		3.0		7.5

Public Administration	Public Administration													Public Administration
Other Justice, Public Order, and Safety Activities	Other Justice, Public Order, and Safety Activities	703		0.2		0.4		676		0.2		0.4		Other Justice, Public Order, and Safety Activities	703		0.2		0.3		29		—		—

Real Estate and Rental and Leasing	Real Estate and Rental and Leasing													Real Estate and Rental and Leasing
Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing		496		0.1		0.3		499		0.1		0.3

Nonresidential Property Managers														Nonresidential Property Managers	2,972		0.6		1.5		2,972		0.6		1.5
Office Machinery and Equipment Rental and Leasing	Office Machinery and Equipment Rental and Leasing	5,953		1.3		3.7		2,736		0.6		1.7		Office Machinery and Equipment Rental and Leasing	5,952		1.3		2.9		2,774		0.5		1.4

Retail Trade	Retail Trade													Retail Trade
Automotive Parts and Accessories Stores														Automotive Parts and Accessories Stores	2,688		0.6		1.3		2,704		0.5		1.3
Cosmetics, Beauty Supplies, and Perfume Stores	Cosmetics, Beauty Supplies, and Perfume Stores	6,738		1.5		4.2		6,701		1.5		4.2		Cosmetics, Beauty Supplies, and Perfume Stores	1,533		0.3		0.8		1,531		0.3		0.8
Electronic Shopping and Mail-Order Houses														Electronic Shopping and Mail-Order Houses	6,913		1.5		3.4		6,870		1.4		3.4
Shoe Store														Shoe Store	9,893		2.2		4.9		9,342		1.8		4.6
Sporting Goods Stores														Sporting Goods Stores	1,958		0.4		1.0		1,972		0.4		1.0

All Other General Merchandise Stores														All Other General Merchandise Stores	499		0.1		0.2		1,698		0.3		0.8
Transportation and Warehousing														Transportation and Warehousing
Freight Transportation Arrangement														Freight Transportation Arrangement	1,960		0.4		1.0		1,970		0.4		1.0

Scheduled Passenger Air Transportation														Scheduled Passenger Air Transportation	360		0.1		0.2		377		0.1		0.2

Wholesale Trade														Wholesale Trade
Business to Business Electronic Markets														Business to Business Electronic Markets	2,875		0.6		1.4		2,838		0.6		1.4
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers														Computer and Computer Peripheral Equipment and Software Merchant Wholesalers	7,173		1.6		3.5		6,903		1.4		3.4

Drugs and Druggists' Sundries Merchant Wholesalers														Drugs and Druggists' Sundries Merchant Wholesalers	5,529		1.2		2.7		5,550		1.1		2.7

Industrial Machinery and Equipment Merchant Wholesalers														Industrial Machinery and Equipment Merchant Wholesalers	9,071		2.0		4.5		9,073		1.8		4.5

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

Percentage of Total Percentage of Total
Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Shoe Store $ 9,748 2.1 % 6.1 % $ 4,368 1.0 % 2.7 %
Sporting Goods Stores 2,907 0.6 1.8 2,968 0.7 1.9
All Other General Merchandise Stores 5,252 1.1 3.3 5,060 1.1 3.2
Transportation and Warehousing
Scheduled Passenger Air Transportation 495 0.1 0.3 520 0.1 0.3
Taxi Service 1,976 0.4 1.2 1,997 0.5 1.3
Wholesale Trade
Business to Business Electronic Markets 2,891 0.6 1.8 2,875 0.6 1.8
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 1,955 0.4 1.2 1,942 0.4 1.2
Construction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers 16,392 3.6 10.3 16,777 3.8 10.6
General Line Grocery Merchant Wholesalers 275 0.1 0.2 284 0.1 0.2
Industrial Machinery and Equipment Merchant Wholesalers 9,696 2.1 6.1 9,179 2.1 5.8
Industrial Supplies Merchant Wholesalers 6,908 1.5 4.3 5,476 1.2 3.4
Motor Vehicle Parts (Used) Merchant Wholesalers 14,167 3.1 8.9 13,581 3.1 8.5
Sporting and Recreational Goods and Supplies Merchant Wholesalers 8,247 1.8 5.2 346 0.1 0.2
Stationery and Office Supplies Merchant Wholesalers 16,129 3.5 10.1 2,426 0.5 1.5
Total Portfolio Company Investments $ 405,163 87.9 % 254.9 % $ 385,898 87.2 % 242.8 %
Structured Finance Notes 55,860 12.1 35.1 56,425 12.8 35.5
Total investments $ 461,023 100.0 % 290.0 % $ 442,323 100.0 % 278.3 %


			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Motor Vehicle Parts (Used) Merchant Wholesalers	$	23,005	5.0	%	11.3	%	$	23,052	4.5	%	11.3	%

Sporting and Recreational Goods and Supplies Merchant Wholesalers	8,179		1.8		3.9		699		0.1		0.2

Total debt and equity investments	$	382,361	83.4	%	187.7	%	$	431,898	85.6	%	212.0	%
Structured Finance Notes	74,951		16.6		36.8		75,201		14.4		36.9
Total investments	$	457,312	100.0	%	224.5	%	$	507,099	100.0	%	248.9	%

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 and/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 ~~$38,208~~$18,888 and ~~$7,746,~~$7,758, respectively, at ~~September 30, 2021,~~March 31, 2022, and ~~$48,102~~$19,054 and ~~$12,135~~$7,726 respectively, at December 31, ~~2020.~~

On April 5, 2021, the Company sold its subordinated debt investment in Community Intervention Services, Inc. for $91. During the nine months ended September 30, 2021, the Company recognized a realized loss on its investment in Community Intervention Services, Inc. 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 nine months ended September 30, 2021, the Company recognized a realized loss on its investments in My Alarm Center, LLC of $3,094, of which $2,997 was recognized as an unrealized loss as of December 31, 2020.

During the three months ended September 30, 2021, the Company recognized realized gains of $1,505 and $1,741 on the sale of its preferred equity in Neosystems Corp. and common equity in Chemical Resources Holdings, Inc, respectively.

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 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

~~OFS Capital Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~

~~(Dollar amounts in thousands, except per share data)~~

~~the restructuring of $9,145 for the nine months ended September 30, 2020, which was fully recognized as an unrealized loss as of December 31, 2019.~~2021.

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~~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. A senior security with a fair value of $6,773 was transferred from Level 3 to Level 2 during the three months ended March 31, 2022. Senior securities with a fair value of ~~$2,296 and $858~~$899 were transferred from Level 3 to Level 2 during the three ~~and nine~~ months ended September 30, 2021, respectively. Senior securities with a fair value of $3,585 and $599 were transferred from Level 3 to Level 2 during the three and nine months ended September 30, 2020, respectively.March 31, 2021. Transfers from Level 3 to Level 2 during the ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ reporting periods, were due to availability of reliable Indicative Prices in those periods.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

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 ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020.~~2021:


Security	Level 1		Level 2		Level 3		Fair Value at March 31, 2022
Debt investments	$	—	$	69,105	$	301,565	$	370,670
Equity investments	—		—		95,867		95,867
Structured Finance Notes	—		—		90,377		90,377
	$	—	$	69,105	$	487,809	$	556,914


Security	Level 1		Level 2		Level 3		Fair Value at December 31, 2021
Debt investments	$	—	$	65,591	$	279,056	$	344,647
Equity investments	—		—		87,251		87,251
Structured Finance Notes	—		—		75,201		75,201
	$	—	$	65,591	$	441,508	$	507,099

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, 2021
Debt investments $ — $ 92,260 $ 273,212 $ 365,472
Equity investments — — 84,181 84,181
Structured Finance Notes — — 76,626 76,626
$ — $ 92,260 $ 434,019 $ 526,279

Security Level 1 Level 2 Level 3 Fair 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

~~OFS Capital Corporation and Subsidiaries~~

~~Notes to Consolidated Financial Statements~~ (unaudited)

(Dollar amounts in thousands, except per share data)

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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. 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, 2021~~March 31, 2022

Valuation technique

Unobservable inputs

Range
(Weighted average)

Debt investments:

Senior secured

~~221,235~~242,154

Discounted cash flow

Discount rates

~~5.03%~~7.80% - ~~12.18% (9.05%~~14.49% (10.03%)

Senior secured

~~18,475~~10,963

Market approach

EBITDA multiples

6.80x - 6.80x (6.80x)

Senior secured

7,322

Market approach

Revenue multiples

~~0.50x~~0.70x - ~~0.74x (0.59x)~~0.70x (0.70x)

Senior secured

~~15,977~~31,773

Market approach

Transaction Price

Subordinated

~~8,689~~8,917

Discounted cash flow

Discount rates

~~19.27%~~19.30% - ~~19.27% (19.27%~~19.30% (19.30%)

Subordinated

~~8,091~~

~~Market approach~~

~~EBITDA multiples~~

~~5.80x - 5.80x (5.80x)~~

~~Subordinated~~

~~745~~436

Market approach

Revenue multiples

~~0.11x~~0.25x - ~~0.28x (0.28x)~~0.25x (0.25x)

Structured Finance Notes

Subordinated notes ~~(3)~~(1)

~~65,334~~53,966

Discounted cash flow

Discount rates

~~7.00%~~13.00% - ~~18.00% (12.88%)~~

~~Constant default rate(1)~~

~~0.00% - 2.00% (1.78%~~22.00% (16.19%)

Constant default rate(2)

2.00% - 2.00% (2.00%)

~~Recovery~~

Constant default rate(3)

~~60.00%~~2.00% - ~~60.00% (60.00%~~2.00% (2.00%)

Recovery rate

65.00% - 65.00% (65.00%)

Subordinated notes

3,085

Market approach

Net asset value liquidation(4)

Mezzanine debt

~~2,792~~2,754

Discounted cash flow

Discount margin

~~7.15%~~7.25% - ~~8.80% (7.81%)~~

~~Constant Default Rate(1)~~

~~2.00% - 3.00% (2.36%~~9.10% (8.11%)

Constant Default Rate(2)

2.00% - 3.00% (2.36%)

~~Recovery rate~~

Constant Default Rate(3)

~~60.00%~~2.00% - ~~60.00% (60.00%~~3.00% (2.36%)

Recovery rate

65.00% - 65.00% (65.00%)

Mezzanine debt

13,572

Market approach

Transaction Price

Loan Accumulation Facility

~~8,500~~17,000

Market approach

Transaction Price

Equity investments:

Preferred equity

~~8,734~~4,959

Market approach

EBITDA multiples

7.00x - ~~10.24x (8.00x)~~7.00x (7.00x)

Preferred equity

~~1,071~~1,236

Market approach

Revenue multiples

~~0.15x~~0.25x - ~~2.40x (0.91x)~~3.25x (1.66x)

Common equity, warrants and other

~~74,088~~87,160

Market approach

EBITDA multiples

~~3.50x~~5.00x - 12.00x ~~(8.01x)~~(9.02x)

Common equity, warrants and other

881,222

Market approach

Revenue multiples

~~0.15x~~0.25x - ~~3.25x (3.00x)~~1.11x (1.11x)

Common equity, warrants and other

~~200~~1,290

Market approach

Transaction Price

~~434,019~~487,809

(1) ~~Constant default rates for the next six months.~~

~~(2) Constant default rates following the next six months.~~

~~(3)~~ The cash flows utilized in the discounted cash flow calculations assume (i) liquidation of (a) certain distressed investments and (b) all investments currently in default held by the issuing CLO at their current market prices and (ii) redeployment of proceeds at the issuing ~~CLO's~~CLO’s assumed reinvestment rate.

(2) Constant default rates for the six months ending September 30, 2022.

(3) Constant default rates for the period between September 30, 2022 and the assumed optional redemptions of the instruments.

(4) Net asset value liquidation represents the fair value, or estimated expected residual value, of the subordinated note that has been optionally redeemed.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

Fair Value at December 31, ~~2020~~2021

Valuation technique

Unobservable inputs

Range
(Weighted average)

Debt investments:

Senior secured

~~256,042~~178,382

Discounted cash flow

Discount rates

~~6.30%~~6.47% - ~~24.43% (10.18%~~12.32% (9.25%)

Senior secured

~~12,668~~11,632

Market approach

EBITDA multiples

~~8.50x~~7.09x - ~~8.50x (8.50x)~~7.09x (7.09x)

Senior secured

~~9,257~~7,027

Market approach

Revenue multiples

~~0.86x~~0.74x - ~~0.86x (0.86x)~~0.74x (0.74x)

Senior secured

~~6,111~~64,072

Market approach

Transaction Price

Subordinated

~~7,822~~17,244

Discounted cash flow

Discount rates

~~17.83%~~15.90% - ~~17.83% (17.83%~~17.49% (16.65%)

Subordinated

~~6,794~~

~~Market approach~~

~~EBITDA multiples~~

~~7.05x - 9.10x (7.78x)~~

~~Subordinated~~

~~451~~699

Market approach

Revenue multiples

~~0.10x~~0.28x - ~~0.20x (0.18x)~~0.28x (0.28x)

Structured Finance Notes:

Subordinated notes(1)

~~54,724~~63,922

Discounted cash flow

Discount rates

~~15.00%~~8.00% - ~~19.50% (17.79%~~16.00% (12.39%)

Constant default rate(2)

0.00% - 2.00% ~~(1.63%~~(1.77%)

Constant default rate ~~after 6 months~~(3)

2.00% - 2.00% (2.00%)

Recovery rate

60.00% - 60.00% (60.00%)

Mezzanine debt

~~1,701~~2,779

Discounted cash flow

Discount ~~Margin~~margin

~~7.25%~~7.10% - ~~9.45% (8.58%~~8.95% (7.91%)

Constant default rate(2)

~~0.00%~~2.00% - ~~2.00% (1.01%~~3.00% (2.36%)

Constant default rate ~~after 9 months~~(3)

2.00% - 3.00% ~~(2.49%~~(2.36%)

Recovery rate

60.00% - 60.00% (60.00%)

Loan accumulation facility

8,500

Market approach

Transaction Price

Equity investments:

Preferred equity

~~10,395~~2,748

Market approach

EBITDA multiples

~~4.73x~~7.80x - ~~8.50x (7.37x)~~7.80x (7.80x)

Preferred equity

~~1,148~~1,017

Market approach

Revenue multiples

~~0.20x~~0.15x - ~~1.56x (0.96x)~~3.00x (0.91x)

Common equity, warrants and ~~warrants~~other

~~52,969~~83,478

Market approach

EBITDA multiples

~~3.75x~~4.50x - ~~11.50x~~12.00x (8.10x)

Common equity, warrants and ~~warrants~~other

158

Market approach

Revenue multiples

~~0.20x~~0.15x - ~~1.56x (0.47x)~~3.00x (0.15x)

~~420,097~~441,508

(1) The cash flows utilized in the discounted cash flow calculations assume (i) liquidation of (a) certain distressed investments and (b) all investments currently in default held by the issuing CLO at their current market prices and (ii) redeployment of proceeds ~~on all assets currently in~~at the issuing CLO's assumed reinvestment rate.

(2) Constant default rates for the six months ending June 30, 2022.

(3) Constant default rates for the period between June 30, 2022 and ~~all assets below specified fair value thresholds.~~the assumed optional redemptions of the instruments.

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.

