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Item 8. Financial Statements and Supplementary Data

2021-03-05 compared with 2020-03-13 · 1171 added, 1199 removed, 1133 unchanged (68% of the section changed)

12 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of OFS Capital Corporation and subsidiaries (the Company), including the consolidated schedule of investments, as of December 31, 2019, the related consolidated statements of operations, changes in net assets, and cash flows for the year ended December 31, 2019, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations, changes in its net assets and its cash flows for the year ended December 31, 2019, in conformity with U.S.

We have audited the accompanying consolidated statements of assets and liabilities of OFS Capital Corporation and subsidiaries (the Company), including the consolidated schedules of investments, as of December 31, 2020 and 2019, the related consolidated statements of operations, changes in net assets, and cash flows for each of the years in the two‑year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations, changes in its net assets and its cash flows for each of the years in the two‑year period ended December 31, 2020, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 13, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting as of December 31, 2020.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Such procedures also included confirmation of investments owned as of December 31, 2019, by correspondence with the custodian, loan agents, or portfolio companies, or by other appropriate auditing procedures where replies were not received.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Such procedures also included confirmation of investments owned as of December 31, 2020 and 2019, by correspondence with custodians, agents, or portfolio companies, or by other appropriate auditing procedures where replies were not received.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the fair value of Portfolio Company Investments using unobservable inputs

As discussed in Notes 2 and 5 to the consolidated financial statements, the Company measures its investments at fair value.

For those investments where the valuation is based on less observable or unobservable inputs, the Company’s determination of fair value requires more judgment.

The majority of the Company’s investments are debt or equity investments in a portfolio company, excluding Structured Finance Notes, (collectively, Portfolio Company Investments) valued using unobservable inputs which the Company measures using either the income approach or market approach.

As of December 31, 2020, the fair value of such investments was $363.7 million.

We identified the evaluation of the fair value of Portfolio Company Investments valued using unobservable inputs as a critical audit matter.

In particular, assessing the discount rates used in the discounted cash flows valuation technique and the earnings metric multiples used in the market approach valuation technique required a high degree of auditor judgment and the involvement of valuation professionals.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design of certain internal controls related to the fair value of Portfolio Company Investments using unobservable inputs.

This included controls related to the development of the discount rates and earnings metric multiples used in the discounted cash flows and market approach valuation techniques, respectively.

For a selection of Portfolio Company Investments, we compared relevant data elements used by the Company to derive the discount rates and earnings metric multiples to

underlying documentation.

We involved valuation professionals with specialized skills and knowledge who assisted in evaluating a selection of Portfolio Company Investments by developing:

- a market yield analysis that assessed publicly available market information such as observable market yields of comparable companies of similar credit quality for selected Portfolio Company Investments fair valued by the Company using the income approach

- a set of guideline public companies that assessed market information from publicly available sources, including earnings metric multiples of publicly traded comparable companies for selected Portfolio Company Investments fair valued by the Company using the market approach

- a fair value range for the selected Portfolio Company Investments, based upon the independent market research performed and compared the results to the Company’s fair value estimates.

We have served as the Company’s auditor since 2019.

2 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

OFS Capital Corporation:

Opinion on Internal Control Over Financial Reporting

We have audited OFS Capital Corporation and subsidiaries’ (the Company’s) internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of assets and liabilities, including the consolidated schedule of investments, of the Company as of December 31, 2019, the related consolidated statements of operations, changes in net assets, and cash flows for the year ended December 31, 2019, and the related notes (collectively, the consolidated financial statements), and our report dated March 13, 2020 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting .

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Chicago, Illinois

March 13, 2020

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

2 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statement of assets and liabilities of OFS Capital Corporation (the “Company”), including the consolidated schedule of investments, as of December 31, 2018, the related consolidated statements of operations, changes in net assets, and cash flows for each of the two years in the period ended December 31, 2018, and the related notes, including the financial highlights for each of the four years in the period ended December 31, 2018 (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018, and the results of their operations, the changes in their net assets, and their cash flows for each of the two years in the period ended December 31, 2018, and their financial highlights for each of the four years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated statements of operations, changes in net assets, and cash flows of OFS Capital Corporation (the “Company”) for the year ended December 31, 2018, and the related notes, including the financial highlights for each of the three years in the period ended December 31, 2018 (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018, and the results of its operations, the changes in its net assets, and its cash flows for the year ended December 31, 2018 , and the financial highlights for each of the three years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

3 unchanged sentences

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our procedures included confirmation of securities owned as of December 31, 2018 by correspondence with the custodian, loan agent, portfolio companies, or by other appropriate auditing procedures where replies were not received.

We believe that our audits provide a reasonable basis for our opinion.

14 unchanged sentences

Prepaid expenses and other assets 2,484 4,461

Total assets $ 483,813 $ 538,188

Revolving line of credits $ 32,050 $ 56,450

21 unchanged sentences

Years Ended December 31,

2020 2019 2018

Investment income

9 unchanged sentences

Total payment-in-kind interest and dividend income:

2,032 1,825 2,099

Dividend income:

Non-control/non-affiliate investments

Affiliate investments 450 413 130

12 unchanged sentences

Other expenses 1,335 1,002 1,649

Total expenses before incentive fee waiver

Incentive fee waiver (see Note 3)

Total expenses, net of incentive fee waiver

Total expenses before incentive fee waivers 33,621 33,423 24,471

Incentive fee waivers (see Note 3) (441) — (22)

Total expenses, net of incentive fee waivers 33,180 33,423 24,449

Net investment income 12,295 19,098 18,385

2 unchanged sentences

Net realized gain on affiliate investments — — 187

Net unrealized depreciation on non-control/non-affiliate investments

Net unrealized depreciation on non-control/non-affiliate investments, net of deferred taxes (11,020) (9,610) (2,484)

Net unrealized appreciation (depreciation) on affiliate investments 12,633 5,376 (803)

1 unchanged sentence

Net loss on investments (6,704) (9,545) (8,813)

Losses on extinguishment of debt (820) — —

Loss on impairment of goodwill (1,077) — —

Net increase in net assets resulting from operations $ 3,694 $ 9,553 $ 9,572

7 unchanged sentences

(Dollar amounts in thousands, except per share data)

Preferred Stock

Number of shares

Paid-in capital in excess of par

Total distributable earnings (accumulated losses)

Total net assets

Preferred Stock Common Stock

Number of shares Par value Number of shares Par value Paid-in capital in excess of par Total distributable earnings (accumulated losses) Total net assets

Balances at January 1, 2018 — $ — 13,340,217 $ 133 $ 187,398 $ 805 $ 188,336

1 unchanged sentence

Net investment income — — — — — 18,385 18,385

Net realized gain on investments

Net realized losses on investments — — — — — (4,779) (4,779)

Unrealized depreciation on investments, net of deferred taxes — — — — — (4,034) (4,034)

1 unchanged sentence

Distributions to stockholders:

Common stock issued from reinvestment of stockholder distributions

Common stock issued from public offering

Common stock issued from reinvestment of stockholder distributions, net of repurchases — — 17,420 1 204 — 205

Repurchase of common stock — — (300) — — — —

Dividends declared — — — — — (23,090) (23,090)

7 unchanged sentences

Distributions to stockholders:

Common stock issued from reinvestment of stockholder distributions, net of repurchases

Repurchase of common stock

Common stock issued from reinvestment of stockholder distributions — — 19,499 — 227 — 227

Dividends declared — — — — — (18,176) (18,176)

4 unchanged sentences

Net realized losses on investments — — — — — (10,022) (10,022)

Unrealized depreciation on investments, net of deferred taxes

Unrealized appreciation on investments, net of deferred taxes — — — — — 3,318 3,318

Loss on extinguishment of debt — — — — — (820) (820)

Loss on impairment of goodwill — — — — — (1,077) (1,077)

Tax reclassifications of permanent differences — — — — (331) 331 —

Distributions to stockholders:

Preferred Stock

Number of shares

Paid-in capital in excess of par

Total distributable earnings (accumulated losses)

Total net assets

Common stock issued from reinvestment of stockholder distributions — — 32,723 — 150 — 150

7 unchanged sentences

Years Ended December 31,

2020 2019 2018

Cash flows from operating activities

1 unchanged sentence

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:

Net realized (gain) loss on investments

Net change in unrealized depreciation on investments

Net realized loss on investments 10,022 3,900 4,779

Net change in unrealized (appreciation) depreciation on investments (3,318) 5,645 4,034

Losses on extinguishment of debt 820 — —

Loss on impairment of goodwill 1,077 — —

Amortization of net loan fees (1,640) (1,424) (2,288)

7 unchanged sentences

Proceeds from sale or redemption of portfolio investments 70,771 35,033 47,435

Distributions received from portfolio investments

Distributions received from Structured Finance Notes 6,709 3,076 —

Changes in operating assets and liabilities:

6 unchanged sentences

Cash flows from financing activities

Proceeds from common stock offering, net of expenses

Payment of common stock offering costs

Proceeds from unsecured notes offerings, net of discounts

24,250 52,270 95,446

Distributions paid to stockholders

(11,365) (17,949) (22,895)

Borrowings under revolving line of credit

86,200 151,975 96,500

Repayments under revolving line of credit

(110,600) (107,525) (102,100)

Repayment of SBA debentures (44,610) — —

Payment of deferred financing costs and other financing costs

Net cash provided by financing activities

(239) (1,860) (643)

Net cash provided by (used in) financing activities (56,364) 76,911 66,308

Net increase (decrease) in cash and cash equivalents 24,261 (24,725) (34,780)

3 unchanged sentences

Cash paid during the period for interest

$ 17,641 $ 13,754 $ 7,256

Reinvestment of stockholder distributions

5 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Non-control/Non-affiliate Investments

Acrisure, LLC (14) (15) (19)

Insurance Agencies and Brokerages

Senior Secured Loan

AHP Health Partners (14) (15) (19)

General Medical and Surgical Hospitals

Senior Secured Loan

Albertson's Holdings LLC (14) (15) (19)

Supermarkets and Other Grocery (except Convenience) Stores

Senior Secured Loan

All Star Auto Lights, Inc.

(4) Motor Vehicle Parts (Used) Merchant Wholesalers

Senior Secured Loan

American Bath Group, LLC (14) (15) (19)

Plastics Plumbing Fixture Manufacturing

Senior Secured Loan

AppLovin Corporation (14) (15) (19)

Advertising Agencies

Senior Secured Loan

Asurion, LLC (14) (15) (19)

Communication Equipment Repair and Maintenance

Senior Secured Loan

Athenahealth, Inc.

Senior Secured Loan 8.50% (L +7.50%) 12/19/2019 8/20/2024 $ 14,293 $ 14,167 $ 13,581 8.5 %

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) —

16,632 16,392 16,777 10.6

Software Publishers

Senior Secured Loan

Bass Pro Group, LLC (14) (15) (19)

Sporting Goods Stores

Senior Secured Loan

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2019

(Dollar amounts in thousands)

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

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

Senior Secured Loan 5.75% (L +5.00%) 6/24/2019 9/25/2024 2,954 2,907 2,968 1.9

BayMark Health Services, Inc.

Outpatient Mental Health and Substance Abuse Centers

Senior Secured Loan

Blackhawk Network Holdings, Inc.

(14) (15) (19)

Computer and Computer Peripheral Equipment and Software Merchant Wholesalers

Senior Secured Loan

BrightSpring Health Services (14) (15) (19)

Residential Intellectual and Developmental Disability Facilities

Senior Secured Loan

Brookfield WEC Holdings Inc.

(14) (15) (19)

Business to Business Electronic Markets

Senior Secured Loan

Carolina Lubes, Inc.

Automotive Oil Change and Lubrication Shops

Senior Secured Loan (4) (8)

Senior Secured Loan (Revolver) (5)

Charter NEX US, Inc.

(14) (15) (19)

Unlaminated Plastics Profile Shape Manufacturing

Senior Secured Loan

CHG Healthcare Services, Inc.

All Other Outpatient Care Centers

Senior Secured Loan

Cirrus Medical Staffing, Inc.

Temporary Help Services

Senior Secured Loan

Senior Secured Loan (Revolver)

Senior Secured Loan 9.25% (L +8.25%) 3/22/2018 3/1/2025 4,000 3,976 4,000 2.5

Community Intervention Services, Inc.

(4) (6) (10) (11)

(4) (6) (11) Outpatient Mental Health and Substance Abuse Centers

Subordinated Loan

7.00% cash / 6.00% PIK

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2019

(Dollar amounts in thousands)

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

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

Finco LLC (14) (15) (19)

Senior Secured Loan

Constellis Holdings, LLC (6)

Other Justice, Public Order, and Safety Activities

Senior Secured Loan

Convergint Technologies Holdings, LLC

Security Systems Services (except Locksmiths)

Senior Secured Loan

Curium BidCo S.A R.L.

(14) (15) (19)

Pharmaceutical and Medicine Manufacturing

Senior Secured Loan

Davis Vision, Inc.

Direct Health and Medical Insurance Carriers

Senior Secured Loan

Dexko Global Inc.

(14) (15) (19)

Motor Vehicle Body Manufacturing

Senior Secured Loan

Diamond Sports Group, LLC (14) (15) (19)

Television Broadcasting

Senior Secured Loan

DuPage Medical Group (15) (19)

Offices of Physicians, Mental Health Specialists

Senior Secured Loan

Eblens Holdings, Inc.

Subordinated Loan (11)

12.00% cash / 1.00% PIK

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

Senior Secured Loan 8.73% (L +8.50%) 7/7/2015 11/1/2025 9,678 9,544 9,302 5.9

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

Constellis Holdings, LLC (10) Other Justice, Public Order, and Safety Activities

Common Equity (20,628 common shares) 3/27/2020 703 676 0.4

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

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

Endo International PLC (14) (15) (19)

Pharmaceutical Preparation Manufacturing

Senior Secured Loan

Envocore Holding, LLC (FKA LRI Holding, LLC) (4)

Electrical Contractors and Other Wiring Installation Contractors

Senior Secured Loan

6.00% cash / 5.00% PIK

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

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 %

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 — —

Excelin Home Health, LLC

Home Health Care Services

Senior Secured Loan

Explorer Holdings, Inc.

17,150 17,368 12,668 8.0

Testing Laboratories

Senior Secured Loan

Garda World Security (14) (15) (19)

Security Systems Services (except Locksmiths)

Senior Secured Loan

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

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 —

Hyland Software, Inc.

Software Publishers

Senior Secured Loan (14) (15) (19)

Senior Secured Loan

Inergex Holdings, LLC

Other Computer Related Services

Senior Secured Loan

Senior Secured Loan (Revolver) (5) (18)

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

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Institutional Shareholder Services, Inc.

Administrative Management and General Management Consulting Services

Senior Secured Loan

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

Kindred Healthcare, Inc.

(FKA Kindred at Home) (14) (15) (19)

Home Health Care Services

Senior Secured Loan

McAfee, LLC (14) (15) (19)

Software Publishers

Senior Secured Loan

Micro Holding Corp (14) (15) (19)

Internet Publishing and Broadcasting and Web Search Portals

Senior Secured Loan

Milrose Consultants, LLC (4) (8)

Administrative Management and General Management Consulting Services

Senior Secured Loan

My Alarm Center, LLC (4) (10) (13)

Security Systems Services (except Locksmiths)

Senior Secured Loan 4.90% (L +4.75%) 12/20/2019 8/24/2025 1,980 1,921 1,905 1.2

I&I Sales Group, LLC Marketing Consulting Services

Senior Secured Loan (15) 9.50% (L +8.50%) 12/30/2020 7/10/2025 5,325 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 — —

Preferred Equity (335 Class Z units) 25% PIK

Common Equity (64,149 units) (4) (13) 7/14/2017 — — —

Online Tech Stores, LLC (4)

Stationery and Office Supplies Merchant Wholesalers

Subordinated Loan

10.50% cash / 3.00% PIK

OnSite Care, PLLC (4) (8)

Home Health Care Services

Senior Secured Loan

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

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

Panther BF Aggregator 2 LP (14) (15) (19)

Other Commercial and Service Industry Machinery Manufacturing

Senior Secured Loan

Parfums Holding Company, Inc.

Cosmetics, Beauty Supplies, and Perfume Stores

Senior Secured Loan (14) (15) (19)

Senior Secured Loan

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Pelican Products, Inc.

Unlaminated Plastics Profile Shape Manufacturing

Senior Secured Loan

Performance Team LLC (4)

General Warehousing and Storage

Senior Secured Loan

PM Acquisition LLC

All Other General Merchandise Stores

Senior Secured Loan

11.50% cash / 2.50% PIK

Senior Secured Loan 8.75% (L +7.75%) 9/24/2018 5/1/2026 $ 6,055 $ 6,059 $ 5,994 3.8 %

(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

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

Quest Software US Holdings Inc.

4,780 5,252 5,060 3.2

Quest Software US Holdings Inc.

(14) (15) Computer and Computer Peripheral Equipment and Software Merchant Wholesalers

Senior Secured Loan

Refinitiv (14) (15) (19)

Public Finance Activities

Senior Secured Loan

Resource Label Group, LLC

Commercial Printing (except Screen and Books)

Senior Secured Loan

Restaurant Technologies, Inc.

Other Grocery and Related Products Merchant Wholesalers

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

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

Senior Secured Loan 9.50% (L +8.50%) 6/7/2017 11/26/2023 4,821 4,789 4,812 3.0

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

Sentry Centers Holdings, LLC (10) (13) Other Professional, Scientific, and Technical Services

Preferred Equity (2,248 Series A units) 9/4/2020 51 47 —

Preferred Equity (1,603 Series B units) 9/4/2020 160 160 0.1

Common Equity (269 units) 9/4/2020 3 3 —

SkyMiles IP Ltd.

and Delta Air Lines, Inc.

(14) (15) Scheduled Passenger Air Transportation

Senior Secured Loan 4.75 (L +3.75%) 9/15/2020 10/20/2027 500 495 520 0.3

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

Rocket Software, Inc.

Software Publishers

Senior Secured Loan

RPLF Holdings, LLC (10) (13)

Software Publishers

Common Equity (254,110 Class A units)

Sentry Centers Holdings, LLC (10) (13)

Other Professional, Scientific, and Technical Services

Common Equity (5,000 Series C units)

Southern Technical Institute, LLC (4) (6) (10)

Colleges, Universities, and Professional Schools

Subordinated Loan

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

SourceHOV Tax, Inc.

(4) (8) Other Accounting Services

Senior Secured Loan 7.61 (L +6.11%) 3/16/2020 3/16/2025 $ 19,892 $ 19,742 $ 19,988 12.6

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

Equity appreciation rights 6/27/2018 — 4,295 2.7

Spring Education Group, Inc.

(F/K/A SSH Group Holdings, Inc.)

Child Day Care Services

Senior Secured Loan

Sprint Communications, Inc.

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

Senior Secured Loan 8.50% (L +8.25%) 7/26/2018 7/30/2026 5,216 5,178 4,656 2.9

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 9,875 9,803 9,647 6.1

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 (Revolver) (5) n/m (18) (L +5.00%) 8/26/2019 8/26/2024 — (5) 15 —

10,942 10,854 10,704 6.8

Wired Telecommunications Carriers

Senior Secured Loan

SSJA Bariatric Management LLC (15) (19)

Offices of Physicians, Mental Health Specialists

Senior Secured Loan

Senior Secured Loan (Revolver) (5)

Stancor, L.P.

2 unchanged sentences

Staples, Inc.

(14) (15) (19)

(14) (15) 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

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 9.00% (L +8.00%) 5/15/2018 4/30/2026 9,073 9,070 8,578 5.4

9,698 9,696 9,179 5.8

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

Senior Secured Loan 5.00% (L +4.00%) 11/20/2019 9/25/2026 1,980 1,988 1,992 1.3

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

STS Operating, Inc.

Industrial Machinery and Equipment Merchant Wholesalers

Senior Secured Loan (14) (15) (19)

Senior Secured Loan

Sunshine Luxembourg VII SARL (14) (15) (19)

Pharmaceutical Preparation Manufacturing

Senior Secured Loan

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Tank Holding Corp.

