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Item 8. Financial Statements and Supplementary Data

2022-03-04 compared with 2021-03-05 · 675 added, 741 removed, 1563 unchanged (48% of the section changed)

12 unchanged sentences

Opinion on the Consolidated Financial Statements

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.

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, 2021 and 2020, the related consolidated statements of operations, changes in net assets, and cash flows for each of the years in the three‑year period ended December 31, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

6 unchanged sentences

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

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

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

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

Accordingly, we express no such opinion.

1 unchanged sentence

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, 2020 and 2019, by correspondence with custodians, agents, or portfolio companies, or by other appropriate auditing procedures where replies were not received.

Such procedures also included confirmation of investments owned as of December 31, 2021, 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.

10 unchanged sentences

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.

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 subjective 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.

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:

5 unchanged sentences

March 4, 2022

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

OFS Capital Corporation

Chicago, Illinois

Opinion on the Consolidated Financial Statements

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

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

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our 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.

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

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

Our 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 audits provide a reasonable basis for our opinion.

/s/ BDO USA, LLP

We served as the Company’s auditor from 2014 to 2019.

Chicago, Illinois

March 15, 2019

OFS Capital Corporation and Subsidiaries

6 unchanged sentences

Total investments at fair value (amortized cost of $457,312 and $461,023, respectively) 507,099 442,323

Cash and cash equivalents 37,708 13,447

Cash 43,048 37,708

Receivable for investments sold 14,893 —

Interest receivable 1,475 1,298

1 unchanged sentence

Total assets $ 569,048 $ 483,813

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

Revolving lines of credit $ 100,000 $ 32,050

SBA debentures (net of deferred debt issuance costs of $555 and $1,088, respectively) 69,365 104,182

27 unchanged sentences

Total interest income 42,384 43,044 49,829

Payment-in-kind interest and dividend income:

Non-control/non-affiliate investments 981 399 668

Affiliate investments 674 1,257 1,321

Control investment 377 169 110

Total payment-in-kind interest and dividend income:

2,032 1,825 2,099

Dividend income:

Non-control/non-affiliate investments 888 — —

Affiliate investments 1,143 955 1,311

8 unchanged sentences

Management fees 7,669 7,605 8,271

Incentive fees 2,025 4,760 4,409

Income Incentive Fee 2,352 2,025 4,760

Capital Gains Fee 1,916 — —

Professional fees 1,670 1,993 1,814

1 unchanged sentence

Other expenses 1,433 1,335 1,002

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

Total expenses before Income Incentive Fee waiver 34,313 33,621 33,423

Income Incentive Fee waiver (Note 3) — (441) —

Total expenses, net of Income Incentive Fee waiver 34,313 33,180 33,423

Net investment income 13,450 12,295 19,098

2 unchanged sentences

Net realized gain on affiliate investments 7,545 — —

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)

Income tax expense on net realized investment gains (1,027) — —

Net unrealized appreciation (depreciation) on non-control/non-affiliate investments 38,551 (11,295) (9,194)

Net unrealized appreciation on affiliate investments 28,153 12,633 5,376

Net unrealized appreciation (depreciation) on control investment 1,783 1,704 (1,411)

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

Deferred tax benefit (expense) on investments net unrealized appreciation/depreciation 114 275 (416)

Net gain (loss) on investments 48,005 (6,704) (9,545)

Losses on extinguishment of debt (4,591) (820) —

4 unchanged sentences

Distributions declared per common share $ 0.91 $ 0.86 $ 1.36

Basic and diluted weighted average shares outstanding 13,394,005 13,364,244 13,348,203

Basic and diluted weighted average common shares outstanding 13,413,861 13,394,005 13,364,244

See Notes to Consolidated Financial Statements.

5 unchanged sentences

Balances at January 1, 2019 — $ — 13,357,337 $ 134 $ 187,540 $ (12,651) $ 175,023

Net increase in net assets resulting from operations:

Net increase (decrease) in net assets resulting from operations:

Net investment income — — — — — 19,098 19,098

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

Net realized losses on investments, net of taxes — — — — — (3,900) (3,900)

Unrealized depreciation on investments, net of deferred taxes — — — — — (5,645) (5,645)

2 unchanged sentences

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

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

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

1 unchanged sentence

Balances at December 31, 2019 — $ — 13,376,836 $ 134 $ 187,305 $ (20,812) $ 166,627

Net increase in net assets resulting from operations:

Net increase (decrease) in net assets resulting from operations:

Net investment income — — — — — 12,295 12,295

Net realized losses on investments — — — — — (3,900) (3,900)

Unrealized depreciation on investments, net of deferred taxes — — — — — (5,645) (5,645)

Net realized losses on investments, net of taxes — — — — — (10,022) (10,022)

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 —

4 unchanged sentences

Balances at December 31, 2020 — $ — 13,409,559 $ 134 $ 187,124 $ (28,302) $ 158,956

Net increase in net assets resulting from operations:

Net increase (decrease) in net assets resulting from operations:

Net investment income — — — — — 13,450 13,450

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

Net realized losses on investments, net of taxes — — — — — (20,596) (20,596)

Unrealized appreciation on investments, net of deferred taxes — — — — — 68,601 68,601

Loss on extinguishment of debt — — — — — (4,591) (4,591)

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

Tax reclassifications of permanent differences — — — — (2,142) 2,142 —

2 unchanged sentences

Dividends declared — — — — — (12,207) (12,207)

Net increase (decrease) for the year ended December 31, 2020 — — 32,723 — (181) (7,490) (7,671)

Repurchase of common stock — — (700) — (5) — (5)

Net increase for the year ended December 31, 2021 — — 12,854 — (2,011) 46,799 44,788

Balances at December 31, 2021 — $ — 13,422,413 $ 134 $ 185,113 $ 18,497 $ 203,744

9 unchanged sentences

Net realized loss on investments 19,568 10,022 3,900

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

Net unrealized (appreciation) depreciation on investments, net of deferred taxes (68,601) (3,318) 5,645

Income tax expense from realized gains on investments 1,027 — —

Losses on extinguishment of debt 4,591 820 —

Loss on impairment of goodwill — 1,077 —

Amortization and write-off of deferred offering costs 1,969 1,690 1,332

Amortization of intangible asset 222 206 195

Amortization of Net Loan Fees (2,442) (1,640) (1,424)

2 unchanged sentences

Accretion of interest income on Structured Finance Notes (9,861) (5,877) (2,861)

Amortization and write-off of debt issuance costs 1,690 1,332 781

Amortization of intangible asset 206 195 195

Purchase and origination of portfolio investments (268,901) (130,399) (222,173)

5 unchanged sentences

Interest payable 509 (523) 714

Receivable for investments sold (14,893) — —

Payable to investment adviser and affiliates 2,965 (854) 406

3 unchanged sentences

Cash flows from financing activities

Proceeds from unsecured notes offerings, net of discounts

24,250 52,270 95,446

Proceeds from offerings of Unsecured Notes, net of discounts 175,506 24,250 52,270

Redemptions of Unsecured Notes (177,850) — —

Distributions paid to stockholders (12,071) (11,365) (17,949)

(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

(239) (1,860) (643)

Borrowings under revolving lines of credit 145,350 86,200 151,975

Repayments under revolving lines of credit (77,400) (110,600) (107,525)

Repayments of SBA debentures (35,350) (44,610) —

Payments of deferred debt issuance costs and other financing costs (836) (239) (1,860)

Net cash provided by (used in) financing activities 17,349 (56,364) 76,911

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

Cash and cash equivalents — beginning of year 13,447 38,172 72,952

Cash and cash equivalents — end of year $ 37,708 $ 13,447 $ 38,172

Net increase (decrease) in cash 5,340 24,261 (24,725)

Cash — beginning of year 37,708 13,447 38,172

Cash — end of year $ 43,048 $ 37,708 $ 13,447

Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for interest $ 15,037 $ 17,641 $ 13,754

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

Reinvestment of stockholder distributions 136 150 227

9 unchanged sentences

Non-control/Non-affiliate Investments

All Star Auto Lights, Inc.

(4) Motor Vehicle Parts (Used) Merchant Wholesalers

3rd Rock Gaming Holdings, LLC (6) (10) Software Publishers

Senior Secured Loan 4.00% N/A 3/13/2018 3/12/2023 $ 16,728 $ 14,358 $ 7,027 3.3 %

AAdvantage Loyalty IP Ltd.

and American Airlines, Inc.

(14) (15) (22) Scheduled Passenger Air Transportation

Senior Secured Loan 5.50% (L +4.75%) 3/10/2021 4/20/2028 364 360 377 0.2

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

Aegion Corporation (15) (22) Water and Sewer Line and Related Structures Construction

Senior Secured Loan 5.50% (L +4.75%) 4/1/2021 5/17/2028 630 627 628 0.3

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

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

Allen Media, LLC (14) (15) Cable and Other Subscription Programming

Senior Secured Loan 5.72% (L +5.50%) 3/2/2021 2/10/2027 3,807 3,801 3,810 1.8

BayMark Health Services, Inc.

Outpatient Mental Health and Substance Abuse Centers

All Star Auto Lights, Inc.

(4) (15) Motor Vehicle Parts (Used) Merchant Wholesalers

Senior Secured Loan 8.25% (L +7.25%) 12/19/2019 8/20/2025 23,335 23,005 23,052 11.3

Community Intervention Services, Inc.

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

Subordinated Loan 7.00% cash / 6.00% PIK N/A 7/16/2015 1/16/2021 10,225 7,639 105 0.1

Confie Seguros Holdings II Co.

Insurance Agencies and Brokerages

Autokiniton US Holdings, Inc.

(14) (15) Automotive Parts and Accessories Stores

Senior Secured Loan 5.00% (L +4.50%) 3/26/2021 4/6/2028 2,696 2,688 2,704 1.3

Finco LLC (14) (15) Taxi Service

Avison Young (15) Nonresidential Property Managers

Senior Secured Loan 5.97% (L +5.75%) 11/25/2021 1/31/2026 2,987 2,972 2,972 1.5

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)

Ball Metalpack Metal Can Manufacturing

Senior Secured Loan 9.75% (L +8.75%) 6/8/2021 7/31/2026 2,167 2,143 2,167 1.1

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

Senior Secured Loan 4.50% (L +3.75%) 2/26/2021 3/6/2028 1,967 1,958 1,972 1.0

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

Consolidated Schedule of Investments

December 31, 2021

4 unchanged sentences

Amount Amortized Cost Fair Value (3) Percent of

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

BayMark Health Services, Inc.