4443

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(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 ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~September 30, 2020.~~March 31, 2021:


		Nine Months Ended September 30, 2021													Three Months Ended March 31, 2022
		Senior Secured Debt Investments		Subordinated Debt Investments		Preferred Equity		Common Equity, Warrants and Other		Structured Finance Notes		Total			Senior Secured Debt Investments		Subordinated Debt Investments		Preferred Equity		Common Equity, Warrants and Other		Structured Finance Notes		Total
Level 3 assets, January 1, 2021		$	284,078	$	15,067	$	11,543	$	52,984	$	56,425	$	420,097
Level 3 assets, December 31, 2021														Level 3 assets, December 31, 2021	$	261,113	$	17,943	$	3,765	$	83,486	$	75,201	$	441,508

Net realized gain (loss) on investments		(321)		(7,548)		(1,956)		1,427		—		(8,398)
Net unrealized appreciation on investments		3,463		9,750		3,235		23,006		344		39,798
Net realized gains on investments														Net realized gains on investments	—		—		—		72		—		72
Net unrealized appreciation (depreciation) on investments														Net unrealized appreciation (depreciation) on investments	(319)		(424)		2,430		7,965		(3,449)		6,203
Amortization of Net Loan Fees	Amortization of Net Loan Fees	1,403		70		—		—		60		1,533		Amortization of Net Loan Fees	228		6		—		—		25		259
Accretion of interest income on Structured Finance Notes	Accretion of interest income on Structured Finance Notes	—		—		—		—		7,315		7,315		Accretion of interest income on Structured Finance Notes	—		—		—		—		2,282		2,282
Capitalized PIK interest and dividends	Capitalized PIK interest and dividends	849		398		143		—		—		1,390		Capitalized PIK interest and dividends	211		58		—		—		—		269
Amendment fees	Amendment fees	(97)		—		—		—		—		(97)		Amendment fees	(90)		—		—		—		—		(90)
Purchase and origination of portfolio investments	Purchase and origination of portfolio investments	76,727		—		—		200		30,550		107,477		Purchase and origination of portfolio investments	43,818		—		—		1,290		22,061		67,169
Proceeds from principal payments on portfolio investments	Proceeds from principal payments on portfolio investments	(100,694)		(121)		—		—		(8,600)		(109,415)		Proceeds from principal payments on portfolio investments	(5,976)		(8,230)		—		—		—		(14,206)
Sale and redemption of portfolio investments	Sale and redemption of portfolio investments	(8,863)		(91)		(3,160)		(3,241)		—		(15,355)		Sale and redemption of portfolio investments	—		—		—		(3,141)		—		(3,141)
Proceeds from distributions received from portfolio investments	Proceeds from distributions received from portfolio investments	—		—		—		—		(9,468)		(9,468)		Proceeds from distributions received from portfolio investments	—		—		—		—		(5,743)		(5,743)

Transfers out of Level 3	Transfers out of Level 3	(858)		—		—		—		—		(858)		Transfers out of Level 3	(6,773)		—		—		—		—		(6,773)
Level 3 assets, September 30, 2021		$	255,687	$	17,525	$	9,805	$	74,376	$	76,626	$	434,019
Level 3 assets, March 31, 2022														Level 3 assets, March 31, 2022	$	292,212	$	9,353	$	6,195	$	89,672	$	90,377	$	487,809

4544

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)


		Nine Months Ended September 30, 2020													Three Months Ended March 31, 2021
		Senior Secured Debt Investments		Subordinated Debt Investments		Preferred Equity		Common Equity, Warrants and Other		Structured Finance Notes		Total			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
Level 3 assets, December 31, 2020														Level 3 assets, December 31, 2020	$	284,078	$	15,067	$	11,543	$	52,984	$	56,425	$	420,097

Net realized gain (loss) on investments		(9,396)		—		51		(497)		—		(9,842)
Net unrealized appreciation (depreciation) on investments	Net unrealized appreciation (depreciation) on investments	(5,039)		(11,895)		(2,808)		17,320		(2,211)		(4,633)		Net unrealized appreciation (depreciation) on investments	4,726		(1,443)		721		1,282		(543)		4,743
Amortization of Net Loan Fees	Amortization of Net Loan Fees	854		16		—		—		—		870		Amortization of Net Loan Fees	524		6		—		—		28		558
Accretion of interest income on structured-finance notes		—		—		—		—		4,141		4,141
Accretion of interest income on Structured Finance Notes														Accretion of interest income on Structured Finance Notes	—		—		—		—		2,278		2,278
Capitalized PIK interest and dividends	Capitalized PIK interest and dividends	859		375		388		—		—		1,622		Capitalized PIK interest and dividends	404		112		47		—		—		563
Amendment fees	Amendment fees	(9)		(22)		—		—		—		(31)		Amendment fees	(97)		—		—		—		—		(97)
Purchase and origination of portfolio investments	Purchase and origination of portfolio investments	57,261		—		160		95		13,605		71,121		Purchase and origination of portfolio investments	32,569		—		—		—		6,163		38,732
Proceeds from principal payments on portfolio investments	Proceeds from principal payments on portfolio investments	(54,157)		—		—		—		—		(54,157)		Proceeds from principal payments on portfolio investments	(31,800)		—		—		—		—		(31,800)
Sale and redemption of portfolio investments		(9,717)		—		(3,645)		—		—		(13,362)

Proceeds from distributions received from portfolio investments	Proceeds from distributions received from portfolio investments	—		—		—		—		(4,614)		(4,614)		Proceeds from distributions received from portfolio investments	—		—		—		—		(2,721)		(2,721)
Conversion from debt investment to equity investment (Note 4)		(703)		—		—		703		—		—

Transfers out of Level 3	Transfers out of Level 3	(599)		—		—		—		—		(599)		Transfers out of Level 3	(899)		—		—		—		—		(899)
Level 3 assets, September 30, 2020		$	313,413	$	31,564	$	11,875	$	43,398	$	32,531	$	432,781
Level 3 assets, March 31, 2021														Level 3 assets, March 31, 2021	$	289,505	$	13,742	$	12,311	$	54,266	$	61,630	$	431,454

The net unrealized appreciation (depreciation) reported in the Company’s consolidated statements of operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ attributable to the Company’s Level 3 assets still held at those respective period ends was as follows:


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Senior secured debt investments	Senior secured debt investments	$	2,431	$	(15,145)	Senior secured debt investments	$	(249)	$	4,078
Subordinated debt investments	Subordinated debt investments	2,216		(11,899)		Subordinated debt investments	(424)		(1,442)
Preferred equity	Preferred equity	609		(2,801)		Preferred equity	2,430		721
Common equity, warrants and other	Common equity, warrants and other	24,612		18,310		Common equity, warrants and other	9,649		1,282
Structured Finance Notes	Structured Finance Notes	356		(2,212)		Structured Finance Notes	(3,449)		(531)
Net unrealized appreciation (depreciation) on investments held		$	30,224	$	(13,747)
Net unrealized appreciation on investments held						Net unrealized appreciation on investments held	$	7,957	$	4,108

4645

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(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 financial 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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		As of September 30, 2021				As of December 31, 2020					As of March 31, 2022				As of December 31, 2021
Description	Description	Carrying Value		Fair Value		Carrying Value		Fair Value		Description	Carrying Value		Fair Value		Carrying Value		Fair Value
PWB Credit Facility	PWB Credit Facility	$	750	$	750	$	600	$	600	PWB Credit Facility	$	3,250	$	3,250	$	—	$	—
BNP Facility	BNP Facility	45,150		45,150		31,450		31,450		BNP Facility	111,400		111,400		100,000		100,000
Unsecured Notes Due September 2023		24,350		25,308		24,106		25,100
Unsecured Notes Due April 2025		—		—		48,891		48,800
Unsecured Notes Due October 2025		—		—		47,339		47,069
Unsecured Notes Due February 2026	Unsecured Notes Due February 2026	121,595		123,692		—		—		Unsecured Notes Due February 2026	121,934		116,687		121,774		123,130
Unsecured Notes Due October 2026		52,837		54,868		52,617		51,066
Unsecured Notes Due October 2028										Unsecured Notes Due October 2028	53,652		54,890		53,672		56,430
SBA-guaranteed debentures	SBA-guaranteed debentures	69,321		73,248		104,182		116,172		SBA-guaranteed debentures	50,553		50,617		69,365		73,011
Total debt, at fair value		$	314,003	$	323,016	$	309,185	$	320,257
Total debt										Total debt	$	340,789	$	336,844	$	344,811	$	352,571

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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


		September 30, 2021									March 31, 2022
Description	Description	Level 1		Level 2		Level 3 (1)		Total		Description	Level 1		Level 2		Level 3 (1)		Total
PWB Credit Facility	PWB Credit Facility	$	—	$	—	$	750	$	750	PWB Credit Facility	$	—	$	—	$	3,250	$	3,250
BNP Facility	BNP Facility	—		—		45,150		45,150		BNP Facility	—		—		111,400		111,400
Unsecured Notes Due September 2023		25,308		—		—		25,308
Unsecured Notes Due February 2026	Unsecured Notes Due February 2026	—		—		123,692		123,692		Unsecured Notes Due February 2026	—		—		116,687		116,687
Unsecured Notes Due October 2026		54,868		—		—		54,868
Unsecured Notes Due October 2028										Unsecured Notes Due October 2028	54,890		—		—		54,890
SBA-guaranteed debentures	SBA-guaranteed debentures	—		—		73,248		73,248		SBA-guaranteed debentures	—		—		50,617		50,617
Total debt, at fair value	Total debt, at fair value	$	80,176	$	—	$	242,840	$	323,016	Total debt, at fair value	$	54,890	$	—	$	281,954	$	336,844


		December 31, 2020									December 31, 2021
Description	Description	Level 1		Level 2		Level 3 (1)		Total		Description	Level 1		Level 2		Level 3 (1)		Total
PWB Credit Facility	PWB Credit Facility	$	—	$	—	$	600	$	600	PWB Credit Facility	$	—	$	—	$	—	$	—
BNP Facility	BNP Facility	—		—		31,450		31,450		BNP Facility	—		—		100,000		100,000
Unsecured Notes Due September 2023		25,100		—		—		25,100
Unsecured Notes Due April 2025		48,800		—		—		48,800
Unsecured Notes Due October 2025		47,069		—		—		47,069
Unsecured Notes Due October 2026		51,066		—		—		51,066
Unsecured Notes Due February 2026										Unsecured Notes Due February 2026	—		—		123,130		123,130
Unsecured Notes Due October 2028										Unsecured Notes Due October 2028	56,430		—		—		56,430
SBA-guaranteed debentures	SBA-guaranteed debentures	—		—		116,172		116,172		SBA-guaranteed debentures	—		—		73,011		73,011
Total debt, at fair value	Total debt, at fair value	$	172,035	$	—	$	148,222	$	320,257	Total debt, at fair value	$	56,430	$	—	$	296,141	$	352,571

(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.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

Note 6. Commitments and Contingencies

The Company has ~~the following unfunded~~outstanding commitments to ~~portfolio companies~~fund investments totaling $44,763 and $43,690 under various undrawn revolvers and other credit facilities as of ~~September 30, 2021:~~

~~Name of Portfolio Company~~

~~Investment Type~~

~~Commitment~~

~~A&A Transfer, LLC~~

~~Senior Secured Loan (Revolver)~~

~~2,136~~

~~Allen Media, LLC~~

~~Senior Secured Loan (Delayed Draw)~~

~~432~~

~~Baymark Health Services, Inc.~~

~~Senior Secured Loan (Delayed Draw)~~

~~2,481~~

~~Convergint Technologies~~

~~Senior Secured Loan (Delayed Draw)~~

~~Dessert Holdings~~

~~Senior Secured Loan (Delayed Draw)~~

~~208~~

~~I&I Sales Group, LLC~~

~~Senior Secured Loan (Revolver)~~

~~156~~

~~Inergex Holdings, LLC~~

~~Senior Secured Loan (Revolver)~~

~~2,813~~

~~Resource Label Group, LLC~~

~~Senior Secured Loan (Delayed Draw)~~

~~451~~

~~RSA Security~~

~~Senior Secured Loan (Delayed Draw)~~

~~1,184~~

~~RumbleOn, Inc.~~

~~Senior Secured Loan (Delayed Draw)~~

~~1,800~~

~~SourceHOV Tax, Inc.~~

~~Senior Secured Loan (Revolver)~~

~~1,196~~

~~SSJA Bariatric Management LLC~~

~~Senior Secured Loan (Revolver)~~

~~667~~

~~13,556~~

March 31, 2022 and December 31, 2021, respectively.

Legal and regulatory proceedings: 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 ~~September 30, 2021.~~March 31, 2022.

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.

Indemnifications: 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 ~~$203,302~~$188,400 and ~~$223,795~~$195,502 in assets at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, which accounted for approximately ~~38%~~33% and ~~46%~~34% of the Company’s total consolidated assets, respectively. These assets cannot be pledged under any debt obligation of the Company.

On February 28, 2022, SBIC I LP redeemed $19,000 of SBA debentures that were contractually due March 1, 2025 and September 1, 2025. As of ~~September 30, 2021,~~March 31, 2022, SBIC I LP had outstanding debentures totaling ~~$69,920.~~$50,920, which bear a fixed interest rate of 2.87% and mature on March 1, 2025.

For the three months ended March 31, 2022 and 2021, the components of interest expense, cash paid for interest, effective interest rates and average outstanding balances for the SBA debentures were as follows:


	Three Months Ended March 31,
		2022			2021
Stated interest expense		$	451		$	769
Amortization of debt issuance costs		44			64
Total interest and debt financing costs		$	495		$	833
Cash paid for interest expense		$	1,002		$	1,553
Effective interest rate		3.12		%	3.47		%
Average outstanding balance		$	63,375		$	95,953

BNP Facility: Under the BNP Facility ~~maturing~~that matures on June 20, 2024, OFSCC-FS has up to $150,000 of available credit, subject to borrowing base requirements, of which ~~$45,150~~$111,400 was drawn as of ~~September 30, 2021.~~March 31, 2022. Borrowings under the BNP Facility bear interest of LIBOR plus an applicable spread, which is determined on the basis of industry-recognized portfolio company metrics at the time of funding. The Company also pays a non-usage fee depending on the size of the unused portion of the BNP Facility. The effective interest rate on the BNP Facility was ~~3.53%~~2.74% at ~~September 30, 2021.~~March 31, 2022. The unused commitment under the BNP Facility was ~~$104,850~~$38,600 as of ~~September 30, 2021.~~March 31, 2022.

~~PWB Credit Facility:~~ Under its PWB Credit Facility maturing February 28, 2023, the Company has up to $25,000 of available credit, subject to borrowing base requirements, of which $750 was drawn as of September 30, 2021. The effective interest rate on the PWB Credit Facility was 5.02% at September 30, 2021. As of September 30, 2021 the unused commitment under the PWB Credit Facility was $24,250.

On February 17, 2021, the Company amended the BLA 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 covenants; and (iv) extend the maturity date from February 28, 2021 to February 28, 2023.

4847

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

For the three months ended March 31, 2022 and 2021, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the BNP Facility were as follows:


	Three Months Ended March 31,
		2022			2021
Stated interest expense		$	616		$	395
Amortization of debt issuance costs		67			55
Total interest and debt financing costs		$	683		$	450
Cash paid for interest expense		$	585		$	397
Effective interest rate		2.56		%	5.77		%
Average outstanding balance		$	106,850		$	31,183

PWB Credit Facility: As of March 31, 2022, the Company had up to $25,000 of available credit under the PWB Credit Facility, subject to borrowing base requirements, of which $3,250 was drawn. Borrowings under the PWB Credit Facility bear interest at a variable rate of the Prime Rate plus a 0.25% margin, with a 4.00% floor, and includes an unused commitment fee for any unused portion in excess of $15,000, payable monthly in arrears, equal to 0.50% per annum on any unused portion. As of March 31, 2022, the stated interest rate of the PWB Credit Facility was 4.00%. The effective interest rate on the PWB Credit Facility was 5.54% at March 31, 2022. As of March 31, 2022 the unused commitment under the PWB Credit Facility was $21,750.

On April 22, 2022, the Company amended the BLA to: (i) increase the maximum amount available under the PWB Credit Facility from $25,000 to $35,000; and (ii) extend the maturity date of the PWB Credit Facility from February 28, 2023 to February 28, 2024.

For the three months ended March 31, 2022 and 2021, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the PWB Credit Facility were as follows:


	Three Months Ended March 31,
		2022			2021
Stated interest expense(1)		$	18		$	40
Amortization of debt issuance costs		—			—
Total interest and debt financing costs		$	18		$	40
Cash paid for interest expense		$	18		$	30
Effective interest rate		14.23		%	7.11		%
Average outstanding balance		$	506		$	2,249

(1) For the three months ended March 31, 2022 and 2021, stated interest expense included unused fees of $13 and $10, respectively.

Unsecured Notes: As of ~~September 30, 2021,~~March 31, 2022, the Company had outstanding Unsecured Notes with an aggregate outstanding principal of ~~$204,325.~~$180,000. The Unsecured Notes are scheduled to mature between February 2026 and October 2028 and bear fixed interest rates between 4.75% and 4.95%. At March 31, 2022, the weighted average effective interest rate on the Unsecured Notes was ~~5.93% at September 30, 2021.~~5.37%.