(14) (15) (19)

(15) Unlaminated Plastics Profile Shape Manufacturing

Senior Secured Loan

The Escape Game, LLC (4)

Other amusement and recreation industries

Senior Secured Loan

Senior Secured Loan (14) 5.50% (L +4.00%) 6/24/2019 3/26/2026 $ 1,975 $ 1,981 $ 1,942 1.2 %

Senior Secured Loan 3.40% (L +3.25%) 12/18/2020 3/26/2026 896 882 882 0.6

2,871 2,863 2,824 1.8

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

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 9.75% (L +8.75%) 12/22/2017 12/31/2021 2,333 2,329 2,216 1.4

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 (Delayed Draw) 9.75% (L +8.75%) 7/20/2018 12/22/2022 7,000 7,000 6,647 4.2

21,000 20,967 19,973 12.6

Truck Hero, Inc.

(15) Truck Trailer Manufacturing

Senior Secured Loan

United Biologics Holdings, LLC (4) (10)

Medical Laboratories

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) Medical Laboratories

Preferred Equity (151,787 units) 4/16/2013 9 26 —

Warrants (29,374 units) 7/26/2012 3/5/2022 (12) 82 12 —

3/05/2022 (12)

Anesthesia Partners (14) (15) (19)

Freestanding Ambulatory Surgical and Emergency Centers

Senior Secured Loan

Verifone Intermediate Holdings, Inc.

(14) (15) (19)

Other Commercial and Service Industry Machinery Manufacturing

Senior Secured Loan

Wastebuilt Environmental Solutions, LLC (4)

Industrial Supplies Merchant Wholesalers

Senior Secured Loan

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

Senior Secured Loan 4.40% (L +4.25%) 6/9/2020 10/22/2025 286 275 284 0.2

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

Senior Secured Loan 4.15% (L +4.00%) 6/1/2020 6/1/2025 433 399 434 0.3

Total Debt and Equity Investments $ 306,683 $ 307,768 $ 272,240 171.3 %

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

Total Debt and Equity Investments

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Structured Finance Note Investments

Apex Credit CLO 2020 (7)

Subordinated Notes 14.16% (9) 11/16/2020 11/19/2031 (17) $ 11,080 $9,461 (16) $ 10,006 6.3 %

Dryden 53 CLO, LTD.

Income Notes 16.68% (9) 10/26/2020 1/15/2031 (17) 2,700 1,779 1,967 1.2

Subordinated Notes 16.68% (9) 10/26/2020 1/15/2031 (17) 2,159 1,423 (16) 1,573 1.0

4,859 3,202 3,540 2.2

Dryden 76 CLO, Ltd.

Subordinated Notes 18.68% (9) 9/27/2019 10/20/2032 (17) 2,750 2,282 (16) 2,235 1.4

Elevation CLO 2017-7, Ltd.

Subordinated Notes 12.32% (9) 2/6/2019 7/15/2030 (17) 10,000 6,955 (16) 6,226 3.9

7/15/2030 (17)

Flatiron CLO 18, Ltd.

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

4/17/2031 (17)

Madison Park Funding XXIII, Ltd.

Subordinated Notes 21.99% (9) 1/8/2020 7/27/2047 (17) 10,000 6,654 (16) 7,129 4.5

Madison Park Funding XXIX, Ltd.

Subordinated Notes 14.22% (9) 12/22/2020 10/18/2047 (17) 9,500 7,529 (16) 7,569 4.8

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

Octagon Investment Partners 39, Ltd.

Subordinated Notes 20.81% (9) 1/23/2020 10/20/2030 (17) 7,000 5,173 (16) 5,493 3.5

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2020

(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

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 %

Regatta II Funding

Mezzanine bond - Class DR2 7.19% (L +6.95%) 6/5/2020 1/15/2029 (17) 800 695 768 0.5

THL Credit Wind River 2019‐3 CLO Ltd.

Subordinated Notes 14.69% (9) 4/5/2019 4/15/2031 (17) 7,000 5,759 (16) 4,824 3.0

4/15/2031 (17)

Total Structured Finance Note Investments $ 73,632 $ 55,860 $ 56,425 35.5 %

1 unchanged sentence

Affiliate Investments

3rd Rock Gaming Holdings, LLC

Software Publishers

Senior Secured Loan

9.44% cash / 1.00% PIK

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)

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

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2019

(Dollar amounts in thousands)

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

13,743 15,444 17,164 10.8

Contract Datascan Holdings, Inc.

(4)(20) Office Machinery and Equipment Rental and Leasing

Subordinated Loan

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 —

DRS Imaging Services, LLC

Data Processing, Hosting, and Related Services

Senior Secured Loan (4) (8)

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) (6) (10)

Sporting and Recreational Goods and Supplies Merchant Wholesalers

Subordinated Loan (11)

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2020

(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

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.

3 unchanged sentences

(4)(20)(21) Pharmaceutical Preparation Manufacturing

Subordinated Loan

Common Equity (400 Class A shares) 1/1/2014 217 36,221 22.8

Professional Pipe Holdings, LLC

Plumbing, Heating, and Air-Conditioning Contractors

Senior Secured Loan

10.55% cash / 1.50% PIK

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 — —

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

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

TalentSmart Holdings, LLC

Professional and Management Development Training

Senior Secured Loan (4)

Senior Secured Loan (Revolver) (5) (18)

Common Equity (1,500 Class A shares) (10) (13)

TRS Services, LLC (4) (11)

Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance

Senior Secured Loan

10.55% cash / 1.00% PIK

Preferred Equity (329,266 Class AA units), 15% PIK (10)

Preferred Equity (3,000,000 Class A units), 11% PIK (10)

Common Equity (3,000,000 units) (10)

TTG Healthcare, LLC

Diagnostic Imaging Centers

Senior Secured Loan (4)

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

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Total Affiliate Investments $ 67,226 $ 86,484 $ 102,846 64.7 %

2 unchanged sentences

(4)(19) Travel Trailer and Camper Manufacturing

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

10.26% cash / 4.50% PIK

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 %

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2019

(Dollar amounts in thousands)

(1) Equity ownership may be held in shares or units of companies affiliated with the portfolio company.

1 unchanged sentence

(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% at December 31, 2020, and reset monthly, quarterly, or semi-annually.

Variable-rate loans with an aggregate cost of $420,410 include LIBOR reference rate floor provisions of generally 1% to 2%;

at December 31, 2019 , the reference rate on all such instruments was above the stated floors.

Variable-rate loans with an aggregate cost of $328,736 include LIBOR reference rate floor provisions of generally 0.75% to 1.0% at December 31, 2020, the reference rate on such instruments was generally below the stated floor provisions.

For each investment, the Company has provided the spread over the reference rate and current interest rate in effect at December 31, 2020.

3 unchanged sentences

(4) Investments (or portion thereof) held by SBIC I LP.

These assets (or a portion thereof) are held to support the SBA debentures and can not be pledged under any debt obligation of the Company.

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.

Investment was on non-accrual status as of December 31, 2019 , meaning the Company has ceased recognition of all or a portion of income on the investment.

(6) Investment was on non-accrual status as of December 31, 2020, meaning the Company has suspended recognition of all or a portion of income on the investment.

See Note 4 for further details.

Structured Finance Notes are considered CLO subordinated debt positions.

(7) CLO subordinated debt positions are entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying securities less contractual payments to debt holders and fund expenses.

1 unchanged sentence

The table below provides additional details as of December 31, 2020:

Portfolio Company

Reported Interest Rate

Interest Rate per Credit Agreement

Additional Interest per Annum

Carolina Lubes, Inc.

Portfolio Company Reported Interest Rate Interest Rate per Credit Agreement Additional Interest per Annum

Chemical Resources Holdings, Inc.

DRS Imaging Services, LLC

9.17% 7.50% 1.67%

Milrose Consultants, LLC 7.62% 7.00% 0.62%

OnSite Care, PLLC

The rate disclosed is an estimated effective yield based upon the current projection of the amount and timing of distributions in addition to the estimated amount and timing of terminal principal payments.

Effective yields for the Company's Structured Finance Note investments are monitored and evaluated at each reporting date.

SourceHOV Tax, Inc.

7.61% 7.00% 0.61%

(9) The rate disclosed is the estimated effective yield, generally established at purchase and re-evaluated upon receipt of distributions, and based upon projected amounts and timing of future distributions and the projected amount and timing of terminal principal payments at the time of estimation.

The estimated yield and investment cost may ultimately not be realized.

(10) Non-income producing.

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2020

(Dollar amounts in thousands)

(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.

1 unchanged sentence

The following table provides additional details on these PIK investments, including the maximum annual PIK interest rate allowed as of December 31, 2020:

Portfolio Company

Investment Type

Range of Cash

Portfolio Company Investment Type Range of PIK

Option Range of Cash

Option Maximum PIK

Community Intervention Services, Inc.

Subordinated Loan

13.00% or 7.00%

Subordinated Loan 0% or 6.00% 13.00% or 7.00% 6.00%

Eblens Holdings, Inc.

Subordinated Loan

13.00% or 12.00%

Master Cutlery, LLC

Senior Secured Loan

TRS Services, LLC

Senior Secured Loan

12.65% or 1.00%

Subordinated Loan 0% or 1.00% 13.00% or 12.00% 1.00%

Master Cutlery, LLC Senior Secured Loan 0% to 13.00% 13.00% to 0% 13.00%

(12) Represents expiration date of the warrants.

All or portion of investment held by OFSCC-MB.

(13) All or portion of investment held by a wholly-owned subsidiary subject to income tax.

(14) Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP.

1 unchanged sentence

(15) Investments (or portion thereof) held by OFSCC-FS.

These assets are pledged as collateral of the BNP Credit Facility and can not be pledged under any other debt obligation of the Company.

Amortized cost reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO Structured Finance Note investments.

Maturity represents the contractual maturity date of the structured finance notes.

Expected maturity and cash flows, not contractual maturity and cash flows, were utilized in deriving the effective yield of the investments.

Commitment fee on undrawn funds.

See Notes to Financial Statements.

These assets are pledged as collateral of the BNP Facility and cannot be pledged under any other debt obligation of the Company.

(16) Amortized cost reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO subordinated debt investments.

(17) Maturity date represents the contractual maturity date of the Structured Finance Notes.

Projected cash flows, including the projected amount and timing of terminal principal payments which may be projected to occur prior to the contractual maturity date, were utilized in deriving the effective yield of the investments.

(18) Not meaningful as there is no outstanding balance on the revolver.

The Company earns unfunded commitment fees on undrawn revolving lines of credit balances, which are reported in fee income.

(19) The Company holds at least one seat on the portfolio company’s board of directors.

(20) The Company has an observer seat on the portfolio company’s board of directors.

(21) Portfolio company represents greater than 5% of total assets at December 31, 2020.

See Notes to Consolidated Financial Statements.

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Non-control/Non-affiliate Investments

BayMark Health Services

Acrisure, LLC (14) (15) (19) Insurance Agencies and Brokerages

Senior Secured Loan 6.19% (L +4.25%) 10/29/2019 11/15/2023 $ 1,995 $ 1,971 $ 2,004 1.2 %

AHP Health Partners (14) (15) (19) General Medical and Surgical Hospitals

Senior Secured Loan 6.30% (L +4.50%) 6/27/2019 6/30/2025 2,607 2,612 2,632 1.6

Albertson's Holdings LLC (14) (15) (19) Supermarkets and Other Grocery (except Convenience) Stores

Senior Secured Loan 4.55% (L +2.75%) 6/24/2019 11/17/2025 1,082 1,081 1,094 0.7

All Star Auto Lights, Inc.

(4) Motor Vehicle Parts (Used) Merchant Wholesalers

Senior Secured Loan 9.24% (L +7.50%) 12/19/2019 8/20/2024 13,250 13,119 13,119 7.9

American Bath Group, LLC (14) (15) (19) Plastics Plumbing Fixture Manufacturing

Senior Secured Loan 6.05% (L +4.25%) 6/24/2019 9/30/2023 1,489 1,484 1,498 0.9

AppLovin Corporation (14) (15) (19) Advertising Agencies

Senior Secured Loan 5.30% (L +3.50%) 6/24/2019 8/15/2025 1,985 1,987 2,001 1.2

Asurion, LLC (14) (15) (19) Communication Equipment Repair and Maintenance

Senior Secured Loan 4.80% (L +3.00%) 6/24/2019 11/3/2024 1,985 1,985 1,998 1.2

Senior Secured Loan 4.80% (L +3.00%) 7/24/2019 11/3/2023 995 997 1,002 0.6

Senior Secured Loan 8.30% (L +6.50%) 11/19/2019 8/24/2025 1,500 1,511 1,511 0.9

4,480 4,493 4,511 2.7

Athenahealth, Inc.

(14) (15) (19) Software Publishers

Senior Secured Loan 6.40% (L +4.50%) 6/24/2019 2/11/2026 1,985 1,990 1,998 1.2

Bass Pro Group, LLC (14) (15) (19) Sporting Goods Stores

Senior Secured Loan 6.80% (L +5.00%) 6/24/2019 9/25/2024 1,985 1,921 1,983 1.2

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2019

(Dollar amounts in thousands)

Portfolio Company (1)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

BayMark Health Services, Inc.

Outpatient Mental Health and Substance Abuse Centers

Senior Secured Loan

Senior Secured Loan 10.21% (L +8.25%) 3/22/2018 3/1/2025 $ 4,000 $ 3,970 $ 4,000 2.4 %

Blackhawk Network Holdings, Inc.

(14) (15) (19) Computer and Computer Peripheral Equipment and Software Merchant Wholesalers

Senior Secured Loan 4.80% (L +3.00%) 10/30/2019 6/15/2025 1,995 1,982 1,999 1.2

BrightSpring Health Services (14) (15) (19) Residential Intellectual and Developmental Disability Facilities

Senior Secured Loan 6.21% (L +4.50%) 6/24/2019 3/5/2026 2,985 2,991 3,006 1.8

Brookfield WEC Holdings Inc.

(14) (15) (19) Business to Business Electronic Markets

Senior Secured Loan

Senior Secured Loan 4.67% (L +3.00%) 7/25/2019 8/1/2025 1,990 2,000 2,000 1.2

Carolina Lubes, Inc.

Automotive Oil Change and Lubrication Shops

Senior Secured Loan (8)

Senior Secured Loan (Revolver) (7)

Senior Secured Loan (4) (8) 9.83% (L +7.73%) 8/23/2017 8/23/2022 20,268 20,172 20,466 12.3

Senior Secured Loan (Revolver) (5) 0.25% (18) (L +7.25%) 8/23/2017 8/23/2022 — (8) (8) —

20,268 20,164 20,458 12.3

Charter NEX US, Inc.

(14) (15) (19) Unlaminated Plastics Profile Shape Manufacturing

Senior Secured Loan 5.30% (L +3.50%) 10/30/2019 5/16/2024 2,000 1,985 1,985 1.2

CHG Healthcare Services, Inc.

(15) (19) All Other Outpatient Care Centers

Senior Secured Loan 4.80% (L +3.00%) 7/24/2019 6/7/2023 1,999 2,001 2,015 1.2

Cirrus Medical Staffing, Inc.

(4) Temporary Help Services

Senior Secured Loan

Senior Secured Loan (Revolver) (7)

Community Intervention Services, Inc.

Senior Secured Loan 10.19% (L +8.25%) 3/5/2018 10/19/2022 12,564 12,458 12,358 7.4

Senior Secured Loan (Revolver) 10.19% (L +8.25%) 3/5/2018 10/19/2022 1,408 1,408 1,384 0.8

13,972 13,866 13,742 8.2

Community Intervention Services, Inc.

(4) (6) (10) (11) Outpatient Mental Health and Substance Abuse Centers

Subordinated Loan

7.0% cash / 6.0% PIK

Subordinated Loan 7.00% cash / 6.00% PIK N/A 7/16/2015 1/16/2021 9,624 7,639 — —

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2019

(Dollar amounts in thousands)

Portfolio Company (1)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Confie Seguros Holdings II Co.

(14) Insurance Agencies and Brokerages

Senior Secured Loan

Constellis Holdings, LLC

Other Justice, Public Order, and Safety Activities

Senior Secured Loan

Convergint Technologies Holdings, LLC

Security Systems Services (except Locksmiths)

Senior Secured Loan

Senior Secured Loan 10.41% (L +8.50%) 7/7/2015 11/1/2025 $ 9,678 $ 9,515 $ 9,382 5.6 %

Finco LLC (14) (15) (19) Taxi Service

Senior Secured Loan 6.29% (L +4.50%) 11/20/2019 12/11/2026 2,000 1,990 1,990 1.2

Constellis Holdings, LLC (6) Other Justice, Public Order, and Safety Activities

Senior Secured Loan 10.93% (L +9.00%) 4/28/2017 4/21/2025 9,950 9,846 407 0.2

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

Senior Secured Loan 8.55% (L +6.75%) 9/28/2018 2/2/2026 3,481 3,430 3,424 2.1

Curium BidCo S.A R.L.

(14) (15) (19) Pharmaceutical and Medicine Manufacturing

Senior Secured Loan 5.94% (L +4.00%) 10/29/2019 7/1/2026 848 853 853 0.5

Davis Vision, Inc.

Direct Health and Medical Insurance Carriers

Senior Secured Loan

Senior Secured Loan 8.55% (L +6.75%) 10/31/2019 12/1/2025 405 395 405 0.2

Dexko Global Inc.

(14) (15) (19) Motor Vehicle Body Manufacturing

Senior Secured Loan 5.30% (L +3.50%) 10/30/2019 7/24/2024 1,995 1,970 1,997 1.2

Diamond Sports Group, LLC (14) (15) (19) Television Broadcasting

Senior Secured Loan 5.03% (L +3.25%) 11/19/2019 8/24/2026 1,995 1,997 1,997 1.2

DuPage Medical Group (15) (19) Offices of Physicians, Mental Health Specialists

Senior Secured Loan 8.80% (L +7.00%) 8/22/2017 8/15/2025 10,098 10,170 10,098 6.1

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

DuPage Medical Group

Offices of Physicians, Mental Health Specialists

Senior Secured Loan

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Eblens Holdings, Inc.

Subordinated Loan (11)

12.0% cash / 1.00% PIK

Subordinated Loan (11) 12.00% cash / 1.00% PIK 7/13/2017 1/13/2023 $ 9,010 $ 8,962 $ 9,025 5.4 %

Common Equity (71,250 Class A units) (10) 7/13/2017 713 892 0.5

Elgin Fasteners Group

Bolt, Nut, Screw, Rivet, and Washer Manufacturing

Senior Secured Loan

Envocore Holding, LLC (FKA LRI Holding, LLC) (4)

Electrical Contractors and Other Wiring Installation Contractors

Senior Secured Loan

9,010 9,675 9,917 5.9

Endo International PLC (14) (15) (19) Pharmaceutical Preparation Manufacturing

Senior Secured Loan 6.06% (L +4.25%) 6/24/2019 4/29/2024 1,985 1,897 1,906 1.1

Envocore Holding, LLC (FKA LRI Holding, LLC) (4) Electrical Contractors and Other Wiring Installation Contractors

Senior Secured Loan 6.00% cash / 5.00% PIK (L +6.00%) 6/30/2017 6/30/2022 16,367 16,207 14,639 8.8

Preferred Equity (238,095 Series B units) (10) 6/30/2017 300 — —

Preferred Equity (13,315 Series C units) (10) 8/13/2018 13 — —

Excelin Home Health, LLC

Home Health Care Services

Senior Secured Loan

16,367 16,520 14,639 8.8

Excelin Home Health, LLC Home Health Care Services

Senior Secured Loan 11.50% (L +9.50%) 10/25/2018 4/25/2024 4,250 4,183 4,070 2.4

Explorer Holdings, Inc.