(15) Outpatient Mental Health and Substance Abuse Centers

Senior Secured Loan 9.50% (L +8.50%) 6/10/2021 6/11/2028 $ 4,962 $ 4,893 $ 5,061 2.5 %

Senior Secured Loan (Delayed Draw) (5) n/m (18) (L +8.50%) 6/10/2021 6/11/2028 — (124) 170 0.1

4,962 4,769 5,231 2.6

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

Common Equity (20,628 common shares) 3/27/2020 703 29 —

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

Senior Secured Loan 7.50% (L +6.75%) 9/28/2018 3/30/2029 4,838 4,827 4,887 2.4

(14) (15) Software Publishers

Senior Secured Loan 5.18% (L +5.00%) 3/2/2021 7/2/2026 2,271 2,265 2,270 1.1

Creation Technologies (15) (22) Bare Printed Circuit Board Manufacturing

Senior Secured Loan 6.00% (L +5.50%) 9/24/2021 10/5/2028 2,000 1,985 1,977 1.0

DHX Media Ltd.

(14) (15) (22) Motion Picture and Video Production

Senior Secured Loan 5.00% (L +4.25%) 3/19/2021 3/18/2028 3,974 3,929 3,970 1.9

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

Senior Secured Loan 3.36% (L +3.25%) 11/19/2019 8/24/2026 1,955 1,957 918 0.5

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

DIRECTV Financing, LLC (14) (15) Wired Telecommunications Carriers

Senior Secured Loan 5.75% (L +5.00%) 7/22/2021 8/2/2027 4,395 4,388 4,405 2.2

4 unchanged sentences

9,207 9,894 9,341 4.5

Electrical Components International, Inc.

Current-Carrying Wiring Device Manufacturing

Senior Secured Loan 8.60% (L +8.50%) 4/8/2021 6/26/2026 3,000 2,653 2,954 1.4

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2021

(Dollar amounts in thousands)

Portfolio Company (1)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

EnergySolutions, LLC (14) (15) Hazardous Waste Treatment and Disposal

Senior Secured Loan 4.75% (L +3.75%) 7/8/2021 5/9/2025 $ 1,837 $ 1,833 $ 1,837 0.9 %

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 — —

Senior Secured Loan 7.50% N/A 12/31/2021 12/31/2025 6,424 6,424 6,424 3.2

Senior Secured Loan 10.00% PIK N/A 12/31/2021 12/31/2026 6,424 6,424 4,645 2.3

Senior Secured Loan (Revolver) (5) 7.50% N/A 11/29/2021 12/31/2025 563 563 563 0.3

Equity Participation Rights (23) 12/31/2021 — 4,722 — —

13,411 18,133 11,632 5.8

3 unchanged sentences

Other Aircraft Parts and Auxiliary Equipment Manufacturing

Senior Secured Loan 9.75% (L +9.50%) 12/29/2017 9/8/2024 5,000 4,931 4,102 2.6

Common Equity (368,852 Class A units) (10) 12/29/2017 450 77 —

Common Equity (40,984 Class B units) (10) 12/29/2017 50 3 —

Honor HN Buyer Inc (15) Services for the Elderly and Persons with Disabilities

Senior Secured Loan 7.00% (L +6.00%) 10/15/2021 10/15/2027 6,598 6,471 6,471 3.2

Senior Secured Loan (Delayed Draw) (5) n/m (18) (L +6.00%) 10/15/2021 10/15/2027 — (40) (40) —

Senior Secured Loan (Revolver) (5) n/m (18) (L +6.00%) 10/15/2021 10/15/2027 — (15) (15) —

6,598 6,416 6,416 3.2

Inergex Holdings, LLC Other Computer Related Services

Hunter Fan Company (14) (15) Small Electrical Appliance Manufacturing

Senior Secured Loan 5.75% (L +5.00%) 8/10/2021 5/8/2028 4,988 4,997 4,997 2.5

Inergex Holdings, LLC Other Computer Related Services

Senior Secured Loan 8.00% cash / 1.00% PIK (L +8.00%) 10/1/2018 10/1/2024 15,260 15,030 15,260 7.5

Senior Secured Loan (Revolver) (5) n/m (18) (L +7.00%) 10/1/2018 10/1/2024 — (13) — —

15,260 15,017 15,260 7.5

Intouch Midco Inc.

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

Senior Secured Loan 4.85% (L +4.75%) 12/20/2019 8/24/2025 2,909 2,872 2,865 1.4

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

Consolidated Schedule of Investments

December 31, 2021

4 unchanged sentences

Amount Amortized Cost Fair Value (3) Percent of

Institutional Shareholder Services, Inc.

Administrative Management and General Management Consulting Services

Ivanti Software, Inc.

(14) (15) Software Publishers

Senior Secured Loan 5.00% (L +4.25%) 3/26/2021 12/1/2027 $ 2,985 $ 2,996 $ 2,993 1.5 %

Intouch Midco Inc.

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

JP Intermediate B, LLC (15) Drugs and Druggists' Sundries Merchant Wholesalers

Senior Secured Loan 6.50% (L +5.50%) 1/14/2021 11/15/2025 5,736 5,529 5,550 2.7

I&I Sales Group, LLC Marketing Consulting Services

KNS Acquisition Corp.

(14) (15) Electronic Shopping and Mail-Order Houses

Senior Secured Loan 7.00% (L +6.25%) 4/16/2021 4/21/2027 6,956 6,913 6,870 3.4

Kreg LLC (15) Other Ambulatory Health Care Services

Senior Secured Loan 7.25% (L +6.25%) 12/20/2021 12/20/2026 20,500 20,347 20,347 10.0

Senior Secured Loan (Revolver) (5) n/m (18) (L +6.25%) 12/20/2021 12/20/2026 — (17) (17) —

20,500 20,330 20,330 10.0

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

LogMeIn, Inc.

(14) (15) Data Processing, Hosting, and Related Services

Senior Secured Loan 4.86% (L +4.75%) 3/26/2021 8/31/2027 2,979 2,977 2,966 1.5

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

Preferred Equity (335 Class Z units) (13) 9/12/2018 325 97 0.1

Preferred Equity (1,485 Class A units), 8% PIK (4) (13) 7/14/2017 1,571 — —

Preferred Equity (1,198 Class B units) (4) 7/14/2017 1,198 — —

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

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

Magenta Buyer LLC (14) (15) Software Publishers

Senior Secured Loan 5.75% (L +5.00%) 7/28/2021 7/27/2028 4,850 4,836 4,845 2.4

Parfums Holding Company, Inc.

Cosmetics, Beauty Supplies, and Perfume Stores

McGraw Hill Global Education Holdings, LLC (14) (15) All Other Publishers

Senior Secured Loan 4.85% (L +4.75%) 4/1/2021 7/28/2028 2,310 2,288 2,303 1.1

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

Senior Secured Loan (15) 7.50% (L +6.50%) 7/16/2019 7/16/2025 22,364 22,364 22,024 10.8

Senior Secured Loan (Revolver) 7.50% (L +6.50%) 7/16/2019 7/16/2025 634 626 610 0.3

22,998 22,990 22,634 11.1

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

Consolidated Schedule of Investments

December 31, 2021

4 unchanged sentences

Amount Amortized Cost Fair Value (3) Percent of

Pelican Products, Inc.

Unlaminated Plastics Profile Shape Manufacturing

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

(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

Molded Devices, Inc.

(15) Other Industrial Machinery Manufacturing

Senior Secured Loan 8.25% (Prime + 5.00%) 11/1/2021 11/1/2026 $ 8,069 $ 7,991 $ 7,991 3.9 %

Senior Secured Loan (Delayed Draw) (5) n/m (18) (Prime + 5.00%) 11/1/2021 11/1/2026 — (7) (7) —

Senior Secured Loan (Revolver) (5) n/m (18) (Prime + 5.00%) 11/1/2021 11/1/2026 — (9) (9) —

8,069 7,975 7,975 3.9

Quest Software US Holdings Inc.

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

Odyssey Logistics and Technology Corporation (14) (15) Freight Transportation Arrangement

Senior Secured Loan 5.00% (L +4.00%) 4/5/2021 10/12/2024 1,985 1,960 1,970 1.0

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

One GI LLC (15) Offices of Other Holding Companies

Senior Secured Loan (Delayed Draw) 7.75% (L +6.75%) 12/13/2021 3/13/2022 5,515 5,403 5,403 2.7

Senior Secured Loan (Delayed Draw) (5) n/m (18) (L +6.75%) 12/13/2021 12/13/2023 — (39) (39) —

Senior Secured Loan (Revolver) (5) n/m (18) (L +6.75%) 12/13/2021 12/22/2025 — (29) (29) —

5,515 5,335 5,335 2.7

Parfums Holding Company, Inc.

(14) (15) Cosmetics, Beauty Supplies, and Perfume Stores

Senior Secured Loan 4.10% (L +4.00%) 6/25/2019 6/30/2024 1,534 1,533 1,531 0.8

Rocket Software, Inc.

(15) Software Publishers

(14) (15) Management Consulting Services

Senior Secured Loan 4.50% (L +3.75%) 4/2/2021 2/1/2028 835 836 837 0.4

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

PM Acquisition LLC (20) All Other General Merchandise Stores

Common Equity (499 units) (10) (13) 9/30/2017 499 1,698 0.8

SkyMiles IP Ltd.

and Delta Air Lines, Inc.

(14) (15) Scheduled Passenger Air Transportation

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

Senior Secured Loan 9.75% cash / 1.00% PIK (L +9.75%) 3/23/2018 3/24/2025 5,367 5,344 5,378 2.6

Resource Label Group, LLC (14) (15) Commercial Printing (except Screen and Books)

Senior Secured Loan 5.00% (L +4.25%) 7/2/2021 7/7/2028 694 692 694 0.3

Senior Secured Loan (Delayed Draw) 5.00% (L +4.25%) 7/2/2021 7/2/2028 2,743 2,735 2,742 1.3

3,437 3,427 3,436 1.6

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

Consolidated Schedule of Investments

December 31, 2021

4 unchanged sentences

Amount Amortized Cost Fair Value (3) Percent of

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

Common Equity (345,339 Class A units) 1/17/2018 $ 492 $ 794 0.4 %

RSA Security (15) Computer and Computer Peripheral Equipment and Software Merchant Wholesalers

Senior Secured Loan (14) 5.50% (L +4.75%) 4/16/2021 4/27/2028 2,797 2,782 2,680 1.3

Senior Secured Loan 8.50% (L +7.75%) 4/16/2021 4/27/2029 4,450 4,392 4,223 2.1

7,247 7,174 6,903 3.4

RumbleOn, Inc.

(15) (22) Other Industrial Machinery Manufacturing

Senior Secured Loan 9.25% (L +8.25%) 8/31/2021 8/31/2026 4,190 3,964 4,006 2.0

Senior Secured Loan (Delayed Draw) (5) n/m (18) (L +8.25%) 8/31/2021 2/23/2023 — (18) (79) —

Warrants (warrants to purchase up to $600,000 in common stock) 8/31/2021 2/28/2023 (12) — 200 274 0.1

4,190 4,146 4,201 2.1

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

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

Preferred Equity (1,603 Series B units) 9/4/2020 160 12 —

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

Signal Parent, Inc.