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 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~~

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, the components of interest expense, cash paid for interest, average interest rates and ~~2020 on the Company's~~average outstanding ~~borrowings is presented below:~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
SBA Debentures $ 688 $ 1,068 $ 2,283 $ 3,406
PWB Credit Facility 33 285 86 1,276
Unsecured Notes(*)
3,029 2,662 9,555 7,867
BNP Facility 484 433 1,376 1,752
Total interest expense $ 4,234 $ 4,448 $ 13,300 $ 14,301
Average dollar borrowings $ 320,187 $ 332,733 $ 335,979 $ 354,078
Weighted average interest rate 5.30 % 5.36 % 5.29 % 5.36 %

~~Interest expense includes the stated interest on the outstanding balance, commitment fees on undrawn amounts, and the amortization of deferred financing costs.~~

*See Note 11balances for ~~changes to~~ the Unsecured Notes ~~subsequent to September 30, 2021.~~were as follows:


	Three Months Ended March 31,
		2022			2021
Stated interest expense		$	2,165		$	3,175
Amortization of debt issuance costs		263			327
Total interest and debt financing costs		$	2,428		$	3,502
Cash paid for interest expense		$	3,672		$	3,715
Effective interest rate		5.40		%	6.32		%
Average outstanding balance		$	180,000		$	221,789

The following table shows the scheduled maturities of the principal balances of the ~~Company's~~Company’s outstanding borrowings as of ~~September 30, 2021:~~March 31, 2022:


		Payments due by period											Payments due by period
		Total		Less than year		1-3 years (1)		4-5 years (1)		After 5 years (1)			Total		Less than year		1-3 years		4-5 years		After 5 years
PWB Credit Facility(1)	PWB Credit Facility(1)	$	750	$	—	$	750	$	—	$	—	PWB Credit Facility(1)	$	3,250	$	3,250	$	—	$	—	$	—
Unsecured Notes ~~(2)~~	Unsecured Notes ~~(2)~~	204,325		—		25,000		125,000		54,325		Unsecured Notes ~~(2)~~	180,000		—		—		125,000		55,000
SBA Debentures	SBA Debentures	69,920		—		—		69,920		—		SBA Debentures	50,920		—		50,920		—		—
BNP Facility	BNP Facility	45,150		—		45,150		—		—		BNP Facility	111,400		—		111,400		—		—
Total	Total	$	320,145	$	—	$	70,900	$	194,920	$	54,325	Total	$	345,570	$	3,250	$	162,320	$	125,000	$	55,000

(1)The ~~SBA debentures are~~PWB Credit Facility was amended on April 22, 2022 to among other things, modify the scheduled maturity to ~~mature between March 2025 and September 2025. The Unsecured Notes are scheduled to mature between September 2023 and October 2026.~~February 28, 2024.

~~(2)On October 1,~~For the three months ended March 31, 2022 and 2021, the ~~Company caused notices to be issued to~~average dollar borrowings and weighted average effective interest rate on the ~~holders of the Unsecured Notes Due September 2023 regarding the exercise of its option to redeem on November 1, 2021 all of the issued and~~Company’s outstanding Unsecured Notes Due September 2023. On October 22, 2021, the Company caused notices to be issued to the holders of the Unsecured Notes Due October 2026 regarding the exercise of its option to redeem on November 22, 2021 all of the issued and outstanding Unsecured Notes Due October 2026. On October 28, 2021 and November 1, 2021, the Company closed the public offering of the Unsecured Notes Due October 2028, which included a full exercise of the underwriters overallotment option. The total net proceeds to the Company, after deducting underwriting discounts of $1,719 and estimated offering expenses, plus reimbursements, was approximately $53,544. The Unsecured Notes Due October 2028 will mature on October 31, 2028.borrowings were as follows:


	Three Months Ended March 31,
		2022			2021
Average dollar borrowings		$	350,731		$	351,174
Weighted average effective interest rate		4.19		%	5.57		%

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

Note 8. Financial Highlights

The following is a schedule of financial highlights for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Three Months Ended September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Per share operating performance:
Net asset value per share at beginning of period $ 13.42 $ 10.10 $ 11.85 $ 12.46
Net investment income (4)
0.24 0.20 0.67 0.69
Net realized loss on non-control/non-affiliate investments (4)
— — (0.80) (0.74)
Net realized gain on affiliate investments (4)
0.24 — 0.24 —
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes (4)
0.13 0.35 1.57 (0.82)
Net unrealized appreciation on affiliate investments (4)
0.32 0.75 1.32 0.47
Net unrealized appreciation (depreciation) on control investment (4)
0.07 0.04 0.16 (0.07)
Loss on extinguishment of debt (4)
(0.02) (0.01) (0.19) (0.03)
Loss on impairment of goodwill (4)
— (0.08) — (0.08)
Total from operations 0.98 1.25 2.97 (0.58)
Distributions (0.24) (0.17) (0.66) (0.68)
Issuance of common stock (10)
— — — (0.02)
Net asset value per share at end of period $ 14.16 $ 11.18 $ 14.16 $ 11.18
Per share market value, end of period $ 10.36 $ 4.71 $ 10.36 $ 4.71
Total return based on market value (1)(9)
6.4 % 8.0 % 55.0 % (50.9) %
Total return based on net asset value (2)(9)
8.0 % 14.7 % 27.8 % 4.5 %
Shares outstanding at end of period 13,418,973 13,406,402 13,418,973 13,406,402
Weighted average shares outstanding 13,415,276 13,399,767 13,412,125 13,389,830
Ratio/Supplemental Data (in thousands except ratios)
Average net asset value (3)
$ 184,985 $ 142,655 $ 172,349 $ 145,480
Net asset value at end of period $ 189,977 $ 149,912 $ 189,977 $ 149,912
Net investment income $ 3,235 $ 2,712 $ 9,020 $ 9,291
Ratio of total expenses, net to average net assets (5)(7)
15.9 % 21.8 % 18.2 % 23.0 %
Ratio of total expenses and loss on extinguishment of debt to average net assets(5)(11)
16.0 % 22.7 % 19.6 % 23.9 %
Ratio of net investment income to average net assets (5)(8)
7.0 % 7.6 % 7.0 % 8.5 %
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 % 0.1 % 1.5 % 0.2 %
Portfolio turnover (6)
6.9 % 1.6 % 31.8 % 17.3 %


	Three Months Ended March 31,
		2022			2021
Per share operating performance:
Net asset value per share at beginning of period		$	15.18		$	11.85
Net investment income(4)		0.22			0.19



Net realized gain on investments, net of taxes		0.02			0.02



Net unrealized appreciation on investments, net of taxes		0.39			0.28
Loss on extinguishment of debt(4)		(0.01)			(0.17)
Total from operations		0.62			0.32
Distributions		(0.28)			(0.20)
Issuance of common stock (8)		—			(0.02)
Net asset value per share at end of period		$	15.52		$	11.95

Per share market value, end of period		$	13.00		$	8.78
Total return based on market value(1)(7)		21.8		%	25.6		%
Total return based on net asset value(2)(7)		4.4		%	3.2		%
Shares outstanding at end of period		13,425,429			13,411,962
Weighted average shares outstanding		13,422,447			13,409,033
Ratio/Supplemental Data (dollar amounts in thousands)
Average net asset value(3)		$	206,065		$	159,713
Net asset value at end of period		$	208,386		$	160,470
Net investment income		$	3,005		$	2,550
Ratio of total expenses to average net assets(5)		15.4		%	19.9		%
Ratio of total expenses and loss on extinguishment of debt to average net assets(5)		15.5		%	25.6		%
Ratio of net investment income to average net assets(5)		5.8		%	6.4		%
Ratio of loss on extinguishment of debt to average net assets(7)		0.1		%	1.4		%
Portfolio turnover (6)		5.4		%	11.4		%

(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)~~(8)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 35.3% for the nine months ended September 30, 2020.~~

Note 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,

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

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~~may 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 ~~$133,727,~~$137,636, and consolidated cash at ~~September 30, 2021~~March 31, 2022 includes ~~$3,883~~$5,199 held by SBIC I LP, all of which ~~$16,459~~ was available for distribution to the ~~Company with the prior consent of the SBA.~~Company. Net Assets of OFSCC-FS were ~~$89,558,~~$75,085, and consolidated cash at ~~September 30, 2021~~March 31, 2022 includes ~~$1,532~~$2,269 held by OFSCC-FS, of which $-0- was available for distribution to the Company.

The following table summarizes distributions declared and paid for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Date Declared Record Date Payment Date Amount
Per Share Cash
Distribution DRIP Shares
Issued DRIP Shares
Value
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
Nine Months Ended September 30, 2021
March 2, 2021 March 24, 2021 March 31, 2021 $ 0.20 $ 2,655 3,103 $ 27
May 11, 2021 June 23, 2021 June 30, 2021 0.22 2,918 3,273 33
August 3, 2021 September 23, 2021 September 30, 2021 0.24 3,181 3,738 39
$ 0.66 $ 8,754 $ 10,114 $ 99


Date Declared	Record Date	Payment Date	Amount Per Share		Cash Distribution		DRIP Shares Issued	DRIP Shares Value
Three Months Ended March 31, 2021
March 2, 2021	March 24, 2021	March 31, 2021	$	0.20	$	2,655	3,103	$	27




Three Months Ended March 31, 2022
March 1, 2022	March 24, 2022	March 31, 2022	$	0.28	$	3,719	3,016	$	39

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. On May ~~4, 2020,~~3, 2022, the Board extended the Stock Repurchase Program for an additional two-year period ending May 22, ~~2022,~~2024, or until the approved dollar amount has been used to repurchase shares.

~~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 ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Period
Total Number
of Shares Purchased
Cost of Shares Purchased Average Price Paid Per Share
Nine Months Ended September 30, 2020
January 1, 2020 through March 31, 2020 — $ — $ —
April 1, 2020 through June 30, 2020 — $ — $ —
July 1, 2020 through September 30, 2020 — $ — $ —
Nine Months Ended September 30, 2021
January 1, 2021 through March 31, 2021 700 $ 5 $ 6.70
April 1, 2021 through June 30, 2021 — $ — $ —
July 1, 2021 through September 30, 2021 — $ — $ —


Period	Total Number of Shares Purchased	Cost of Shares Purchased		Average Price Paid Per Share
Three Months Ended March 31, 2021
January 1, 2021 through March 31, 2021	700	$	5	$	6.70



Three Months Ended March 31, 2022
January 1, 2022 through March 31, 2022	—	$	—	$	—

5251

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

Note 10. Consolidated Schedule of Investments In and Advances To Affiliates


			Nine Month Period Ended September 30, 2021																										Three Month Period Ended March 31, 2022
Name of Portfolio Company	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, 2020, Fair Value		Gross Additions (3)		Gross Reductions (4)			September 30, 2021, Fair Value (5)		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, 2021, Fair Value				Gross Additions (3)				Gross Reductions (4)				March 31, 2022, Fair Value (5)
Control Investment	Control Investment																							Control Investment
MTE Holding Corp.	MTE Holding Corp.	Subordinated Loan	$	—	$	20	$	964	$	—	$	—	$	964	$	7,822	$	321	$	(52)		$	8,091	MTE Holding Corp.		Subordinated Loan			$	—			$	—			$	141			$	—			$	6			$	147			$	8,195			$	35			$	(8,230)			$	—
		Common Equity	—		2,064		—		136		—		136		2,990		2,064		—			5,054				Common Equity			278				(1,684)				—				45				—				45				4,753				—				(4,753)				—
			—		2,084		964		136		—		1,100		10,812		2,385		(52)			13,145							278				(1,684)				141				45				6				192				12,948				35				(12,983)				—

Total Control Investment	Total Control Investment		—		2,084		964		136		—		1,100		10,812		2,385		(52)			13,145		Total Control Investment					278				(1,684)				141				45				6				192				12,948				35				(12,983)				—
Affiliate Investments	Affiliate Investments																							Affiliate Investments
3rd Rock Gaming Holdings, LLC		Senior Secured Loan	—		(20)		—		—		—		—		9,258		160		(2,417)			7,001
		Common Equity (6)	—		—		—		—		—		—		—		—		—			—
			—		(20)		—		—		—		—		9,258		160		(2,417)			7,001

Chemical Resources Holdings, Inc.		Senior Secured Loan	—		(114)		858		—		201		1,059		13,744		114		(13,858)			—
		Common Equity (6)	1,741		(1,606)		—		—		—		—		3,420		1,427		(4,847)			—
			1,741		(1,720)		858		—		201		1,059		17,164		1,541		(18,705)			—

Contract Datascan Holdings, Inc.	Contract Datascan Holdings, Inc.	Preferred Equity (7)	—		582		—		—		—		—		2,690		582		—			3,272		Contract Datascan Holdings, Inc.		Preferred Equity			—				2,195				—				—				—				—				2,748				2,195				—				4,943
		Common Equity (6)	—		33		—		—		—		—		46		33		—			79				Common Equity (6)			—				184				—				—				—				—				25				184				—				209
			—		615		—		—		—		—		2,736		615		—			3,351							—				2,379				—				—				—				—				2,773				2,379				—				5,152

DRS Imaging Services, LLC	DRS Imaging Services, LLC	Common Equity (6)	—		(250)		—		—		—		—		1,749		—		(250)			1,499		DRS Imaging Services, LLC		Common Equity (6)			—				(67)				—				—				—				—				1,289				—				(67)				1,222

Master Cutlery, LLC	Master Cutlery, LLC	Subordinated Loan (6)	—		467		—		—		—		—		346		856		(457)			745		Master Cutlery, LLC		Subordinated Loan (6)			—				(263)				—				—				—				—				699				—				(263)				436
		Preferred Equity (6)	—		—		—		—		—		—		—		—		—			—				Preferred Equity (6)			—				—				—				—				—				—				—				—				—				—
		Common Equity (6)	—		—		—		—		—		—		—		—		—			—				Common Equity (6)			—				—				—				—				—				—				—				—				—				—
			—		467		—		—		—		—		346		856		(457)			745							—				(263)				—				—				—				—				699				—				(263)				436

NeoSystems Corp.		Preferred Equity (7)	1,505		(371)		—		—		—		—		2,250		1,281		(3,531)			—

Pfanstiehl Holdings, Inc	Pfanstiehl Holdings, Inc	Common Equity	—		19,381		—		—		—		—		36,221		19,381		—			55,602		Pfanstiehl Holdings, Inc		Common Equity			—				9,568				—				—				—				—				65,740				9,568				—				75,308

TalentSmart Holdings, LLC																					TalentSmart Holdings, LLC				Common Equity (6)		—				39				—				—				—				—				1,095				39				—				1,134

TRS Services, Inc.																					TRS Services, Inc.				Preferred Equity (6)		—				136				—				—				—				—				988				136				—				1,124
																									Common Equity (6)		—				—				—				—				—				—				—								—				—
																											—				136				—				—				—				—				988				136				—				1,124

Total Affiliate Investments																					Total Affiliate Investments						—				11,792				—				—				—				—				72,584				12,122				(330)				84,376
Total Control and Affiliate Investments																					Total Control and Affiliate Investments						$	278			$	10,108			$	141			$	45			$	6			$	192			$	85,532			$	12,157			$	(13,313)			$	84,376

5352

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

Nine Month Period Ended September 30, 2021
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, 2020, Fair Value Gross
Additions (3) Gross
Reductions (4) September 30, 2021, Fair Value (5)
Professional Pipe Holdings, LLC Senior Secured Loan $ — $ 144 $ 522 $ — $ — $ 522 $ 6,086 $ 303 $ (1,509) $ 4,880
Common Equity (6) — 132 — — — — 1,208 132 — 1,340
— 276 522 — — 522 7,294 435 (1,509) 6,220
TalentSmart Holdings, LLC Common Equity (6) — 15 — — — — 1,306 15 — 1,321
TRS Services, Inc. Preferred Equity (6) — 127 — — — — 915 127 1,042
Common Equity (6) — — — — — — — — —
— 127 — — — — 915 127 — 1,042
TTG Healthcare, LLC Senior Secured Loan — (248) 1,271 — 161 1,432 19,530 11 (398) 19,143
Preferred Equity (6) — (541) — — — — 4,077 — (541) 3,536
— (789) 1,271 — 161 1,432 23,607 11 (939) 22,679
Total Affiliate Investments 3,246 17,731 2,651 — 362 3,013 102,846 24,422 (27,808) 99,460
Total Control and Affiliate Investments $ 3,246 $ 19,815 $ 3,615 $ 136 $ 362 $ 4,113 $ 113,658 $ 26,807 $ (27,860) $ 112,605

(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~~three months ended ~~September 30, 2021,~~March 31, 2022, 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.~~

5453

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollar amounts in thousands, except per share data)

Note 11. Subsequent Events

On ~~October 1, 2021,~~April 22, 2022, the Company ~~caused notices~~amended the BLA to: (i) increase the maximum amount available under the PWB Credit Facility from $25,000 to ~~be issued to~~$35,000; and (ii) extend the ~~holders~~maturity date of the ~~Unsecured Notes Due September~~PWB Credit Facility from February 28, 2023 ~~regarding the exercise of its option~~ to redeem on November 1, 2021 all of the issued and outstanding Unsecured Notes Due September 2023. The Unsecured Notes Due September 2023 were redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid interest through October 31, 2021. The total amount of the redemption, plus accrued interest, is $25,004.February 28, 2024.

On October 22, 2021, the Company caused notices to be issued to the holders of the Unsecured Notes Due October 2026 regarding the exercise of its option to redeem on November 22, 2021 all of the issued and outstanding Unsecured Notes Due October 2026. The Unsecured Notes Due October 2026 will be redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid interest thereon from October 31, 2021 through, but excluding, November 22, 2021. The total amount of the redemption, plus accrued interest, is $54,523.