(14) (15) (19) Testing Laboratories

Senior Secured Loan 5.60% (L +3.75%) 6/25/2019 5/2/2023 1,985 1,987 2,004 1.2

Garda World Security (14) (15) (19) Security Systems Services (except Locksmiths)

Senior Secured Loan 6.66% (L +4.75%) 10/24/2019 10/30/2026 1,667 1,634 1,680 1.0

GGC Aerospace Topco L.P.

Other Aircraft Parts and Auxiliary Equipment Manufacturing

Senior Secured Loan

Senior Secured Loan 10.65% (L +8.75%) 12/29/2017 9/8/2024 5,000 4,912 4,084 2.5

Common Equity (368,852 Class A units) (10) 12/29/2017 450 124 0.1

Common Equity (40,984 Class B units) (10) 12/29/2017 50 5 —

GOBP Holdings, Inc.

Supermarkets and Other Grocery (except Convenience) Stores

Senior Secured Loan

5,000 5,412 4,213 2.6

Hyland Software, Inc.

Software Publishers

Senior Secured Loan

Senior Secured Loan (14) (15) (19) 5.30% (L +3.50%) 10/24/2018 7/1/2024 1,660 1,655 1,672 1.0

Senior Secured Loan 8.80% (L +7.00%) 10/24/2018 7/7/2025 2,601 2,614 2,617 1.6

4,261 4,269 4,289 2.6

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

Inergex Holdings

Other Computer Related Services

Senior Secured Loan

Senior Secured Loan (Revolver) (7)

JBR Clinical Research, Inc.

Research and Development in the Social Sciences and Humanities

Senior Secured Loan

MAI Holdings, Inc.

Printing Machinery and Equipment Manufacturing

Senior Secured Loan

My Alarm Center, LLC (4) (10) (13)

Security Systems Services (except Locksmiths)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Inergex Holdings, LLC Other Computer Related Services

Senior Secured Loan 8.94% (L +7.00%) 10/1/2018 10/1/2024 $ 16,590 $ 16,389 $ 16,489 9.9 %

Senior Secured Loan (Revolver) (5) (18) 6.05% (L +7.00%) 10/1/2018 10/1/2024 1,875 1,853 1,864 1.1

18,465 18,242 18,353 11.0

Institutional Shareholder Services, Inc.

Administrative Management and General Management Consulting Services

Senior Secured Loan 10.44% (L +8.50%) 3/4/2019 3/5/2027 6,244 6,075 6,098 3.7

Intouch Midco Inc.

(15) (19) All Other Professional, Scientific, and Technical Services

Senior Secured Loan 6.05% (L +4.25%) 12/20/2019 8/24/2025 1,995 1,925 1,925 1.2

Kindred Healthcare, Inc.

(FKA Kindred at Home) (14) (15) (19) Home Health Care Services

Senior Secured Loan 5.56% (L +3.75%) 6/25/2019 7/2/2025 2,985 2,998 3,004 1.8

McAfee, LLC (14) (15) (19) Software Publishers

Senior Secured Loan 5.55% (L +3.75%) 6/25/2019 9/30/2024 1,985 1,987 1,996 1.2

Senior Secured Loan 10.30% (L +8.50%) 11/15/2019 9/29/2025 2,000 2,002 2,018 1.2

3,985 3,989 4,014 2.4

Micro Holding Corp (14) (15) (19) Internet Publishing and Broadcasting and Web Search Portals

Senior Secured Loan 5.55% (L +3.75%) 6/25/2019 9/13/2024 1,985 1,969 1,991 1.2

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

Senior Secured Loan 8.14% (L +6.20%) 7/16/2019 7/16/2025 11,500 11,420 11,394 6.7

My Alarm Center, LLC (4) (10) (13) Security Systems Services (except Locksmiths)

Preferred Equity (1,485 Class A units), 8% PIK 7/14/2017 1,571 984 0.6

2 unchanged sentences

Common Equity (64,149 units) 7/14/2017 — — —

Online Tech Stores, LLC (4)

Stationery and Office Supplies Merchant Wholesalers

Subordinated Loan

10.50% cash / 1.0% PIK

OnSite Care, PLLC (4) (8)

Home Health Care Services

Senior Secured Loan

Parfums Holding Company, Inc.

Cosmetics, Beauty Supplies, and Perfume Stores

Senior Secured Loan

Pelican Products, Inc.

Unlaminated Plastics Profile Shape Manufacturing

Senior Secured Loan

Performance Team LLC (4)

General Warehousing and Storage

Senior Secured Loan

3,094 2,120 1.3

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Online Tech Stores, LLC (4) Stationery and Office Supplies Merchant Wholesalers

Subordinated Loan 10.50% cash / 3.00% PIK N/A 2/1/2018 8/1/2023 $ 16,323 $ 16,113 $ 14,559 8.7 %

OnSite Care, PLLC (4) (8) Home Health Care Services

Senior Secured Loan 9.09% (L +7.78%) 8/10/2018 8/10/2023 9,541 9,446 9,162 5.5

Panther BF Aggregator 2 LP (14) (15) (19) Other Commercial and Service Industry Machinery Manufacturing

Senior Secured Loan 5.30% (L +3.50%) 11/19/2019 4/30/2026 1,995 1,978 2,006 1.2

Parfums Holding Company, Inc.

Cosmetics, Beauty Supplies, and Perfume Stores

Senior Secured Loan (14) (15) (19) 6.16% (L +4.25%) 6/25/2019 6/30/2024 87 87 87 0.1

Senior Secured Loan 10.70% (L +8.75%) 11/16/2017 6/30/2025 6,320 6,332 6,276 3.8

6,407 6,419 6,363 3.9

Pelican Products, Inc.

Unlaminated Plastics Profile Shape Manufacturing

Senior Secured Loan 9.49% (L +7.75%) 9/24/2018 5/1/2026 6,055 6,059 5,969 3.6

Performance Team LLC (4) General Warehousing and Storage

Senior Secured Loan 11.80% (L +10.00%) 5/24/2018 11/24/2023 13,889 13,790 14,165 8.4

PM Acquisition LLC All Other General Merchandise Stores

Senior Secured Loan 11.50% cash / 2.50% PIK N/A 9/30/2017 10/29/2021 4,963 4,903 4,800 2.9

Common Equity (499 units) (10) (13) 9/30/2017 499 220 0.1

4,963 5,402 5,020 3.0

Quest Software US Holdings Inc.

(14) (15) (19) Computer and Computer Peripheral Equipment and Software Merchant Wholesalers

Senior Secured Loan 6.18% (L +4.25%) 6/25/2019 5/16/2025 1,990 1,973 1,978 1.2

Refinitiv (14) (15) (19) Public Finance Activities

Senior Secured Loan 5.05% (L +4.25%) 6/24/2019 10/1/2025 1,987 1,941 2,007 1.2

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

PM Acquisition LLC

All Other General Merchandise Stores

Senior Secured Loan

11.50% cash / 2.50% PIK

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

Resource Label Group, LLC

Commercial Printing (except Screen and Books)

Senior Secured Loan

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

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

Senior Secured Loan 10.60% (L +8.50%) 6/7/2017 11/26/2023 $ 4,821 $ 4,777 $ 4,591 2.8 %

Restaurant Technologies, Inc.

(15) (19) Other Grocery and Related Products Merchant Wholesalers

Senior Secured Loan 5.05% (L +3.25%) 8/8/2019 10/1/2025 1,990 1,994 2,003 1.2

Rocket Software, Inc.

(15) (19) Software Publishers

Senior Secured Loan

RPLF Holdings, LLC (10) (13)

Software Publishers

Senior Secured Loan 6.05% (L +4.25%) 11/20/2018 11/28/2025 665 663 649 0.4

Senior Secured Loan 10.05% (L +8.25%) 11/20/2018 11/28/2026 6,275 6,167 6,094 3.7

6,940 6,830 6,743 4.1

RPLF Holdings, LLC (10) (13) Software Publishers

Common Equity (254,110 Class A units) 1/17/2018 254 186 0.1

Sentry Centers Holdings, LLC

Other Professional, Scientific, and Technical Services

Senior Secured Loan (14)

Sentry Centers Holdings, LLC (10) (13) Other Professional, Scientific, and Technical Services

Common Equity (5,000 Series C units) 3/31/2014 — 500 1,490 0.9

Southern Technical Institute, LLC (4) (6) (10)

Colleges, Universities, and Professional Schools

Subordinated Loan

SSH Group Holdings, Inc.

Child Day Care Services

Senior Secured Loan

Stancor, L.P.

Pump and Pumping Equipment Manufacturing

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

Southern Technical Institute, LLC (4) (6) (10) Colleges, Universities, and Professional Schools

Subordinated Loan 6.00% PIK N/A 6/27/2018 12/31/2021 1,611 — — —

Other 6/27/2018 — — — —

Spring Education Group, Inc.

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

Senior Secured Loan 6.19% (L +4.25%) 7/26/2018 7/30/2025 972 970 978 0.6

Senior Secured Loan 10.19% (L +8.25%) 7/26/2018 7/30/2026 7,216 7,157 7,288 4.4

8,188 8,127 8,266 5.0

Sprint Communications, Inc.

(14) (15) (19) Wired Telecommunications Carriers

Senior Secured Loan 4.81% (L +3.00%) 6/24/2019 2/2/2024 1,985 1,972 1,980 1.2

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

SSJA Bariatric Management LLC (15) (19) Offices of Physicians, Mental Health Specialists

Senior Secured Loan 6.94% (L +5.00%) 8/26/2019 8/26/2024 $ 9,975 $ 9,883 $ 9,861 5.9 %

Senior Secured Loan (Revolver) (5) 0.50% (18) (L +5.00%) 8/26/2019 8/26/2024 — (6) (14) —

9,975 9,877 9,847 5.9

Stancor, L.P.

(4) (10) Pump and Pumping Equipment Manufacturing

Preferred Equity (1,250,000 Class A units), 8% PIK 8/19/2014 — 1,501 1,607 1.0

Staples, Inc.

(14) (15) (19) Business to Business Electronic Markets

Senior Secured Loan 6.69% (L +5.00%) 6/24/2019 4/16/2026 1,990 1,920 1,960 1.1

STS Operating, Inc.

Industrial Machinery and Equipment Merchant Wholesalers

Senior Secured Loan

The Escape Game, LLC (4)

Senior Secured Loan

Other amusement and recreation industries

Senior Secured Loan (Delayed Draw) (7)

Senior Secured Loan (14) (15) (19) 6.05% (L +4.25%) 5/16/2018 12/11/2024 632 631 632 0.4 %

Senior Secured Loan 9.80% (L +8.00%) 5/15/2018 4/30/2026 9,073 9,070 9,030 5.4

9,705 9,701 9,662 5.8

Sunshine Luxembourg VII SARL (14) (15) (19) Pharmaceutical Preparation Manufacturing

Senior Secured Loan 6.19% (L +4.25%) 11/20/2019 9/25/2026 2,000 2,010 2,021 1.2

Tank Holding Corp.

(14) (15) (19) Unlaminated Plastics Profile Shape Manufacturing

Senior Secured Loan 6.41% (L +4.00%) 6/24/2019 3/26/2026 1,995 2,002 2,005 1.2

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

Senior Secured Loan 8.80% (L +7.00%) 7/18/2019 3/31/2020 4,667 4,642 4,648 2.8

Senior Secured Loan 10.55% (L +8.75%) 12/22/2017 12/22/2022 7,000 6,969 6,972 4.2

Senior Secured Loan 10.55% (L +8.75%) 7/20/2018 12/22/2022 7,000 7,000 6,972 4.2

18,667 18,611 18,592 11.2

Truck Hero, Inc.

(15) (19) Truck Trailer Manufacturing

Senior Secured Loan

United Biologics Holdings, LLC (4) (10)

Medical Laboratories

Senior Secured Loan 10.05% (L +8.25%) 5/30/2017 4/21/2025 7,014 6,990 6,690 4.0

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2019

(Dollar amounts in thousands)

Portfolio Company (1)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

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

Preferred Equity (151,787 units) 4/16/2013 $ — $ 9 $ 15 — %

Warrants (29,374 units) 7/26/2012 3/05/2022 (12) — 82 7 —

Wand Intermediate I LP

Automotive Body, Paint, and Interior Repair and Maintenance

Senior Secured Loan

Wastebuilt Environmental Solutions, LLC

Industrial Supplies Merchant Wholesalers

Senior Secured Loan

Total Non-control/Non-affiliate Investments

Affiliate Investments

3rd Rock Gaming Holdings, LLC

Software Publishers

Senior Secured Loan

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

Anesthesia Partners (14) (15) (19) Freestanding Ambulatory Surgical and Emergency Centers

Senior Secured Loan 4.80% (L +3.00%) 6/24/2019 6/23/2024 2,980 2,950 2,976 1.8

Verifone Intermediate Holdings, Inc.

(14) (15) (19) Other Commercial and Service Industry Machinery Manufacturing

Senior Secured Loan 5.90% (L +4.00%) 6/24/2019 8/20/2025 258 252 256 0.2

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

Senior Secured Loan 10.69% (L +8.75%) 10/11/2018 10/11/2024 7,000 6,883 6,584 4.0

Total Debt and Equity Investments $ 372,094 $ 373,074 $ 350,925 210.7 %

Structured Finance Note Investments (7)

Dryden 76 CLO, Ltd.

Subordinated Notes 15.37% (9) 9/27/2019 10/20/2032 (17) 2,750 2,491 2,509 1.5

Elevation CLO 2017-7, Ltd.

Subordinated Notes 15.71% (9) 2/6/2019 7/15/2030 (17) 10,000 7,485 6,559 3.9

Flatiron CLO 18, Ltd.

Subordinated Notes 16.68% (9) 1/2/2019 4/17/2031 (17) 9,680 7,355 7,345 4.4

THL Credit Wind River 2019‐3 CLO Ltd.

Subordinated Notes 12.33% (9) 4/5/2019 4/15/2031 (17) 7,000 5,796 5,197 3.1

Total Structured Finance Note Investments $ 29,430 $ 23,127 $ 21,610 12.9 %

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Total Non-control/Non-affiliate Investments $ 401,524 $ 396,201 $ 372,535 223.6 %

Affiliate Investments

3rd Rock Gaming Holdings, LLC Software Publishers

Senior Secured Loan 9.44% cash / 1.00% PIK (L +7.50%) 3/13/2018 3/12/2023 21,373 21,176 20,099 12.1

Common Equity (2,547,250 units) (10) (13) 3/13/2018 — 2,547 1,044 0.6

21,373 23,723 21,143 12.7

Chemical Resources Holdings, Inc.

Custom Compounding of Purchased Resins

Senior Secured Loan (4)(8) 9.82% (L +7.89%) 1/25/2019 1/25/2024 13,743 13,592 13,746 8.2

Common Equity (1,832 Class A shares) (10) (13) 1/25/2019 1,813 2,662 1.6

13,743 15,405 16,408 9.8

Contract Datascan Holdings, Inc.

(4) Office Machinery and Equipment Rental and Leasing

Subordinated Loan

Subordinated Loan 12.00% N/A 8/5/2015 2/5/2021 8,000 7,995 8,000 4.8

Preferred Equity (3,061 Series A shares) 10% PIK (10) 8/5/2015 5,599 5,671 3.4

Common Equity (11,273 shares) (10) 6/28/2016 104 671 0.4

DRS Imaging Services, LLC

Data Processing, Hosting, and Related Services

Senior Secured Loan (4) (8)

8,000 13,698 14,342 8.6

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

Senior Secured Loan (4) (8) 11.21% (L +9.27%) 3/8/2018 11/20/2023 10,741 10,670 10,569 6.3

Common Equity (1,135 units) (10) (13) 3/8/2018 1,135 1,331 0.8

Master Cutlery, LLC (4) (6) (10)

Sporting and Recreational Goods and Supplies Merchant Wholesalers

Subordinated Loan (11)

10,741 11,805 11,900 7.1

Master Cutlery, LLC (4) (6) (10) Sporting and Recreational Goods and Supplies Merchant Wholesalers

Subordinated Loan (11) 13.00% N/A 4/17/2015 4/17/2020 5,947 4,764 255 0.2

Preferred Equity (3,723 Series A units), 8% PIK 4/17/2015 — 3,483 — —

Common Equity (15,564 units) 4/17/2015 — — — —

5,947 8,247 255 0.2

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2019

(Dollar amounts in thousands)

Portfolio Company (1)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

NeoSystems Corp.

3 unchanged sentences

(4) Pharmaceutical Preparation Manufacturing

Subordinated Loan

Subordinated Loan 10.50% N/A 1/1/2014 9/29/2022 3,788 3,807 3,788 2.3

Common Equity (400 Class A shares) 1/1/2014 — 217 11,979 7.2

Professional Pipe Holdings, LLC

Plumbing, Heating, and Air-Conditioning Contractors

Senior Secured Loan

3,788 4,024 15,767 9.5

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

Senior Secured Loan 10.55% cash / 1.50% PIK (L +9.27%) 3/23/2018 3/23/2023 7,099 7,008 7,170 4.3

Common Equity (1,414 Class A units) (10) 3/23/2018 — 1,414 2,413 1.4

7,099 8,422 9,583 5.7

TalentSmart Holdings, LLC Professional and Management Development Training

Senior Secured Loan (4) 8.50% (L +6.75%) 10/11/2019 10/11/2024 10,000 9,833 9,833 5.9

Senior Secured Loan (Revolver) (5) (18) 8.50% (L +6.75%) 10/11/2019 10/11/2024 250 242 242 0.1

Common Equity (1,500 Class A shares) (10) (13) 10/11/2019 — 1,500 1,500 0.9

10,250 11,575 11,575 6.9

TRS Services, LLC (4) (11) Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance

Senior Secured Loan 10.55% cash / 1.00% PIK (L +8.75%) 12/10/2014 3/16/2020 14,624 14,615 14,623 8.8

Preferred Equity (329,266 Class AA units), 15% PIK (10) 6/30/2016 — 545 547 0.3

Preferred Equity (3,000,000 Class A units), 11% PIK (10) 12/10/2014 — 3,374 3,095 1.9

Common Equity (3,000,000 units) (10) 12/10/2014 — 572 — —

14,624 19,106 18,265 11.0

TTG Healthcare, LLC Diagnostic Imaging Centers

Senior Secured Loan (4) 10.71% (L +9.00%) 3/1/2019 3/1/2024 12,103 11,938 11,767 7.1

Preferred Equity ( 2,309 Class B units) (10) (13) 3/1/2019 2,309 2,424 1.5

12,103 14,247 14,191 8.6

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Portfolio Company (1)

Investment Type

Interest Rate (2)

Initial Acquisition Date

Amortized Cost

Fair Value (3)

TRS Services, LLC (4) (11)

Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance

Senior Secured Loan

11.27% cash / 1.0% PIK

Preferred Equity (329,266 Class AA units), 15% PIK

Preferred Equity (3,000,000 Class A units), 11% PIK (10)

Common Equity (3,000,000 units) (10)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Total Affiliate Investments $ 107,668 $ 131,950 $ 135,679 81.5 %

2 unchanged sentences

(4) Travel Trailer and Camper Manufacturing

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

14.00% cash / 1.50% PIK

Subordinated Loan (to Mirage Trailers, LLC, a controlled, consolidated subsidiary of MTE Holding Corp.) 10.26% cash / 4.50% PIK (L +8.50%) 11/25/2015 11/25/2020 $ 7,464 $ 7,451 $ 7,464 4.5 %

Common Equity (554 shares) 11/25/2015 — 3,069 1,253 0.8

7,464 10,520 8,717 5.3

Total Control Investment $ 7,464 $ 10,520 $ 8,717 5.3 %

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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.

Substantially all of the investments that bear interest at a variable rate are indexed to LIBOR (L), and reset monthly, quarterly, or semi-annually.

(2) Substantially all of the investments that bear interest at a variable rate are indexed to LIBOR (L), generally between 1.7% and 2.1% at December 31, 2020, and reset monthly, quarterly, or semi-annually.