(14) (15) New Single-Family Housing Construction (except For-Sale Builders)

Senior Secured Loan 4.25% (L +3.50%) 3/25/2021 4/3/2028 1,840 1,823 1,794 0.9

SourceHOV Tax, Inc.

1 unchanged sentence

Senior Secured Loan 7.50% (L +6.50%) 3/16/2020 3/16/2025 19,790 19,648 19,935 9.8

Senior Secured Loan (Revolver) (5) n/m (18) (L +6.50%) 5/17/2021 3/17/2025 — (15) — —

19,790 19,633 19,935 9.8

Southern Technical Institute, LLC (4) (10)(23) Colleges, Universities, and Professional Schools

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

Equity Participation Rights 6/27/2018 — 7,408 3.6

Spring Education Group, Inc.

1 unchanged sentence

Senior Secured Loan 8.47% (L +8.25%) 7/26/2018 7/30/2026 6,399 6,336 5,916 2.9

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2021

(Dollar amounts in thousands)

Portfolio Company (1)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

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

1 unchanged sentence

Senior Secured Loan 6.00% (L +5.00%) 12/31/2020 8/26/2024 1,056 1,048 1,056 0.5

Senior Secured Loan 6.00% (L +5.00%) 12/8/2021 8/26/2024 2,660 2,634 2,660 1.3

Senior Secured Loan (Revolver) (5) n/m (18) (L +5.00%) 8/26/2019 8/26/2024 — (4) — —

13,491 13,401 13,491 6.6

Stancor, L.P.

(4) Pump and Pumping Equipment Manufacturing

Preferred Equity (1,250,000 Class A units), 8% PIK (10) 8/19/2014 1,501 1,281 0.8

SS Acquisition, LLC (15) Sports and Recreation Instruction

Senior Secured Loan (8) 7.88% (L +6.88%) 12/30/2021 12/30/2026 3,042 3,011 3,011 1.5

Senior Secured Loan (Delayed Draw) (5) n/m (18) (L +6.88%) 12/30/2021 12/30/2026 — — — —

3,042 3,011 3,011 1.5

Staples, Inc.

4 unchanged sentences

Senior Secured Loan 9.00% (L +8.00%) 5/15/2018 4/30/2026 9,073 9,071 9,073 4.5

Teneo Global LLC (14) (15) Management Consulting Services

Senior Secured Loan 6.25% (L +5.25%) 9/10/2021 7/11/2025 1,421 1,415 1,427 0.7

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

Senior Secured Loan 8.00% (L +7.00%) 12/21/2021 12/22/2024 16,333 16,333 16,382 8.0

Senior Secured Loan (Revolver) (5) n/m (18) (L +7.00%) 12/21/2021 — (46) 14 —

16,333 16,287 16,396 8.0

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

(14) (15) Directory and Mailing List Publishers

Senior Secured Loan 9.50% (L +8.50%) 2/18/2021 3/1/2026 2,050 2,004 2,085 1.0

Tolemar Acquisition, INC.

(15) Motorcycle, Bicycle, and Parts Manufacturing

Senior Secured Loan 7.00% (L +6.00%) 10/14/2021 10/14/2026 14,889 14,818 14,818 7.3

Senior Secured Loan (Revolver) (5) 7.00% (L +6.00%) 10/14/2021 10/14/2026 360 348 348 0.2

15,249 15,166 15,166 7.5

TruGreen Limited Partnership Landscaping Services

Senior Secured Loan 9.25% (L +8.50%) 5/13/2021 11/2/2028 4,500 4,630 4,590 2.3

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

Consolidated Schedule of Investments

December 31, 2021

4 unchanged sentences

Amount Amortized Cost Fair Value (3) Percent of

Tank Holding Corp.

(15) Unlaminated Plastics Profile Shape Manufacturing

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

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 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

1 unchanged sentence

Warrants (29,374 units) 7/26/2012 3/5/2022 (12) 82 8 —

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

West Corporation (14) (15) All Other Telecommunications

Senior Secured Loan 4.50% (L +3.50%) 2/26/2021 10/10/2024 887 874 838 0.4

Weight Watchers International, Inc.

(14) (15) Diet and Weight Reducing Centers

Senior Secured Loan 5.00% (L +4.00%) 7/29/2021 10/10/2024 2,611 2,555 2,485 1.2

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

3,498 3,429 3,323 1.6

Yahoo / Verizon Media (14) (15) Internet Publishing and Broadcasting and Web Search Portals

Senior Secured Loan 6.25% (L +5.50%) 7/21/2021 9/1/2027 3,294 3,249 3,299 1.6

Total Debt and Equity Investments $ 350,939 $ 353,447 $ 346,366 170.1 %

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

Structured Finance Note Investments (22)

Subordinated Notes and Mezzanine Debt (9) (16)

Apex Credit CLO 2020 (7)

Subordinated Notes 10.20% 11/16/2020 10/20/2031 $ 11,080 $ 9,297 $ 9,090 4.5 %

Apex Credit CLO 2021 Ltd (7)

Subordinated Notes 14.53% 5/28/2021 7/18/2034 8,630 7,797 7,442 3.7

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 - Income 23.72% 10/26/2020 1/15/2031 2,700 1,611 1,672 0.8

Subordinated Notes 23.69% 10/26/2020 1/15/2031 2,159 1,289 1,337 0.7

4 unchanged sentences

Subordinated Notes 11.96% 2/6/2019 7/15/2030 10,000 6,137 5,357 2.6

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2021

(Dollar amounts in thousands)

Portfolio Company (1)

Investment Type Industry Interest Rate (2) Spread Above

Index (2) Initial Acquisition Date Maturity Principal

Amount Amortized Cost Fair Value (3) Percent of

Flatiron CLO 18, Ltd.

8 unchanged sentences

Subordinated Notes 17.69% 1/23/2020 10/20/2030 7,000 4,733 4,845 2.4

Park Avenue Institutional Advisers CLO Ltd 2021-1

Mezzanine bond - Class E 8.63% (L +7.30%) 1/26/2021 1/20/2034 1,000 974 988 0.5

Redding Ridge 4 (7)

Subordinated Notes 18.02 3/4/2021 4/15/2030 1,300 1,104 1,106 0.5

Regatta II Funding

Mezzanine bond - Class DR2 13.42% (L +6.95%) 6/5/2020 1/15/2029 800 737 795 0.4

THL Credit Wind River 2019‐3 CLO Ltd.

Subordinated Notes 13.09% 4/5/2019 4/15/2031 7,000 5,710 5,231 2.6

Trinitas CLO VIII (7)

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

Consolidated Schedule of Investments

December 31, 2021

4 unchanged sentences

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 21.34% 3/4/2021 7/20/2117 $ 5,200 $ 3,128 $ 3,229 1.6 %

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

Wellfleet CLO 2018-2 (7)

Subordinated Notes 19.74% 3/4/2021 10/20/2031 1,000 655 696 0.3

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

Loan Accumulation Facility (17) (22)

Apex Credit CLO 2021-II Ltd

Loan accumulation facility 13.50% 7/14/2021 7/14/2022 $ 8,500 $ 8,500 $ 8,500 4.2 %

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

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

Affiliate Investments

3rd Rock Gaming Holdings, LLC (20) Software Publishers

Senior Secured Loan (6) 8.50% cash / 1.00% PIK (L +7.50%) 3/13/2018 3/12/2023 20,858 19,570 9,258 5.8

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

20,858 22,117 9,258 5.8

Chemical Resources Holdings, Inc.

(20) Custom Compounding of Purchased Resins

Senior Secured Loan (4)(8) 9.22% (L +7.72%) 1/25/2019 1/25/2024 13,743 13,630 13,744 8.6

Common Equity (1,832 Class A shares) (10) (13) 1/25/2019 1,814 3,420 2.2

13,743 15,444 17,164 10.8

Contract Datascan Holdings, Inc.

5 unchanged sentences

Common Equity (1,135 units) (10) (13) 3/8/2018 1,135 1,289 0.6

Master Cutlery, LLC (4) (10)(20) Sporting and Recreational Goods and Supplies Merchant Wholesalers

Subordinated Loan (6) (11) 13.00% (11) N/A 4/17/2015 7/20/2022 7,563 4,696 699 0.3

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

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

7,563 8,179 699 0.3

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

Consolidated Schedule of Investments

December 31, 2021

4 unchanged sentences

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.

(4)(20) Other Accounting Services

Preferred Equity (521,962 convertible shares) 10% PIK 8/14/2014 1,879 2,250 1.4

Pfanstiehl Holdings, Inc.

1 unchanged sentence

Common Equity (400 Class A shares) 1/1/2014 $ 217 $ 65,740 32.3 %

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

3 unchanged sentences

Common Equity (3,000,000 units) 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

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

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

10 unchanged sentences

(2) Substantially all of the investments that bear interest at a variable rate are indexed to LIBOR (L), generally between 0.75% and 1.00% at December 31, 2021, and reset monthly, quarterly, or semi-annually.

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.

Variable-rate loans with an aggregate cost of $316,558 include LIBOR reference rate floor provisions of generally 0.75% to 1.00% at December 31, 2021, the reference rates on such instruments were generally below the stated floor provisions.

For each investment, the Company has provided the spread over the reference rate and current interest rate in effect at December 31, 2021.

2 unchanged sentences

See Note 5 for further details.

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments

December 31, 2021

(Dollar amounts in thousands)

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

1 unchanged sentence

(5) Subject to unfunded commitments.

See Note 6 for further details.

(6) Investment was on non-accrual status as of December 31, 2021, meaning the Company has suspended recognition of all or a portion of income on the investment.

See Note 4 for further details.

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

(7) CLO subordinated debt positions are entitled to recurring distributions generally equal to the residual cash flow of payments received on 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.

1 unchanged sentence

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

Chemical Resources Holdings, Inc.

9.17% 7.50% 1.67%

Milrose Consultants, LLC 7.62% 7.00% 0.62%

SourceHOV Tax, Inc.

7.61% 7.00% 0.61%

SS Acquisition, LLC 7.88% 7.50% 0.38%

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

1 unchanged sentence

(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.

4 unchanged sentences

Option Maximum PIK

Community Intervention Services, Inc.

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

Eblens Holdings, Inc.

8 unchanged sentences

(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.

(17) Loan accumulation facilities are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle.

Reported yields represent the realized yield since acquisition.

Income notes associated with loan accumulation facilities generally pay returns equal to the actual income earned on facility assets less costs of senior financing.