On October 28, 2021 and November 1, 2021, the Company closed the public offering of the Unsecured Notes Due October 2028, which included a full exercise of the underwriters overallotment option. The total net proceeds to the Company, after deducting underwriting discounts of $1,719 and estimated offering expenses, plus reimbursements, was approximately $53,544. The Unsecured Notes Due October 2028 will mature on October 31, 2028 and bear an effective interest rate, including amortization of deferred debt issuance costs, of 5.34%. The Unsecured Notes Due October 2028 may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after October 31, 2023 at the redemption price of 100% of the aggregate principal amount thereof plus accrued and unpaid interest.

~~On November 2, 2021,~~May 3, 2022, the Board declared a distribution of ~~$0.25~~$0.29 per share for the ~~fourth~~second quarter of ~~2021,~~2022, payable on ~~December 31, 2021~~June 30, 2022 to stockholders of record as of ~~December 24, 2021.~~

~~COVID-19~~

We evaluated events subsequent to September 30, 2021 through November 4, 2021. We are continuing to closely monitor the impact of the COVID-19 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, which 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 downturn.June 23, 2022.

On ~~March 27, 2020,~~May 3, 2022, the ~~U.S. government enacted~~Board extended the ~~CARES Act, which contains provisions intended~~Stock Repurchase Program for an additional two-year period ending May 22, 2024, or until the approved dollar amount has been used to mitigate the adverse economic effects of the COVID-19 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 have been or 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 relief or assistance. As a result of this disruption and the pressures on their liquidity, certain of our portfolio companies have been, or may continue to be, incentivized to draw on most, if not all, of the unfunded portion of any revolving or delayed draw term loans made by us, subject to availability under the terms of such loans.

The extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, will depend to a large extent on future developments regarding the duration and severity of the coronavirus, effectiveness of vaccination deployment and the actions taken by governments (including stimulus measures or the lack thereof) and their 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.repurchase shares.

5554

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~~“Item 1. ~~Business"~~Business” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Overview

Key performance metrics are presented below:

September 30, 2021 June 30, 2021
Net asset value per common share $ 14.16 $ 13.42


	March 31, 2022		December 31, 2021
Net asset value per common share	$	15.52	$	15.18


		Three Months Ended				Nine Months Ended September 30,					Three Months Ended
		September 30, 2021		June 30, 2021		2021		2020			March 31, 2022		December 31, 2021
Net investment income per common share	Net investment income per common share	$	0.24	$	0.24	$	0.67	$	0.69	Net investment income per common share	$	0.22	$	0.33
Net increase (decrease) in net assets resulting from operations per common share		0.98		1.67		2.97		(0.58)
Net increase in net assets resulting from operations per common share										Net increase in net assets resulting from operations per common share	0.62		1.27
Distributions paid per common share	Distributions paid per common share	0.24		0.22		0.66		0.68		Distributions paid per common share	0.28		0.25

Our NAV per common share increased ~~5.5%~~2.2% to ~~$14.16~~$15.52 at ~~September 30, 2021~~March 31, 2022 from ~~$13.42~~$15.18 at ~~June 30,~~December 31, 2021, primarily due to net gains on our investment portfolio of ~~$10.2~~$5.5 million, or ~~$0.76~~$0.41 per common share. For the quarter ended March 31, 2022, net gains were primarily related to unrealized appreciation on our equity investments.

~~Net~~For the quarter ended March 31, 2022, net investment income per share ~~of $0.24 was stable~~decreased $0.11 compared to the prior ~~quarter. Our net interest margin—total interest income less interest expense— decreased $0.04~~quarter, primarily due to a $0.20 per share, ~~due to lower interest income. The reduction in interest income was principally attributable to accelerations of Net Loan Fees from loan prepayments that occurred in the prior quarter. The~~or $2.6 million, decrease in ~~net interest margin during~~dividend and fee income, which can vary from quarter to quarter based on investment activity. Interest income also decreased as our portfolio’s weighted-average performing income yield decreased to 9.0% for the quarter ended ~~September 30,~~March 31, 2022 compared to 11.1% for the quarter ended December 31, 2021, primarily due to the redeployment of payoffs into lower-yielding senior secured loans. Net investment income included an accrued Capital Gains Fee expense of $1.1 million, or $0.08 per share, that is deferred and not due to OFS Advisor until the close of the year in which such gains are realized. Incentive fees on unrealized appreciation are subject to reversal should such unrealized appreciation diminish prior to realization. As of March 31, 2022, there was ~~offset by~~no Capital Gains Fee contractually due and payable under the terms of the Investment Advisory Agreement.

For the quarter ended March 31, 2022, our weighted-average debt interest costs decreased to 4.2% compared to 4.6% for the quarter ended December 31, 2021, primarily due to the redemption of $79.25 million of Unsecured Notes in November 2021 which bore fixed interest rates of 6.25% and 5.95%, respectively, and the issuance of $55.0 million of new Unsecured Notes which bear a ~~decrease~~fixed interest rate of 4.95%. As of March 31, 2022, approximately 67% of our debt was fixed rate and matures in ~~incentive fees of $0.05 per share.~~2025 and beyond.

On ~~November 2, 2021,~~May 3, 2022, the Board declared a distribution of ~~$0.25~~$0.29 per share for the ~~fourth~~second quarter of ~~2021,~~2022, payable on ~~December 31, 2021~~June 30, 2022 to stockholders of record as of ~~December 24, 2021.~~June 23, 2022.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, floating rate loans at fair value, excluding Structured Finance Notes, comprised ~~97%~~93% and ~~96%~~92% 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. As of September 30, 2021, the weighted average yield on debt and Structured Finance Notes investment was 8.87%, compared to 8.91% as of June 30, 2021. The slight decrease was primarily due to a decline in the yield of our senior secured debt to 7.55% from 7.66% in the prior quarter, as we continue to focus on lower-yielding, first lien senior secured loans to larger borrowers, which we believe will improve our overall risk profile.

~~As of September 30, 2021, approximately 86% of our debt was fixed rate and bore a weighted-average interest cost of 5.21%.~~

During the three months ended ~~September 30, 2021,~~March 31, 2022, our portfolio experienced net gains of ~~$10.2~~$5.5 million, or ~~$0.76~~$0.41 per share, principally due to a ~~$8.9~~$10.0 million, or ~~a 3.2%~~3.1%, ~~improvement~~increase in the fair values of our directly originated debt and equity investments. The net appreciation in our directly originated investments was primarily attributable to a ~~$6.4~~$9.6 million ~~improvement~~increase in fair value on our common equity in Pfanstiehl Holdings, Inc., as well as a ~~$1.0~~$2.4 million ~~improvement~~increase on our ~~common~~ equity ~~investment~~investments in ~~MTE~~Contract Datascan Holdings, ~~Corp.~~Inc., in each case, as a result of improved operating results. Pfanstiehl Holdings, Inc., a global manufacturer of high-purity pharmaceutical ingredients, accounted for ~~10.6%~~13.5% of our portfolio at fair value, and ~~29.3%~~36.1% of our consolidated net assets as of ~~September 30, 2021.~~

Since OFS Advisor implemented its business continuity plan in mid-March 2020, OFS 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.

~~OFS 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.~~March 31, 2022. During the ~~three months ended September 30, 2021,~~first quarter, we ~~provided delayed draw term facilities with total commitments~~experienced unrealized losses of ~~$3.1~~$1.0 million and $3.4 million on our broadly syndicated loans and Structured Finance Notes, respectively, primarily due to ~~four portfolio companies and amended seven directly-originated loans.~~ widening of liquid credit market spreads.

As of ~~September 30, 2021,~~March 31, 2022, we have unfunded commitments of ~~$13.6~~$44.8 million to ~~twelve~~16 portfolio companies. During the three months ended ~~September 30, 2021,~~March 31, 2022, we purchased a Structured Finance ~~Note~~Notes for a cost of ~~$8.5~~$22.1 million and ~~completed $56.2~~funded $48.1 million in new and existing Portfolio Company Investments.

At ~~September 30, 2021,~~March 31, 2022, our asset coverage ratio of ~~176%~~171% exceeded the minimum asset coverage requirements under the 1940 Act, and we remained in compliance with all applicable ~~financial thresholds~~covenants under our outstanding ~~debt.~~debt facilities. As of ~~September 30, 2021,~~March 31, 2022, we had an unused commitment of ~~$24.25~~$21.8 million under our PWB Credit Facility, as well as an unused commitment of ~~$104.9~~$38.6 million under our BNP Facility, both subject to a borrowing base and other covenants. Based on our portfolio's fair value and our equity capital at ~~September 30, 2021,~~March 31, 2022, we could access ~~these available lines of~~all unused commitments under our credit ~~for $133 million~~facilities and remain in compliance with our asset coverage requirements. On April 22, 2022, we amended the BLA, to among other things, increase the maximum amount available under the PWB Credit Facility from $25.0 million to $35.0 million. We continue to believe that we have sufficient levels of liquidity to support our existing portfolio companies and expect to continue to selectively deploy capital in new investment opportunities in this challenging environment.

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 and impact of additional 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 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 ourOur 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 andincluding the fair value of our portfolio investments, and results of operations may be materially impacted after March 31, 2022 by circumstances and events that are not yet known. To the extent our portfolio investments are adversely ~~impacted.~~impacted by the COVID-19 pandemic, the conflict between Russia and Ukraine, or by other factors, we may experience a material adverse impact on our future net investment income, the underlying value of our investments, our financial condition and the financial condition of our portfolio investments.

We are also subject to financial risks, including changes in market interest rates. As of ~~September 30, 2021,~~March 31, 2022, approximately ~~$376~~$349 million ~~(principal~~(aggregate principal amount) of our debt investments bore interest at variable rates, which are generally LIBOR-based but will transition away from LIBOR to any one of the various alternative reference rates, and many of which are subject to reference-rate floors. ~~In connection with~~We have prepared and planned for the ~~COVID-19 pandemic,~~transition away from LIBOR, incorporating alternate reference rates to be used in our credit agreements and making other preparations, and believe the impact on us from the transition will be minimal. However, it is not possible to predict the effect of these developments, and any future initiatives to regulate, reform or change the manner of administration of LIBOR could result in adverse consequences to the rate of interest payable and receivable on, market value of and market liquidity for LIBOR-based financial instruments. Additionally, as of March 16, 2022, the U.S. Federal Reserve and other central banks have reduced certain interest rates contributing to the decline in other market interest reference rates, 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 s~~uch decreases are~~ not offset by a corresponding increase in the spread over the reference rates 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 theapproved an interest rate ~~of our floating interest rate liabilities indexed to LIBOR, or its replacement reference rate(s) when determined.~~increase and signaled that additional increases are likely. As of ~~September 30, 2021,~~March 31, 2022, the majority of our variable rate debt investments ~~are subject~~have base rate floors. However, there may be disputes between market participants regarding the interpretation and enforceability of provisions related to the ~~base rate~~economic floors in our LIBOR-based investments (or lack thereof), which may result in a loss or degradation of floor ~~partially mitigating~~protection in the ~~impact~~case of a transition from LIBOR to any one of the ~~recent decrease in LIBOR on our gross investment income.~~various alternative reference rates.

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~~“Item 8. Financial Statements - Notes to Financial Statements - Note 2"2” and ~~"Management's~~“Management's Discussion and Analysis - Critical Accounting Policies and Significant ~~Estimates"~~Estimates” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Fair value estimates. ~~Our approach to fair value estimates was significantly adjusted in response to~~In 2020, the economic uncertainty associated with the spread of the COVID-19 pandemic, principally through adjustments to the weights given the various methodologies we utilize to estimate discount rates, greater use of pandemic-adjusted forward-looking information, and shortening the evaluation periods used to assess the market depth and liquidity associated with Indicative Prices. These adjustments resulted from observed decreases in the historic correlation between observable inputs utilized on our valuation

models. However, as of December 31, 2020, we had reverted all of our methodologies to their pre-pandemic weightings and evaluation periods as financial markets stabilized and the correlations between observable market 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 September 30, 2021 (dollar amounts in thousands):

Investment Type Fair Value at September 30, 2021 Range of Fair Value
Low-end High-end
Debt investments:
Senior secured $ 331,970 $ 328,477 $ 335,324
Senior secured (valued at Transaction Prices) 15,977 15,977 15,977
Subordinated 17,525 17,046 18,003
Structured Finance Notes:
Subordinated notes 65,334 63,358 67,309
Mezzanine debt 2,792 2,748 2,837
Loan accumulation facility (valued at Transaction Price) 8,500 8,500 8,500
Equity investments:
Preferred equity 9,805 8,491 11,060
Common equity, warrants and other 74,176 70,104 80,469
Common equity, warrants and other (valued at Transaction Prices) 200 200 200
$ 526,279 $ 514,901 $ 539,679

~~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.

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 March 31, 2022 (dollar amounts in thousands):


Investment Type	Fair Value at March 31, 2022		Range of Fair Value
			Low-end		High-end
Debt investments:
Senior secured	$	361,317	$	357,902	$	364,709
Subordinated	9,353		8,867		9,839

Structured Finance Notes:
Subordinated notes	57,051		54,822		59,282
Mezzanine debt	16,326		16,286		16,365
Loan accumulation facilities	17,000		17,000		17,000

Equity investments:
Preferred equity	6,195		5,743		6,598
Common equity, warrants and other	89,672		84,316		95,064
	$	556,914	$	544,936	$	568,857

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”.

•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”.

•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, 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.

Effective January 1, ~~2020,~~2021 OFS Advisor agreed to ~~further~~ reduce ~~the~~its 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 OFSCC-FS Assets (excluding cash) at the end of the two most recently completed

calendar quarters. OFS Advisor’s base management fee reduction 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. This agreement was most recently renewed for the ~~2021~~2022 calendar year on February ~~16, 2021.~~4, 2022.

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 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. We 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~~we may file an amendment to ~~an exemptive order issued by the SEC on April 8, 2020 and applicable~~our existing Order to ~~all BDCs, through December 31, 2020, we were permitted, subject~~permit us to ~~the satisfaction of certain conditions,~~continue to co-invest in our existing portfolio companies with certain affiliates that are private funds even if such other funds had not previously invested in such existing portfolio ~~company. Without this order, affiliated funds would not~~company, subject to certain conditions. However, if filed, there is no guarantee that such amendment will be able to participate in such co-investments with us unless the affiliated funds had previously acquired securities of the portfolio company in a co-investment transaction with us. Although the 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.granted.

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~~“Item 1. Business — Conflicts of ~~Interest"~~Interest”, ~~"Item~~“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"~~Accounts” and ~~"Item~~“Item 1A. Risk Factors — Regulations — Conflicts of Interest - Conflicts Related to Portfolio ~~Investments"~~Investments” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Portfolio Composition and Investment Activity

Portfolio Composition

As of ~~September 30, 2021,~~March 31, 2022, the fair value of our debt investment portfolio totaled ~~$365.5~~$370.7 million in 7063 portfolio companies, of which ~~95%~~97% and 5%3% were senior secured loans and subordinated loans, respectively. As of ~~September 30, 2021,~~March 31, 2022, we had equity investments in 2117 portfolio companies with a fair value of approximately ~~$84.2~~$95.9 million. We also have ~~seventeen~~20 investments in Structured Finance Notes with a fair value of ~~$76.6~~$90.4 million. We had unfunded commitments of ~~$13.6~~$44.8 million to ~~twelve~~16 portfolio companies at ~~September 30, 2021.~~March 31, 2022. Set forth in the tables and charts below is selected information with respect to our portfolio as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

The following table presents our investment portfolio by each wholly owned legal entity within the consolidated group as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (dollar amounts in thousands):


		September 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Amortized Cost		Fair Value		Amortized Cost		Fair Value			Amortized Cost		Fair Value		Amortized Cost		Fair Value
OFS Capital Corporation (Parent)	OFS Capital Corporation (Parent)	$	175,554	$	165,907	$	190,627	$	172,249	OFS Capital Corporation (Parent)	$	184,827	$	174,071	$	157,190	$	150,254
SBIC I LP	SBIC I LP	166,075		198,635		191,192		190,573		SBIC I LP	114,351		182,546		125,584		183,524
OFSCC-FS	OFSCC-FS	154,180		154,494		67,781		68,037		OFSCC-FS	197,897		195,671		171,101		170,132
OFSCC-MB	OFSCC-MB	8,292		7,243		11,423		11,464		OFSCC-MB	4,726		4,626		3,437		3,189
Total investments	Total investments	$	504,101	$	526,279	$	461,023	$	442,323	Total investments	$	501,801	$	556,914	$	457,312	$	507,099

The following table presents our ten largest debt and equity investments by portfolio company based on fair value as of March 31, 2022 (dollar amounts in thousands):


	Amortized Cost		Fair Value		% of Total Portfolio, at Fair Value
Pfanstiehl Holdings, Inc.	$	217	$	75,308	13.5	%
All Star Auto Lights, Inc.	22,970		23,187		4.2	%
Milrose Consultants, LLC	22,776		22,432		4.0	%
Kreg LLC	20,212		20,129		3.6	%
SourceHOV Tax, Inc.	19,594		19,740		3.5	%
The Escape Game, LLC	17,224		17,305		3.1	%
Tolemar Acquisition, Inc.	16,569		16,836		3.0	%
Inergex Holdings, LLC	15,429		15,729		2.8	%
SSJA Bariatric Management, LLC	13,376		13,456		2.4	%
Envocore Holding, LLC (F/K/A LRI Holding, LLC)	17,716		10,963		2.0	%
Total	$	166,083	$	235,085	42.1	%

Portfolio Yields

The following table presents weighted-average yields metrics for our portfolio as of March 31, 2022 and December 31, 2021:



	For the Three Months Ended
	March 31, 2022		December 31, 2021
Weighted-average performing current yield (1):
Debt investments	7.5	%	9.2	%
Structured Finance Notes	14.2	%	15.5	%
Interest-bearing investments	8.8	%	10.3	%

Weighted-average performing income yield (2):
Debt investments	7.7	%	10.2	%
Structured Finance Notes	14.3	%	15.5	%
Interest-bearing investments	9.0	%	11.1	%

Weighted-average realized yield:
Interest-bearing investments (3)	8.6	%	10.4	%
Total portfolio (4)	8.2	%	9.9	%

(1) Current yield is calculated as (a) the actual amount earned on performing investments, including interest and prepayment fees but excluding amortization of Net Loan Fees, divided by (b) the weighted-average of total performing investments amortized cost.