Variable-rate loans with an aggregate cost of $309,350 include LIBOR reference rate floor provisions of generally 1% to 2%;

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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.

Fair value was determined using significant unobservable inputs for all of the Company's investments.

(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.

All other investments pledged as collateral under the PWB Credit Facility.

Elgin Fasteners Group became contractually due on August 27, 2018.

The lending group entered into a forbearance agreement to extend the maturity through September 26, 2019.

The investment shall continue to accrue interest as the borrower has continued to make interest and amortization payments.

Investment was on non-accrual status as of December 31, 2019 , meaning the Company has ceased recognizing all or a portion of income on the investment.

See Note 5 for further details.

These assets (or a portion thereof) are held to support the SBA debentures and cannot be pledged under any debt obligation of the Company.

(5) Subject to unfunded commitments.

See Note 6 for further details.

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2018

(Dollar amounts in thousands)

The Company has entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it has agreed to receive its principal payment after the repayment of certain co‑lenders pursuant to a payment waterfall.

(6) Investment was on non-accrual status as of December 31, 2020, meaning the Company has ceased recognition of all or a portion of income on the investment.

See Note 4 for further details.

(7) Structured Finance Notes are considered CLO subordinated debt positions.

CLO subordinated debt positions are entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying securities less contractual payments to debt holders and fund expenses.

(8) The Company has entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it has agreed to receive its payment after the repayment of certain co‑lenders pursuant to a payment waterfall.

The table below provides additional details as of December 31, 2020:

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 (%)

Carolina Lubes, Inc.

9.83% 9.35% 0.48%

Chemical Resources Holdings, Inc.

9.82% 7.93% 1.89%

DRS Imaging Services, LLC 11.21% 9.94% 1.27%

JBR Clinical Research, Inc.

Milrose Consultants, LLC 8.14% 7.44% 0.70%

OnSite Care, PLLC 9.49% 7.96% 1.53%

(9) The rate disclosed is an estimated effective yield based upon the current projection of the amount and timing of distributions in addition to the estimated amount and timing of terminal principal payments.

Effective yields for the Company's Structured Finance Note investments are monitored and evaluated at each reporting date.

The estimated yield and investment cost may ultimately not be realized.

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

December 31, 2019

(Dollar amounts in thousands)

(10) Non-income producing.

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The following table provides additional details on these PIK investments, including the maximum annual PIK interest rate allowed as of December 31, 2020:

Portfolio Company

Investment Type

Range of Cash

Portfolio Company Investment Type Range of PIK

Option (%) Range of Cash

Option (%) Maximum PIK

Rate Allowed (%)

Community Intervention Services, Inc.

Subordinated Loan

13.00% or 7.00%

Subordinated Loan 0% or 6.00% 13.00% or 7.00% 6.00%

Eblens Holdings, Inc.

Subordinated Loan

14.00% or 12.00%

Master Cutlery, LLC

Senior Secured Loan

TRS Services, LLC

Senior Secured Loan

11.25% or 1.00%

Subordinated Loan 0% or 1.00% 13.00% or 12.00% 1.00%

Master Cutlery, LLC Senior Secured Loan 0% to 13.00% 13.00% to 0% 13.00%

TRS Services, LLC Senior Secured Loan 0% or 1.00% 12.65% or 1.00% 1.00%

(12) Represents expiration date of the warrants.

All or portion of investment held by a wholly owned subsidiary subject to corporate income tax.

(13) All or portion of investment held by OFSCC-MB.

(14) Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP.

See Note 5 for further details.

Maximum interest rate allowable under the terms of this investment is 13.50%

See Notes to Financial Statements.

(15) Investments (or portion thereof) held by OFSCC-FS.

These assets are pledged as collateral of the BNP Credit Facility and cannot be pledged under any other debt obligation of the Company.

(16) Amortized cost reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO Structured Finance Note investments.

(17) Maturity represents the contractual maturity date of the Structured Finance Notes.

Expected maturity and cash flows, not contractual maturity and cash flows, were utilized in deriving the effective yield of the investments.

(18) Commitment fee on undrawn funds.

See Notes to Consolidated Financial Statements.

OFS Capital Corporation and Subsidiaries

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(“OCCI”), a non-diversified, externally managed, closed-end management investment company that has registered as an investment company under the 1940 Act that primarily invests in CLO debt and subordinated securities.

In addition, OFSAM owns 2,946,474 shares, or approximately 22%, of the outstanding common stock of the Company.

The Company may make investments directly, or follow-on investments in current portfolio companies held through OFS SBIC I LP (“SBIC LP”), its investment company subsidiary licensed under the U.S.

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and is subject to periodic audits and examinations of its financial statements.

The Company may make investments through OFSCC-FS, LLC ("OFSCC-FS"), a special-purpose vehicle formed in April 2019 for the purpose of acquiring senior secured loan investments.

OFSCC-FS entered into a debt financing through 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 equity holder, the Company, as servicer, Citibank, N.A., as collateral agent and Virtus Group, LP, as collateral administrator, which provides for borrowings in an aggregate principal amount up to $150,000,000.

The Company may also make investments through OFSCC-MB, LLC ("OFSCC-MB"), a wholly owned subsidiary taxed under subchapter C of the Code and generally holds the equity investments of the Company that are taxed as pass-through entities.

The Company may also make investments through OFSCC-FS, LLC (“OFSCC-FS”), a special-purpose vehicle formed in April 2019 for the purpose of acquiring senior secured loan investments and through OFSCC-MB, LLC (“OFSCC-MB”), 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.

Summary of Significant Accounting Policies

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The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP"), including ASC Topic 946, Financial Services-Investment Companies, and the requirements for reporting on Form 10-K, the 1940 Act, and Articles 6 and 12 of Regulation S-X.

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 in accordance with GAAP.

The consolidated financial statements include all adjustments, consisting only of normal and recurring accruals and adjustments, necessary for fair presentation in accordance with GAAP.

Certain amounts in the prior period financial statements have been reclassified to conform to the current year presentation.

Reclassifications :

Certain prior period amounts have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes thereto.

Reclassifications did not impact net increase in net assets resulting from operations, total assets, total liabilities or total net assets, or consolidated statements of changes in net assets and consolidated statements of cash flows classifications.

Principles of consolidation:

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The Company applies fair value accounting in accordance with ASC Topic 820, Fair Value Measurements, which defines fair value, establishes a framework to measure fair value, and requires disclosures regarding fair value measurements.

Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between market participants at

OFS Capital Corporation and Subsidiaries

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date.

the measurement date.

Fair value is determined through the use of models and other valuation techniques, valuation inputs, and assumptions market participants would use to value the investment.

1 unchanged sentence

The availability of observable inputs can vary significantly and is affected by many factors, including the type of product, whether the product is new to the market, whether the product is traded on an active exchange or in the secondary market, and the current market conditions.

To the extent that the valuation is based on less observable or unobservable inputs, the determination of fair value requires more judgment.

Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3 (i.e., those instruments valued using non-observable inputs), which comprise the majority of the Company’s investments.

See footnote 5 for details.

To the extent that the valuation is based on unobservable inputs, the determination of fair value requires more judgment.

Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3 (i.e., those instruments valued using unobservable inputs), which comprise the majority of the Company’s investments.

See Note 5 for details.

Changes to the valuation policy are reviewed by management and the Company’s board of directors (the “Board”).

4 unchanged sentences

Under the 1940 Act, “Control Investments” are defined as investments in those companies in which the Company owns more than 25% of the voting securities or has rights to maintain greater than 50% of board representation, “Affiliate Investments” are defined as investments in those companies in which the Company owns between 5% and 25% of the voting securities, and “Non-Control/Non-Affiliate Investments” are those that neither qualify as Control Investments nor Affiliate Investments.

Significant Subsidiaries :

The Company evaluates the issuers of its Control Investments for significance in accordance with Rules 3-09 and 4-08(g) of Regulation S-X.

No issuers of Control Investments were considered a significant subsidiary under these rules as of or for the years ended December 31, 2020, 2019 and 2018.

Use of estimates:

1 unchanged sentence

Actual results could differ significantly from those estimates.

Reportable segments:

The Company has a single reportable segment and single operating segment structure.

Cash and cash equivalents:

Cash and cash equivalents consist of cash and highly liquid investments not held for resale with original maturities of three months or less.

Cash and cash equivalents consist of cash and highly liquid investments not held for resale with initial maturities of three months or less.

The Company’s cash and cash equivalents are maintained with a member bank of the FDIC and at times, such balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits.

Included in cash and cash equivalents was $37,708 and $13,447 held in a US Bank Money Market Deposit Account as of December 31, 2020 and 2019, respectively.

In addition, the Company's use of cash and cash equivalents held by SBIC I LP is limited by SBA regulation, including, but not limited to, investment in eligible portfolio companies and general corporate purposes, subject to a statutory measure of undistributed accumulated earnings.

distributions by SBIC I LP subject to a statutory measure of undistributed accumulated earnings.

Revenue recognition:

Interest income :

Interest income is recorded on an accrual basis and reported as an interest receivable until collected.

Interest income is accrued daily based on the outstanding principal amount and the contractual terms of the debt investment.

Interest income is recognized on an accrual basis and reported as an interest receivable until collected.

Interest income is accrued daily based on the outstanding principal amount on the consolidated statements of assets and liabilities and the contractual terms of the debt investment.

Certain of the Company’s investments contain a payment-in-kind interest income provision (“PIK interest”).

The PIK interest, computed at the contractual rate specified in the applicable investment agreement, is added to the principal balance of the investment, rather than being paid in cash, and recorded as interest income at fair value, as applicable, on the consolidated statements of operations.

The PIK interest, computed at the contractual rate specified in the applicable investment agreement, is added to the principal balance of the investment, rather than being paid in cash.

Recognition of PIK interest includes assessments of collectibility, and may result in recognition of the PIK income that corresponds to the fair value of the associated investment.

The Company discontinues accrual of interest income, including PIK interest, when there is reasonable doubt that the interest income will be collected.

1 unchanged sentence

When the Company receives a loan principal payment, the unamortized Net Loan Fees related to the paid principal is accelerated and recognized in interest income.

Further, the Company may acquire or receive equity, warrants or other equity-related securities (“Equity”) in connection with the Company’s acquisition of, or subsequent amendment to, debt investments.

The Company determines the cost basis of Equity based on its fair value, and the fair value of debt investments and other securities or consideration received.

Any resulting difference between the face amount of the debt and its recorded cost resulting from the assignment of value to the Equity is treated as OID, and accreted into interest income as described above.

OFS Capital Corporation and Subsidiaries

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

Further, the Company may acquire or receive equity, warrants or other equity-related securities (“Equity”) in connection with the Company’s acquisition of, subsequent amendment or restructuing to, debt investments.

The Company determines the cost basis of Equity based on its fair value, and the fair value of debt investments and other securities or consideration received.

Interest income - Structured Finance Notes :

Interest income from investments in Structured Finance Notes is recognized on the basis of the estimated effective yield to expected redemptions utilizing assumed cash flows in accordance with ASC Sub-topic 325-40, Beneficial Interests in Securitized Financial Assets.

The Company monitors the expected cash flows from its Structured Finance Notes and the effective yield is determined and updated periodically.

Interest income from investments in CLO mezzanine debt and CLO subordinated debt positions (“Structured Finance Notes”) is recognized on the basis of the estimated effective yield to expected redemptions utilizing assumed cash flows in accordance with ASC Sub-topic 325-40, Beneficial Interests in Securitized Financial Assets .

The Company monitors the expected cash flows from its Structured Finance Notes and the effective yield is generally established at purchase and re-evaluated upon receipt of distributions.

Dividend income :

5 unchanged sentences

Distributions in excess of the accumulated net income of the underlying portfolio company are recorded as a reduction in the cost of the common or preferred stock investment.

The Company generates revenue in the form of management, valuation, and other contractual fees, that is recognized as the related services are rendered.

In the general course of its business, the Company receives certain fees from portfolio companies which are non-recurring in nature.

Such non-recurring fees include prepayment fees on certain loans repaid prior to their scheduled due date, which are recognized as earned when received, and fees for capital structuring, loan syndication or advisory services from certain portfolio companies, which are recognized as earned upon closing of the investment.

The Company generates fee revenue in the form of syndication, prepayment, and other contractual fees, that are recognized as the related services are rendered.

In the general course of its business, the Company receives certain fees, such as management fees, from portfolio companies which are non-recurring in nature.

Prepayment fees are received on certain loans when repaid prior to their scheduled due date, which are recognized as earned when received, and syndication fees are received for capital structuring, loan syndication or advisory services from certain portfolio companies, which are recognized as earned upon closing of the investment.

Investment Transactions and net realized and unrealized gain or loss on investments :

Investment transactions are reported on a trade-date basis.

Unsettled trades as of the balance sheet date are included in payable for investments purchased.

Unsettled trades as of the statement of assets and liabilities date are included in payable for investments purchased.

Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of the investment.

6 unchanged sentences

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 and interest.

In the opinion of management, if there is a question as to the ability of the debtor to meet the terms of the loan agreement, or interest or principal is more than 90 days contractually past due, the loan investment will be placed on non-accrual status.

If there is a question as to the ability of the debtor to meet the terms of the loan agreement, or interest or principal is more than 90 days contractually past due, the loan investment will be placed on non-accrual status.

Past due status is based on how long after the contractual due date a principal or interest payment is received.

2 unchanged sentences

The Company has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code.

To qualify as a RIC, the Company must, among other things, meet certain source of income and asset diversification requirements, and timely distribute at least 90% of its investment company table income ("ICTI") to its stockholders.

The Company has made, and intends to continue to make, the requisite distributions to its stockholders, which generally relieves the Company from U.S.

2 unchanged sentences

federal income tax liability under Subchapter M of the Code.

However, the Company would be liable for a 4% excise tax on such income.

Excise tax liability is recognized when the Company determines its estimated current year annual ICTI, as defined in the Code, exceeds distributions from current year ICTI.

The Company may utilize OFSCC-MB ("OFSCC-MB"), a wholly owned holding company taxed under Subchapter C of the Code, when making equity investments in portfolio companies taxed as pass-through entities to meet its source-of-income requirements as a RIC.

OFSCC-MB is an investment company under GAAP, and is consolidated in the Company’s GAAP financial statements and may incur current and deferred federal and state income tax expense with respect to income derived

However, the Company would be liable for a

OFS Capital Corporation and Subsidiaries

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

from those investments.

4% excise tax on such income.

Excise tax liability is recognized when the Company determines its estimated current year annual ICTI, as defined in the Code, exceeds distributions from current year ICTI.

The Company may utilize OFSCC-MB when making equity investments in portfolio companies taxed as pass-through entities to meet its source-of-income requirements as a RIC.

Such income, net of applicable income taxes, is not included in the Company’s tax-basis net investment income until distributed by OFSCC-MB which may result in timing and character differences between the Company’s GAAP and tax-basis net investment income and realized gains and losses.

21 unchanged sentences

Deferred debt issuance costs are amortized to interest expense over the term of the related debt.

On December 4, 2013, in connection with the the Company's acquisition of the remaining ownership interests in SBIC I LP and SBIC I GP, LLC on December 4, 2013, making SBIC I LP a wholly owned subsidiary of the Company ("SBIC Acquisition"), the Company recorded goodwill of $1,077, which is included in prepaid expenses and other assets on the consolidated statements of assets and liabilities.

Goodwill is not subject to amortization.

Goodwill is evaluated for impairment annually or more frequently if events occur or circumstances change that indicate goodwill may be impaired.

There have been no goodwill impairments since the date of the SBIC Acquisition.

On December 4, 2013, in connection with the Company's acquisition of the remaining ownership interests in SBIC I LP and SBIC I GP, LLC, making SBIC I LP a wholly owned subsidiary of the Company (“SBIC Acquisition”), the Company recorded goodwill of $1,077.

The decline in the price of the Company’s common stock and the level at which it continued to trade relative to the broader stock indices for the BDC industry, led management to conclude in the third quarter of 2020 that an impairment in the value of the Company’s goodwill was more likely than not.

Moreover, due to the discount at which the Company’s stock traded to its net asset value management concluded that the impairment of goodwill equal to the full amount of its carrying value of $1,077 was appropriate.

Intangible asset:

On December 4, 2013, in connection with the SBIC Acquisition, the Company recorded an intangible asset of $2,500 attributable to the SBIC license.

The Company amortizes this intangible asset on a straight-line basis over its estimated useful life of 13 years.

The Company expects to incur annual amortization expense of $195 in each annual period through December 31, 2025 and $145 in 2026.

The Company amortizes this intangible asset on a straight-line basis over its estimated useful life, initially 154 months ended September 30, 2026.

The Company changed its estimate on the useful life to terminate on December 31, 2025.

The Company recognized amortization of $206 for the year ended December 31, 2020, and anticipates recognizing $216 on an annual basis through December 31, 2025 based on the current estimated useful life.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The Company tests its intangible asset for impairment if events or circumstances suggest that the asset carrying value may not be fully recoverable.

7 unchanged sentences

Management believes this risk of loss is minimal.

The amount of loss due to credit risk from debt investments if borrowers fail to perform according to the terms of the contracts, and the collateral or other security for those

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

instruments proved to be of no value to the Company, is equal to the Company's recorded investment in debt instruments and the unfunded loan commitments as disclosed in Note 6 .

The amount of loss due to credit risk from debt investments if borrowers 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 Company's recorded investment in debt instruments and the unfunded loan commitments as disclosed in Note 6.

New Accounting Standards

The following table discusses recently issued ASUs by the FASB:

Period of Adoption

Effect of Adoption on the Financial Statements

Standard Description Period of Adoption Effect of Adoption on the Financial Statements

Standards that were adopted

ASU 2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment

Removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation.

A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

Fourth Quarter 2019 prospectively

No material impact to the Company's consolidated financial statements.

ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities

Shortens the amortization period for certain purchased callable debt securities held at a premium to the earliest call date.

Securities held at a discount are to continue to be amortized to maturity.

Fourth Quarter 2019 prospectively

No material impact to the Company's consolidated financial statements.

ASU 2020-04, Reference Rate Reform (Topic 840):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting Provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates (e.g., LIBOR) that are expected to be discontinued.

ASU 2020-04 allows, among other things, certain contract modifications, such as those within the scope of Topic 310 on receivables, to be accounted as a continuation of the existing contract.

First Quarter 2020, prospectively Through December 31, 2020, no contracts have transitioned away from discontinued reference rates.

Related Party Transactions

2 unchanged sentences

The Investment Advisory Agreement was most recently re-approved on April 2, 2020.

Under the terms of the Investment Advisory Agreement, which are in accordance with the 1940 Act and subject to the overall supervision of the Company’s 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.

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 is a subsidiary of OFSAM and a registered investment advisor under the Investment Advisers Act of 1940, as amended.

4 unchanged sentences

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 and cash equivalents but including assets purchased with borrowed amounts and including 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.

On June 11, 2019, OFS Advisor agreed to reduce a portion of its base management fee by reducing the portion of such fee from 0.4375% per quarter (1.75% annualized) to 0.25% per quarter (1.00% annualized) of the average value of the portion of the total assets held by the Company through OFSCC-FS (the "OFSCC-FS Assets"), at the end of the two most recently completed calendar quarters to the extent that such portion of the OFSCC-FS Assets are financed using leverage (also calculated on an average basis) that causes the Company’s statutory asset coverage ratio to fall below 200%.

When calculating its statutory asset coverage ratio, the Company excludes its SBA guaranteed debentures from its total outstanding senior securities as permitted

OFS Advisor has elected to exclude the value of the intangible assets resulting from the SBIC Acquisition from the base management fee calculation.

OFS Capital Corporation and Subsidiaries

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

pursuant to exemptive relief granted by the SEC dated November 26, 2013.

Effective January 1, 2020, OFS Advisor agreed to further reduce the base management fee to 0.25% per quarter (1.00% annualized) of the average value of the portion of total assets held by the Company through OFSCC-FS at the end of the two most recently completed calendar quarters without regard to the statutory asset coverage ratio.