As of December 31, 2021, the fair value of loan accumulation facilities were determined by reference to Transaction Price.

(18) Not meaningful as there is no outstanding balance on the revolver or delayed draw loan.

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

1 unchanged sentence

(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.

(21) Portfolio company at fair value represents greater than 5% of total assets at December 31, 2021.

(22) Non-qualifying assets under Section 55(a) of the 1940 Act.

Qualifying assets as defined in Section 55 of the 1940 Act must represent at least 70% of the Company's assets immediately following the acquisition of any additional non-qualifying assets.

As of December 31, 2021, approximately 85% of the Company's assets were qualifying assets.

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

See Notes to Consolidated Financial Statements.

8 unchanged sentences

Non-control/Non-affiliate Investments

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.

1 unchanged sentence

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

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

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

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) 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

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.

1 unchanged sentence

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

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

Carolina Lubes, Inc.

Automotive Oil Change and Lubrication Shops

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

Senior Secured Loan (Revolver) (5) 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 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.

1 unchanged sentence

Subordinated Loan 7.00% cash / 6.00% PIK N/A 7/16/2015 1/16/2021 10,225 7,639 105 0.1

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.

4 unchanged sentences

Constellis Holdings, LLC (10) 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

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

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 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

Consolidated Schedule of Investments - Continued

Consolidated Schedule of Investments

December 31, 2020

4 unchanged sentences

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.

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

(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

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

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

4 unchanged sentences

Senior Secured Loan 11.50% (L +9.50%) 10/25/2018 4/25/2024 4,250 4,199 4,250 2.7

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.

4 unchanged sentences

5,000 5,431 4,275 2.7

Hyland Software, Inc.

Software Publishers

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

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

Consolidated Schedule of Investments - Continued

Consolidated Schedule of Investments

December 31, 2020

4 unchanged sentences

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.

4 unchanged sentences

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

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

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

1 unchanged sentence

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 9/12/2018 325 1,136 0.7

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

3,094 2,120 1.3

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

Online Tech Stores, LLC (4) (6) 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

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

5 unchanged sentences

6,708 6,738 6,701 4.3

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments

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

Pelican Products, Inc.

1 unchanged sentence

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

Performance Team LLC (4) General Warehousing and Storage

(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

6 unchanged sentences

Senior Secured Loan 4.46% (L +4.25%) 6/25/2019 5/16/2025 1,970 1,955 1,942 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

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

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

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.

1 unchanged sentence

Senior Secured Loan 8.46% (L +8.25%) 11/20/2018 11/28/2026 6,275 6,190 6,241 3.9

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

1 unchanged sentence

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 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

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) (23) 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

Consolidated Schedule of Investments - Continued

Consolidated Schedule of Investments

December 31, 2020

4 unchanged sentences

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) (22) Colleges, Universities, and Professional Schools

Equity participation 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 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 (Revolver) (5) 0.50% (18) (L +5.00%) 8/26/2019 8/26/2024 — (6) (14) —

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

12 unchanged sentences

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

Consolidated Schedule of Investments

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

Tank Holding Corp.

1 unchanged sentence

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

2 unchanged sentences

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

2 unchanged sentences

Senior Secured Loan 9.25% (L +8.25%) 5/30/2017 4/21/2025 8,174 8,118 8,174 5.1

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

1 unchanged sentence

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

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

United Natural Foods (14) (15) (23) General Line Grocery Merchant Wholesalers

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

1 unchanged sentence

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) (23) 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) (23) 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

Consolidated Schedule of Investments

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

Structured Finance Note Investments (23)

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.

Subordinated Notes - Income 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.

2 unchanged sentences

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

THL Credit Wind River 2019‐3 CLO Ltd.

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

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

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

Consolidated Schedule of Investments

December 31, 2020

4 unchanged sentences

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

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

Total Non-control/Non-affiliate Investments $ 380,315 $ 363,628 $ 328,665 206.8 %

11 unchanged sentences

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

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

Preferred Equity (3,061 Series A shares) 10% PIK 8/5/2015 5,849 2,690 1.7

2 unchanged sentences

DRS Imaging Services, LLC (20) 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 1,749 1.1

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

Consolidated Schedule of Investments

December 31, 2020

4 unchanged sentences

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 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 36,221 22.8

3,788 4,024 15,767 9.5

Professional Pipe Holdings, LLC (19) Plumbing, Heating, and Air-Conditioning Contractors

3 unchanged sentences

TalentSmart Holdings, LLC (20) 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 (1,595,238 Class A shares) (10) (13) 10/11/2019 1,595 1,306 0.8

10,250 11,575 11,575 6.9

TRS Services, LLC (4)(20) 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 (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 — —

14,624 19,106 18,265 11.0

TTG Healthcare, LLC (20) Diagnostic Imaging Centers

3 unchanged sentences

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued

Consolidated Schedule of Investments

December 31, 2020

16 unchanged sentences

(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, 2021, 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%;

at December 31, 2020, 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, 2021, the reference rates on such instruments were generally below the stated floor provisions.

For each investment, the Company has provided the spread over the reference rate and current interest rate in effect at December 31, 2021.

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 cannot 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.

(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.

(6) Investment was on non-accrual status as of December 31, 2021, meaning the Company has suspended recognition of all or a portion of income on the investment.

See Note 4 for further details.

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

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

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

1 unchanged sentence

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.

9.17% 7.50% 1.67%

DRS Imaging Services, LLC 11.21% 9.94% 1.27%

Milrose Consultants, LLC 7.62% 7.00% 0.62%

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.

SourceHOV Tax, Inc.

7.61% 7.00% 0.61%

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

Consolidated Schedule of Investments

December 31, 2020

(Dollar amounts in thousands)

(10) Non-income producing.

4 unchanged sentences

Option Maximum PIK

Rate Allowed (%)

Community Intervention Services, Inc.

3 unchanged sentences

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.

(13) 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 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.

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.

(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.

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

(23) Non-qualifying assets under Section 55(a) of the 1940 Act.

Qualifying assets as defined in Section 55 of the 1940 Act must represent at least 70% of the Company's assets immediately following the acquisition of any additional non-qualifying assets.

As of December 31, 2020, approximately 87% of the Company's assets were qualifying assets.

See Notes to Consolidated Financial Statements.

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In addition, for income tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of Code under the Internal Revenue Code of 1986, as amended (the “Code”).

The Company’s investment objective is to provide stockholders with current income and capital appreciation through its strategic investment focus primarily on debt investments and, to a lesser extent, equity investments primarily in middle-market companies principally in the United States.

OFS Capital Management, LLC, a registered investment advisor under the Advisers Act (“Advisor”), and a wholly owned subsidiary of Orchard First Source Asset Management, LLC, a full-service provider of capital and leveraged finance solutions to U.S.

The Company’s investment objective is to provide stockholders with both current income and capital appreciation through its strategic investment focus primarily on debt investments and, to a lesser extent, equity investments primarily in middle-market companies principally in the United States.

In addition, the Company may invest in collateralized loan obligation (“CLO”) mezzanine debt, CLO subordinated debt and loan accumulation facility positions (collectively referred to as “Structured Finance Notes”).

OFS Capital Management, LLC (“OFS Advisor”), a registered investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), a wholly owned subsidiary of Orchard First Source Asset Management, LLC, and a full-service provider of capital and leveraged finance solutions to U.S.

Corporations (“OFSAM”), manages the day-to-day operations of, and provides investment advisory services to, the Company.

In addition, OFS Advisor also serves as the investment adviser for Hancock Park Corporate Income, Inc.

OFS Advisor also serves as the investment adviser for Hancock Park Corporate Income, Inc.

(“HPCI”), a Maryland corporation and a BDC.

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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.

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.

Additionally, OFS Advisor serves as the collateral manager to CLOs and sub-advisor to investment companies manged by an affiliate.

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

Small Business Administration's (“SBA”) small business investment company program (“SBIC Program”).

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

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.

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

and through OFSCC-MB, Inc.

(“OFSCC-MB”), a wholly owned and consolidated 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

Basis of presentation:

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.

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 reporting requirements for Form 10-K, the 1940 Act, and Articles 6 and 12 of Regulation S-X.

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 :

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All intercompany balances and transactions are eliminated upon consolidation.

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

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(Dollar amounts in thousands, except per share data)

the measurement date.

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.

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.

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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 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;

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

Cash includes $43,048 and $37,708 held in US Bank N.A.

and Citibank N.A.

money market deposit accounts as of December 31, 2021 and 2020, respectively.

In addition, the Company's use of cash held by SBIC I LP is limited by SBA regulation, including, but not limited to, investment in eligible portfolio companies and general corporate purposes;

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

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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.

Recognition of PIK interest includes assessments of collectibility.

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

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Interest income - Structured Finance Notes :

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.

Structured Finance Notes includes CLO mezzanine debt, CLO subordinated debt and loan accumulation facility positions.

Interest income from investments in CLO mezzanine debt and CLO subordinated debt positions 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, and the accretable yields are determined and updated periodically.

Expected cash flows inherent in the Company's estimates of accretable yields are based on expectations of defaults and loss-on-default severity, as well as other loan-performance assumptions, impacting the loans in the underlying CLO portfolios.

These estimated cash flows are subject to a reasonable possibility of near-term change as economic and credit market conditions—including the transition away from LIBOR to any one the various alternative reference rates, including SOFR— become known, and the effect of these changes could be material.

Recognition of interest income on our loan accumulation facilities generally take the form of mandatorily redeemable instruments that mature upon the earlier of closing of the CLO securitization or stated expiration date of the instrument.

Interest income is recognized on an accrual basis as earned in accordance with the settlement terms of the instrument.

Dividend income :

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Declared dividends payable in cash are reported as dividend receivables until collected.

Non-cash dividends payable in additional preferred securities or contractually earned but not declared (“PIK dividends”) are recognized at fair value and recorded as an adjustment to the cost basis of the investment.

Non-cash dividends payable in additional preferred securities or contractually earned but not declared ("PIK dividends") and are recorded as an adjustment to the cost basis of the investment.

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.

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Investment transactions are reported on a trade-date basis.

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

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

Investments are valued at fair value as determined in good faith by Company management under the supervision and review of the Board.

After recording all appropriate interest, dividend, and other income, some of which is recorded as an adjustment to the cost basis of the investment as described above, the Company reports changes in the fair value of investments as net changes in unrealized appreciation (depreciation) on investments in the consolidated statements of operations.

After recording all appropriate interest, dividend, and other income, some of which is recorded as an adjustment to the cost basis of the investment as described above, the Company reports changes in the fair value of investments as net unrealized appreciation (depreciation) on investments in the consolidated statements of operations.

Non-accrual loans :

When there is reasonable doubt that principal, cash interest, or PIK interest, will be collected, debt investments are placed on non-accrual status and the Company will cease recognizing cash interest, PIK interest, or Net Loan Fee amortization, as applicable.