(2) Income yield is calculated as (a) the actual amount earned on performing investments, including interest and prepayment fees and amortization of Net Loan Fees, divided by (b) the weighted-average of total performing investment amortized cost.

(3) Realized yield is computed as (a) the actual amount earned on interest-bearing investments, including interest, prepayment fees and Net Loan Fees, divided by (b) the weighted-average of total interest-bearing investments amortized cost, in each case, including debt investments in non-accrual status and non-income producing Structured Finance Notes.

(4) Realized yield is computed as (a) the actual amount earned on all investments including interest, dividends and prepayment fees, amortization of Net Loan Fees, and dividends received divided by (b) the weighted-average of total investments amortized cost or cost.

For the three months ended March 31, 2022, the decrease in the weighted-average portfolio yields compared to the prior quarter were primarily due to a decrease in prepayment fees and related fee accelerations on payoffs.

~~Portfolio Yields~~

~~The weighted average yield on total investments(1)~~ was 8.39% and 8.56% at September 30, 2021 and December 31, 2020, respectively. The following table displays the composition of our performing debt investment and Structured Finance Note portfolio by yield range and weighted averageWeighted-average yields ~~as of September 30, 2021 and December 31, 2020:~~

September 30, 2021 December 31, 2020
Yield Range Senior
Secured Subordinated Structured Finance Senior
Secured Subordinated Structured Finance
Debt Debt Notes Total Debt Debt Notes Total
Less than 8% 50.8 % — % — % 40.0 % 29.5 % — % 1.4 % 24.0 %
8% - 10% 35.0 — 2.5 28.0 52.0 — 1.4 42.2
10% - 12% 5.9 — 19.8 8.1 13.5 — — 10.9
12% - 14% 8.3 53.1 20.6 12.2 3.4 53.6 12.5 7.0
Greater than 14% — 46.9 57.1 11.7 1.6 46.4 84.7 15.9
Total 100.0 % 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)
7.93 % 14.78 % 16.27 % 9.64 % 8.92 % 14.88 % 16.56 % 10.27 %
Weighted average yield - total debt and Structured Finance Note investments (3)
7.55 % 6.68 % 16.27 % 8.87 % 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) the total amortized cost of our investment portfolio, including equity securities and 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 9.64% at September 30, 2021 from 10.27% at December 31, 2020, primarily due to the 8.0% weighted average yield on new debt investments and Structured Finance Notes. During the nine months ended September 30, 2021, we purchased approximately $141.2 million in debt securities, primarily in lower-yielding, first lien senior secured loans to larger borrowers, with a weighted average yield of 6.9%. The weighted average yield on total debt, including Structured Finance Notes, decreased to 8.87% at September 30, 2021 from 9.15% at December 31, 2020.

As of September 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.

~~The weighted average yield~~ of our investments isare 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~~yields will remain at ~~its~~their current ~~level.~~levels.

Portfolio Company Investments

The following table summarizes the composition of our Portfolio Company Investments as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (dollar amounts in thousands):


		September 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Amortized Cost		Fair Value		Amortized Cost		Fair Value			Amortized Cost		Fair Value		Amortized Cost		Fair Value
Senior secured debt investments ~~(1)~~	Senior secured debt investments ~~(1)~~	$	362,747	$	347,947	$	325,647	$	306,304	Senior secured debt investments ~~(1)~~	$	371,941	$	361,317	$	336,132	$	326,704
Subordinated debt investments	Subordinated debt investments	38,117		17,525		45,409		15,067		Subordinated debt investments	13,906		9,353		22,071		17,943
Preferred equity	Preferred equity	13,675		9,805		18,648		11,543		Preferred equity	9,552		6,195		9,552		3,765
Common equity, warrants and other(1)	Common equity, warrants and other(1)	13,845		74,376		15,459		52,984		Common equity, warrants and other(1)	12,827		89,672		14,606		83,486
Total Portfolio Company Investments	Total Portfolio Company Investments	$	428,384	$	449,653	$	405,163	$	385,898	Total Portfolio Company Investments	$	408,226	$	466,537	$	382,361	$	431,898
Total number of portfolio companies		83		83		62		62
Number of portfolio companies										Number of portfolio companies	75		75		70		70

(1) ~~Includes debt~~As of March 31, 2022, other investments ~~in which we have entered into contractual arrangements~~represent equity participation right investments 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~~an aggregate ~~amortized~~ cost and fair value of ~~these investments was $22,400~~$4.7 million and ~~$22,800, respectively, at September 30, 2021, and $55,776 and $56,217, respectively, at~~$8.0 million, respectively. As of December 31, ~~2020.~~2021, other investments represent equity participation right investments with an aggregate cost and fair value of $4.7 million and $7.4 million, respectively.

At ~~September 30, 2021, 95%~~March 31, 2022, 97% and ~~66%~~65% of our loan portfolio and total portfolio, respectively, consisted of senior secured loans, based on fair value. ~~Approximately 77% 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 adverse economic changes, including those caused by the COVID-19 pandemic.

As of ~~September 30, 2021,~~March 31, 2022, the three largest industries of our Portfolio Company Investments by fair value, were (1) Manufacturing ~~(24.7%~~(25.5%), (2) Professional, Scientific, and Technical Services ~~(15.5%~~(14.1%), and (3) ~~Wholesale Trade (13.8%~~Health Care and Social Assistance(13.2%), totaling approximately ~~54.0%~~51.3% of our Portfolio Company Investment portfolio. For a full summary of our investment portfolio by industry, see “Item 1–Financial Statements–Note 4.”

As of ~~September 30, 2021,~~March 31, 2022, our common equity in Pfanstiehl Holdings, Inc. based on its fair value of ~~$55.6~~$75.3 million, ~~$55.4~~$75.1 million of which represents an unrealized gain, accounts for ~~10.6%~~13.5% of our total portfolio at fair value, or ~~29.3%~~36.1% of total net assets. Since December 31, ~~2020~~2021 and December 31, ~~2019,~~2020, Pfanstiehl Holdings, Inc., a global manufacturer of high-purity pharmaceutical ingredients, has appreciated ~~$19.4~~$9.6 million and ~~$43.6~~$39.1 million, respectively, primarily due to improved operating results, as well as multiple ~~expansion in the pharmaceutical industry.~~expansion.

Structured Finance Notes

The following table ~~presents~~summarizes the composition of our ~~debt investment portfolio by investment size~~Structured Finance Notes as of ~~September 30, 2021~~March 31, 2022, and December 31, ~~2020~~2021 (in thousands):


	March 31, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Subordinated notes	$	60,329	$	57,051	$	63,791	$	63,922
Mezzanine debt	16,246		16,326		2,660		2,779
Loan accumulation facilities	17,000		17,000		8,500		8,500
Total Structured Finance Notes	$	93,575	$	90,377	$	74,951	$	75,201

Investment Activity

The following is a summary of our investment activity for the three months ended March 31, 2022 (dollar amounts in ~~thousands)~~millions):

Amortized Cost Fair Value
September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020
Up to $4,000 $ 66,948 16.7 % $ 30,427 8.2 % $ 67,274 18.4 % $ 33,149 10.3 %
$4,001 to $7,000 94,474 23.6 72,030 19.4 90,249 24.7 68,939 21.5
$7,001 to $10,000 44,039 11.0 51,874 14.0 40,690 11.1 43,735 13.6
$10,001 to $13,000 10,790 2.7 21,013 5.7 32,386 8.9 33,470 10.4
Greater than $13,000 184,613 46.0 195,711 52.7 134,873 36.9 142,078 44.2
Total $ 400,864 100.0 % $ 371,055 100.0 % $ 365,472 100.0 % $ 321,371 100.0 %


	Three Months Ended March 31, 2022
Investments in new Portfolio Companies		$	33.0
Investments in existing Portfolio Companies		15.1
Investments in Structured Finance Notes		22.1
Total investments		$	70.2

Proceeds from principal payments and equity distributions		$	19.6
Proceeds from investments sold or redeemed		3.1
Total proceeds from principal payments, equity distributions and investments sold		$	22.7

During the three months ended March 31, 2022, notable investments in new portfolio companies, included 24 Seven Holdco, LLC ($8.9 million senior secured loan), Atlantis Holding, LLC ($8.1 million senior secured loan) and Idera ($4.0 million senior secured loan).

During the three months ended March 31, 2022, notable investments in existing portfolio companies, included BayMark Health Services, Inc. ($2.8 million senior secured loan) and One GI LLC ($2.0 million senior secured loans).

The following is a summary of our investment activity for the three months ended March 31, 2021 (dollar amounts in millions):


	Three Months Ended March 31, 2021
Investments in new Portfolio Companies		$	36.2
Investments in existing Portfolio Companies		26.1
Investments in Structured Finance Notes		6.2
Total investments		$	68.5

Proceeds from principal payments and equity distributions		$	48.6
Proceeds from investments sold or redeemed		0.6
Total proceeds from principal payments, equity distributions and investments sold		$	49.2

During the three months ended March 31, 2021, notable investments in new portfolio companies, included Allen Media, LLC ($2.9 million senior secured loan), Confie Seguros Holding II Co. ($2.9 million senior secured loan), Innovacare, Inc. ($3.0 million senior secured loan), Ivanti Software, Inc. ($3.0 million senior secured loan) and JP Intermediate B, LLC ($3.8 million senior secured loan).

During the three months ended March 31, 2021, notable investments in existing portfolio companies, included Convergint Technologies Holdings, LLC ($9.4 million senior secured loan), BayMark Health Services, Inc. ($5.4 million senior secured loan) and Bass Pro Group, LLC ($5.7 million senior secured loan).

~~Investment Activity~~

~~The following is a summary of our Portfolio Company Investment activity for the three and nine months ended September 30, 2021 (dollar amounts in millions):~~

Three Months Ended
September 30, 2021 Nine Months Ended September 30, 2021
Debt
Investments Equity
Investments Debt
Investments Equity
Investments
New Portfolio Company Investments $ 29.5 $ 0.2 $ 92.3 $ 0.2
Add-on Portfolio Company Investments 26.4 — 70.6 —
Total Portfolio Company Investments $ 55.9 $ 0.2 $ 162.9 $ 0.2
Number of new Portfolio Company Investments 14 1 46 1
Number of add-on Portfolio Company Investments 22 — 47 —
Proceeds/redemptions from principal payments/
equity investments
24.3 — 125.1 —
Proceeds from investments sold or redeemed 7.5 — 17.8 —
Total proceeds from principal payments, equity
distributions and investments sold
$ 31.8 $ — $ 142.9 $ —

Notable investments in new portfolio companies during the nine months ended September 30, 2021, include KNS Acquisition Corp. ($5.0 million senior secured loan), Electrical Components International, Inc. ($5.6 million senior secured loan), TruGreen Limited Partnership ($4.6 million senior secured loan), RumbleOn, Inc. ($4.1 million senior secured loan), Directv Financing, LLC ($4.5 million senior secured loan) and Magenta Buyer LLC ($4.8 million senior secured loan).

Notable add-on investments during the nine months ended September 30, 2021, include All Star Auto Lights, Inc. ($6.8 million senior secured loan) and Convergint Technologies Holdings, LLC ($10.0 million senior secured loans).

~~During the nine months ended September 30, 2021, the weighted-average yield of new debt in Portfolio Company Investments was 6.9%.~~

~~During the nine months ended September 30, 2021, we also invested $30.4 million in Structured Finance Notes with a weighted average annual effective yield of 15.3%.~~

~~The following is a summary of our Portfolio Company Investment activity for the three and nine months ended September 30, 2020 (dollar amounts in millions):~~

Three Months Ended
September 30, 2020 Nine Months Ended
September 30, 2020
Debt
Investments Equity
Investments Debt
Investments Equity
Investments
Investments in new portfolio companies $ 1.5 $ — $ 43.8 $ —
Investments in existing portfolio companies
Follow-on investments 7.6 — 17.7 0.1
Restructured investments — 0.2 — 0.9
Delayed draw and revolver funding — — 5.7 —
Total investments in existing portfolio companies 7.6 0.2 23.4 1.0
Total investments in new and existing portfolio
companies
$ 9.1 $ 0.2 $ 67.2 $ 1.0
Number of new portfolio company investments 3 — 13 —
Number of existing portfolio company
investments
1 3 16 6
Proceeds/distributions from principal payments/
equity investments
3.8 — 60.1 —
Proceeds from investments sold or redeemed 1.9 — 63.8 3.6
Total proceeds from principal payments, equity
distributions and investments sold
$ 5.7 $ — $ 123.9 $ 3.6

Notable investments in new portfolio companies during the nine months ended September 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).

~~During the nine months ended September 30, 2020, the weighted-average yield of new debt in Portfolio Company Investments was 8.4%.~~

~~During the nine months ended September 30, 2020, we also invested $13.6 million in Structured Finance Notes with a weighted average annual effective yield of 18.9%.~~

~~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 nine months ended September 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 shares of common equity. The fair value of the 20,628 shares of common equity received was $0.7 million, which we recognized as the investment's cost.

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, ~~2020.~~2021, filed on March 4, 2022. The following table shows the classification of our debt securities of portfolio companies, excluding Structured Finance Notes, by credit risk rating as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 (dollar amounts in thousands):


		Debt Investments, at Fair Value									Debt Investments, at Fair Value
Risk Category	Risk Category	September 30, 2021				December 31, 2020				Risk Category	March 31, 2022				December 31, 2021
1 (Low Risk)	1 (Low Risk)	$	—	—	%	$	—	—	%	1 (Low Risk)	$	—	—	%	$	—	—	%
2 (Below Average Risk)	2 (Below Average Risk)	—		—		—		—		2 (Below Average Risk)	—		—		—		—
3 (Average)	3 (Average)	341,373		93.4		263,934		82.2		3 (Average)	351,014		94.7		324,370		94.2
4 (Special Mention)	4 (Special Mention)	16,353		4.5		45,302		14.1		4 (Special Mention)	11,898		3.2		12,550		3.6
5 (Substandard)	5 (Substandard)	7,001		1.9		11,684		3.6		5 (Substandard)	7,322		2.0		7,027		2.0
6 (Doubtful)	6 (Doubtful)	745		0.2		451		0.1		6 (Doubtful)	436		0.1		699		0.2
7 (Loss)	7 (Loss)	—		—		—		—		7 (Loss)	—		—		—		—
		$	365,472	100.0	%	$	321,371	100.0	%		$	370,670	100.0	%	$	344,646	100.0	%

~~Changes in the distribution~~As of March 31, 2022, 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. During the nine months ended September 30, 2021, debt investments with an aggregate cost and fair value of $17.2 million and $16.8 million, respectively, had risk rating upgrades from risk category 4ratings remained stable compared to ~~risk category 3 and a debt investment with a cost and fair value of $16.1 million and -0- million, respectively, had risk rating downgrades from risk category 5 to risk category 7.~~December 31, 2021.

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 and/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. No new loans were placed on non-accrual status during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The aggregate amortized cost and fair value of loans on ~~non-accrual~~non-accrual status with respect to all interest and Net Loan Fee amortization was ~~$38.2~~$18.9 million and $7.8 million, respectively, at March 31, 2022, and $19.1 million and $7.7 million, respectively, at ~~September 30, 2021, and $48.1 million and $12.1 million, respectively, at~~ December 31, ~~2020. During the nine months ended September 30, 2021, Community Intervention Services, Inc., a non-accrual loan since September 30, 2016 with a cost of $7.6 million, was sold for $0.1 million.~~

2021.