When calculating its statutory asset coverage ratio, the Company excludes its SBA guaranteed debentures from its total outstanding senior securities as permitted pursuant to exemptive relief granted by the SEC dated November 26, 2013.

Effective as of January 1, 2020, OFS Advisor agreed to further reduce the base management fee to 0.25% per quarter (1.00% annualized) of the average value of the portion of total assets held by the Company through OFSCC-FS at the end of the two most recently completed calendar quarters without regard to the statutory asset coverage ratio.

The base management fee reduction by OFS Advisor is renewable on an annual basis and the amount of the base management fee reduced with respect to the OFSCC-FS Assets shall not be subject to recoupment by OFS Advisor;

The base management fee is payable quarterly in arrears and was $8,271 , $6,335, and $4,999, for the years ended December 31, 2019, 2018 and 2017 , respectively.

The Company owed the Advisor management fees of $2,209 and $1,749 as of December 31, 2019 and 2018, respectively.

this agreement was renewed on February 16, 2021.

The incentive fee has two parts.

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provided that the incentive fee determined as of December 31, 2012, was calculated for a period of shorter than twelve calendar months to take into account any realized capital gains computed net of all realized capital losses and unrealized capital depreciation for the period beginning on the date of the Company’s election to be a BDC and ending December 31, 2012.

The Company accrues the Capital Gain Fee if, on a cumulative basis, the sum of net realized capital gains and (losses) plus net unrealized appreciation and (depreciation) is positive.

If, on a cumulative basis, the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation) decreases during a period, the Company will reverse any excess Capital Gain

OFS Capital Corporation and Subsidiaries

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(Dollar amounts in thousands, except per share data)

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).

OFS Advisor has excluded from the Capital Gain Fee calculation any realized gain with respect to (1) the SBIC Acquisition, and (2) the WM Asset Sale.

The Company incurred incentive fee expense of $4,760 , $4,409, and $2,962 for the years ended December 31, 2019, 2018 and 2017 , respectively.

Incentive fees for the years ended December 31, 2019, 2018 and 2017 , included Part One incentive fees (based on net investment income) of $4,760 , $4,409, which included an irrevocably waiver of receipt of $22 by OFS Advisor, and $2,962 respectively, which included a share issue adjustment of $(593) related to the Company's Offering, and Part Two incentive fees (based upon net realized and unrealized gains and losses, or capital gains) of $0, $0 and $0, respectively.

The Company owed the Advisor incentive fees of $1,138 and $1,368 as of December 31, 2019 and 2018, respectively.

The Company accrues the Capital Gain Fee if, on a cumulative basis, the sum of net realized capital gains and (losses) plus net unrealized appreciation and (depreciation) is positive.

If, on a cumulative basis, the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation) decreases during a period, the Company will reverse any excess Capital Gain Fee previously accrued such that the amount of Capital Gains Fee accrued is no more than 20% of the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation).

On May 4, 2020, OFS Advisor agreed to irrevocably waive the receipt of $441 in Income Incentive Fees (based on net investment income) related to net investment income, that it would otherwise be entitled to receive under the Investment Advisory Agreement for the three months ended March 31, 2020.

As a result of the voluntary fee waiver, the Company incurred Income Incentive Fee expense of $442 for the three months ended March 31, 2020, which is equal to half the Income Incentive Fee expense the Company would have incurred for the three months ended March 31, 2020.

The voluntary fee waiver did not include Capital Gain Fees, which was $0 for the three months ended March 31, 2020.

License Agreement:

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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.

Administration fee expense was $1,747 , $1,601 and $1,314 for the years ended December 31, 2019, 2018 and 2017 , respectively.

The Company owed OFS Services administration fees of $759 and $577 as of December 31, 2019 and 2018, respectively.

Equity Ownership:

As of December 31, 2020, affiliates of OFS Advisor held 3,033,257 shares of common stock, which is approximately 23% of the Company's outstanding shares of common stock.

Distributions paid to affiliates and expenses recognized under agreements with OFS Advisor and OFS Services for the years ended December 31, 2020, 2019 and 2018 are presented below:

2020 2019 2018

Base management fees $ 7,605 $ 8,271 $ 6,335

Incentive fees:

Income Incentive Fee 2,025 4,760 4,409

Incentive fee waiver (441) — (22)

Administration fees 1,855 1,747 1,601

Distributions paid to affiliates 2,553 4,007 5,097

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

As of December 31, 2020, the Company had loans to 49 portfolio companies, of which 95% were senior secured loans and 5% were subordinated loans, at fair value, as well as equity investments in 10 of these portfolio companies.

The Company also held an equity investment in six portfolio companies in which it did not hold a debt investment, as well as four investments in Structured Finance Notes.

The Company also held an equity investment in 13 portfolio companies in which it did not hold a debt investment, as well as 12 investments in Structured Finance Notes.

At December 31, 2020, investments consisted of the following:

Percentage of Total

Amortized Cost

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 %

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Structured Finance Notes 55,860 12.2 35.1 56,425 12.8 35.5

At December 31, 2019 , the Company had four loans (Community Intervention Services, Inc., Southern Technical Institute, LLC, Master Cutlery, LLC and Constellis Holdings, LLC) on non-accrual status with respect to all interest and Net Loan Fee

Total $ 461,023 100.0 % 290.0 % $ 442,323 100.0 % 278.3 %

At December 31, 2020, the Company had four loans (Community Intervention Services, Inc., Master Cutlery, LLC, 3rd Rock Gaming Holdings, LLC, and Online Tech Stores, LLC) on non-accrual status with respect to all interest and Net Loan Fee amortization, with an aggregate amortized cost and fair value of $48,102 and $12,135, 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 common shares of equity.

As of March 31, 2020, the cost and fair value of the common shares received were $703 and $703, respectively.

The Company recognized a realized loss on the restructuring of $9,145 for the year ended December 31, 2020, which was fully recognized as an unrealized loss as of December 31, 2019.

On September 4, 2020, the Company's equity investment in Sentry Centers Holdings, LLC was restructured, pursuant to which the Company converted its 500 Series C units into 269 shares of common equity.

In addition, the Company invested $160 in a capital raise and received Series A and Series B preferred units.

Accordingly, during the year ended December 31, 2020, the Company recognized a realized loss of $446.

On September 30, 2020, the Company's debt investment in Southern Technical Institute, LLC was restructured, pursuant to which the Company received proceeds of $529, in full satisfaction of contractually due interest of $215 and principal of $1,660.

This investment was carried at a cost of $-0-.

Accordingly, during the year ended December 31, 2020, the Company fully recognized a realized gain of $314 as the investment was carried at cost as of December 31, 2019.

As of December 31, 2020, the Company holds equity appreciation rights with a cost and fair value of $-0- and $4,295, respectively.

Geographic composition is determined by the location of the corporate headquarters of the portfolio company.

As of December 31, 2020, the Company's investment portfolio was domiciled as follows:

December 31, 2020 December 31, 2019

Amortized Cost Fair Value Amortized Cost Fair Value

United States of America $ 399,278 $ 380,004 $ 505,235 $ 484,946

Canada 1,921 1,905 3,559 3,605

Cayman Islands 1

55,860 56,425 23,127 21,610

Ireland — — 1,897 1,906

Luxembourg 1,976 1,997 2,843 2,843

Switzerland 1,988 1,992 2,010 2,021

Total investments $ 461,023 $ 442,323 $ 538,671 $ 516,931

(1) Cayman Island investments represent Structured Finance Notes held by the Company.

These investments generally hold underling portfolios of investments in United States domiciled companies.

OFS Capital Corporation and Subsidiaries

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(Dollar amounts in thousands, except per share data)

amortization, with an aggregate amortized cost and fair value of $22,249 and $662 , respectively.

The change to non-accrual status for the Company's investment in Constellis Holdings, LLC was effective November 1, 2019.

On January 31, 2019, Maverick Healthcare Equity, LLC was acquired in a purchase transaction.

Proceeds from this transaction were insufficient to redeem the class of equity held by the Company.

Accordingly, the Company recognized a net loss of $89, which is comprised of $900 realized loss net of $811 unrealized loss reversal, in the year ended December 31, 2019.

At December 31, 2019 , the Company had international domiciled debt investments, all denominated in US dollars, with an amortized cost and fair value of $10,309 and $10,374 , respectively, and debt and equity investments with an amortized cost and fair value of $505,232 and $484,945 domiciled in the United States.

The industry compositions of the Company’s debt and equity investment portfolio were as follows:

Percentage of Total

Amortized Cost

As of December 31, 2020, 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 % $ 210 — % 0.1 %

Security Systems Services (except Locksmiths) 6,531 1.4 4.1 3,487 0.8 2.2

Temporary Help Services

Arts, Entertainment, and Recreation

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Finance and Insurance

Direct Health and Medical Insurance Carriers

Insurance Agencies and Brokerages 9,544 2.1 6.0 9,302 2.1 5.9

Health Care and Social Assistance

All Other Outpatient Care Centers

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

Freestanding Ambulatory Surgical and Emergency Centers

General Medical and Surgical Hospitals

Home Health Care Services 4,199 0.9 2.6 4,250 1.0 2.7

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Outpatient Mental Health and Substance Abuse Centers 11,615 2.5 7.3 4,105 0.9 2.6

Residential Intellectual and Developmental Disability Facilities

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Percentage of Total

Amortized Cost

Data Processing, Hosting, and Related Services 1,135 0.2 0.7 1,749 0.4 1.1

Internet Publishing and Broadcasting and Web Search Portals

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

Wired Telecommunications Carriers

Manufacturing

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Custom Compounding of Purchased Resins 15,444 3.3 9.7 17,164 3.9 10.8

Motor Vehicle Body Manufacturing

Other Aircraft Parts and Auxiliary Equipment Manufacturing 5,431 1.2 3.4 4,275 1.0 2.7

Other Commercial and Service Industry Machinery Manufacturing 1,925 0.4 1.2 1,936 0.4 1.2

Pharmaceutical and Medicine Manufacturing

Pharmaceutical Preparation Manufacturing 2,205 0.5 1.4 38,213 8.7 24.1

Plastics Plumbing Fixture Manufacturing

Pump and Pumping Equipment Manufacturing 1,501 0.3 0.9 1,281 0.3 0.8

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(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

Semiconductor and Related Device Manufacturing $ 399 0.1 % 0.3 % $ 434 0.1 % 0.3 %

Travel Trailer and Camper Manufacturing 10,911 2.4 6.9 10,812 2.4 6.8

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Other Services (except Public Administration)

Automotive Oil Change and Lubrication Shops

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

Communication Equipment Repair and Maintenance

Diet and Weight Reducing Centers 477 0.1 0.3 479 0.1 0.3

Professional, Scientific, and Technical Services

Administrative Management and General Management Consulting Services 28,503 6.3 18.0 28,729 6.6 18.2

Advertising Agencies

All Other Professional, Scientific, and Technical Services 1,921 0.4 1.2 1,905 0.4 1.2

Marketing Consulting Services 5,229 1.1 3.3 5,229 1.2 3.3

Other Accounting Services 21,621 4.7 13.7 22,238 5.0 14.0

Other Computer Related Services 16,247 3.5 10.2 16,000 3.6 10.1

Other Professional, Scientific, and Technical Services

Testing Laboratories

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Percentage of Total

Amortized Cost

Public Administration

Other Justice, Public Order, and Safety Activities 703 0.2 0.4 676 0.2 0.4

Public Finance Activities

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

Office Machinery and Equipment Rental and Leasing 5,953 1.3 3.7 2,736 0.6 1.7

Cosmetics, Beauty Supplies, and Perfume Stores 6,738 1.5 4.2 6,701 1.5 4.2

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

Supermarkets and Other Grocery (except Convenience) Stores

All Other General Merchandise Stores 5,252 1.1 3.3 5,060 1.1 3.2

Transportation and Warehousing

General Warehousing and Storage

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

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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

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(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

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

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Motor Vehicle Parts (Used) Merchant Wholesalers 14,167 3.1 8.9 13,581 3.1 8.5

Other Grocery and Related Products Merchant Wholesalers

Sporting and Recreational Goods and Supplies Merchant Wholesalers 8,247 1.8 5.2 346 0.1 0.2

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As of December 31, 2019, the Company had loans to 79 portfolio companies, of which 90% were senior secured loans and 10% were subordinated loans, at fair value, as well as equity investments in 15 of these portfolio companies.

The Company also held an equity investment in six portfolio companies in which it did not hold a debt investment.

At December 31, 2018, investments consisted of the following:

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The Company also held an equity investment in six portfolio companies in which it did not hold a debt investment, as well as four investments in Structured Finance Notes.

At December 31, 2019, investments consisted of the following:

Percentage of Total

Amortized Cost

Percentage of Total Percentage of Total

Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets

Senior secured debt investments $ 421,970 78.3 % 253.2 % $ 408,724 79.1 % 245.3 %

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Common equity and warrants 14,919 2.8 9.0 25,777 5.0 15.5

In June 2018, the Company's investment in Southern Technical Institute, LLC was restructured.

The Company converted its subordinated note, SP-1 preferred shares, and warrants for a $1,471 subordinated loan and 1,764,720 shares of Class A-1 common units.

The cost and fair value of the securities received were $-0- and $-0- as of December 31, 2018.

The Company recognized a realized loss on the restructuring of $5,608 for the year ended December 31, 2018, of which $4,407 was recognized as unrealized losses as of December 31, 2017.

At December 31, 2018, the Company had three loans (Community Intervention Services, Inc., Southern Technical Institute, LLC and Master Cutlery, LLC) on non-accrual status with respect to all interest and Net Loan Fee amortization, with an aggregate amortized cost and fair value of $12,403 and $850, respectively.

In August 2018, the Elgin Fasteners Group senior secured loan became contractually due.

The lending group entered into a forbearance agreement with respect to the maturity date through September 26, 2019, subject to other terms and conditions.

The investment continues to accrue interest as the borrower has continued to make interest and amortization payments.

On October 9, 2019 the Company sold the investment for proceeds of $3,361.

At December 31, 2018, all of the Company’s investments were domiciled in the United States.

The industry compositions of the Company’s investment portfolio were as follows:

Percentage of Total

Amortized Cost

Total debt and equity investments 515,545 95.7 % 309.4 % 495,321 95.8 % 297.3 %

Structured Finance Notes 23,126 4.3 14.0 21,610 4.2 12.9

Total $ 538,671 100.0 % 323.4 % $ 516,931 100.0 % 310.2 %

At December 31, 2019, the Company had four loans (Community Intervention Services, Inc., Southern Technical Institute, LLC, Master Cutlery, LLC and Constellis Holdings, LLC) on non-accrual status with respect to all interest and Net Loan Fee amortization, with an aggregate amortized cost and fair value of $22,249 and $662, respectively.

On January 31, 2019, Maverick Healthcare Equity, LLC was acquired in a purchase transaction.

Proceeds from this transaction were insufficient to redeem the class of equity held by the Company.

Accordingly, the Company recognized a net loss of $89, which is comprised of $900 realized loss net of $811 unrealized loss reversal, in the year ended December 31, 2019.

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

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Temporary Help Services 13,866 2.7 8.3 13,742 2.8 8.2

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(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

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Colleges, Universities, and Professional Schools — — — — — —

Professional and Management Development Training 11,574 2.2 6.9 11,575 2.3 6.9

Finance and Insurance

Direct Health and Medical Insurance Carriers 395 0.1 0.2 405 0.1 0.2

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Insurance Agencies and Brokerages 11,487 2.2 6.9 11,386 2.3 6.8

Health Care and Social Assistance

All Other Outpatient Care Centers 2,001 0.4 1.2 2,015 0.4 1.2

Child Day Care Services 8,126 1.6 4.9 8,266 1.7 5.0

Diagnostic Imaging Centers 14,247 2.8 8.6 14,191 2.9 8.5

Freestanding Ambulatory Surgical and Emergency Centers 2,950 0.6 1.8 2,976 0.6 1.8

General Medical and Surgical Hospitals 2,612 0.5 1.6 2,632 0.5 1.6

Home Health Care Services 16,627 3.2 10.0 16,236 3.3 9.7

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Outpatient Mental Health and Substance Abuse Centers 11,609 2.3 7.0 4,000 0.8 2.4

Residential Intellectual and Developmental Disability Facilities 2,991 0.6 1.8 3,006 0.6 1.8

Data Processing, Hosting, and Related Services 11,805 2.3 7.1 11,900 2.4 7.1

Internet Publishing and Broadcasting and Web Search Portals 1,969 0.4 1.2 1,992 0.4 1.2

Software Publishers 41,054 8.0 24.5 38,373 7.7 22.9

Television Broadcasting 1,997 0.4 1.2 1,997 0.4 1.1

Wired Telecommunications Carriers 1,972 0.4 1.2 1,980 0.4 1.2

Manufacturing

Bolt, Nut, Screw, Rivet, and Washer Manufacturing

Commercial Printing (except Screen and Books) 4,778 0.9 2.9 4,591 0.9 2.8

Custom Compounding of Purchased Resins 15,405 3.0 9.2 16,408 3.3 9.8

Motor Vehicle Body Manufacturing 1,970 0.4 1.2 1,997 0.4 1.2

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(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

Other Aircraft Parts and Auxiliary Equipment Manufacturing $ 5,412 1.0 % 3.2 % $ 4,213 0.9 % 2.5 %

Other Commercial and Service Industry Machinery Manufacturing 2,229 0.4 1.3 2,262 0.5 1.4

Pharmaceutical and Medicine Manufacturing 853 0.2 0.5 853 0.2 0.5

Pharmaceutical Preparation Manufacturing 7,931 1.5 4.8 19,694 4.0 11.8

Printing Machinery and Equipment Manufacturing

Plastics Plumbing Fixture Manufacturing 1,484 0.3 0.9 1,498 0.3 0.9

Pump and Pumping Equipment Manufacturing 1,501 0.3 0.9 1,607 0.3 1.0

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Other Services (except Public Administration)

Automotive Body, Paint, and Interior Repair and Maintenance

Automotive Oil Change and Lubrication Shops 20,165 3.9 12.1 20,458 4.0 12.3

Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance 19,106 3.7 11.5 18,265 3.7 11.0

Communication Equipment Repair and Maintenance 4,493 0.9 2.7 4,512 0.9 2.7

Professional, Scientific, and Technical Services

Administrative Management and General Management Consulting Services 17,496 3.4 10.5 17,492 3.5 10.5

Advertising Agencies 1,987 0.4 1.2 2,001 0.4 1.2

All Other Professional, Scientific, and Technical Services 1,925 0.4 1.2 1,925 0.4 1.2

Other Accounting Services 1,698 0.3 1.0 2,250 0.5 1.4

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Other Professional, Scientific, and Technical Services 500 0.1 0.3 1,490 0.3 0.9

Research and Development in the Social Sciences and Humanities

Testing Laboratories 1,987 0.4 1.2 2,004 0.4 1.2

Public Administration

Other Justice, Public Order, and Safety Activities 9,846 1.9 5.9 407 0.1 0.2

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Public Finance Activities 1,941 0.4 1.2 2,007 0.4 1.2

Real Estate and Rental and Leasing

Home Health Equipment Rental

Office Machinery and Equipment Rental and Leasing 13,698 2.7 8.2 14,342 2.9 8.6

Cosmetics, Beauty Supplies, and Perfume Stores 6,419 1.2 3.9 6,363 1.3 3.8

Shoe Store 9,675 1.8 5.8 9,917 2.0 6.0

Sporting Goods Stores 1,921 0.4 1.2 1,983 0.4 1.2

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(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

Supermarkets and Other Grocery (except Convenience) Stores $ 1,081 0.2 % 0.6 % $ 1,094 0.2 % 0.7 %

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General Warehousing and Storage 13,790 2.7 8.3 14,165 2.9 8.5

Taxi Service 1,990 0.4 1.2 1,990 0.4 1.2

Wholesale Trade

Business to Business Electronic Markets 3,920 0.8 2.4 3,960 0.8 2.4

Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 3,955 0.8 2.4 3,976 0.8 2.4

Industrial Machinery and Equipment Merchant Wholesalers 9,700 1.9 5.8 9,662 2.0 5.8

Industrial Supplies Merchant Wholesalers 6,883 1.3 4.1 6,584 1.3 4.0

Motor Vehicle Parts (Used) Merchant Wholesalers 13,119 2.5 7.9 13,119 2.6 7.9

Other Grocery and Related Products Merchant Wholesalers 1,995 0.4 1.2 2,003 0.4 1.2

Sporting and Recreational Goods and Supplies Merchant Wholesalers 8,247 1.6 4.9 255 0.1 0.2

Stationery and Office Supplies Merchant Wholesalers 16,113 3.1 9.7 14,559 2.9 8.7

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Unconsolidated Significant Subsidiaries:

In accordance with Regulation S-X and GAAP, the Company is not permitted to consolidate any subsidiary or other entity that is not an investment company, including those in which the Company has a controlling interest unless the business of the controlled operating company consists of providing services to the Company.