When an investment is placed on non-accrual status, all interest previously accrued but not collected is reserved against current period interest income.

Management reviews all loans that become past due on principal and interest, or when there is reasonable doubt that principal, cash interest, or PIK interest, will be collected, for placement on non-accrual status.

When a loan is placed on non-accrual status, unpaid interest is credited to income and is reversed.

Additionally, Net Loan Fees are no longer accreted to interest income as of the date the loan is placed on non-accrual status.

Interest payments subsequently received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgment.

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.

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.

See Note 4 for further information.

See Note 4 for further information on loans on non-accrual status as of December 31, 2021 and December 31, 2020.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Income taxes:

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federal income tax liability under Subchapter M of the Code.

However, the Company would be liable for a

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

4% excise tax on such income.

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 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 from those investments.

OFSCC-MB is an investment company under GAAP, is consolidated in the Company’s GAAP financial statements, and may incur current and deferred federal and state income tax expenses or benefits with respect to income derived from those investments.

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.

Income tax expense from OFSCC-MB related to net investment income is included in general and administrative expenses, or the applicable net realized or unrealized gain (loss) line item from which the federal or state income tax originated for capital gains and losses.

Income tax expense from OFSCC-MB related to net investment income is included in general and administrative expenses, and the federal and state income tax from net investment gains, which includes taxes on realized gains upon the sale of the investment as well as deferred taxes or benefits on unrealized gains/losses, are included in net realized and unrealized gain (loss) on investments in the statements of operations.

See Note 8 for further information.

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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, 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.

Moreover, due to the discount at which the

OFS Capital Corporation and Subsidiaries

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(Dollar amounts in thousands, except per share data)

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, initially 154 months ending September 30, 2026.

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

The Company recognized amortization of $222 and $206 for the years ended December 31, 2021 and 2020, respectively.

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

The intangible asset, net of accumulated amortization of $1,392 and $1,186 at December 31, 2020 and 2019, respectively, is included in prepaid expenses and other assets in the consolidated statements of assets and liabilities.

The carrying value of the intangible asset, net of accumulated amortization, was $886 and $1,108 at December 31, 2021 and 2020, respectively, is included in prepaid expenses and other assets in the consolidated statements of assets and liabilities.

Interest expense:

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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:

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

Standards that were adopted

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

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

On June 11, 2019, OFS Advisor agreed to reduce the portion of its base management fee attributable to the portion of the assets held by the Company through OFSCC-FS (“OFSCC-FS Assets”) that caused the Company’s asset coverage ratio to fall below 200%.

Specifically, under the reduction, the Company was required to pay 0.25% per quarter (1.00% annualized) on the average value of the portion of the OFSCC-FS Assets, at the end of the two most recently completed calendar quarters, that were financed using leverage and caused the Company’s statutory asset coverage ratio to fall below 200%.

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

Additionally, effective from January 1, 2020, January 1, 2021 and January 1, 2022 through December 31, 2022, OFS Advisor agreed to continue the reduced base management fee attributable to all of the OFSCC-FS Assets, excluding cash commencing January 1, 2022, but without regard to the Company’s asset coverage.

The agreement reduced the base management fee to 0.25% per quarter (1.00% annualized) of the average value of the OFSCC-FS Assets, excluding cash as of January 1, 2022, at

OFS Capital Corporation and Subsidiaries

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(Dollar amounts in thousands, except per share data)

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%.

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;

this agreement was renewed on February 16, 2021.

the end of the two most recently completed calendar quarters.

OFS Advisor’s base management fee reduction is renewable on an annual basis and OFS Advisor is not entitled to recoup the amount of the base management fee reduced with respect to the OFSCC-FS Assets.

This agreement was renewed for the 2022 calendar year on February 4, 2022.

The incentive fee has two parts.

The first part ("Part One") is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately preceding calendar quarter.

The first part of the incentive fee ("Income Incentive Fee") is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately preceding calendar quarter.

For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination and sourcing, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement (as defined below) and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee).

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Pre-incentive fee net investment income is expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter and adjusted for any share issuances or repurchases during such quarter.

Accordingly, as a result of the follow-on public offering of 3,625,000 shares of common stock in April 2017 (the "Offering"), the Part One incentive fee was reduced by $593 for the three months ended June 30, 2017, determined by adjusting the value of net assets, as defined above, at March 31, 2017 by the daily weighted average of the Offering proceeds available to the Company during the three months ended June 30, 2017.

The incentive fee with respect to pre-incentive fee net income is 20.0% of the amount, if any, by which the pre-incentive fee net investment income for the immediately preceding calendar quarter exceeds a 2.0% (which is 8.0% annualized) hurdle rate and a “catch-up” provision measured as of the end of each calendar quarter.

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These calculations are appropriately prorated for any period of less than three months.

The second part ("Part Two") of the incentive fee (the “Capital Gain Fee”) is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), commencing on December 31, 2012, and equals 20.0% of the Company’s aggregate realized capital gains, if any, on a cumulative basis from the date of the election to be a BDC through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation through the end of such year, less all previous amounts paid in respect of the Capital Gain Fee;

The second part of the incentive fee (the “Capital Gains Fee”) is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), commencing on December 31, 2012, and equals 20.0% of the Company’s aggregate realized capital gains, if any, on a cumulative basis from the date of the election to be a BDC through the end of each calendar year, computed net of all realized capital losses, losses on extinguishment of debt, income taxes from realized capital gains and unrealized capital depreciation through the end of such year, less all previous amounts paid in respect of the Capital Gains Fee;

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 Gains Fee if, on a cumulative basis, the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation) is positive.

An accrued Capital Gains Fee relating to net unrealized appreciation is deferred until, and not due to OFS Advisor, until the close of the year in which such gains are realized.

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

As of December 31, 2021, payable to investment adviser and affiliates on the consolidated statements of assets and liabilities includes a Capital Gains Fee of $1,916 which is deferred.

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

OFS Capital Corporation and Subsidiaries

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(Dollar amounts in thousands, except per share data)

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).

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.

Fee expense the Company would have incurred for the three months ended March 31, 2020.

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

License Agreement:

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Income Incentive Fee 2,352 2,025 4,760

Incentive fee waiver (441) — (22)

Income Incentive Fee waiver — (441) —

Capital Gains Fee (1)

Administration fees 1,758 1,855 1,747

Distributions paid to affiliates 2,764 2,553 4,007

(1) As of December 31, 2021, the Capital Gains Fee of $1,916 is deferred, and not due to the Advisor, until the close of the year in which such gains are realized.

OFS Capital Corporation and Subsidiaries

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Preferred equity 9,552 2.1 4.7 3,765 0.7 1.8

Common equity and warrants 15,459 3.4 9.7 52,984 12.0 33.3

Common equity, warrants and other 14,606 3.2 7.2 83,486 16.5 41.0

Total debt and equity investments $ 382,361 83.4 % 187.7 % $ 431,898 85.6 % 212.0 %

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Total $ 457,312 100.0 % 224.5 % $ 507,099 100.0 % 248.9 %

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.

At December 31, 2021, the Company had two loans (Master Cutlery, LLC and 3rd Rock Gaming 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 $19,054 and $7,726, 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:

As of December 31, 2021 and 2020, the Company's investment portfolio was domiciled as follows:

December 31, 2021 December 31, 2020

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66,451 66,701 55,860 56,425

Ireland — — 1,897 1,906

Luxembourg — — 1,976 1,997

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Total investments $ 457,312 $ 507,099 $ 461,023 $ 442,323

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

(1) Cayman Island investments represent subordinated notes and mezzanine debt securities held by the Company.

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

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Convention and Trade Show Organizers $ 214 — % 0.1 % $ 12 — % — %

Hazardous Waste Treatment and Disposal 1,833 0.4 0.9 1,837 0.4 0.9

Landscaping Services 4,630 1.0 2.3 4,590 0.9 2.3

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

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Electrical Contractors and Other Wiring Installation Contractors 18,132 4.0 8.9 11,632 2.3 5.7

New Single-Family Housing Construction (except For-Sale Builders) 1,823 0.4 0.9 1,794 0.4 0.9

Plumbing, Heating, and Air-Conditioning Contractors 5,344 1.2 2.6 5,378 1.1 2.6

Water and Sewer Line and Related Structures Construction 627 0.1 0.3 628 0.1 0.3

Education Services

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Professional and Management Development Training 1,595 0.3 0.8 1,095 0.2 0.5

Finance and Insurance

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

Sports and Recreation Instruction 3,011 0.7 1.5 3,011 0.6 1.5

Health Care and Social Assistance

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

Diagnostic Imaging Centers 21,718 4.8 13.8 23,607 5.3 14.9

Home Health Care Services 4,182 0.9 2.1 4,250 0.8 2.1

1 unchanged sentence

Offices of Physicians, Mental Health Specialists 13,402 2.9 6.6 13,491 2.7 6.6

Other Ambulatory Health Care Services 20,331 4.4 10.0 20,331 4.0 10.0

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

Services for the Elderly and Persons with Disabilities 6,416 1.4 3.1 6,416 1.3 3.1

All Other Publishers 2,288 0.5 1.1 2,303 0.5 1.1

All Other Telecommunications 3,429 0.7 1.7 3,323 0.7 1.6

Cable and Other Subscription Programming 3,801 0.8 1.9 3,810 0.8 1.9

Data Processing, Hosting, and Related Services 4,112 0.9 2.0 4,255 0.8 2.1

Directory and Mailing List Publishers 2,004 0.4 1.0 2,085 0.4 1.0

Internet Publishing and Broadcasting and Web Search Portals 3,249 0.7 1.6 3,299 0.7 1.6

Motion Picture and Video Production 3,929 0.9 1.9 3,970 0.8 1.9

Software Publishers 24,948 5.5 12.2 17,929 3.5 8.8

Television Broadcasting 1,977 0.4 1.2 1,758 0.4 1.1

Manufacturing

Commercial Printing (except Screen and Books) 4,789 1.0 3.0 4,812 1.1 3.0

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

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

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

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

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 %

Television Broadcasting $ 1,957 0.4 % 1.0 % $ 918 0.2 % 0.5 %

Wired Telecommunications Carriers 4,388 1.0 2.2 4,405 0.9 2.2

Management of Companies and Enterprises

Offices of Other Holding Companies 5,336 1.2 2.6 5,336 1.1 2.6

Manufacturing

Bare Printed Circuit Board Manufacturing 1,985 0.4 1.0 1,977 0.4 1.0

Commercial Printing (except Screen and Books) 3,427 0.7 1.7 3,436 0.7 1.7

Current-Carrying Wiring Device Manufacturing 2,653 0.6 1.3 2,954 0.6 1.4

Motorcycle, Bicycle, and Parts Manufacturing 15,166 3.3 7.4 15,166 3.0 7.4

Metal Can Manufacturing 2,143 0.5 1.1 2,167 0.4 1.1

Other Aircraft Parts and Auxiliary Equipment Manufacturing 500 0.1 0.2 80 — —

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

Pharmaceutical Preparation Manufacturing 217 — 0.1 65,740 13.0 32.3

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

Travel Trailer and Camper Manufacturing 11,264 2.5 5.5 12,948 2.6 6.4

Truck Trailer Manufacturing 8,118 1.8 5.1 8,174 1.8 5.1

Unlaminated Plastics Profile Shape Manufacturing 8,922 1.9 5.6 8,818 2.0 5.5

Other Services (except Public Administration)