~~Structured Finance Notes~~

~~The following table summarizes the composition of our Structured Finance Notes as of September 30, 2021, and December 31, 2020 (in thousands):~~

September 30, 2021 December 31, 2020
Amortized Cost Fair Value Amortized Cost Fair Value
Subordinated notes $ 64,572 $ 65,334 $ 54,280 $ 54,724
Mezzanine bonds 2,645 2,792 1,580 1,701
Loan accumulation facility $ 8,500 $ 8,500 $ — $ —
Total Structured Finance Notes $ 75,717 $ 76,626 $ 55,860 $ 56,425

As of September 30, 2021, the weighted average yield on Structured Finance Notes remained stable at 16.27%, compared to 16.56% at December 31, 2020. During the nine months ended September 30, 2021, we purchased Structured Finance Notes with a the weighted average yield of 15.3%, based on current amortized cost.

Results of Operations

Our key financial measures are described in ~~"Item~~“Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations–Results of Operations–Key Financial ~~Measures"~~Measures” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021, filed on March 4, 2022. The following is a discussion of the key financial measures that management employs in reviewing the performance of our operations.

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 the 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.

6462

Comparison of the three months ended ~~September 30,~~March 31, 2022 and December 31, 2021 ~~and June 30, 2021 and comparison of the nine months ended September 30, 2021 and 2020~~

Consolidated operating results for the three months ended ~~September 30,~~March 31, 2022 and December 31, 2021 ~~and June 30, 2021 and the nine months ended September 30, 2021 and 2020~~ are as follows (in thousands):


		Three Months Ended				Nine Months Ended September 30,					Three Months Ended
		September 30, 2021		June 30, 2021		2021		2020			March 31, 2022		December 31, 2021
Investment income	Investment income									Investment income
Interest income:	Interest income:									Interest income:
Cash interest income	Cash interest income	$	6,771	$	6,972	$	20,580	$	26,565	Cash interest income	$	7,013	$	7,739
PIK interest income	PIK interest income	406		397		1,243		1,222		PIK interest income	278		283
Net Loan Fee amortization	Net Loan Fee amortization	322		857		1,752		959		Net Loan Fee amortization	213		913
Accretion of interest income on Structured Finance Notes	Accretion of interest income on Structured Finance Notes	2,645		2,392		7,315		4,141		Accretion of interest income on Structured Finance Notes	2,282		2,547
Other interest income	Other interest income	—		—		12		54		Other interest income	2		—
Total interest income	Total interest income	10,144		10,618		30,902		32,941		Total interest income	9,788		11,482

Dividend income:	Dividend income:									Dividend income:
Preferred equity PIK dividends		37		59		143		388
Common cash dividends		33		136		169		100

Cash dividends										Cash dividends	758		1,855
Total dividend income	Total dividend income	70		195		312		488		Total dividend income	758		1,855
Fee income:	Fee income:									Fee income:
Syndication fees	Syndication fees	124		439		780		467		Syndication fees	257		1,455
Prepayment and other fees	Prepayment and other fees	251		164		502		442		Prepayment and other fees	143		475
Total fee income	Total fee income	375		603		1,282		909		Total fee income	400		1,930
Total investment income	Total investment income	10,589		11,416		32,496		34,338		Total investment income	10,946		15,267
Total expenses, net		7,354		8,181		23,476		25,047
Total expenses										Total expenses	7,941		10,837
Net investment income	Net investment income	3,235		3,235		9,020		9,291		Net investment income	3,005		4,430
Net gain (loss) on investments		10,154		19,206		33,283		(15,619)
Net gain on investments										Net gain on investments	5,500		14,722
Loss on extinguishment of debt	Loss on extinguishment of debt	(224)		—		(2,523)		(336)		Loss on extinguishment of debt	(144)		(2,068)
Loss on impairment of goodwill		—		—		—		(1,077)
Net increase (decrease) in net assets resulting from operations		$	13,165	$	22,441	$	39,780	$	(7,741)
Net increase in net assets resulting from operations										Net increase in net assets resulting from operations	$	8,361	$	17,084

Interest income by debt investment type for the three months ended ~~September 30,~~March 31, 2022 and December 31, 2021 ~~and June 30, 2021 and nine months ended September 30, 2021 and 2020,~~ is summarized below (in thousands):


		Three Months Ended				Nine Months Ended September 30,					Three Months Ended
		September 30, 2021		June 30, 2021		2021		2020			March 31, 2022		December 31, 2021
Interest income:	Interest income:									Interest income:
Senior secured debt investments	Senior secured debt investments	$	6,170	$	7,580	$	20,952	$	25,665	Senior secured debt investments	$	6,362	$	7,965
Subordinated debt investments	Subordinated debt investments	708		646		2,014		3,092		Subordinated debt investments	444		593
Structured Finance Notes	Structured Finance Notes	3,266		2,392		7,936		4,183		Structured Finance Notes	2,982		2,924
Total interest income	Total interest income	10,144		10,618		30,902		32,941		Total interest income	9,788		11,482
Less Net Loan Fees accelerations	Less Net Loan Fees accelerations	(118)		(551)		(1,011)		(196)		Less Net Loan Fees accelerations	(40)		(628)
Recurring interest income	Recurring interest income	$	10,026	$	10,067	$	29,891	$	32,745	Recurring interest income	$	9,748	$	10,854

Investment Income

~~Other than acceleration~~For the three months ended March 31, 2022, total investment income of ~~Net Loan Fees recognized upon~~$10.9 million decreased by $4.3 million compared to the ~~repayment~~three months ended December 31, 2021, primarily due to a decrease of ~~a loan, we consider our interest~~$2.6 million in dividend and fee income.

Interest income ~~on direct debt investments to portfolio companies to be recurring in nature. Such recurring interest income remained stable~~decreased $1.7 million during the three months ended ~~September 30, 2021~~March 31, 2022 compared to the prior ~~quarter. Recurring interest income decreased $2.9 million during the nine months ended September 30, 2021 compared to the corresponding period in the prior year,~~quarter primarily due to a

~~$3.7 million volume variance from a $50 million~~ decrease in our portfolio’s weighted-average performing income yield to 9.0% for the ~~average outstanding performing loan balance, partly offset by a $0.8 million increase from a 28 basis point increase in~~quarter ended March 31, 2022 compared to 11.1% for the ~~recurring earned yield.~~quarter ended December 31, 2021, primarily due to the redeployment of payoffs into lower yielding senior secured loans.

During the three months ended ~~September 30, 2021,~~March 31, 2022, we recognized dividend income ~~decreased $0.1~~of $0.8 million, ~~compared to the prior quarter due~~of which $0.7 million related to a distribution from ~~our equity investment in MTE Holding Corp during the prior quarter.~~Southern Technical Institute, LLC.

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. Syndication fees, which are recognized when OFS Advisor sources, structures, and arranges the lending group, and for which we are additionally compensated, decreased to ~~$0.1~~$0.3 million for the three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$0.4~~$1.5 million for the three months ended ~~June 30,~~December 31, 2021. Total fee income for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to the ~~corresponding period in the~~ prior ~~year, increased~~quarter, decreased from ~~$0.9~~$1.9 million to ~~$1.3~~$0.4 million primarily due to a ~~$0.3~~$1.2 million ~~increase~~decrease in syndication fees.

Expenses

Operating expenses for the three months ended ~~September 30,~~March 31, 2022 and December 31, 2021 ~~and June 30, 2021 and nine months ended September 30, 2021 and 2020,~~ are presented below (in thousands):


		Three Months Ended				Nine Months Ended September 30,					Three Months Ended
		September 30, 2021		June 30, 2021		2021		2020			March 31, 2022		December 31, 2021
Interest expense	Interest expense	$	4,234	$	4,241	$	13,300	$	14,301	Interest expense	$	3,624	$	4,215
Management fee	Management fee	1,950		1,876		5,660		5,759		Management fee	2,020		2,009
Incentive fee		102		809		911		1,332
Income Incentive Fee										Income Incentive Fee	—		1,543
Capital Gains Fee										Capital Gains Fee	1,072		1,814
Professional fees	Professional fees	354		489		1,230		1,530		Professional fees	407		440
Administration fee	Administration fee	335		439		1,342		1,456		Administration fee	451		416
Other expenses	Other expenses	379		327		1,033		1,110		Other expenses	367		400
Total expenses before incentive fee waiver		7,354		8,181		23,476		25,488
Incentive fee waiver		—		—		—		(441)
Total expenses, net of incentive fee waiver		$	7,354	$	8,181	$	23,476	$	25,047
Total expenses										Total expenses	$	7,941	$	10,837

Interest expense for the three months ended ~~September 30, 2021 remained stable compared to the preceding quarter. Interest expense for the nine months ended September 30, 2021~~March 31, 2022 decreased ~~$1.0 million compared to the corresponding period in the prior year, primarily due to a $18.1 million decrease in the weighted average debt balance.~~

~~Management fee expense for the three months ended September 30, 2021 increased $0.1~~$0.6 million compared to the prior quarter primarily due to the ~~increase in total assets.~~ issuance of the Unsecured Notes Due October 2028 that bear a fixed interest rate of 4.95% and the redemption of the Unsecured Notes Due October 2026 and Unsecured Notes Due September 2023, that boar interest rates of 5.95% and 6.25%, respectively.

Management fee expense for the ~~nine~~three months ended ~~September 30, 2021 decreased $0.1 million~~March 31, 2022 remained stable compared to the ~~corresponding period in the~~ prior ~~year consistent with changes in total assets.~~quarter.

The incentive fees earned by OFS Advisor for the three months ended ~~September 30, 2021~~March 31, 2022 decreased ~~$0.7~~$2.3 million compared to the prior quarter, primarily due to pre-incentive fee net investment income not exceeding the performance hurdle for incentives in the three months ended ~~September 30, 2021.~~March 31, 2022. For the three months ended ~~September 30, 2021,~~March 31, 2022, the Company accrued a ~~capital gains incentive fee~~Capital Gains Fee of ~~$0.1~~$1.1 million due to an increase in unrealized capital ~~gains. Incentive fee expense for the nine months ended September 30, 2021 decreased $0.4 million~~gains, compared to ~~the corresponding period~~an accrued Capital Gains Fee of $1.8 million in the prior ~~year, before taking into account~~quarter. As of March 31, 2022, a deferred Capital Gains Fee of $2,988 was included in the ~~incentive fee waiver during~~amounts payable to investment adviser and affiliates as listed on the consolidated statements of assets and liabilities.

For the three months ended March 31, ~~2020, primarily due to the decrease in net interest margin during 2021.~~

~~Professional~~2022, professional fees, ~~for the three months ended September 30, 2021 decreased $0.1 million~~administration fees and other expenses remained stable compared to the prior quarter. ~~Professional fees for the nine months ended September 30, 2021 decreased $0.3 million compared to the corresponding period in the prior year due to a decrease in valuation and consulting services.~~

Administration fee expense for the three and nine months ended September 30, 2021 decreased $0.1 million and $0.1 million, respectively, compared to the prior quarter and prior year due to allocations of administrative services and software.

Other expenses for the three months ended September 30, 2021 increased $0.1 million compared to the prior quarter. Other 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 months ended ~~September 30,~~March 31, 2022 and December 31, 2021, ~~and June 30, 2021 and nine months ended September 30, 2021 and 2020,~~ were as follows (in thousands):


		Three Months Ended				Nine Months Ended September 30,					Three Months Ended
		September 30, 2021		June 30, 2021		2021		2020			March 31, 2022		December 31, 2021
Senior secured debt	Senior secured debt	$	(460)	$	918	4,338		$	(16,428)	Senior secured debt	$	(1,198)	$	5,432
Subordinated debt	Subordinated debt	145		3,513		2,216		(11,585)		Subordinated debt	(424)		335
Preferred equity	Preferred equity	1,006		(81)		1,646		(2,752)		Preferred equity	2,391		3,556
Common equity, warrants and other	Common equity, warrants and other	9,094		14,371		24,838		16,942		Common equity, warrants and other	8,269		6,870
Structured Finance Notes	Structured Finance Notes	196		690		344		(2,212)		Structured Finance Notes	(3,449)		(658)
Income tax expense on net realized investment gains										Income tax expense on net realized investment gains	(48)		(1,027)
Deferred income tax benefit (expense)	Deferred income tax benefit (expense)	173		(205)		(99)		416		Deferred income tax benefit (expense)	(41)		214
Total net gain (loss) on investments		$	10,154	$	19,206	$	33,283	$	(15,619)
Total net gain on investments										Total net gain on investments	$	5,500	$	14,722

Net gain on investments for the three months ended ~~September 30, 2021~~March 31, 2022 and ~~June 30,~~December 31, 2021

Three months ended ~~September 30, 2021~~March 31, 2022

Our portfolio experienced net gains of ~~$10.2~~$5.5 million in the ~~third~~first quarter of ~~2021,~~2022, principally due to a ~~$8.9~~$10.0 million, or ~~3.2%~~3.1%, ~~improvement~~increase in the fair values of our directly originated debt and equity investments. ~~Net gains for the quarter include realized gains of $3.3 million primarily on the sale of our preferred equity in Neosystems Corp. and our common equity in Chemical Resources Holdings, Inc.~~

During the ~~three months ended September 30, 2021, our senior secured debt decreased $0.5 million primarily due to a decrease~~first quarter of ~~$0.7 million in our debt investment in Envocore Holding, LLC.~~

~~During the three months ended September 30, 2021, our portfolio~~2022, we experienced ~~net gains~~unrealized losses of $1.0 million and ~~$9.1~~$3.4 million, respectively, on our ~~preferred equity~~broadly syndicated loans and ~~common equity, respectively. The net gains on our preferred equity investments were~~Structured Finance Notes primarily ~~attributable~~due to ~~the $0.6 million improvement in Stancor, L.P. and $0.5 million improvement in Contract Datascan Holdings, Inc., respectively. The net~~widening of liquid credit market spreads.

Net gains on our common equity investments were primarily attributable to the ~~$6.4 million improvement in Pfanstiehl Holdings, Inc. These net gains were primarily attributable to the positive impact of portfolio company-specific performance factors.~~

~~Three months ended June 30, 2021~~

Our portfolio experienced net gains of $19.2 million in the second quarter of 2021, 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, experiencing 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 gain on our common equity in the second quarter of 2021 was primarily attributable to the $12.1~~$9.6 million improvement in Pfanstiehl Holdings, Inc.

~~Net~~Three months ended December 31, 2021

During the three months ended December 31, 2021, net gain on investments ~~for the nine months ended September 30, 2021 and 2020~~

~~Nine months ended September 30, 2021~~

~~During the nine months ended September 30, 2021, our portfolio experienced net gains~~ of ~~$33.3~~$14.7 million ~~principally~~was primarily due to ~~a $31.8~~unrealized appreciation of $10.1 million ~~net gain~~ on ~~our directly originated debt and equity investments. During the nine months ended September 30, 2021,~~ our common equity investment in Pfanstiehl Holdings, Inc. ~~and~~During the three months ended December 31, 2021, we sold our ~~subordinated debt~~preferred equity investment in ~~Eblens Holdings, Inc. had unrealized appreciation~~TTG Healthcare, LLC and realized a gain of ~~$19.4~~$5.8 million, ~~and $4.2~~of which $4.6 million ~~respectively.~~

~~Nine months ended September 30, 2020~~

~~During~~was recognized during the nine months ended September 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. 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.quarter.

~~Loss on Impairment of Goodwill~~

~~Nine months ended September 30, 2020~~

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. The loss on impairment of goodwill did not impact our third quarter management or incentive fees.

Loss on Extinguishment of Debt

Three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we ~~prepaid $35.4~~redeemed $19.0 million of SBA debentures ~~and redeemed $98.5 million of unsecured notes,~~ and, as a result, we recognized losses on extinguishment of debt of ~~$2.5~~$0.1 million related to the charge-off of unamortized deferred borrowing costs on ~~these instruments.~~the redeemed debentures.

Three months ended March 31, 2021

During the three months ended ~~September 30,~~March 31, 2021, we ~~prepaid $25.6~~redeemed $9.8 million of SBA debentures and $98.5 million of Unsecured Notes and, as a result, we ~~recognized a loss on extinguishment of debt of $0.2 million related to the charge-off of deferred borrowing costs on the prepaid debentures.~~

~~Three and nine months ended September 30, 2020~~

~~During the nine months ended September 30, 2020, we prepaid $21.1 million of SBA debentures that were contractually due September 1, 2023, March 1, 2024 and September 1, 2024. We~~ recognized losses on extinguishment of debt of ~~$0.24~~$2.3 million related to the charge-off of unamortized deferred borrowing costs on these instruments.