In accordance with Regulation S-X Rules 3-09 and 4-08(g), the Company evaluates its unconsolidated controlled portfolio companies as significant subsidiaries under the respective rules.

MTE Holding Corp.

and Subsidiaries were not considered a significant unconsolidated subsidiary under Regulation S-X Rule 4-08(g) as of December 31, 2019 and 2018, respectively.

As of December 31, 2017, MTE Holding Corp.

and Subsidiaries was considered a significant unconsolidated subsidiary under Regulation S-X Rule 4-08(g).

The Company's voting ownership in MTE Holding Corp.

and Subsidiaries is limited to 50% through a substantive participating voting rights agreement with an unaffiliated investor.

Based on the requirements under Regulation S-X Rule 4-08(g), the summarized consolidated financial information of MTE Holding Corp.

and Subsidiaries is presented below:

Balance Sheet:

Current assets

Noncurrent assets

Current liabilities

Noncurrent liabilities

Total liabilities

Non-controlling interest

Controlling interest

Year Ended December 31

Summary of Operations:

Net income (loss)

Net income (loss) attributable to MTE Holding Corp.

Total debt and equity investments $ 515,545 100.0 % 309.4 % $ 495,321 100.0 % 297.3 %

Structured Finance Notes 23,126 — 14.0 % 21,610 — 12.9 %

Total investments $ 538,671 100.0 % 323.4 % $ 516,931 100.0 % 310.2 %

Fair Value of Financial Instruments

The Company’s investments are valued at fair value as determined by the Company's board of directors.

The Company’s investments are valued 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.

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Level 2 inputs include:

(i) quoted prices for similar assets or liabilities in

(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.

OFS Capital Corporation and Subsidiaries

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(Dollar amounts in thousands, except per share data)

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.

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.

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The Company assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the measurement date.

Senior securities with a fair value of $2,321, $-0- and $-0- were transfered from Level 3 to Level 2 during the years ended December 31, 2019, 2018 and 2017 .

Senior securities with a fair value of $601 and $2,321 were transferred from Level 3 to Level 2 during the years ended December 31, 2020 and 2019, respectively.

Certain of the Company's investments are exchanged in the non-public market among banks, CLOs and other institutional investors for loans to large U.S.

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In addition, each quarter, the Company assesses whether an arm’s length transaction occurred in the same security, including the Company's new investments during the quarter, the cost of which (“Transaction Prices”), may be considered a reasonable indication of fair value for up to three months after the transaction date.

Senior securities with a fair value of $10,266 were valued at their Transaction Price at December 31, 2019.

Senior secured debt investments with a fair value of $6,114 were valued at their Transaction Price at December 31, 2020.

Based on liquidity and other market factors, these securities are designated as Level 3 in the fair value hierarchy.

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A key determinant of portfolio-company risk is the leverage through the investment relative to earnings metrics of the portfolio company.

The fair value of Structured Finance Notes in the Company's portfolio are also estimated primarily by discounted cash flow fair value analytics.

The fair value of Structured Finance Notes are also estimated primarily by discounted cash flow techniques.

In valuing such investments, the Company considers CLO performance metrics, including prepayment rates, default rates, loss-on-default and recovery rates, and other metrics, as well as estimated market yields provided by a recognized industry pricing service as a primary source for discounted cash flow fair value estimates, supplemented by actual trades executed in the market at or around period-end, as well as the indicative prices provided by broker-dealers in its estimate of the fair value of such investments.

The Company also considers the operating metrics of the CLO vehicle, including compliance with collateralization tests, concentration limits, defaults, restructuring activity and prepayment rates on the underlying loans, if applicable.

The Company also considers the operating metrics of the CLO vehicle, including compliance with collateralization tests, concentration limits and restructuring activity, if applicable.

The fair value of Company’s equity investments as well as certain of its non-performing debt investments are estimated through analysis of the portfolio companies’ enterprise value under a market approach.

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Application of these valuation methodologies involves a significant degree of judgment by management.

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

OFS Capital Corporation and Subsidiaries

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(Dollar amounts in thousands, except per share data)

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.

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.

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The following tables presents the Company's investment portfolio measured at fair value on a recurring basis as of December 31, 2020 and 2019, respectively.

Fair Value at December 31, 2019

Security Level 1 Level 2 Level 3 Fair Value at December 31, 2020

Debt investments $ — $ 22,226 $ 299,145 $ 321,371

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Structured Finance Notes — — 56.425 56,425

Fair Value at December 31, 2018

$ — $ 22,226 $ 420,097 $ 442,323

Security Level 1 Level 2 Level 3 Fair Value at December 31, 2019

Debt investments $ — $ 74,666 $ 377,149 $ 451,815

1 unchanged sentence

Structured Finance Notes — — 21,610 21,610

$ — $ 74,666 $ 442,265 $ 516,931

OFS Capital Corporation and Subsidiaries

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

The following tables provide quantitative information about the Company’s significant Level 3 fair value inputs to the Company’s fair value measurements as of December 31, 2019 and 2018 .

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 December 31, 2019

Valuation technique

Unobservable inputs

The following tables provide quantitative information about the Company’s significant unobservable inputs to the Company’s Level 3 fair value measurements as of December 31, 2020 and 2019.

Fair Value at December 31, 2020 Valuation technique Unobservable inputs Range

(Weighted average)

Debt investments:

Senior secured

Discounted cash flow

Discount rates

5.64% - 17.42% (11.17%)

Senior secured

Market approach

EBITDA multiples

8.09x - 13.22x (13.08x)

Senior secured

Market approach

Transaction Price

Discounted cash flow

Discount rates

6.38% - 18.86% (14.32%)

Market approach

EBITDA multiples

4.75x - 6.35x (6.35x)

Market approach

Revenue multiple

Senior secured $ 256,042 Discounted cash flow Discount rates 6.30% - 24.43% (10.18%)

Senior secured 12,668 Market approach EBITDA multiples 8.50x - 8.50x (8.50x)

Senior secured 9,257 Market approach Revenue multiples 0.86x - 0.86x (0.86x)

Senior secured 6,111 Market approach

Subordinated 7,822 Discounted cash flow Discount rates 17.83% - 17.83% (17.83%)

Subordinated 6,794 Market approach EBITDA multiples 7.05x - 9.10x (7.78x)

Subordinated 451 Market approach Revenue multiples 0.10x - 0.20x (0.18x)

Structured Finance Notes:

Subordinated notes (1)

Discounted cash flow

Discount rates

14.50% - 19.50% (17.16%)

54,724 Discounted cash flow Discount rates 15.00% - 19.50% (17.79%)

Constant default rate 0.00% - 2.00% (1.63%)

1.26% - 1.40% (1.33%)

Constant default rate after 6 months 2.00% - 2.00% (2.00%)

Recovery rate 60.00% - 60.00% (60.00%)

69.30% - 70.00% (69.70%)

Mezzanine debt 1,701 Discounted cash flow Discount Margin 7.25% - 9.45% (8.58%)

Constant default rate 0.00% - 2.00% (1.01%)

Constant default rate after 9 months 2.00% - 3.00% (2.49%)

Recovery rate 60.00% - 60.00% (60.00%)

Equity investments:

Preferred equity

Market approach

EBITDA multiples

6.25x - 13.22x (4.96x)

Preferred equity

Market approach

Revenue multiples

0.23x - 9.58x (9.58x)

Preferred equity

Market approach

Recurring monthly revenue

40.00x - 40.00x (40.00x)

Common equity and warrants

Market approach

EBITDA multiples

4.50x - 13.22x (13.03x)

Common equity and warrants

Market approach

Revenue multiples

0.23x - 7.00x (7.00x)

Common equity and warrants

Transaction Price

(1) Constant default rates for the next twelve months.

Preferred equity 10,395 Market approach EBITDA multiples 4.73x - 8.50x (7.37x)

Preferred equity 1,148 Market approach Revenue multiples 0.20x - 1.56x (0.96x)

Common equity and warrants 52,969 Market approach EBITDA multiples 3.75x - 11.50x (8.10x)

Common equity and warrants 15 Market approach Revenue multiples 0.20x - 1.56x (0.47x)

(1) The cash flows utilized in the discounted cash flow calculations assume liquidation at current market prices and redeployment of proceeds on all assets currently in default and all assets below specified fair value thresholds.

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(Dollar amounts in thousands, except per share data)

Fair Value at December 31, 2018 (1)

Valuation technique

Unobservable inputs

Fair Value at December 31, 2019 Valuation technique Unobservable inputs Range

(Weighted average)

Debt investments:

Senior secured

Discounted cash flow

Discount rates

6.94% - 19.70% (12.49%)

Senior secured

Market approach

Transaction Price

Discounted cash flow

Discount rates

Senior secured $ 295,835 Discounted cash flow Discount rates 5.64% - 17.42% (11.17%)

Senior secured 15,031 Market approach EBITDA multiples 8.09x - 13.22x (13.08x)

Senior secured 23,193 Market approach Transaction Price

Subordinated 35,371 Discounted cash flow Discount rates 6.38% - 18.86% (14.32%)

Subordinated 7,464 Market approach EBITDA multiples 4.75x - 6.35x (6.35x)

Subordinated 255 Market approach Revenue multiple 0.23x - 0.23x (0.23x)

Structured Finance Notes:

Subordinated notes (2)

21,610 Discounted cash flow Discount rates 14.50% - 19.50% (17.16%)

Constant default rate (1)

1.26% - 1.40% (1.33%)

Market approach

EBITDA multiples

3.50x - 7.65x (5.10x)

Recovery rate 69.30% - 70.00% (69.70%)

Equity investments:

Preferred equity

Market approach

EBITDA multiples

4.50x - 8.50x (7.42x)

Preferred equity

Market approach

Reoccurring Monthly Revenue

38.0x - 42.0x (40.0x)

Common equity and warrants

Market approach

EBITDA multiples

3.50x - 11.00x (8.68x)

Preferred equity 13,185 Market approach EBITDA multiples 6.25x - 13.22x (4.96x)

Preferred equity 2,424 Market approach Revenue multiples 0.23x - 9.58x (9.58x)

Preferred equity 2,120 Market approach Recurring monthly revenue 40.00x - 40.00x (40.00x)

Common equity and warrants 22,788 Market approach EBITDA multiples 4.50x - 13.22x (13.03x)

Common equity and warrants 1,489 Market approach Revenue multiples 0.23x - 7.00x (7.00x)

Common equity and warrants 1,500 Transaction Price

(1) Constant default rates for the next twelve months.

(2) The cash flows utilized in the discounted cash flow calculations assume liquidation at current market prices and redeployment of proceeds on all assets currently in default and all assets below specified fair value thresholds.

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.

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Due to wide range of approaches towards developing input assumptions to these 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.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables present changes in investments measured at fair value using Level 3 inputs for the years ended December 31, 2020 and 2019:

Year Ended December 31, 2020

Preferred Equity

Common Equity and Warrants

Structured Finance Notes

Investments Subordinated

Investments Preferred Equity Common Equity and Warrants Structured Finance Notes Total

Level 3 assets, January 1, 2020 $ 334,059 $ 43,090 $ 17,729 $ 25,777 $ 21,610 $ 442,265

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Sale and redemption of portfolio investments (9,635) — (3,925) — — (13,560)

Proceeds from distributions received from portfolio investments

Proceeds from distributions received from Structured Finance Notes — — — — (6,709) (6,709)

Conversion from debt investment to equity investment (Note 4) (703) — — 703 — —

Transfers out of Level 3 (601) — — — — (601)

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Year Ended December 31, 2019

Preferred Equity

Common Equity and Warrants

Investments Subordinated

Investments Preferred Equity Common Equity and Warrants Structured Finance Notes Total

Level 3 assets, January 1, 2019 $ 319,017 $ 44,540 $ 14,613 $ 18,627 $ — $ 396,797

Net realized gain on investments

Net unrealized appreciation (depreciation) on investments

Amortization of Net Loan Fees

Capitalized PIK interest and dividends

Amendment fees

Net realized loss on investments (3,000) — (900) — — (3,900)

Net change in unrealized appreciation (depreciation) on investments (8,405) (1,968) 811 3,837 (1,516) (7,242)

Amortization of net loan origination fees 1,278 86 — — — 1,364

Accretion of interest income on Structured Finance Notes — — — — 2,861 2,861

Capitalized PIK interest, dividends, and fees 489 432 896 — — 1,817

Purchase and origination of portfolio investments 122,184 — 2,309 3,313 23,341 151,147

1 unchanged sentence

Sale and redemption of portfolio investments (38,033) — — — — (38,033)

Reclassification between preferred equity and common equity and warrants

Proceeds from distributions received from Structured Finance Notes — — — — (3,076) (3,076)

Transfers out of Level 3 (2,321) — — — — (2,321)

Level 3 assets, December 31, 2019 $ 334,059 $ 43,090 $ 17,729 $ 25,777 $ 21,610 $ 442,264

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Other Financial Assets and Liabilities

GAAP requires disclosure of the fair value of financial instruments not reported at fair value on a recurring basis for which it is practical to estimate such value.

GAAP requires disclosure of the fair value of financial instruments not reported at fair value on a recurring basis for which it is practical to estimate such values.

The Company believes that the carrying amounts of its other financial instruments such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments.

The PWB Credit Facility and BNP Facility are variable rate instruments and fair value is approximately book value.

The senior secured revolving credit facility between the Company and Pacific Western Bank, as lender (“PWB Credit Facility”) and the secured revolving credit facility that provides for borrowings in an aggregate principal amount up to $150,000 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 (“BNP Facility”) are variable rate instruments and fair value is approximately book value.

The following tables present the fair value measurements of the Company's debt and the level within fair value hierarchy of the significant unobservable inputs used to determine such fair values as of December 31, 2020 and 2019:

OFS Capital Corporation and Subsidiaries

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(Dollar amounts in thousands, except per share data)

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 December 31, 2019 and 2018 :

December 31, 2020

Description Level 1 (2)

Level 2 Level 3 (1)

PWB Credit Facility $ — $ — $ 600 $ 600

BNP Facility — — 31,450 31,450

OFS Capital Corporation 6.375% Notes due 2025 48,800 — — 48,800

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OFS Capital Corporation 5.95% Notes due 2026

51,066 — — 51,066

OFS Capital Corporation 6.25% Notes due 2023 25,100 — — 25,100

SBA-guaranteed debentures

— — 116,172 116,172

Total debt, at fair value $ 172,035 $ — $ 148,222 $ 320,257

December 31, 2019

Description Level 1 (2)

Level 2 Level 3 (1)

PWB Credit Facility $ — $ — $ — $ —

BNP Facility — — 56,450 56,450

OFS Capital Corporation 6.375% Notes due 2025 50,600 — — 50,600

OFS Capital Corporation 6.5% Notes due 2025 49,282 — — 49,282

OFS Capital Corporation 5.95% Notes due 2026

54,282 — — 54,282

SBA-guaranteed debentures

— — 155,562 155,562

Total debt, at fair value $ 154,164 $ — $ 212,012 $ 366,176

(1) For Level 3 measurements, fair value is estimated by discounting remaining payments using current market rates for similar instruments at the measurement date and considering such factors as the legal maturity date.

(1) For Level 3 measurements, fair value is estimated through discounting remaining payments using current market rates for similar instruments at the measurement date through the legal maturity date.

(2) For Level 1 measurements, fair value is estimated by using the closing price of the security on the Nasdaq Global Select Market.

The following are the carrying values and fair values of the Company’s debt as of December 31, 2020 and 2019:

As of December 31, 2019

As of December 31, 2018

Carrying Value

As of December 31, 2020 As of December 31, 2019

Description Carrying Value Fair Value Carrying Value Fair Value

PWB Credit Facility $ 600 $ 600 $ — $ —

BNP Facility 31,450 31,450 56,450 56,450

OFS Capital Corporation 6.375% Notes due 2025 48,891 48,800 48,634 50,600

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OFS Capital Corporation 5.95% Notes due 2026

52,617 51,066 52,325 54,282

OFS Capital Corporation 6.25% Notes due 2023 24,106 25,100 — —

SBA-guaranteed debentures

104,182 116,172 147,976 155,562

Total debt, at fair value $ 309,185 $ 320,257 $ 352,478 $ 366,176

Commitments and Contingencies

The Company has the following unfunded commitments to portfolio companies as of December 31, 2019 :

Name of Portfolio Company

Investment Type

Carolina Lubes, Inc.

Senior Secured Loan (Revolver)

Inergex Holdings

Senior Secured Loan (Revolver)

SSJA Bariactric Management LLC

Senior Secured Loan (Revolver)

TalentSmart Holdings, LLC

Senior Secured Loan (Revolver)

OFS Capital Corporation and Subsidiaries

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(Dollar amounts in thousands, except per share data)

Commitments and Contingencies

The Company has the following unfunded commitments to portfolio companies as of December 31, 2020:

Name of Portfolio Company Investment Type Amount

A&A Transfer, LLC Senior Secured Loan (Revolver) $ 2,136

I&I Sales Group, LLC Senior Secured Loan (Revolver) 156

Inergex Holdings Senior Secured Loan (Revolver) 2,813

SSJA Bariactric Management LLC Senior Secured Loan (Revolver) 667

From time to time, the Company is involved in legal proceedings in the normal course of its business.

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In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnifications.

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 occurred.

The Company believes the risk of any material obligation under these indemnifications to be low.

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 remote.

SBA Debentures:

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Treasury Notes with ten-year maturities.

Under present regulations of the SBIC Act, the maximum amount of SBA-guaranteed debt that may be issued by a single SBIC licensee is $150,000 (or $175,000 with SBA approval).

An SBIC fund may borrow up to two times the amount of its regulatory capital, subject to customary regulatory requirements.

In connection with the SBIC Acquisition, the Company increased its total commitments to SBIC I LP to $75,000, which became a drop down SBIC fund of the Company on December 4, 2013.

During 2014, the Company fully funded its $75,000 commitment to SBIC I LP.

As of December 31, 2019 and 2018 , SBIC I LP had fully drawn the $149,880 of leverage commitments from the SBA.

As of December 31, 2020 and 2019, SBIC I LP had outstanding SBA debentures of $105,270 and $149,880, respectively.

On a stand-alone basis, SBIC I LP held $223,795 and $249,576 in assets at December 31, 2020 and 2019, respectively, which accounted for approximately 46% and 46% of the Company’s total consolidated assets, respectively.

These assets can not be pledged under any debt obligation of the Company.

These assets cannot be pledged under any debt obligation of the Company.