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

Diet and Weight Reducing Centers 477 0.1 0.3 479 0.1 0.3

Professional, Scientific, and Technical Services

1 unchanged sentence

All Other Professional, Scientific, and Technical Services 2,872 0.6 1.4 2,865 0.6 1.4

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

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

Other Accounting Services 19,631 4.3 9.6 19,927 3.9 9.8

3 unchanged sentences

Real Estate and Rental and Leasing

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

Nonresidential Property Managers 2,972 0.6 1.5 2,972 0.6 1.5

Office Machinery and Equipment Rental and Leasing 5,952 1.3 2.9 2,774 0.5 1.4

Automotive Parts and Accessories Stores 2,688 0.6 1.3 2,704 0.5 1.3

Cosmetics, Beauty Supplies, and Perfume Stores 1,533 0.3 0.8 1,531 0.3 0.8

Electronic Shopping and Mail-Order Houses 6,913 1.5 3.4 6,870 1.4 3.4

Shoe Store 9,893 2.2 4.9 9,342 1.8 4.6

1 unchanged sentence

All Other General Merchandise Stores 499 0.1 0.2 1,698 0.3 0.8

Transportation and Warehousing

Scheduled Passenger Air Transportation 495 0.1 0.3 520 0.1 0.3

Taxi Service 1,976 0.4 1.2 1,997 0.5 1.3

Wholesale Trade

Business to Business Electronic Markets 2,891 0.6 1.8 2,875 0.6 1.8

Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 1,955 0.4 1.2 1,942 0.4 1.2

Construction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers 16,392 3.6 10.3 16,777 3.8 10.6

OFS Capital Corporation and Subsidiaries

3 unchanged sentences

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 %

Transportation and Warehousing

Freight Transportation Arrangement $ 1,960 0.4 % 1.0 % $ 1,970 0.4 % 1.0 %

Scheduled Passenger Air Transportation 360 0.1 0.2 377 0.1 0.2

Wholesale Trade

Business to Business Electronic Markets 2,875 0.6 1.4 2,838 0.6 1.4

Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 7,173 1.6 3.5 6,903 1.4 3.4

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

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

Industrial Supplies Merchant Wholesalers 6,908 1.5 4.3 5,476 1.2 3.4

Motor Vehicle Parts (Used) Merchant Wholesalers 23,005 5.0 11.3 23,052 4.5 11.3

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

Stationery and Office Supplies Merchant Wholesalers 16,129 3.5 10.1 2,426 0.5 1.5

Total debt and equity investments $ 382,361 83.4 % 187.7 % $ 431,898 85.6 % 212.0 %

2 unchanged sentences

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:

4 unchanged sentences

Preferred equity 18,648 4.0 11.7 11,543 2.6 7.3

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

Common equity, warrants and other 15,459 3.4 9.7 52,984 12.0 33.3

Total debt and equity investments $ 405,163 87.8 % 254.9 % $ 385,898 87.2 % 242.8 %

1 unchanged sentence

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

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:

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

1 unchanged sentence

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 13,866 2.7 8.3 13,742 2.8 8.2

OFS Capital Corporation and Subsidiaries

11 unchanged sentences

Finance and Insurance

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

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 2,001 0.4 1.2 2,015 0.4 1.2

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 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 4,199 0.9 2.6 4,250 1.0 2.7

2 unchanged sentences

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 2,991 0.6 1.8 3,006 0.6 1.8

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 1,969 0.4 1.2 1,992 0.4 1.2

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 1,972 0.4 1.2 1,980 0.4 1.2

Manufacturing

1 unchanged sentence

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

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 5,431 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 853 0.2 0.5 853 0.2 0.5

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

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 1,281 0.3 0.8

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

1 unchanged sentence

Unlaminated Plastics Profile Shape Manufacturing 8,922 1.9 5.6 8,818 2.0 5.5

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 Services (except Public Administration)

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 $ 572 0.1 % 0.4 % $ 915 0.2 % 0.6 %

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

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 1,987 0.4 1.2 2,001 0.4 1.2

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 500 0.1 0.3 1,490 0.3 0.9

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

Public Administration

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

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

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

2 unchanged sentences

Sporting Goods Stores 2,907 0.6 1.8 2,968 0.7 1.9

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 %

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

Transportation and Warehousing

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

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

2 unchanged sentences

Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 1,955 0.4 1.2 1,942 0.4 1.2

Construction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers 16,392 3.6 10.3 16,777 3.8 10.6

General Line Grocery Merchant Wholesalers 275 0.1 0.2 284 0.1 0.2

Industrial Machinery and Equipment Merchant Wholesalers 9,696 2.1 6.1 9,179 2.1 5.8

Industrial Supplies Merchant Wholesalers 6,908 1.5 4.3 5,476 1.2 3.4

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

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 1,995 0.4 1.2 2,003 0.4 1.2

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

4 unchanged sentences

Fair Value of Financial Instruments

The Company’s investments are valued at fair value as determined by the Board.

The Company’s investments are carried at fair value as determined by the Board.

These fair values are determined in accordance with a documented valuation policy and a consistently applied valuation process.

8 unchanged sentences

(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

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share 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.

10 unchanged sentences

Investments for which sufficient Indicative Prices exist are generally valued consistent with such Indicative Prices.

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 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.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Senior secured debt investments with a fair value of $72,572 and $6,114, respectively, were valued at their Transaction Price at December 31, 2021 and December 31, 2020;

these securities are designated as Level 3 in the fair value hierarchy based on assessments of market liquidity and other factors.

Investments that are not valued using Indicative Prices or Transaction Prices are typically valued using two different valuation techniques.

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EBITDA multiples are typically determined based upon review of market comparable transactions and publicly traded comparable companies, if any.

The Company may also utilize other portfolio-company earnings metrics to determine enterprise value, such as recurring monthly revenue ("RMR”) or a delineated measure of portfolio company EBITDA.

The Company may also utilize other portfolio-company earnings metrics to determine enterprise value, such as recurring monthly revenue or a delineated measure of portfolio company EBITDA.

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

1 unchanged sentence

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

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

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.

If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, the Company might realize significantly less than the value at which such investment had previously been recorded.

The Company’s investments are subject to market risk.

1 unchanged sentence

Market risk is directly impacted by the volatility and liquidity in the markets in which the investments are traded.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following tables presents the Company's investment portfolio measured at fair value on a recurring basis as of December 31, 2021 and 2020, respectively.

19 unchanged sentences

Senior secured 7,027 Market approach Revenue multiples 0.74x - 0.74x (0.74x)

Senior secured 6,111 Market approach

Senior secured 64,072 Market approach Transaction Price

Subordinated 17,244 Discounted cash flow Discount rates 15.90% - 17.49% (16.65%)

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

Subordinated 699 Market approach Revenue multiples 0.28x - 0.28x (0.28x)

3 unchanged sentences

Constant default rate (2)

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

0.00% - 2.00% (1.77%)

Constant default rate (3)

2.00% - 2.00% (2.00%)

Recovery rate 60.00% - 60.00% (60.00%)

1 unchanged sentence

Constant default rate (2)

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

2.00% - 3.00% (2.36%)

Constant default rate (3)

2.00% - 3.00% (2.36%)

Recovery rate 60.00% - 60.00% (60.00%)

Loan accumulation facility 8,500 Market approach Transaction Price

Equity investments:

1 unchanged sentence

Preferred equity 1,017 Market approach Revenue multiples 0.15x - 3.00x (0.91x)

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.

Common equity, warrants and other 83,478 Market approach EBITDA multiples 4.50x - 12.00x (8.10x)

Common equity, warrants and other 8 Market approach Revenue multiples 0.15x - 3.00x (0.15x)

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

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

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

OFS Capital Corporation and Subsidiaries

6 unchanged sentences

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

Senior secured 23,193 Market approach Transaction Price

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

Senior secured 6,111 Market approach Transaction Prices

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

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

Structured Finance Notes:

3 unchanged sentences

0.00% - 2.00% (1.63%)

Constant default rate (3)

2.00% - 2.00% (2.00%)

Recovery rate 60.00% - 60.00% (60.00%)

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

Constant default rate (4)

0.00% - 2.00% (1.01%)

Constant default rate (5)

2.00% - 3.00% (2.49%)

Recovery rate 60.00% - 60.00% (60.00%)

Equity investments:

1 unchanged sentence

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

Preferred equity 2,120 Market approach Recurring monthly revenue 40.00x - 40.00x (40.00x)

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)

Common equity and warrants 1,500 Transaction Price

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

(2) Constant default rates for the six months ended June 30, 2021.

(3) Constant default rates for the period between June 30, 2021, and the assumed optional redemptions of the instruments.

(4) Constant default rates for the nine months ended September 30, 2021.

(5) Constant default rates for the period between September 30, 2021, and the assumed optional redemptions of the instruments.

Changes in market credit spreads or events impacting the credit quality of the underlying portfolio company (both of which could impact the discount rate), as well as changes in EBITDA and/or EBITDA multiples, among other things, could have a significant impact on fair values, with the fair value of a particular debt investment susceptible to change in inverse relation to the changes in the discount rate.

Changes in EBITDA and/or EBITDA multiples, as well as changes in the discount rate, could have a significant impact on fair values, with the fair value of an equity investment susceptible to change in tandem with the changes in EBITDA and/or EBITDA multiples, and in inverse relation to changes in the discount rate.

Due to 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.

Due to wide range of

OFS Capital Corporation and Subsidiaries

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

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.