Non-GAAP Financial Measure – Adjusted Net Investment Income

On a supplemental basis, we disclose adjusted net investment income (“Adjusted NII”) (including on a per share basis), which is a financial measure calculated and presented on basis other than in accordance with GAAP. Adjusted NII represents net investment income, excluding the ~~prepaid debentures.~~capital gains incentive fee, in periods in which such expense occurs. GAAP requires recognition of a capital gains incentive fee in our financial statements when aggregate net realized and unrealized capital gains, if any, on a cumulative basis from the date of the election to be a BDC through the reporting date is positive. Such fees are subject to further conditions specified in the Investment Advisory Agreement, principally related to the realization of such net gains, before OFS Advisor is entitled to payment, and such recognized fees are subject to the risk of reversal should unrealized gains diminish to become losses. Management believes that Adjusted NII is a useful indicator of operations exclusive of any net capital gains incentive fee, as net investment income does not include the net gains, realized or unrealized, associated with the capital gains incentive fee.

~~During~~Management believes Adjusted NII facilitates analysis of our results of operations and provides greater transparency into the determination of incentive fees. Adjusted NII is not meant as a substitute for net investment income determined in accordance with GAAP and should be considered in the context of the entirety of our reported results of operations, financial position and cash flows determined in accordance with GAAP.

The following table provides a reconciliation from net investment income (the most comparable GAAP measure) to Adjusted NII for the three months ended ~~September 30, 2020,~~March 31, 2022 and December 31, 2021 (dollar amounts in thousands, except per share data):


	Three Months Ended
	March 31, 2022				December 31, 2021
	(000's)		Per Share		(000's)		Per Share
Net investment income	$	3,005	$	0.22	$	4,430	$	0.33
Capital Gains Fee	1,072		0.08		1,814		0.14
Adjusted NII	$	4,077	$	0.30	$	6,244	$	0.47

For the ~~BLA~~quarter ended March 31, 2022, the Capital Gains Fee of $1.1 million was ~~amended~~primarily due to ~~reduce the total commitment from $100.0~~net unrealized appreciation of $55.0 million ~~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.~~investment portfolio, partially offset by cumulative net realized losses of $40.1 million.

Although these non-GAAP financial measures are intended to enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP.

Liquidity and Capital Resources

At ~~September 30, 2021,~~March 31, 2022, we held cash of ~~$7.0~~$10.5 million, which includes ~~$3.9~~$5.2 million held by SBIC I LP, our wholly owned SBIC, and ~~$1.5~~$2.3 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 (“READ”) or regulatory capital of SBIC I ~~LP, and require the prior approval of the SBA.~~LP. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Parent received a ~~return of capital~~READ 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.~~LP of $0.5 million. Distributions from OFSCC-FS to the Parent are restricted by the terms and conditions of the BNP Facility. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Parent received ~~$3.4~~$2.3 million in cash distributions from OFSCC-FS. As of ~~September 30, 2021,~~March 31, 2022, cash available to be distributed from SBIC I LP and OFSCC-FS were ~~$16.5~~$5.2 million and $-0-, respectively.

At ~~September 30, 2021,~~March 31, 2022, we had an unused commitment of ~~$24.25~~$21.8 million under our PWB Credit Facility, as well as an unused commitment of ~~$104.9~~$38.6 million under our BNP Facility, both subject to a borrowing base requirements and other covenants. Based on fair values and equity capital at ~~September 30, 2021,~~March 31, 2022, we could access ~~available lines of~~all unused commitments under our credit ~~for $133 million~~facilities and remain in compliance with our asset coverage requirements. On April 22, 2022, we amended the PWB Credit Facility to, among other things, increase the maximum amount available from $25.0 million to $35.0 million.

As of ~~November~~May 2, ~~2021,~~2022, we had cash on hand of approximately ~~$37.6~~$22.9 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 ~~September 30, 2021.~~March 31, 2022.

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, as well as accreted interest income on Structured Finance Notes, which may not coincide with cash distributions from these investments. As discussed in ~~"Item~~“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. 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):


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash from net investment income(1)	Cash from net investment income(1)	$	5,653	$	5,755	Cash from net investment income(1)	$	428	$	761
Net (purchases and originations)/repayments and sales of portfolio investments(1)	Net (purchases and originations)/repayments and sales of portfolio investments(1)	(28,751)		36,740		Net (purchases and originations)/repayments and sales of portfolio investments(1)	(24,812)		5,062
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	(23,098)		42,495		Net cash provided by (used in) operating activities	(24,384)		5,823

Distributions paid to stockholders(2)	Distributions paid to stockholders(2)	(8,754)		(8,974)		Distributions paid to stockholders(2)	(3,719)		(2,655)
Net payments under lines of credit		13,850		(31,800)
Net (borrowings) payments under lines of credit						Net (borrowings) payments under lines of credit	14,650		(12,500)
Repayment of SBA debentures	Repayment of SBA debentures	(35,350)		(21,110)		Repayment of SBA debentures	(19,000)		(9,765)
Proceeds from unsecured notes offering, net of discounts	Proceeds from unsecured notes offering, net of discounts	121,791		24,250		Proceeds from unsecured notes offering, net of discounts	—		121,791
Redemption of unsecured notes	Redemption of unsecured notes	(98,525)		—		Redemption of unsecured notes	—		(98,525)
Other financing activities	Other financing activities	(623)		(11)		Other financing activities	(122)		(236)
Net cash used in financing activities	Net cash used in financing activities	(7,611)		(37,645)		Net cash used in financing activities	(8,191)		(1,890)
Increase (decrease) in cash	Increase (decrease) in cash	$	(30,709)	$	4,850	Increase (decrease) in cash	$	(32,575)	$	3,933

(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 decreased ~~$0.1~~$0.3 million for the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022 compared to the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.

Net (purchases and originations)/repayments and sales of portfolio investments

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, net purchases and originations of portfolio investments of ~~$28.8~~$24.8 million were primarily due to ~~$173.8~~$65.9 million of cash we used to purchase portfolio investments, offset by ~~$145.1~~$41.1 million of cash we received from amortized cost repayments, sales on our portfolio investments and the net proceeds from distributions received from Structured Finance Notes and accretion of interest income on Structured Finance Notes. During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, net purchases and originations of portfolio investments of ~~$36.7~~$5.1 million were primarily due to ~~$89.8~~$44.0 million of cash we used to purchase portfolio investments, offset by ~~$126.5~~$49.1 million of cash we received from amortized cost repayments, sales on our portfolio investments and the net proceeds from distributions received from Structured Finance Notes and accretion of interest income on Structured Finance Notes. See "—“—Portfolio Composition and Investment Activity–Investment Activity."”

Borrowings

SBA Debentures

SBIC I LP’s SBIC license 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 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 ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, SBIC I LP had outstanding debentures of ~~$69.9~~$50.9 million and ~~$105.3~~$69.9 million, respectively.

On a stand-alone basis, SBIC I LP held ~~$203.3~~$188.4 million and ~~$223.8~~$195.5 million in total assets at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, which accounted for approximately ~~38%~~33% and ~~46%~~34% 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 pay its outstanding SBA debentures prior to their scheduled maturity 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 three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, SBIC I LP ~~prepaid $25.6 million and $35.4~~redeemed $19.0 million of SBA debentures that were contractually due ~~September~~March 1, ~~2022, September 1, 2024~~2025 and September 1, 2025. During the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, we recognized a loss on extinguishment of debt of ~~$0.2 million and $0.3~~$0.1 million related to the charge-off of unamortized deferred borrowing costs on the ~~prepaid~~redeemed 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.

On ~~February 17, 2021,~~April 22, 2022, we amended the BLA ~~to among other things:~~to: (i) increase the maximum amount available under the PWB Credit Facility from ~~$20.0~~$25.0 million to ~~$25.0~~$35.0 million; ~~(ii) decrease the interest rate floor from 5.25% per annum to 5.00% per annum; (iii) modify certain financial performance covenants;~~ and ~~(iv)~~(ii) extend the maturity date of the PWB Credit Facility from February 28, ~~2021~~2023 to February 28, ~~2023.~~2024.

As of ~~September 30, 2021,~~March 31, 2022, we had ~~$0.75~~$3.3 million outstanding and an unused commitment of ~~$24.25~~$21.8 million under the PWB Credit Facility, 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 ~~September 30, 2021,~~March 31, 2022, we were in compliance with the applicable covenants under the PWB Credit Facility.

Unsecured Notes

On February 10, 2021, we closed the public offering of $100.0 million aggregate principal amount of our 4.75% notes due 2026, and on March 18, 2021, we closed an additional public offering of $25.0 million aggregate principal amount of our 4.75% notes due 2026 (the "Unsecured Notes Due February 2026"). The total net proceeds to us from the Unsecured Notes Due February 2026, after deducting underwriting fees of $3.2 million and offering expenses of $0.6 million, was approximately $121.2 million. The Unsecured Notes Due February 2026 bear an effective interest rate, including amortization of deferred debt issuance costs, of 5.36%. The Unsecured Notes Due February 2026 will mature on February 10, 2026, and we may redeem the Unsecured Notes Due 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 Unsecured Notes Due February 2026 bear interest at a rate of 4.75% per year payable semi-annually in arrears on February 10 and August 10 of each year, commencing on August 10, 2021.

In connection with, and using the proceeds from, the issuance of the Unsecured Notes Due 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 $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 of $2.2 million related to the charge-off of deferred borrowing costs on the redemption of the notes.

On October 1, 2021, we caused notices to be issued to the holders of the Unsecured Notes Due September 2023 regarding the exercise of our option to redeem on November 1, 2021 all of the issued and outstanding Unsecured Notes Due September 2023. The Unsecured Notes Due September 2023 were redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid interest through October 31, 2021. We expect to recognize a loss on extinguishment of debt of $0.6 million related to the charge-off of deferred borrowing costs on the redemption of the notes. The total amount of the redemption, plus accrued interest, is $25.0 million.

On October 28, 2021 and November 1, 2021, we closed the public offering of the Unsecured Notes Due October 2028, which included a full exercise of the underwriters overallotment option. The total net proceeds to us, after deducting underwriting discounts of $1.72 million and estimated offering expenses, plus reimbursements, was approximately $53.5 million. The Unsecured Notes Due October 2028 will mature on October 31, 2028 and bear an effective interest rate, including amortization of deferred debt issuance costs, of 5.34%. The Unsecured Notes Due October 2028 may be redeemed in whole or in part at any time or from time to time at our option on or after October 31, 2023 at the redemption price of 100% of the aggregate principal amount thereof plus accrued and unpaid interest.

On October 22, 2021, we caused notices to be issued to the holders of the Unsecured Notes Due October 2026 regarding the exercise of our option to redeem on November 22, 2021 all of the issued and outstanding Unsecured Notes Due October 2026. The Unsecured Notes Due October 2026 will be redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid interest thereon from October 31, 2021, through, but excluding, November 22, 2021. We expect to recognize a loss on extinguishment of debt of $1.6 million related to the charge-off of deferred borrowing costs on the redemption of the notes. The total amount of the redemption, plus accrued interest, is $54.5 million.

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 ~~$45.2~~$111.4 million was drawn as of ~~September 30, 2021.~~March 31, 2022. 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 ~~3.53%~~2.74% at ~~September 30, 2021.~~March 31, 2022. The BNP Facility will mature on the earlier of June 20, 2024 or upon certain other events defined in the credit agreement which may 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 ~~$104.9~~$38.6 million as of ~~September 30, 2021.~~March 31, 2022. As of ~~September 30, 2021,~~March 31, 2022, we were in compliance with the applicable ~~covenants.~~covenants under the BNP Facility.

On a stand-alone basis, OFSCC-FS held approximately ~~$157.3~~$199.2 million and ~~$72.4~~$185.1 million in total assets at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, which accounted for approximately ~~29%~~35% and ~~15%~~33% 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.

As 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. We have, and may continue to, make opportunistic investments in Structured Finance Notes and other non-qualifying assets, consistent with our investment strategy. As of ~~September 30, 2021,~~March 31, 2022, approximately ~~83%~~81% of our investments were qualifying assets.

BDCs generally are required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities to total senior securities, which include all of our borrowings and any outstanding preferred stock, of at least 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.

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 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 and May 3, 2022, the Board extended the Stock Repurchase Program for an additional two-year ~~period.~~periods. 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,~~2024, 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.

~~The following table summarizes~~ No shares of common stock were repurchased during the three months ended March 31, 2022. As of March 31, 2022, the approximate dollar value of shares remaining that may be purchased under the ~~Stock Repurchase Program during the nine months ended September 30, 2021 (in thousands).~~

Period
Total Number
of Shares Purchased
Cost of Shares Purchased Average Price Paid Per Share
January 1, 2021 through March 31, 2021 700 $ 5 $ 6.70
April 1, 2021 through June 30, 2021 — $ — $ —
July 1, 2021 through September 30, 2021 — $ — $ —
program was $9.99 million.

As of ~~September 30, 2021,~~March 31, 2022, the aggregate amount outstanding of the senior securities issued by us was ~~$250.2~~$345.6 million, for which our asset coverage was ~~176%~~171%. The Small Business Administration ~~Debentures~~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 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). We have not sold any shares below net asset value pursuant to the proposal approved by our stockholders.

Contractual Obligations and Off-Balance Sheet Arrangements

~~The following table shows~~At March 31, 2022, we had $10.5 million of cash and cash equivalents, as well as $21.8 million and $38.6 million of unfunded commitments under our ~~contractual obligations as of September 30, 2021 (in thousands):~~

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 $ 750 $ — $ 750 $ — $ —
Unsecured Notes(3)
204,325 — 25,000 125,000 54,325
SBA Debentures 69,920 — — 69,920 —
BNP Facility 45,150 — 45,150 — —
Total(4)
$ 320,145 $ — $ 70,900 $ 194,920 $ 54,325

~~(1)Excludes commitments to extend credit to our portfolio companies.~~

~~(2)The~~ PWB Credit Facility ~~is scheduled~~and BNP Facility, respectively, to ~~mature on February 28, 2023. The~~meet our short-term contractual obligations. At March 31, 2022, we had $44.8 million in outstanding commitments to fund investments under various undrawn revolvers and other credit facilities. Long-term contractual obligations, such as our BNP Facility that matures in 2024 and has $111.4 million outstanding at March 31, 2022, can be repaid by selling OFSCC-FS portfolio investments that have a fair value of $195.7 million at March 31, 2022. We cannot, however, be certain that this source of funds will be available and upon terms acceptable to us in sufficient amounts in the future.

At March 31, 2022, we have $50.9 million of outstanding SBA debentures ~~are scheduled~~that mature in 2025, which we may repay prior to ~~mature between March 2025 and September 2025.~~their maturity dates by using proceeds from investment repayments. The SBIC I LP ~~is repaying over time its outstanding SBA debentures prior to the scheduled maturity dates~~investment portfolio has a fair value 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)~~On October 1, 2021, we caused notices to be issued to the holders of the Unsecured Notes Due September 2023 regarding the exercise of our option to redeem on November 1, 2021 all of the issued and outstanding Unsecured Notes Due September 2023. On October 22, 2021, we caused notices to be issued to the holders of the Unsecured Notes Due October 2026 regarding the exercise of our option to redeem on November 22, 2021 all of the issued and outstanding Unsecured Notes Due October 2026. On October 28, 2021 and November 1, 2021, we closed the public offering of the Unsecured Notes Due October 2028, which included a full exercise of the underwriters overallotment option. The total net proceeds to us, after deducting underwriting discounts of $1.72$182.5 million ~~and estimated offering expenses, plus reimbursements, was approximately $53.5 million. The Unsecured Notes Due October 2028 will mature on October~~at March 31, ~~2028.~~

~~(4)64% of the outstanding debt is unsecured.~~2022.

As of ~~September 30, 2021,~~March 31, 2022, we continue to believe our long-dated financing, with approximately ~~92%~~67% of our total debt, contractually maturing in ~~2024~~2025 and beyond, affords us operational flexibility.

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. ~~At September 30, 2021, we had $13.6 million~~There is no guarantee that these amounts will be funded to the borrowing party now or in ~~unfunded commitments to twelve portfolio companies.~~the future. 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 and BNP Facility. In addition, we generally hold broadly syndicated loans in larger portfolio companies that can be sold over a relatively short period to generate cash.

Distributions

We are taxed as a RIC under the Code. In order to maintain our tax 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 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 ~~October 1, 2021,~~April 22, 2022, we ~~caused notices~~amended the BLA to: (i) increase the maximum amount available under our PWB Credit Facility from $25.0 million to ~~be issued to~~$35.0 million; and (ii) extend the ~~holders~~maturity date of the ~~Unsecured Notes Due September~~PWB Credit Facility from February 28, 2023 ~~regarding the exercise of our option~~ to redeem on November 1, 2021 all of the issued and outstanding Unsecured Notes Due September 2023. The Unsecured Notes Due September 2023 were redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid interest through October 31, 2021. We expect to recognize a loss on extinguishment of debt of $0.6 million related to the charge-off of deferred borrowing costs on the redemption of the notes. The total amount of the redemption, plus accrued interest, is $25.0 million.February 28, 2024.