The following table shows the Company’s outstanding SBA debentures payable as of December 31, 2020 and 2019:

Fixed Interest Rate

SBA debentures outstanding

Maturity Date

December 31, 2019

December 31, 2018

September 19, 2012

September 1, 2022

September 25, 2013

September 1, 2023

March 26, 2014

March 1, 2024

September 24, 2014

September 1, 2024

September 24, 2014

September 1, 2024

March 25, 2015

March 1, 2025

September 23, 2015

September 1, 2025

Fixed Interest Rate SBA debentures outstanding

Pooling Date Maturity Date December 31, 2020 December 31, 2019

September 19, 2012 September 1, 2022 3.049 % $ 14,000 $ 14,000

September 25, 2013 September 1, 2023 4.448 — 7,000

March 26, 2014 March 1, 2024 3.995 — 5,000

September 24, 2014 September 1, 2024 3.819 — 4,110

September 24, 2014 September 1, 2024 3.370 2,765 31,265

March 25, 2015 March 1, 2025 2.872 65,920 65,920

September 23, 2015 September 1, 2025 3.184 22,585 22,585

SBA debentures outstanding 105,270 149,880

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The Company received exemptive relief from the SEC effective November 26, 2013, which permits the Company to exclude SBA guaranteed debentures from the definition of senior securities in the statutory asset coverage ratio under the 1940 Act, allowing for greater capital deployment.

The effective interest rate on the SBA debentures, which includes amortization of deferred debt issuance costs, was 3.43% as of December 31, 2019 and 2018 .

Interest expense on the SBA debentures was $5,137 , $5,137, and $5,141 for the years ended December 31, 2019, 2018 and 2017 , respectively, which includes $ 377 , $377, and $380 of debt issuance costs amortization, respectively.

OFS Capital Corporation and Subsidiaries

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(Dollar amounts in thousands, except per share data)

The weighted-average fixed cash interest rate on the SBA debentures as of December 31, 2019 and 2018 , was 3.18%.

The effective interest rate on the SBA debentures, which includes amortization of deferred debt issuance costs, was 3.31%, 3.43% and 3.43% as of December 31, 2020, 2019 and 2018, respectively.

Interest expense on the SBA debentures was $4,402, $5,137, and $5,137 for the years ended December 31, 2020, 2019 and 2018, respectively, which includes $332, $377, and $377 of debt issuance costs amortization, respectively.

The weighted-average fixed cash interest rate on the SBA debentures as of December 31, 2020 and 2019, was 2.98% and 3.18%, respectively.

During the year ended December 31, 2020, SBIC I LP prepaid $44,610 of SBA debentures that were contractually due September 1, 2023, March 1, 2024 and September 1, 2024.

The Company recognized losses on extinguishment of debt of $678 related to the charge-off of deferred borrowing costs on the prepaid debentures.

Unsecured Notes :

In April 2018, the Company publicly offered the Unsecured Notes Due April 2025 with an aggregate principal of $50,000.

The total net proceeds to the Company from the Unsecured Notes Due April 2025, after deducting underwriting discounts and offering costs of $1,804 were $48,196.

In October and November 2018, the Company publicly offered the Unsecured Notes Due October 2025 with an aggregate principal of $48,525, which included a partial exercise of the underwriters overallotment option.

The total net proceeds to the Company from the Unsecured Notes Due October 2025, after deducting underwriting discounts and offering expenses of $1,724, were $46,801.

In October and November 2019, the Company publicly offered the Unsecured Notes Due October 2026 with an aggregate principal of $54,325, which included a partial exercise of the underwriters overallotment option.

The total net proceeds to the Company from the Unsecured Notes Due October 2026, after deducting underwriting discounts and offering costs of $2,054 were $52,270.

The Unsecured Notes Due April 2025, the Unsecured Notes Due October 2025 and the Unsecured Notes Due October 2026, combined (the “Unsecured Notes”), totaled $152,850 in aggregate principal debt, with net proceeds of $147,267 to the Company.

The Company publicly offered the Unsecured Notes Due April 2025 with an aggregate principal of $50,000, the Unsecured Notes Due October 2025 with an aggregate principal of $48,525, the Unsecured Notes Due October 2026 with an aggregate principal of $54,325 and the Unsecured Notes Due September 2023 with an aggregate principal of $25,000.

The Unsecured Notes Due September 2023, the Unsecured Notes Due April 2025, the Unsecured Notes Due October 2025 and the Unsecured Notes Due October 2026, combined (the “Unsecured Notes”), totaled $177,850 in aggregate principal debt, with net proceeds of $171,281 to the Company.

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 grant a security interest), to the extent of the value of the assets securing such indebtedness, including, without limitation, borrowings under the senior secured revolving credit facility between the Company and Pacific Western Bank ("PWB Credit Facility") and borrowings under the 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("BNP Facility") .

The indenture governing the Unsecured Notes contains certain covenants (i) prohibiting additional borrowings, including through the issuance of additional debt securities, unless the Company's asset coverage, as defined in the 1940 Act, after giving effect to any exemptive relief granted to the Company by the SEC, equals at least 200% (or 150% on and after May 3, 2019) after such borrowings;

and (ii) prohibiting (a) the declaration of any cash dividend or distribution upon any class of the Company’s capital stock (except to the extent necessary for the Company to maintain its treatment as a RIC under Subchapter M of the Code), or (b) the purchase of any capital stock if the Company’s asset coverage, as defined in the 1940 Act, were below 200% (or 150% on and after May 3, 2019) at the time of such capital transaction and after deducting the amount of such transaction.

and (ii) prohibiting (a) the declaration of any cash dividend or distribution upon any class of the Company’s capital stock (except to the extent necessary for the Company to maintain its treatment as a RIC under Subchapter M of the Code), or (b) the purchase of any capital stock if the Company’s asset coverage, as defined in the 1940 Act, were below 150% at the time of such capital transaction and after deducting the amount of such transaction.

As of December 31, 2020, the Unsecured Notes had the following terms and balances:

Unsecured Notes

Unamortized Discount and Issuance Costs

Stated Interest Rate (1)

Unsecured Notes Principal Unamortized Discount and Issuance Costs Stated Interest Rate (1)

Effective Interest Rate (2)

2020 Interest Expense (4)

Unsecured Notes Due September 2023 $ 25,000 $ 894 6.25 % 7.56 % 9/30/2023 $ 550

Unsecured Notes Due April 2025 50,000 1,109 6.38 % 6.88 % 4/30/2025 3,444

1 unchanged sentence

Unsecured Notes Due October 2026 54,325 1,708 5.95 % 6.49 % 10/31/2026 3,548

Total $ 177,850 $ 4,897 $ 10,952

(1) The weighted-average fixed cash interest rate on the Unsecured Notes as of December 31, 2020 was 6.26%.

(2) The effective interest rate on the Unsecured Notes includes deferred debt issuance cost amortization.

(3) The Unsecured Notes Due April 2025, the Unsecured Notes Due October 2025, and the Unsecured Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after April 30, 2020, October 31, 2020, and October 31, 2021, respectively.

(3) The Unsecured Notes Due September 2023, the Unsecured Notes Due April 2025, the Unsecured Notes Due October 2025, and the Unsecured Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after September 30, 2021, April 30, 2020, October 31, 2020, and October 31, 2021, respectively.

(4) Interest expense includes debt issuance costs amortization of $909 for the year ended December 31, 2020.

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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 and as otherwise specified in the BLA.

The PWB Credit

The PWB Credit Facility is guaranteed by OFSCC-MB and secured by all of our current and future assets excluding assets held by SBIC I LP,

OFS Capital Corporation and Subsidiaries

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

Facility is guaranteed by OFSCC-MB 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 SBIC I GP.

OFSCC-FS, and the Company’s partnership interests in SBIC I LP and SBIC I GP.

During the year ended December 31, 2020, the BLA was amended to, among other things:

modify certain financial performance covenants and reduce the total commitment from $100,000 to $20,000.

The Company recognized a loss on extinguishment of debt of $142 related to the charge-off of deferred borrowing costs on the commitment reduction.

The PWB Credit Facility bears interest at a variable rate of the Prime Rate plus a 0.25% margin, with a 5.25% floor, and includes an unused commitment fee, payable monthly in arrears, equal to 0.50% per annum on any unused portion.

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Interest expense on the PWB Credit Facility was $1,285, $2,136 and $959 for the years ended December 31, 2020, 2019, and 2018, respectively, which includes $225, $283 and $180 of deferred financing amortization, respectively Unamortized debt issuance costs included in prepaid expenses and other assets on the consolidated statements of assets and liabilities as of December 31, 2020 and 2019 were $11 and $399, respectively.

Availability under the PWB Credit Facility was $69,005 based on the stated advance rate of 50% under the borrowing base, and the $-0- outstanding as of December 31, 2019 .

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, and a statutory asset coverage test.

As of December 31, 2020, availability under the PWB Credit Facility was $19,400 based on the stated advance rate of 50% under the borrowing base, and the $600 outstanding.

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.

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.

1 unchanged sentence

BNP Facility:

On June 20, 2019, OFSCC-FS entered into the BNP Facility, which provides for borrowings in an aggregate principal amount up to $150,000, of which $56,450 was drawn as of December 31, 2019 .

OFSCC-FS is party to the BNP Facility, which provides for borrowings in an aggregate principal amount up to $150,000, of which $31,450 was drawn as of December 31, 2020.

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.

7 unchanged sentences

The average dollar amount of borrowings outstanding during the year ended December 31, 2020, was $39,182.

Interest expense on the BNP Facility was $905 , which included $118 of deferred financing amortization, for the year ended December 31, 2019.

For the year ended December 31, 2020 interest expense on the BNP Facility was $2,168, which included $225 of deferred financing amortization.

The average dollar borrowings and average interest rate for all Company debt during the years ended December 31, 2020, 2019 and 2018, were as follows:

Average Dollar Borrowings

Weighted Average Interest Rate

Year ended Average Dollar Borrowings Weighted Average Interest Rate

December 31, 2020 $ 347,229 5.32 %

6 unchanged sentences

Principal Due by Year

Debt liabilities (1)

Debt liabilities Total 2021 2022 2023 2024 2025 Thereafter

PWB Credit Facility (1)

$ 600 600 $ — $ — $ — $ — $ —

BNP Facility 31,450 — — — 31,450 — —

SBA Debentures (2)

105,270 — 14,000 — 2,765 88,505 —

Unsecured Notes (3)

The PWB Credit Facility is scheduled to mature on February 28, 2021.

The BNP Facility is scheduled to mature on June 20, 2024.

The SBA debentures are scheduled to mature between September 2022 and 2025.

The Unsecured Notes are scheduled to mature between April 2025 and October 2026.

SBIC I LP intends, over time, to repay outstanding SBA debentures prior to the scheduled maturity date of its debentures.

See footnote 13 for additional information.

177,850 — — 25,000 — 98,525 54,325

Total $ 315,170 $ 600 $ 14,000 $ 25,000 $ 34,215 $ 187,030 $ 54,325

(1) The PWB Credit Facility was amended on February 17, 2021 to among other things, modify the scheduled maturity to February 28, 2023.

(2) During the year ended December 31, 2020, SBIC I LP prepaid $44,610 in SBA debentures prior to their scheduled maturities.

(3) On February 10, 2021, the Company exercised its option to redeem all issued and outstanding Unsecured Notes Due April 2025 and Unsecured Notes Due October 2025.

The Company will redeem the $98,525 in aggregate principal of such unsecured notes on March 12, 2021, and expects to recognize a loss on extinguishment of debt of approximately $2,295 in the first quarter of 2021.

Federal Income Tax

6 unchanged sentences

Maintenance of the Company's RIC status also requires adherence to certain source of income and asset diversification requirements.

OFSCC-MB, an entity taxed as a corporation under Subchapter C of the Code, is consolidated in the Company’s GAAP financial statements but is not included in the determination of ICTI or the RIC compliance requirements of the Company.

The income of OFSCC-MB, net of applicable income taxes, is not included in the Company’s ICTI until distributed by OFSCC-MB, which may result in timing and character differences between the Company’s GAAP and tax-basis net investment income and realized gains and losses.

Taxable income and distributions:

6 unchanged sentences

Years Ended December 31,

2020 2019 2018

Ordinary taxable income $ 11,516 $ 18,176 $ 18,053

1 unchanged sentence

Total distributions to stockholders $ 11,516 $ 18,176 $ 23,089

Tax-basis components of distributable earnings (accumulated losses) as of December 31, 2019 and 2018 , were as follows:

Ordinary income

Net long-term capital loss carryforward – non-expiring

The Company records reclassifications to its capital accounts related to permanent differences between GAAP and tax treatment related to goodwill amortization, excise taxes, and other permanent differences;

and temporary differences between GAAP and tax treatment of realized gains and losses, income arising from Company’s equity investments in pass-through entities, PIK dividends, and other temporary differences.

The Company recorded reclassifications to increase (decrease)

OFS Capital Corporation and Subsidiaries

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

additional paid-in capital against total distributable earnings (accumulated loss) of $(462), $(62) and $(409) for the years ended December 31, 2019, 2018 and 2017, respectively.

Tax-basis components of distributable earnings (accumulated losses) as of December 31, 2020 and 2019, were as follows:

Ordinary income (RIC) $ 5,640 $ 2,578

Net operating loss carry-forward (OFSCC-MB;

C-Corporation) (1,188) —

Capital loss carryforwards:

RIC – short-term, non-expiring

RIC – long-term, non-expiring

(17,325) (8,578)

OFSCC-MB (C-Corporation) – short-term, expires in 2025

The Company records reclassifications to its capital accounts related to permanent differences between GAAP and tax treatment of goodwill amortization and impairment, excise taxes, return-of-capital distributions, and other permanent differences.

The Company recorded reclassifications to decrease additional paid-in capital against total distributable earnings (accumulated loss) of $331, $462 and $62 for the years ended December 31, 2020, 2019 and 2018, respectively.

The tax-basis cost of investments and associated tax-basis gross unrealized appreciation (depreciation) inherent in the fair value of investments as of December 31, 2020 and 2019, were as follows:

5 unchanged sentences

Deferred taxes:

The Company recognizes deferred taxes on the unrealized appreciation or depreciation of securities held through Taxable Blockers.

The Company recognizes deferred taxes on the unrealized appreciation or depreciation of securities held through OFSCC-MB.

Deferred tax assets and liabilities are measured using enacted corporate federal tax rates expected to apply to taxable income in the years in which those unrealized gains and losses are realized.

The recoverability of deferred tax assets is assessed and a valuation allowance is recorded to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized on the basis of the projected taxable income or other taxable events in the Taxable Blocker.

Deferred tax assets and liabilities, and related valuation allowance, as of December 31, 2020 and 2019, were as follows:

2 unchanged sentences

Valuation allowance on net deferred tax assets — —

Net unrealized appreciation (depreciation) on investments reported in the consolidated statements of operations includes $(416), $(4) and $4 of net deferred tax (benefit) expense for the years ended December 31, 2019, 2018 and 2017 , respectively.

Net unrealized appreciation (depreciation) on investments reported in the consolidated statements of operations includes $275, $(416) and $(4) of net deferred tax expense (benefit) for the years ended December 31, 2020, 2019 and 2018, respectively.

OFS Capital Corporation and Subsidiaries

2 unchanged sentences

Financial Highlights

The following is a schedule of financial highlights for the years ended December 31, 2019 , 2018 , 2017 , 2016 and 2015:

The following is a schedule of financial highlights for the each year in the five-year period ended December 31, 2020:

Years Ended December 31,

2020 2019 2018 2017 2016

Per share operating performance:

Net asset value per share at beginning of year

$ 12.46 $ 13.10 $ 14.12 $ 14.82 $ 14.76

Net investment income (4)

0.92 1.43 1.38 1.28 1.46

Net realized gain (loss) on non-control/non-affiliate investments (4)

(0.75) (0.29) (0.37) (0.26) 0.25

Net realized gain on affiliate investments (4)

Net unrealized appreciation (depreciation) on non-control/non-affiliate investments (10)

— — 0.01 0.81 —

Net unrealized depreciation on non-control/non-affiliate investments (4)

(0.82) (0.72) (0.19) (0.78) (0.69)

Net unrealized appreciation (depreciation) on affiliate investments (4)

0.94 0.40 (0.06) (0.41) 0.33

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

Total from investment operations

0.13 (0.10) (0.06) — 0.07

Loss on extinguishment of debt (4)

(0.06) — — — —

Loss on impairment of goodwill (4)

(0.08) — — — —

Total from operations 0.28 0.72 0.71 0.64 1.42

Distributions

(0.86) (1.36) (1.73) (1.36) (1.36)

Issuance of common stock (5)

(0.03) — — (0.03) —

Net asset value per share at end of year $ 11.85 $ 12.46 $ 13.10 $ 14.12 $ 14.82

Per share market value, end of period

$ 7.15 $ 11.17 $ 10.60 $ 11.90 $ 13.76

Total return based on market value (1)

(24.0) % 18.3 % 3.5 % (4.7) % 32.3 %

Total return based on net asset value (2)

13.6 % 6.7 % 7.8 % 5.0 % 10.9 %

Shares outstanding at end of period 13,409,559 13,376,836 13,357,337 13,340,217 9,700,297

Weighted average shares outstanding

13,394,005 13,364,244 13,348,203 12,403,706 9,693,801

Ratio/Supplemental Data (in thousands except ratios)

Average net asset value (3)

$ 148,175 $ 171,889 $ 182,468 $ 171,631 $ 142,818

Net asset value at end of year

$ 158,956 $ 166,627 $ 175,023 $ 188,336 $ 143,778

Net investment income

$ 12,295 $ 19,098 $ 18,385 $ 15,877 $ 14,145

Ratio of total expenses, net to average net assets (8)

22.4 % 19.4 % 13.4 % 10.2 % 11.9 %

Ratio of total expenses, net and losses on impairment of goodwill and extinguishment of debt to average net assets (9)

23.7 % — % — % — % — %

Ratio of net investment income to average net assets (10)

8.3 % 11.1 % 10.5 % 8.4 % 9.8 %

Ratio of goodwill impairment loss to average net assets 0.7 % — % — % — % — %

Ratio of loss on extinguishment of debt to average net assets 0.6 % — % — % — % — %

Portfolio turnover (7)

28.1 % 21.2 % 41.9 % 50.4 % 18.1 %

(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.

Calculated as ending net asset value less beginning net asset value, adjusting for distributions reinvested at 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 of the indicated period and the end of each calendar quarter within the period indicated.

The issuance of common stock on a per share basis reflects the incremental net asset value change as a result of the Offering.

Represents the impact of different share amounts used in calculating per share data as a result of calculating certain per share data based on a weighted average shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.

Portfolio turnover rate is calculated using the lesser of year-to-date sales and principal payments or year-to-date purchases over the average of the invested assets at fair value at the beginning of the indicated period and the end of each calendar quarter within the period indicated.

Ratio of total expenses before incentive fee waiver to average net assets was 13.4% for the year ended December 31, 2018.

Ratio of net investment income before incentive fee waiver to average net assets was 10.5% for the year ended December 31, 2018.

(4) Calculated on the average share method.

(5) The issuance of common stock on a per share basis reflects the incremental net asset value change as a result of the Offering.

OFS Capital Corporation and Subsidiaries

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

(6) Represents the impact of different share amounts used in calculating per share data as a result of calculating certain per share data based on a weighted average shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.

(7) Portfolio turnover rate is calculated using the lesser of year-to-date sales, Structured Finance Note distributions and principal payments or year-to-date purchases over the average of the invested assets at fair value at the beginning of the indicated period and the end of each calendar quarter within the period indicated.

(8) Ratio of total expenses before incentive fee waiver to average net assets was 22.7% and 13.4% for the years ended December 31, 2020 and December 31, 2018, respectively.

(9) Ratio of total expenses before incentive fee waiver and losses on impairment of goodwill and extinguishment of debt to average net assets was 24.0% for the year ended December 31, 2020.

(10) Ratio of net investment income before incentive fee waiver to average net assets was 8.0% and 10.5% for the years ended December 31, 2020 and December 31, 2018, respectively.

Capital Transactions

1 unchanged sentence

The Company intends to make distributions to stockholders on a quarterly basis of substantially all of its net investment income.

In addition, although the Company intends to make distributions of net realized capital gains, if any, at least annually, out of assets legally available for such distributions.

The Company may in the future decide to retain such net investment income and capital gains for investment or corporate purposes.