The following tables present changes in investments measured at fair value using Level 3 inputs for the years ended December 31, 2021 and 2020:

2 unchanged sentences

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

Net realized loss on investments (9,107) — 51 (497) — (9,553)

Level 3 assets, December 31, 2020 $ 284,078 $ 15,067 $ 11,543 $ 52,984 $ 56,425 $ 420,097

Net realized gain (loss) on investments (265) (23,676) 3,310 (49) — (20,680)

Net change in unrealized appreciation (depreciation) on investments 10,780 26,214 1,318 31,355 (314) 69,353

5 unchanged sentences

Sale and redemption of portfolio investments (27,381) (91) (12,549) (5,726) (8,600) (54,347)

Proceeds from distributions received from Structured Finance Notes — — — — (6,709) (6,709)

Distributions received from Structured Finance Notes — — — — (12,656) (12,656)

Conversion from debt investment to equity investment (Note 4) (4,722) — — 4,722 — —

Transfers out of Level 3 (601) — — — — (601)

Level 3 assets, December 31, 2021 $ 261,113 $ 17,943 $ 3,765 $ 83,486 $ 75,201 $ 441,508

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Year Ended December 31, 2020

10 unchanged sentences

Sale and redemption of portfolio investments (9,635) — (3,925) — — (13,560)

Proceeds from distributions received from Structured Finance Notes — — — — (3,076) (3,076)

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)

Level 3 assets, December 31, 2020 $ 284,078 $ 15,067 $ 11,543 $ 52,984 $ 56,425 $ 420,097

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The net unrealized appreciation (depreciation) reported in the Company’s consolidated statements of operations for the years ended December 31, 2021 and 2020, attributable to the Company’s Level 3 assets still held at those respective year ends was as follows:

3 unchanged sentences

Preferred equity (73) (2,907)

Common equity and warrants 27,657 3,837

Common equity, warrants and other 30,208 27,657

Structured Finance Notes (302) 2,081

Net unrealized depreciation on investments held $ (4,796) $ (7,440)

Net unrealized appreciation (depreciation) on investments held $ 38,447 $ (4,796)

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 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 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, 2021 and 2020:

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

December 31, 2021

5 unchanged sentences

OFS Capital Corporation 4.95% Notes due 2028 56,430 — — 56,430

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

— — 73,011 73,011

Total debt, at fair value $ 172,035 $ — $ 148,222 $ 320,257

Total debt $ 56,430 $ — $ 296,141 $ 352,571

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

December 31, 2020

7 unchanged sentences

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 $ 154,164 $ — $ 212,012 $ 366,176

Total debt $ 172,035 $ — $ 148,222 $ 320,257

(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.

10 unchanged sentences

OFS Capital Corporation 6.25% Notes due 2023 — — 24,106 25,100

OFS Capital Corporation 4.75% Notes due 2026 121,774 123,130 — —

OFS Capital Corporation 4.95% Notes due 2028 53,672 56,430 — —

SBA-guaranteed debentures

69,365 73,011 104,182 116,172

Total debt, at fair value $ 309,185 $ 320,257 $ 352,478 $ 366,176

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

Total debt $ 344,811 $ 352,571 $ 309,185 $ 320,257

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

The Company has outstanding commitments to fund investments totaling $43,690 and $5,772 under various undrawn revolvers and other credit facilities as of December 31, 2021 and 2020, respectively.

Legal and regulatory proceedings:

From time to time, the Company is involved in legal proceedings in the normal course of its business.

1 unchanged sentence

Additionally, the Company is subject to periodic inspection by regulators to assess compliance with applicable BDC regulations and the SBIC I LP is subject to periodic inspections by the SBA.

Indemnifications:

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide 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 yet occurred.

The Company believes the risk of any material obligation under these indemnifications to be remote.

The Company believes the risk of any material obligation under these indemnifications to be low.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

SBA Debentures:

13 unchanged sentences

September 23, 2015 September 1, 2025 3.184 4,000 22,585

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 69,920 105,270

2 unchanged sentences

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.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The effective interest rate on the SBA debentures, which includes amortization of deferred debt issuance costs, was 3.11% and 3.31% as of December 31, 2021 and 2020, respectively.

1 unchanged sentence

The weighted-average fixed cash interest rate on the SBA debentures as of December 31, 2021 and 2020, was 2.89% and 2.98%, 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.

During the year ended December 31, 2021, SBIC I LP redeemed $35,350 of SBA debentures that were contractually due September 1, 2022, September 1, 2024 and September 1, 2025.

The Company recognized losses on extinguishment of debt of $324 related to the charge-off of deferred borrowing costs on the prepaid debentures.

Unsecured Notes:

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.

The unsecured notes totaled $180,000 and $177,850 in aggregate principal debt at December 31, 2021 and 2020, respectively.

Issuances during the years ended December 31, 2021 and 2020

On February 10, 2021, the Company closed the public offering of $100,000 aggregate principal amount of its 4.75% notes due 2026, and on March 18, 2021, the Company closed an additional public offering of $25,000 aggregate principal amount of its 4.75% notes due 2026 (the "Unsecured Notes Due February 2026").

The total net proceeds to the Company from the Unsecured Notes Due February 2026, after deducting underwriting fees and offering expenses of $3,936, was approximately $121,064.

On October 28, 2021 and November 1, 2021, the Company closed the public offering of the $55,000 aggregate principal amount of its 4.95% notes due 2028 (the “Unsecured Notes Due October 2028”), which included a full exercise of the underwriters overallotment option.

The total net proceeds to the Company, after deducting underwriting discounts and offering expenses of $1,389, was approximately $53,611.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

In September 2020, the Company closed the public offering of the $25,000 aggregate principal amount of its 6.25% notes due 2023 (the “Unsecured Notes Due September 2023”).

The total net proceeds to the Company, after deducting underwriting discounts and offering expenses of $894, was approximately $24,106.

Redemptions during the years ended December 31, 2021

On March 12, 2021, the Company redeemed all of its $50,000 aggregate principal amount of 6.375% notes due April 30, 2025 (the “Unsecured Notes Due April 2025”) and $48,525 aggregate principal amount of 6.50% notes due October 30, 2025 (the “Unsecured Notes Due October 2025”).

On November 1, 2021, the Company redeemed all of its Unsecured Notes Due September 2023.

On November 22, 2021, the Company redeemed all of its $54,325 aggregate principal amount of 5.95% notes due October 31, 2026 (the “Unsecured Notes Due October 2026”).

During the year ended December 31, 2021, the Company recognized a loss on extinguishment of $4,267 related to the charge-off of deferred borrowing costs on the redemption of unsecured notes.

The Unsecured Notes Due February 2026, the Unsecured Notes Due October 2028, the Unsecured Notes Due April 2025, the Unsecured Notes Due October 2025, the Unsecured Notes Due September 2023 and Unsecured Notes Due October 2026, combined (the “Unsecured Notes”), of which the Unsecured Notes Due February 2026 and the Unsecured Notes Due October 2028 were outstanding at December 31, 2021, 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 PWB Credit Facility and BNP Facility.

4 unchanged sentences

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

Unsecured Notes Due October 2025 48,525 1,186 6.50 % 7.01 % 10/31/2025 3,410

Unsecured Notes Due February 2026 $ 125,000 $ 3,226 4.75 % 5.38 % 2/10/2026

Unsecured Notes Due October 2028 55,000 1,328 4.95 % 5.29 % 10/31/2028

2 unchanged sentences

(2) The effective interest rate on the Unsecured Notes includes deferred debt issuance cost amortization.

(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.

(3) The Company may redeem the Unsecured Notes Due February 2026 in whole or in part at any time, or from time to time, at its option at par plus a "make-whole" premium, if applicable.

The Company may redeem the Unsecured Notes Due October 2028 in whole or in part at any time, or from time to time, at its option on or after October 31, 2023.

Interest expense on the Unsecured Notes were $12,563, $10,952 and $7,650 for the years ended December 31, 2021, 2020, and 2019, respectively, which includes $1,403, $909 and $584 of deferred financing amortization, respectively.

PWB Credit Facility :

1 unchanged sentence

The PWB Credit Facility is available for general corporate purposes including investment funding and is scheduled to mature on February 28, 2023.

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 Facility is guaranteed by OFSCC-MB and secured by all of our current and future assets excluding assets held by SBIC I LP,

The maximum availability of the PWB Credit Facility is equal to 50% of the aggregate outstanding principal amount of eligible loans included in the

OFS Capital Corporation and Subsidiaries

1 unchanged sentence

(Dollar amounts in thousands, except per share data)

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.

borrowing base, which excludes subordinated loan investments and as otherwise specified in the BLA.

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, OFSCC-FS, and the Company’s partnership interests in SBIC I LP and SBIC I GP.

The PWB Credit Facility bears interest at a variable rate of the Prime Rate plus a 0.25% margin, with a 4.00% floor, and includes an unused commitment fee for any unused portion in excess of $15,000, payable monthly in arrears, equal to 0.50% per annum on any unused portion.

As of December 31, 2021, the stated interest rate of the PWB Credit Facility was 4.00%.

The average dollar amount of borrowings outstanding during the year ended December 31, 2020, was $15,222.

The effective interest rate, which includes amortization of deferred debt issuance costs as of December 31, 2020, was 6.50% based on the maximum amount available under the PWB Credit Facility.

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.

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.

At December 31, 2021, the effective interest rate was 4.22% based on the maximum amount available under the PWB Credit Facility.

Interest expense on the PWB Credit Facility was $120, $1,285 and $2,136 for the years ended December 31, 2021, 2020, and 2019, respectively, which includes $19, $225 and $283 of deferred financing amortization, respectively, based on average balances outstanding of $1,810, $15,222 and $28,061, respectively.

Unamortized debt issuance costs included in prepaid expenses and other assets on the consolidated statements of assets and liabilities as of December 31, 2021 and 2020, were $6 and $11, respectively.

As of December 31, 2021, the Company had $0 outstanding debt under the PWB Credit Facility and $25.0 million of availability under the terms of the borrowing base.

On February 17, 2021, the Company amended the BLA to among other things:

3 unchanged sentences

and (iv) extend the maturity date from February 28, 2021 to February 28, 2023.

On November 15, 2021, the Company amended the BLA to decrease the interest rate floor from 5.0% to 4.0%, effective as of November 1, 2021.

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 maximum debt/worth ratio.

4 unchanged sentences

Borrowings under the BNP Facility bear interest of LIBOR plus an applicable spread, which is determined on the basis of industry-recognized portfolio company metrics at the time of funding.

The effective interest rate on the BNP Facility was 5.53% at December 31, 2020.

At December 31, 2021, the effective interest rate on the BNP Facility was 4.20%.

The BNP Facility will mature on the earlier of June 20, 2024 or upon certain other events defined in the credit agreement which result in accelerated maturity.

The BNP Facility also contains customary events of default, including, without limitation, nonpayment, failure to maintain valid ownership interest in all of the collateral and bankruptcy.

Borrowings under the BNP Facility are secured by substantially all of the assets held by OFSCC-FS, which were $185,105 and $72,412, or 33% and 15% of the Company's total consolidated assets at December 31, 2021 and 2020, respectively.

2 unchanged sentences

The unused commitment under the BNP Facility was $50,000 as of December 31, 2021.