~~On November 2, 2021,~~May 3, 2022, our Board declared a distribution of ~~$0.25~~$0.29 per share for the ~~fourth~~second quarter of ~~2021,~~2022, payable on ~~December 31, 2021~~June 30, 2022 to stockholders of record as of ~~December 24, 2021.~~

As a result of this disruption and the pressures on their liquidity, certain of our portfolio companies have been, or may continue to be, incentivized to draw on most, if not all, of the unfunded portion of any revolving or delayed draw term loans made by us, subject to availability under the terms of such loans.

7470

~~taken by governments (including stimulus measures~~On May 3, 2022, our Board extended the Stock Repurchase Program for an additional two-year period ending May 22, 2024, or until the ~~lack thereof) and their citizens~~approved dollar amount has been used 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.repurchase shares.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates and the valuations of our investment portfolio. The economic effects of the ongoing conflict between Russia and Ukraine and the COVID-19 pandemic ~~has~~have introduced significant volatility in the financial ~~markets. The U.S. Federal Reserve~~markets and ~~other central banks~~global supply chain disruptions, and the effects of this volatility and these disruptions have ~~reduced certain interest rates~~impacted and ~~LIBOR has decreased. In addition, in a prolonged low interest rate environment, including a reduction of LIBOR~~could continue to ~~zero,~~impact our ~~net interest margin will be compressed and adversely affect our operating results.~~market risks. For additional information concerning ~~the COVID-19 pandemic~~risks and ~~its~~their potential impact on our business and our operating results, see" “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021, filed on March 4, 2022.

Investment Valuation Risk

Because there is not a readily available market value for most of the investments in our portfolio, we value a significant portion of our portfolio investments at fair value as determined in good faith by our Board based on independent third-party valuation firms that have been engaged at the direction of our Board to assist in the valuation of each portfolio investment without a readily available market quotation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, some investments may be subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than its current fair value. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Estimates” as well as Notes 2 and 5 to our consolidated financial statements for the three months ended March 31, 2022 for more information relating to our investment valuation.

Interest Rate Risk

Changes in interest rates, including any further interest rate increases approved by the U.S. Federal Reserve, and rising inflation rates may affect both our cost of funding and the valuation of our investment portfolio. As of ~~September 30, 2021, 97%~~March 31, 2022, 93% of our debt investments bore interest at floating interest rates, at fair value. ~~The~~Historically, the interest rates on our debt investments bearing floating interest rates ~~are usually~~have been based on a floating LIBOR, ~~and~~but will transition away from LIBOR to any one the ~~debt investments~~various alternative reference rates, and typically contain interest rate re-set provisions that adjust applicable interest rates to current ~~market~~ rates on a periodic basis. ~~A significant portion~~Based on par, 90% 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. Based on par, the weighted average floor was 0.85%. As of ~~September 30, 2021,~~March 31, 2022, 3-month LIBOR was 0.96% and we had debt investments with a ~~majority~~aggregate principal of ~~our floating rate loans were based on a floating LIBOR,~~$189.5 million subject to ~~its~~their 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 ~~5.02%~~5.54% and ~~3.53%~~2.74%, respectively, as of ~~September 30, 2021.~~March 31, 2022.

Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Assuming that the interim and unaudited consolidated balance sheet as of ~~September 30, 2021~~March 31, 2022 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 increase	Interest income		Interest expense		Net change
25	$	801	$	(240)	$	561
50	1,543		(525)		1,018
75	2,398		(811)		1,587
100	3,280		(1,098)		2,182
125	4,171		(1,385)		2,786


Basis point increase		Interest income		Interest expense		Net change
Basis point decrease								Basis point decrease	Interest income		Interest expense		Net change
25	25	$	86	$	(119)	$	(33)	25	$	(170)	$	317	$	147
50	50	184		(233)		(49)		50	(330)		596		266
75	75	343		(348)		(5)		75	(391)		611		220
100	100	805		(462)		343		100	(421)		611		190
125	125	1,569		(576)		993		125	(424)		611		187

Basis point decrease(1)
Interest income Interest expense Net change
25 $ (120) $ 54 $ (66)

(1) Decreases in LIBOR or Prime Rate 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.

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 ~~September 30, 2021.~~March 31, 2022. 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 ~~September 30, 2021,~~March 31, 2022, 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 ~~September 30, 2021,~~March 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

7672

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 ~~September 30, 2021.~~March 31, 2022. 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, ~~2020, and in "Part II, Item 1A. Risk Factors" in our Quarterly Reports~~2021, filed on ~~Form 10-Q for the quarters ended~~ March ~~31, 2021 and June 30, 2021,~~4, 2022, 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 risk described below, there have been no material changes ~~from~~to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020 and Quarterly Reports~~2021, filed on ~~Form 10-Q for the quarters ended~~ March ~~31, 2021 and June 30, 2021.~~4, 2022. The risks previously disclosed in our Annual Report on Form 10-K ~~and Quarterly Reports 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.

Global economic, political and market conditions may adversely affect our business, financial condition and results of operations, including our revenue growth and profitability.

The ~~interest rates~~current worldwide financial markets situation, as well as various social and political tensions in the United States and around the world (including wars and other forms of ~~our loans~~conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may contribute to ~~our portfolio companies that extend beyond 2021 might be subject to change based on recent regulatory changes, including the decommissioning of LIBOR.~~

~~LIBOR is the basic rate of interest used in lending transactions between banks~~increased market volatility, may have long term effects on the ~~London interbank market~~United States and ~~is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate~~worldwide financial markets, and may cause economic uncertainties or deterioration in loans we extend to portfolio companies such that the interest due to us pursuant to a loan extended to a portfolio company is calculated using LIBOR. The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR.

~~On March 5, 2021,~~ the United ~~Kingdom's Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that it will not compel panel banks~~States and worldwide. For example, the COVID-19 pandemic continues to ~~contribute~~adversely impact global commercial activity and has contributed to significant volatility in financial markets. In addition, the ongoing conflict between Russia and Ukraine, and resulting market volatility, could adversely affect our business, financial condition or results of operations. In response to the ~~overnight 1, 3, 6~~conflict between Russia and 12 months U.S. LIBOR tenors after June 30, 2023 and all other tenors after December 31, 2021. It is unclear if at 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 byUkraine, the U.S. Federal Reserve Board and the Federal Reserve Bank of New York, was formed. On July 29, 2021, the ARRC formally recommended the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative replacement rate for LIBOR for use in derivatives and other ~~financial contracts currently indexed to LIBOR. SOFR is a measure~~countries have imposed sanctions or other restrictive actions against Russia. Any of the ~~cost of borrowing cash overnight, collateralized by U.S. Treasury securities,~~above factors, including sanctions, export controls, tariffs, trade wars and is based on directly observable U.S. Treasury-backed repurchase transactions. The AARC has proposed a paced market transition plan to SOFR from LIBOR. There are significant differences between LIBOR and SOFR, such as LIBOR being an unsecured lending rate while SOFR is a secured lending rate, and SOFR is an overnight rate while LIBOR reflects term rates at different maturities. If our LIBOR-based borrowings are converted to SOFR, the differences between LIBOR and SOFR, plus the recommended spread adjustment, could result in higher interest costs for us, whichother governmental actions, could have a material adverse effect on our operating results and liquidity. Although SOFR is the ARRC's recommended replacement rate, it is also possible that lenders may instead choose alternative replacement rates that may differ from LIBOR in ways similar to SOFR. In addition, the planned discontinuance of LIBOR and/or changes to another index could result in mismatches with the interest rate of some of our investments. The transition from LIBOR to SOFR or other alternative reference rates may also introduce operational risks in our accounting,business, financial ~~reporting, loan servicing, liability management and other aspects of our business. However, we cannot reasonably estimate the impact of the transition at this time.~~

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, we do not anticipate such a transition to 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:

~~• 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 result in many underlying corporate borrowers electing to pay interest based on 1-month LIBOR. This mismatch in the rate 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 ourcondition, cash flows and results of ~~operations. Unless spreads are adjusted~~operations and could cause the market value of our common shares and/or debt securities 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~~decline. We monitor developments and seek to manage our investments in ~~which~~a manner consistent with achieving our investment objectives, but there can be no assurance that we ~~invest typically have floating interest rates. A rising interest rate environment may increase loan defaults, resulting~~will be successful 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.

doing so.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three month period ended ~~September 30, 2021,~~March 31, 2022, we issued ~~3,738~~3,016 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 ~~$38,722.~~$39,201.

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.

On May 4, 2020 and May 3, 2022, the Board extended the Stock Repurchase Program for an additional two-year ~~period.~~periods. 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,~~2024, 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 ~~September 30, 2021,~~March 31, 2022, no shares of common stock were repurchased on the open market under the Stock Repurchase Program. The following table provides information regarding the Stock Repurchase Program (amount in thousands except shares and per share amounts):

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
October 1, 2020 through December 31, 2020 — — — 9,997
January 1, 2021 through March 31, 2021 700 5 6.70 9,992
April 1, 2021 through June 30, 2021 — — — 9,992
July 1, 2021 through September 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 December 31, 2018	300	$	3	$	10.29	$	9,997
January 1, 2019 through December 31, 2019	—	—		—		9,997
January 1, 2020 through December 31, 2020	—	—		—		9,997
January 1, 2021 through December 31, 2021	700	5		6.70		9,992
January 1, 2022 through March 31, 2022	—	—		—		9,992

(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.

7974

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

Description

Form and SEC File No.

Filing Date with SEC

Filed with this 10-Q

3.1

Certificate of Incorporation of OFS Capital Corporation

Form N-2/A
(333-166363)

March 18, 2011

3.2

Certificate of Correction to Certificate of Incorporation of OFS Capital Corporation

Form 10-K

March 26, 2013

3.3

Bylaws of OFS Capital Corporation

Form N-2/A
(333-166363)

March 18, 2011

14.1

Joint Code of Ethics of OFS Capital Corporation and OFS Advisor

31.1

Certification of Chief Executive Officer pursuant to Rule s 13a-14 a nd 1 5d-14(a) of the Securities Exchange Act of 1934, as ~~amended~~Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act

31.2

Certification of Chief Financial Officer pursuant to Rule s 13a-14 and 15d -14(a) of the Securities Exchange Act of 1934, as ~~amended~~Adopted Pursuant to Section 302 of the Sarbanes-Oxley A ct

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 13 50, as Ad opted Pursuant to S ection 906 of the Sarbanes-Oxley Act of 2002

†

32.2

~~Certificate~~Certific ation of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Ad opted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

†


*			Filed herewith
†			Furnished herewith

8075

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: ~~November 5, 2021~~May 6, 2022	OFS 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

8176


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Per share operating performance:
Net asset value per share at beginning of period	$	13.42		$	10.10		$	11.85		$	12.46
Net investment income (4)	0.24			0.20			0.67			0.69
Net realized loss on non-control/non-affiliate investments (4)	—			—			(0.80)			(0.74)
Net realized gain on affiliate investments (4)	0.24			—			0.24			—
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes (4)	0.13			0.35			1.57			(0.82)
Net unrealized appreciation on affiliate investments (4)	0.32			0.75			1.32			0.47
Net unrealized appreciation (depreciation) on control investment (4)	0.07			0.04			0.16			(0.07)
Loss on extinguishment of debt (4)	(0.02)			(0.01)			(0.19)			(0.03)
Loss on impairment of goodwill (4)	—			(0.08)			—			(0.08)
Total from operations	0.98			1.25			2.97			(0.58)
Distributions	(0.24)			(0.17)			(0.66)			(0.68)
Issuance of common stock (10)	—			—			—			(0.02)
Net asset value per share at end of period	$	14.16		$	11.18		$	14.16		$	11.18

Per share market value, end of period	$	10.36		$	4.71		$	10.36		$	4.71
Total return based on market value (1)(9)	6.4		%	8.0		%	55.0		%	(50.9)		%
Total return based on net asset value (2)(9)	8.0		%	14.7		%	27.8		%	4.5		%
Shares outstanding at end of period	13,418,973			13,406,402			13,418,973			13,406,402
Weighted average shares outstanding	13,415,276			13,399,767			13,412,125			13,389,830
Ratio/Supplemental Data (in thousands except ratios)
Average net asset value (3)	$	184,985		$	142,655		$	172,349		$	145,480
Net asset value at end of period	$	189,977		$	149,912		$	189,977		$	149,912
Net investment income	$	3,235		$	2,712		$	9,020		$	9,291
Ratio of total expenses, net to average net assets (5)(7)	15.9		%	21.8		%	18.2		%	23.0		%
Ratio of total expenses and loss on extinguishment of debt to average net assets(5)(11)	16.0		%	22.7		%	19.6		%	23.9		%
Ratio of net investment income to average net assets (5)(8)	7.0		%	7.6		%	7.0		%	8.5		%
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		%	0.1		%	1.5		%	0.2		%
Portfolio turnover (6)	6.9		%	1.6		%	31.8		%	17.3		%


Investment Type	Fair Value at September 30, 2021		Range of Fair Value
			Low-end		High-end
Debt investments:
Senior secured	$	331,970	$	328,477	$	335,324
Senior secured (valued at Transaction Prices)	15,977		15,977		15,977
Subordinated	17,525		17,046		18,003

Structured Finance Notes:
Subordinated notes	65,334		63,358		67,309
Mezzanine debt	2,792		2,748		2,837
Loan accumulation facility (valued at Transaction Price)	8,500		8,500		8,500

Equity investments:
Preferred equity	9,805		8,491		11,060
Common equity, warrants and other	74,176		70,104		80,469
Common equity, warrants and other (valued at Transaction Prices)	200		200		200
	$	526,279	$	514,901	$	539,679


	September 30, 2021						December 31, 2020
Yield Range	Senior Secured		Subordinated		Structured Finance					Senior Secured		Subordinated		Structured Finance
	Debt		Debt		Notes			Total		Debt		Debt		Notes		Total
Less than 8%	50.8	%	—	%	—	%		40.0	%	29.5	%	—	%	1.4	%	24.0	%
8% - 10%	35.0		—		2.5			28.0		52.0		—		1.4		42.2
10% - 12%	5.9		—		19.8			8.1		13.5		—		—		10.9
12% - 14%	8.3		53.1		20.6			12.2		3.4		53.6		12.5		7.0
Greater than 14%	—		46.9		57.1			11.7		1.6		46.4		84.7		15.9
Total	100.0	%	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)	7.93	%	14.78	%	16.27	%		9.64	%	8.92	%	14.88	%	16.56	%	10.27	%
Weighted average yield - total debt and Structured Finance Note investments (3)	7.55	%	6.68	%	16.27	%		8.87	%	8.38	%	5.53	%	16.56	%	9.15	%


	Three Months Ended September 30, 2021				Nine Months Ended September 30, 2021
	Debt Investments		Equity Investments		Debt Investments		Equity Investments
New Portfolio Company Investments	$	29.5	$	0.2	$	92.3	$	0.2

Add-on Portfolio Company Investments	26.4		—		70.6		—



Total Portfolio Company Investments	$	55.9	$	0.2	$	162.9	$	0.2
Number of new Portfolio Company Investments	14		1		46		1
Number of add-on Portfolio Company Investments	22		—		47		—

Proceeds/redemptions from principal payments/ equity investments	24.3		—		125.1		—
Proceeds from investments sold or redeemed	7.5		—		17.8		—
Total proceeds from principal payments, equity distributions and investments sold	$	31.8	$	—	$	142.9	$	—


	Three Months Ended September 30, 2020				Nine Months Ended September 30, 2020
	Debt Investments		Equity Investments		Debt Investments		Equity Investments
Investments in new portfolio companies	$	1.5	$	—	$	43.8	$	—
Investments in existing portfolio companies
Follow-on investments	7.6		—		17.7		0.1
Restructured investments	—		0.2		—		0.9
Delayed draw and revolver funding	—		—		5.7		—
Total investments in existing portfolio companies	7.6		0.2		23.4		1.0
Total investments in new and existing portfolio companies	$	9.1	$	0.2	$	67.2	$	1.0
Number of new portfolio company investments	3		—		13		—
Number of existing portfolio company investments	1		3		16		6

Proceeds/distributions from principal payments/ equity investments	3.8		—		60.1		—
Proceeds from investments sold or redeemed	1.9		—		63.8		3.6
Total proceeds from principal payments, equity distributions and investments sold	$	5.7	$	—	$	123.9	$	3.6


	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	$	750	$	—	$	750	$	—	$	—
Unsecured Notes(3)	204,325		—		25,000		125,000		54,325
SBA Debentures	69,920		—		—		69,920		—
BNP Facility	45,150		—		45,150		—		—
Total(4)	$	320,145	$	—	$	70,900	$	194,920	$	54,325


Basis point decrease(1)	Interest income		Interest expense		Net change
25	$	(120)	$	54	$	(66)