In addition, although the Company intends to make distributions of any net realized capital gains, out of assets legally available for such distributions at least annually, the Company may in the future decide to retain such net investment income and capital gains for investment or corporate purposes.

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 also be affected by its restrictions imposed by the SBA regulations on the Company's wholly owned SBIC subsidiary.

The Company’s ability to make distributions may also be affected by its restrictions imposed by the SBA regulations on the Company's wholly owned SBIC subsidiary, and currently require the prior approval of the SBA.

In addition, distributions from OFSCC-FS to the Company are restricted by the terms and conditions of the BNP Facility.

2 unchanged sentences

The following table summarizes distributions declared and paid for the years ended December 31, 2020, 2019 and 2018:

Date Declared

Year ended December 31, 2017

March 9, 2017

March 17, 2017

March 31, 2017

June 16, 2017

June 30, 2017

August 1, 2017

September 15, 2017

September 29, 2017

October 31, 2017

December 15, 2017

December 29, 2917

Date Declared Record Date Payment Date Amount

Per Share Cash

Distribution DRIP Shares

Issued DRIP Shares

Year ended December 31, 2018

February 12, 2018 (1)

March 22, 2018

March 29, 2018

February 27, 2018

March 22, 2018

March 29, 2018

June 22, 2018

June 29, 2018

August 3, 2018

September 14, 2018

September 28, 2018

October 30, 2018

December 17, 2018

December 31, 2018

March 22, 2018 March 29, 2018 $ 0.37 $ 4,886 4,459 $ 50

February 27, 2018 March 22, 2018 March 29, 2018 0.34 4,490 4,098 46

May 1, 2018 June 22, 2018 June 29, 2018 0.34 4,518 1,684 20

August 3, 2018 September 14, 2018 September 28, 2018 0.34 4,511 2,366 28

October 30, 2018 December 17, 2018 December 31, 2018 0.34 4,489 4,813 51

$ 1.73 $ 22,894 17,420 $ 195

Year ended December 31, 2019

March 5, 2019

March 22, 2019

March 29, 2019

April 30, 2019

June 21, 2019

June 28, 2019

July 30, 2019

September 23, 2019

September 30, 2019

November 6, 2019

December 24, 2019

December 31, 2019

March 5, 2019 March 22, 2019 March 29, 2019 $ 0.34 $ 4,497 3,797 $ 45

April 30, 2019 June 21, 2019 June 28, 2019 0.34 4,479 5,327 64

July 30, 2019 September 23, 2019 September 30, 2019 0.34 4,487 4,990 58

November 6, 2019 December 24, 2019 December 31, 2019 0.34 4,486 5,385 60

$ 1.36 $ 17,949 19,499 $ 227

Year ended December 31, 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

November 3, 2020 December 24, 2020 December 31, 2020 0.18 2,391 3,157 22

$ 0.86 $ 11,365 32,723 $ 150

(1) Special distribution representing undistributed net long-term capital gains realized by the Company in 2017.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following table represents DRIP participation for the years ended December 31, 2020, 2019 and 2018, respectively:

For the Year Ended

DRIP Shares Value

Total Distribution Declared

DRIP Shares Issued

Average Value Per Share

For the Year Ended DRIP Shares Value Total Distribution Declared DRIP Shares Issued Average Value Per Share

December 31, 2020 150 $ 11,516 32,723 $ 4.60

1 unchanged sentence

December 31, 2018 195 23,089 17,420 11.16

Since the Company’s IPO, distributions to stockholders total $109,040 , or $9.72 per share on a cumulative basis.

Since the Company’s IPO in 2012, distributions to stockholders total $120,555, or $10.58 per share on a cumulative basis.

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 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

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

actual tax attributes of the Company’s distributions for a 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 source of the distribution is mailed to the Company’s stockholders.

1 unchanged sentence

Stock repurchase program:

On May 22, 2018, the Board authorized the Company to initiate the Stock Repurchase Program under which the Company may acquire up to $10,000 of its outstanding common stock.

Under the 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 Stock Repurchase Program may be extended, modified or discontinued at any time for any reason.

The Company is authorized to acquire up to $10,000 of our outstanding common stock through May 22, 2022 (the “Stock Repurchase Program”).

Under the Stock Repurchase Program, the Company may repurchase shares in open-market transactions, including through block purchases, depending on prevailing market conditions and other factors.

The Company expects the Stock Repurchase Program to be in place through May 22, 2022, or until the approved dollar amount has been used to repurchase shares.

The Stock Repurchase Program does not obligate the Company to acquire any specific number of shares, and all repurchases will be made in accordance with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases.

The following table summarizes the shares of common stock the Company repurchased under the Stock Repurchase Program during the years ended December 31, 2019 and 2018 (amount in thousands except shares):

Total Number of Shares Purchased

Average Price Paid Per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet be Purchased Under the Plans or Programs

The Stock Repurchase Program may be extended, modified or discontinued at any time for any reason.

The following table summarizes the shares of common stock the Company repurchased under the Stock Repurchase Program (amount in thousands except shares):

Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet be Purchased Under the Plans or Programs

May 22, 2018 through December 31, 2018 300 $ 10.29 300 $ 9,997

January 1, 2019 through December 31, 2019 — — — —

Selected Quarterly Financial Data (Unaudited)

Three Months Ended

September 30,

Total investment income

Net investment income

Net loss on investments

Net increase in net assets resulting from operations

Net investment income per share – basic and diluted (1)

Net increase in net assets resulting from operations per share – basic and diluted (1)

Net asset value per share (2)

Three Months Ended

September 30,

Total investment income

Net investment income

Net gain (loss) on investments

Net increase (decrease) in net assets resulting from operations

Net investment income per share – basic and diluted (1)

Net increase (decrease) in net assets resulting from operations per share – basic and diluted (1)

Net asset value per share (2)

Based on weighted average shares outstanding for the respective period.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Based on shares outstanding at the end of the respective period.

January 1, 2020 through December 31, 2020 — — — —

Total 300 10.29 300 9,997

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

Year Ended December 31, 2020

Name of Portfolio Company

Investment Type (1)

Net Realized Gain (Loss)

Net change in unrealized appreciation/ (depreciation)

Interest & PIK Interest

Total Income (2)

December 31, 2018, Fair Value

Name of Portfolio Company Investment Type (1)

Net Realized Gain (Loss) Net change in unrealized appreciation/ (depreciation) Interest & PIK Interest Dividends Fees Total Income (2)

December 31, 2019, Fair Value Gross

Additions (3)

5 unchanged sentences

Common Equity — 1,737 — — — — 1,253 1,737 — 2,990

— 1,704 1,217 — 66 1,283 8,717 2,128 (33) 10,812

Total Control Investment — 1,704 1,217 — 66 1,283 8,717 2,128 (33) 10,812

Affiliate Investments

3rd Rock Gaming Holdings, LLC

Senior Secured Loan

3rd Rock Gaming Holdings, LLC Senior Secured Loan — (9,235) 572 — — 572 20,099 — (10,841) 9,258

Common Equity (6)

— (1,044) — — — — 1,044 — (1,044) —

— (10,279) 572 — — 572 21,143 — (11,885) 9,258

Chemical Resources Holdings, Inc.

1 unchanged sentence

Common Equity (6)

Contract Datascan Holdings, Inc.

Subordinated Loan

Preferred Equity (7)

Common Equity (6)

— 757 — — — — 2,662 758 — 3,420

— 717 1,352 — — 1,352 16,408 796 (40) 17,164

OFS Capital Corporation and Subsidiaries

2 unchanged sentences

Year Ended December 31, 2020

Name of Portfolio Company

Investment Type (1)

Net Realized Gain (Loss)

Net change in unrealized appreciation/ (depreciation)

Interest & PIK Interest

Total Income (2)

December 31, 2018, Fair Value

Name of Portfolio Company Investment Type (1)

Net Realized Gain (Loss) Net change in unrealized appreciation/ (depreciation) Interest & PIK Interest Dividends Fees Total Income (2)

December 31, 2019, Fair Value Gross

Additions (3)

1 unchanged sentence

December 31, 2020, Fair Value (5)

DRS Imaging Services, LLC

Senior Secured Loan

Common Equity (6)

Master Cutlery, LLC

Contract Datascan Holdings, Inc.

Subordinated Loan $ — $ (5) $ 912 $ — $ — $ 912 $ 8,000 $ 27 $ (8,027) $ —

Preferred Equity (7)

— (3,231) 250 — — 250 5,671 250 (3,231) 2,690

Common Equity (6)

— (625) — — — — 671 — (625) 46

— (3,861) 1,162 — — 1,162 14,342 277 (11,883) 2,736

DRS Imaging Services, LLC Senior Secured Loan — 101 1,188 — — 1,188 10,569 172 (10,741) —

Common Equity (6)

— 418 — — — — 1,331 418 — 1,749

— 519 1,188 — — 1,188 11,900 590 (10,741) 1,749

Master Cutlery, LLC Subordinated Loan (6)

— 91 — — — — 255 91 — 346

Preferred Equity (6)

— — — — — — — — — —

Common Equity (6)

— — — — — — — — — —

— 91 — — — — 255 91 — 346

NeoSystems Corp.

Preferred Stock (7)

— (181) 180 — — 180 2,250 181 (181) 2,250

Pfanstiehl Holdings, Inc.

1 unchanged sentence

Common Equity — 24,242 — 450 — 450 11,979 24,242 — 36,221

Professional Pipe Holdings, LLC

Senior Secured Loan

Common Equity (6)

— 24,261 361 450 — 811 15,767 24,261 (3,807) 36,221

OFS Capital Corporation and Subsidiaries

2 unchanged sentences

Year Ended December 31, 2020

Name of Portfolio Company

Investment Type (1)

Net Realized Gain (Loss)

Net change in unrealized appreciation/ (depreciation)

Interest & PIK Interest

Total Income (2)

December 31, 2018, Fair Value

Name of Portfolio Company Investment Type (1)

Net Realized Gain (Loss) Net change in unrealized appreciation/ (depreciation) Interest & PIK Interest Dividends Fees Total Income (2)

December 31, 2019, Fair Value Gross

Additions (3)

1 unchanged sentence

December 31, 2020, Fair Value (5)

TalentSmart Holdings, LLC

Senior Secured Loan

Professional Pipe Holdings, LLC Senior Secured Loan $ — $ (269) $ 848 $ — $ — $ 848 $ 7,170 $ 128 $ (1,212) $ 6,086

Common Equity (6)

— (1,205) — — — — 2,413 — (1,205) 1,208

— (1,474) 848 — — 848 9,583 128 (2,417) 7,294

TalentSmart Holdings, LLC Senior Secured Loan — — 855 — 205 1,060 9,833 167 (10,000) —

Senior Secured Loan (Revolver) — — 42 — — 42 242 258 (500) —

Common Equity (6)

— (289) — — — 1,500 95 (289) 1,306

— (289) 897 — 205 1,102 11,575 520 (10,789) 1,306

TRS Services, Inc.

3 unchanged sentences

Common Equity (6)

TTG Healthcare, LLC

Senior Secured Loan

— — — — — — — — — —

— 1,184 156 — 7 163 18,265 1,209 (18,559) 915

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Year Ended December 31, 2020

Name of Portfolio Company Investment Type (1)

Net Realized Gain (Loss) Net change in unrealized appreciation/ (depreciation) Interest & PIK Interest Dividends Fees Total Income (2)

December 31, 2019, Fair Value Gross

Additions (3)

Reductions (4)

December 31, 2020, Fair Value (5)

TTG Healthcare, LLC Senior Secured Loan $ — $ 291 $ 1,338 $ — $ 253 $ 1,591 $ 11,767 $ 7,891 $ (128) $ 19,530

Preferred Equity (6)

— 1,653 — — — — 2,424 1,653 — 4,077

— 1,944 1,338 — 253 1,591 14,191 9,544 (128) 23,607

Total Affiliate Investments — 12,633 8,054 450 465 8,969 135,679 37,598 (70,430) 102,846

3 unchanged sentences

(2) Represents the total amount of interest, fees or dividends included in 2020 income for the portion of the year ended December 31, 2020, that an investment was included in Control or Affiliate Investment categories, respectively.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

(3) Gross additions include increases in cost basis resulting from a new portfolio investment, PIK interest, fees and dividends, accretion of OID, and net increases in unrealized net appreciation or decreases in net unrealized depreciation.

4 unchanged sentences

(7) Dividends credited to income include dividends contractually earned but not declared.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Year Ended December 31, 2019

Name of Portfolio Company

Investment Type (1)

Net Realized Gain (Loss)

Net change in unrealized appreciation/ (depreciation)

Interest & PIK Interest

Total Income (2)

December 31, 2017, Fair Value

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, 2018, Fair Value Gross

Additions (3)

3 unchanged sentences

MTE Holding Corp.

Subordinated Secured Loan

Subordinated Loan $ — $ (15) $ 1,172 $ — $ 42 $ 1,214 $ 7,296 $ 183 $ (15) $ 7,464

Common Equity — (1,396) — 89 — 89 2,649 — (1,396) 1,253

— (1,411) 1,172 89 42 1,303 9,945 183 (1,411) 8,717

Total Control Investment — (1,411) 1,172 89 42 1,303 9,945 183 (1,411) 8,717

Affiliate Investments

3rd Rock Gaming Holdings, LLC

Senior Secured Loan

3rd Rock Gaming Holdings, LLC Senior Secured Loan — 253 2,360 — — 2,360 20,023 451 (375) 20,099

Common Equity (6)

All Metals Holding, LLC

— (29) — — — — 1,073 — (29) 1,044

— 224 2,360 — — 2,360 21,096 451 (404) 21,143

Chemical Resources Holdings, Inc.

Senior Secured Loan — 154 1,395 — 204 1,599 — 13,932 (186) 13,746

Common Equity (6)

— 849 — — — — — 2,662 — 2,662

— 1,003 1,395 — 204 1,599 — 16,594 (186) 16,408

Contract Datascan Holdings, Inc.

Subordinated Loan — (5) 931 — — 931 8,000 5 (5) 8,000

Preferred Equity (7)

— (1,636) 656 — — 656 6,652 656 (1,637) 5,671

Common Equity (6)

— (1,642) — — — — 2,313 — (1,642) 671

— (3,283) 1,587 — — 1,587 16,965 661 (3,284) 14,342

OFS Capital Corporation and Subsidiaries

2 unchanged sentences

Year Ended December 31, 2019

Name of Portfolio Company

Investment Type (1)

Net Realized Gain (Loss)

Net change in unrealized appreciation/ (depreciation)

Interest & PIK Interest

Total Income (2)

December 31, 2017, Fair Value

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, 2018, Fair Value Gross

Additions (3)

1 unchanged sentence

December 31, 2019, Fair Value (5)

Contract Datascan Holdings, Inc.

Subordinated Loan

Preferred Equity A (7)

Common Equity (6)

DRS Imaging Services, LLC

Senior Secured Loan

Common Equity (6)

Jobson Healthcare Information (8)

Senior Secured Loan

DRS Imaging Services, LLC Senior Secured Loan $ — $ 56 $ 1,317 $ — $ — $ 1,317 $ 10,617 $ 75 $ (123) $ 10,569

Common Equity (6)

Master Cutlery, LLC

Subordinated Loan

— 134 — — — — 1,197 134 — 1,331

— 190 1,317 — — 1,317 11,814 209 (123) 11,900

Master Cutlery, LLC Subordinated Loan (6)

— (595) — — — — 850 718 (1,313) 255

Preferred Equity (6)

— — — — — — — — — —

Common Equity (6)

— — — — — — — — — —

— (595) — — — — 850 718 (1,313) 255

NeoSystems Corp.

Subordinated Loan

Preferred Stock (7)

— (161) 162 — — 162 2,250 162 (162) 2,250

Pfanstiehl Holdings, Inc.

Subordinated Loan — 7 390 — — 390 3,788 8 (8) 3,788

Common Equity — 3,619 — 413 — 413 8,360 3,619 — 11,979

— 3,626 390 413 — 803 12,148 3,627 (8) 15,767

Professional Pipe Holdings, LLC Senior Secured Loan — 343 999 — — 999 7,466 470 (766) 7,170

Common Equity (6)

— 1,644 — — — — 769 1,644 — 2,413

— 1,987 999 — — 999 8,235 2,114 (766) 9,583

TalentSmart Holdings, LLC Senior Secured Loan — — 203 — — 203 — 10,008 (175) 9,833

Senior Secured Loan (Revolver) — — 4 — — 4 — 251 (9) 242

Common Equity (6)

— — — — — — — 1,500 — 1,500

— — 207 — — 207 — 11,759 (184) 11,575

OFS Capital Corporation and Subsidiaries

2 unchanged sentences

Year Ended December 31, 2019

Name of Portfolio Company

Investment Type (1)

Net Realized Gain (Loss)

Net change in unrealized appreciation/ (depreciation)

Interest & PIK Interest

Total Income (2)

December 31, 2017, Fair Value

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, 2018, Fair Value Gross

Additions (3)

1 unchanged sentence

December 31, 2019, Fair Value (5)

Pfanstiehl Holdings, Inc.

Subordinated Loan

Common Equity

Professional Pipe Holdings, LLC

Senior Secured Loan

Common Equity (6)

TRS Services, Inc.

1 unchanged sentence

Preferred Equity (Class AA units) (7)

— (6) 80 — — 80 473 80 (6) 547

Preferred Equity (Class A units) (6)

— 2,269 — — — — 826 2,269 — 3,095

Common Equity (6)

— — — — — — — — — —

— 2,442 1,922 — 6 1,928 15,745 17,344 (14,824) 18,265

TTG Healthcare, LLC Senior Secured Loan — (171) 1,282 — 11 1,293 — 14,951 (3,184) 11,767

Preferred Equity (6)

— 115 — — 2,424 — 2,424

— (56) 1,282 — 11 1,293 — 17,375 (3,184) 14,191

Total Affiliate Investments — 5,376 11,621 413 221 12,255 89,103 71,014 (24,438) 135,679

4 unchanged sentences

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

(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 unrealized depreciation.

3 unchanged sentences

(7) Dividends credited to income include dividends contractually earned but not declared.

Jobson became an affiliate investment effective December 31, 2017, due to an increase in voting ownership interest.

OFS Capital Corporation and Subsidiaries

2 unchanged sentences

Subsequent Events Not Disclosed Elsewhere

On January 5, 2021, SBIC I LP prepaid $9,765 of SBA debentures that were contractually due September 1, 2022 and September 1, 2024.

On February 10, 2021, the Company and U.S.

Bank National Association, entered into a Fifth Supplemental Indenture, relating to the Company’s issuance of $100,000 aggregate principal amount of its 4.75% notes due 2026 (the “Unsecured Notes Due February 2026”).

The Unsecured Notes Due February 2026 will mature on February 10, 2026, and the Company may redeem the Unsecured Notes Due February 2026 in whole or in part at any time, or from time to time, at the Company’s 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.

Also, on February 10, 2021, the Company caused notices to be issued to the holders of the Unsecured Notes Due April 2025 and the holders of the Unsecured Notes Due October 2025 regarding its exercise of the option to redeem all of the issued and outstanding Unsecured Notes Due April 2025 and Unsecured Notes Due October 2025.

The Company will redeem all $50,000 in aggregate principal amount of the Unsecured Notes Due April 2025 and all $48,525 in aggregate principal amount of the Unsecured Notes Due October 2025 on March 12, 2021.

The Unsecured Notes Due April 2025 and the Unsecured Notes Due October 2025 will be 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.

The Company expects to recognize a loss on extinguishment of debt of $2,295 related to the charge-off of deferred borrowing costs on the redemption of the notes.

On March 2, 2021, the Company’s Board declared a distribution of $0.20 per share for the first quarter of 2021, payable on March 31, 2021 to stockholders of record as of March 24, 2021.

On March 1, 2020, SBIC I LP prepaid $16,110 of SBA debentures that were contractually due September 1, 2023, March 1, 2024 and September 1, 2024.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data