The average dollar amount of borrowings outstanding during the year ended December 31, 2020, was $39,182.

For the year ended December 31, 2020 interest expense on the BNP Facility was $2,168, which included $225 of deferred financing amortization.

For the years ended December 31, 2021, 2020 and 2019, interest expense on the BNP Facility was $1,996, $2,168 and $905, respectively, which included $338, $225 and $118 of deferred financing amortization, based on average balances outstanding of $47,481, $39,182 and $20,000, respectively.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The average dollar borrowings and average interest rate for all Company debt during the years ended December 31, 2021, 2020 and 2019, were as follows:

3 unchanged sentences

December 31, 2019 307,826 4.99

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

As of December 31, 2021, the Company's debt liabilities are scheduled to mature as follows:

5 unchanged sentences

SBA Debentures 69,920 — — — 69,920 — —

105,270 — 14,000 — 2,765 88,505 —

Unsecured Notes 180,000 — — — — 125,000 55,000

177,850 — — 25,000 — 98,525 54,325

Total $ 349,920 $ — $ — $ 100,000 $ 69,920 $ 125,000 $ 55,000

(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

10 unchanged sentences

The Company has met the required distribution, source of income and asset diversification requirements as of December 31, 2021, and intends to continue meeting these requirements.

Accordingly, there is no liability for federal income taxes at the Company level.

Accordingly, there is no liability for federal income tax at the Company level.

The Company’s ICTI differs from the net increase in net assets resulting from operations primarily due to differences in income recognition on the unrealized appreciation/depreciation of investments, income from Company’s equity investments in pass-through entities, PIK dividends that have not yet been declared and paid by underlying portfolio companies, capital gains and losses and the net creation or utilization of capital loss carryforwards.

The Company recognized approximately $12,207 of ordinary taxable income during the year ended December 31, 2021.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The distributions paid to stockholders are reported as ordinary income, long-term capital gains, and returns of capital.

4 unchanged sentences

Long-term capital gain — — —

Return of capital — — —

Total distributions to stockholders $ 12,207 $ 11,516 $ 18,176

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

(1) The calculation of 2021 U.S.

federal taxable income is based on certain estimated amounts, including information received from third parties and, as a result, actual 2021 U.S.

federal taxable income will not be finally determined until the Company’s 2021 U.S.

federal tax return is filed in 2022 (and, therefore, such estimate is subject to change).

Tax-basis components of distributable earnings (accumulated losses) as of December 31, 2021 and 2020, were as follows:

Ordinary income (RIC) $ 1,193 $ 5,640

Net operating loss carry-forward (OFSCC-MB;

Undistributed earnings and profits (net operating loss carry-forward) (OFSCC-MB;

C-Corporation) 3,325 (1,188)

1 unchanged sentence

RIC – short-term, non-expiring

(3,226) (695)

RIC – long-term, non-expiring

1 unchanged sentence

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 Company records reclassifications to its capital accounts related to permanent differences between GAAP and tax treatment of excise taxes and other permanent differences.

The Company recorded reclassifications to decrease additional paid-in capital against total distributable earnings (accumulated loss) o f $2,142, $33 1 and $462 for the years ended December 31, 2021, 2020 and 2019, 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, 2021 and 2020, were as follows:

2 unchanged sentences

Tax-basis gross unrealized depreciation on investments (28,656) (64,487)

Tax-basis net unrealized depreciation on investments (14,311) (14,850)

Tax-basis net unrealized appreciation (depreciation) on investments 54,377 (14,311)

Fair value of investments $ 507,099 $ 442,323

Deferred taxes:

The Company recognizes deferred taxes on the unrealized appreciation or depreciation of securities held through OFSCC-MB.

The Company recognizes deferred taxes on the unrealized appreciation or depreciation of securities held through OFSCC-MB, and other basis differences including available loss carry forwards and suspended interest expense deductions reported by portfolio companies.

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 OFSCC-MB.

Deferred tax assets and liabilities, and related valuation allowance, as of December 31, 2020 and 2019, were as follows:

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

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

portion of the deferred tax asset will not be realized on the basis of the projected taxable income or other taxable events in OFSCC-MB.

The tax-basis unrealized appreciation (depreciation) of investments by tax entity inherent in the fair value of investments as of December 31, 2021 and 2020, were as follows:

Total net unrealized appreciation (depreciation) on investments held by RIC entities $ 54,282 (15,519)

OFSCC-MB (C-Corp):

Gross unrealized appreciation on investments 649 4,400

Gross unrealized depreciation on investments (554) $ (3,192)

Total net unrealized appreciation on investments on investments held by OFSCC-MB 95 1,208

Total tax-basis net unrealized appreciation (depreciation) on investments $ 54,377 $ (14,311)

Deferred tax assets and liabilities as of December 31, 2021 and 2020, were as follows:

Total deferred tax assets $ 141 $ 1,012

Total deferred tax liabilities (167) (1,153)

Valuation allowance on net deferred tax assets — —

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.

Deferred tax liabilities and assets with tax basis unrealized gain and losses differs from the amount that would have resulted from applying the federal rate of 21% to unrealized gains and losses because of state income taxes, net of associated federal benefit.

OFS Capital Corporation and Subsidiaries

10 unchanged sentences

1.00 0.92 1.43 1.38 1.28

Net realized gain (loss) on non-control/non-affiliate investments (4)

Net realized loss on non-control/non-affiliate investments (4)

(2.02) (0.75) (0.29) (0.37) (0.26)

1 unchanged sentence

0.56 — — 0.01 0.81

Net unrealized depreciation on non-control/non-affiliate investments (4)

Income tax expense on net realized investment gains (4)

(0.08) — — — —

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

2.89 (0.82) (0.72) (0.19) (0.78)

Net unrealized appreciation (depreciation) on affiliate investments (4)

60 unchanged sentences

At December 31, 2021 and December 31, 2020, net assets of OFSCC-FS were $76,072 and $39,942, respectively, which included cash of $3,693 and $3,264 of which $0 and $618 were available for distribution to the Company at December 31, 2021 and 2020, respectively.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following table summarizes distributions declared and paid for the years ended December 31, 2021, 2020 and 2019:

4 unchanged sentences

Year ended December 31, 2019

February 12, 2018 (1)

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 $ 0.34 $ 4,497 3,797 $ 45

9 unchanged sentences

$ 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)

Year ended December 31, 2021

March 2, 2021 March 24, 2021 March 31, 2021 $ 0.20 $ 2,655 3,103 $ 27

May 7, 2021 June 23, 2021 June 30, 2021 0.22 2,918 3,273 33

August 3, 2021 September 23, 2021 September 30, 2021 0.24 3,181 3,738 39

November 2, 2021 December 24, 2021 December 31, 2021 0.25 3,317 3,440 38

$ 0.91 $ 12,071 13,554 $ 137

The following table represents DRIP participation for the years ended December 31, 2021, 2020 and 2019, respectively:

3 unchanged sentences

December 31, 2019 227 18,176 19,500 11.62

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.

Since the Company’s initial public offering in 2012, distributions to stockholders total $132,763, or $11.49 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 a 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 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.

For the year ended December 31, 2020, approximately $0.86 per share, $0.00 per share, and $0.00 per share of the Company’s distributions represented ordinary income, long-term capital gain, and a return of capital to its stockholders, respectively.

Each year if required, a statement on Form 1099-DIV identifying the source of the distribution is mailed to the Company’s stockholders.

Stock repurchase program:

3 unchanged sentences

The Stock Repurchase Program may be extended, modified or discontinued at any time for any reason.

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollar amounts in thousands, except per share data)

The following table summarizes the shares of common stock the Company repurchased under the Stock Repurchase Program (amount in thousands except shares):

3 unchanged sentences

January 1, 2020 through December 31, 2020 — — — —

January 1, 2021 through December 31, 2021 700 6.7 700 9,992

Total 1,000 $ 7.78 1,000 $ 9,992

26 unchanged sentences

1,730 (1,720) 857 — 201 1,058 17,164 114 (17,278) —

Contract Datascan Holdings, Inc.

Preferred Equity (7)

— 59 — — — — 2,690 58 — 2,748

Common Equity (6)

— (21) — — — — 46 — (21) 25

— 38 — — — — 2,736 58 (21) 2,773

OFS Capital Corporation and Subsidiaries

8 unchanged sentences

December 31, 2021, Fair Value (5)

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

DRS Imaging Services, LLC Common Equity (6)

$ — $ (460) $ — $ — $ — $ — $ 1,749 $ — $ (460) $ 1,289

7 unchanged sentences

NeoSystems Corp.

Preferred Stock (7)

Preferred Equity (7)

1,505 (371) — 143 — 143 2,250 143 (2,393) —

Pfanstiehl Holdings, Inc.

Subordinated Loan — 19 361 — — 361 3,788 19 (3,807) —

Common Equity — 29,519 — 1,000 — 1,000 36,221 29,519 — 65,740

— 24,261 361 450 — 811 15,767 24,261 (3,807) 36,221

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)

Professional Pipe Holdings, LLC Senior Secured Loan — — 867 — — 867 6,086 1,370 (7,456) —

2 unchanged sentences

1,061 206 867 — — 867 7,294 2,637 (9,931) —

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

TalentSmart Holdings, LLC Common Equity (6)

— (211) — — — 1,306 — (211) 1,095

TRS Services, Inc.

Senior Secured Loan — (8) 81 — 7 88 14,623 9 (14,632) —

Preferred Equity (Class AA units) — (2) 6 — — 6 547 6 (553) —

Preferred Equity (Class A units) — 1,194 69 — — 69 3,095 1,194 (3,374) 915

Preferred Equity (6)

— 73 — — — — 915 73 — 988

Common Equity (6)

22 unchanged sentences

(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.

Gross reductions also include transfers of portfolio companies out of the affiliate classification to the non-affiliate/non-control classificaiton during the period.

(5) Fair value was determined using significant unobservable inputs.

67 unchanged sentences

— (1,474) 848 — — 848 9,583 128 (2,417) 7,294

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

8 unchanged sentences

December 31, 2020, Fair Value (5)

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.

1 unchanged sentence

Preferred Equity (Class AA units) — (2) 6 — — 6 547 6 (553) —

— (6) 80 — — 80 473 80 (6) 547

Preferred Equity (Class A units) — 1,194 69 — — 69 3,095 1,194 (3,374) 915

— 2,269 — — — — 826 2,269 — 3,095

Common Equity (6)

10 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.

8 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 1, 2022, the Company’s Board declared a distribution of $0.28 per share for the first quarter of 2022, payable on March 31, 2022 to stockholders of record as of March 24, 2022.

On February 28, 2022, SBIC I LP prepaid $19,000 of SBA debentures that were contractually due March 1, 2025 and September 1, 2025.

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