OFS Capital Corp 10-K

ITEM 8. Financial Statements and Supplementary Data Index to Financial Statements Reports of Independent Registered Public Accounting Firm (PCAOB Firm ID 185 ) 99 Consolidated Statements of Assets and Liabilities as of December 31, 202 3 and 202 2 101 Consolidated Statements of Operations for the Years Ended December 31, 202 3 , 202 2 and 202 1 102 Consolidated Statements of Changes in Net Assets for the Years Ended December 31, 202 3 , 202 2 and 202 1 103 Consolidated Statements of Cash Flows for the Years Ended December 31, 202 3 , 202 2 and 202 1 104 Consolidated Schedules of Investments as of December 31, 202 3 and 202 2 105 Notes to Consolidated Financial Statements 129 98 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors OFS Capital Corporation: 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, 2023 and 2022, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. 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. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Such procedures also included confirmation of investments owned as of December 31, 2023, by correspondence with custodians, agents, or portfolio companies, or by other appropriate auditing procedures where replies were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Evaluation of the fair value of Portfolio Company Investments using unobservable inputs As discussed in Notes 2 and 5 to the consolidated financial statements, the Company measures its investments at fair value. For those investments where the valuation is based on less observable or unobservable inputs, the Company’s determination of fair value requires more judgment. The majority of the Company’s investments are debt or equity investments in a portfolio company, excluding Structured Finance Securities, (collectively, Portfolio Company Investments), valued using unobservable inputs which the Company measures using either the income approach or market approach, or combining multiple valuation approaches. As of December 31, 2023, the fair value of such investments was $325.2 million. We identified the evaluation of the fair value of Portfolio Company Investments valued using unobservable inputs as a critical audit matter. In particular, assessing the discount rates used in the discounted cash flows valuation technique and the earnings metric multiples used in the market approach valuation technique required a high degree of 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 99 flows and market approach valuation techniques, respectively. For a selection of Portfolio Company Investments, we compared relevant data elements used by the Company to derive the discount rates and earnings metric multiples to underlying documentation. We involved valuation professionals with specialized skills and knowledge who assisted in evaluating a selection of Portfolio Company Investments by developing: • a market yield analysis that assessed publicly available market information such as observable market yields of comparable companies of similar credit quality for selected Portfolio Company Investments fair valued by the Company using the income approach • a set of guideline public companies that assessed market information from publicly available sources, including earnings metric multiples of publicly traded comparable companies for selected Portfolio Company Investments fair valued by the Company using the market approach • a fair value range for the selected Portfolio Company Investments, based upon the independent market research performed and compared the results to the Company’s fair value estimates. Accompanying Supplementary Information We have also previously audited, in accordance with the standards of the PCAOB, the statements of assets and liabilities of the Company, including the schedules of investments, as of December 31, 2021, 2020 and 2019, and the related statements of operations and cash flows for the years then ended and the related statements of changes in net assets for each of the years in the three-year period ended December 31, 2021 (none of which is presented herein), and we expressed unqualified opinions on those consolidated financial statements. The senior securities information as of December 31, 2023, 2022, 2021, 2020 and 2019 included in Part II, Item 5 of the Annual Report on Form 10-K of the Company under the caption “Senior Securities” (the senior securities table) has been subjected to audit procedures performed in conjunction with the audits of the Company’s consolidated financial statements. The senior securities table is the responsibility of the Company’s management. Our audit procedures included determining whether the senior securities table reconciles to the consolidated financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the senior securities table. In forming our opinion on the senior securities table, we evaluated whether the senior securities table, including its form and content, is presented in conformity with the instructions to Form N-2. In our opinion, the senior securities table as of December 31, 2023, 2022, 2021, 2020 and 2019 is fairly stated, in all material respects, in relation to the consolidated financial statements as a whole. /s/ KPMG LLP We have served as the Company’s auditor since 2019. Chicago, Illinois March 5, 2024 100 OFS Capital Corporation and Subsidiaries Consolidated Statements of Assets and Liabilities (Dollar amounts in thousands, except per share data) December 31, 2023 2022 Assets Investments, at fair value Non-control/non-affiliate investments (amortized cost of $ 384,339 and $ 446,620 , respectively) $ 333,456 $ 402,771 Affiliate investments (amortized cost of $ 19,191 and $ 18,100 , respectively) 86,831 96,701 Control investments (amortized cost of 0 and $ 10,160 , respectively) — 1,104 Total investments, at fair value (amortized cost of $ 403,530 and $ 474,880 , respectively) 420,287 500,576 Cash and cash equivalents 45,349 14,937 Interest receivable 2,217 2,202 Prepaid expenses and other assets 1,965 3,002 Total assets 469,818 520,717 Liabilities Revolving lines of credit 90,500 104,700 SBA debentures (net of deferred debt issuance costs of $ 20 and $ 223 , respectively) 31,900 50,697 Unsecured Notes (net of discounts and deferred debt issuance costs of $ 2,667 and $ 3,647 , respectively) 177,333 176,353 Interest payable 3,712 3,947 Payable to investment adviser and affiliates (Note 3) 3,556 3,909 Accrued professional fees 500 444 Other liabilities 313 244 Total liabilities 307,814 340,294 Commitments and contingencies (Note 6) Net Assets Preferred stock, par value of $ 0.01 per share, 2,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively — — Common stock, par value of $ 0.01 per share, 100,000,000 shares authorized, 13,398,078 and 13,398,078 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively 134 134 Paid-in capital in excess of par 184,841 184,841 Total distributable earnings (accumulated losses) ( 22,971 ) ( 4,552 ) Total net assets $ 162,004 $ 180,423 Total liabilities and net assets $ 469,818 $ 520,717 Number of shares outstanding 13,398,078 13,398,078 Net asset value per share $ 12.09 $ 13.47 See Notes to Consolidated Financial Statements. 101 OFS Capital Corporation and Subsidiaries Consolidated Statements of Operations (Dollar amounts in thousands, except per share data) Year Ended December 31, 2023 2022 2021 Investment income Interest income: Non-control/non-affiliate investments $ 53,208 $ 45,636 $ 36,399 Affiliate investments — — 3,517 Control investments — 98 943 Total interest income 53,208 45,734 40,859 Payment-in-kind interest and dividend income: Non-control/non-affiliate investments 1,461 480 951 Affiliate investments 1,136 466 312 Control investments — 43 405 Total payment-in-kind interest and dividend income: 2,597 989 1,668 Dividend income: Non-control/non-affiliate investments 29 800 888 Affiliate investments 630 103 1,000 Control investments — 45 136 Total dividend income 659 948 2,024 Fee income: Non-control/non-affiliate investments 479 1,067 2,485 Affiliate investments — — 653 Control investments — 6 74 Total fee income 479 1,073 3,212 Total investment income 56,943 48,744 47,763 Expenses Interest and financing expense 19,482 17,025 17,515 Base management fees 7,218 7,979 7,669 Income Incentive Fee 5,040 2,276 2,352 Capital Gains Fee — ( 1,916 ) 1,916 Professional fees 1,681 1,608 1,670 Administration fees 1,680 1,742 1,758 Other expenses 1,682 1,678 1,433 Total expenses 36,783 30,392 34,313 Net investment income 20,160 18,352 13,450 Net realized and unrealized gain (loss) on investments Net realized loss on non-control/non-affiliate investments ( 838 ) ( 2,163 ) ( 27,114 ) Net realized gain on affiliate investments — — 7,545 Net realized gain (loss) on control investments ( 10,516 ) 278 — Income tax (expense) benefit on net realized gains on investments ( 51 ) 155 ( 1,027 ) Net unrealized appreciation (depreciation) on non-control/non-affiliate investments ( 7,033 ) ( 42,110 ) 38,551 Net unrealized appreciation (depreciation) on affiliate investments ( 10,961 ) 23,667 28,153 Net unrealized appreciation (depreciation) on control investments 9,056 ( 5,648 ) 1,783 Deferred tax (expense) benefit on net unrealized appreciation (depreciation) ( 69 ) 27 114 Net gain (loss) on investments ( 20,412 ) ( 25,794 ) 48,005 Loss on extinguishment of debt ( 213 ) ( 144 ) ( 4,591 ) Net increase (decrease) in net assets resulting from operations $ ( 465 ) $ ( 7,586 ) $ 56,864 Net investment income per common share - basic and diluted $ 1.50 $ 1.37 $ 1.00 Net increase (decrease) in net assets resulting from operations per common share - basic and diluted $ ( 0.04 ) $ ( 0.57 ) $ 4.24 Distributions declared per common share $ 1.34 $ 1.16 $ 0.91 Basic and diluted weighted-average common shares outstanding 13,398,078 13,417,410 13,413,861 See Notes to Consolidated Financial Statements. 102 OFS Capital Corporation and Subsidiaries Consolidated Statements of Changes in Net Assets (Dollar amounts in thousands, except per share data) Preferred Stock Common Stock Number of shares Par value Number of shares Par value Paid-in capital in excess of par Total distributable earnings (accumulated losses) Total net assets Balances at December 31, 2020 — $ — 13,409,559 $ 134 $ 187,124 $ ( 28,302 ) $ 158,956 Net increase in net assets resulting from operations: Net investment income — — — — — 13,450 13,450 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 debts — — — — — ( 4,591 ) ( 4,591 ) Tax reclassifications of permanent differences — — — — ( 2,142 ) 2,142 — Distributions to stockholders: Common stock issued from reinvestment of stockholder distributions — — 13,554 — 136 — 136 Dividends declared — — — — — ( 12,207 ) ( 12,207 ) Repurchase of common stock — — ( 700 ) — ( 5 ) — ( 5 ) Net increase (decrease) 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 Net decrease in net assets resulting from operations: Net investment income — — — — — 18,352 18,352 Net realized losses on investments, net of taxes — — — — — ( 1,730 ) ( 1,730 ) Unrealized depreciation on investments, net of deferred taxes — — — — — ( 24,064 ) ( 24,064 ) Loss on extinguishment of debts — — — — — ( 144 ) ( 144 ) Tax reclassifications of permanent differences — — — — ( 101 ) 101 — Distributions to stockholders: Common stock issued from reinvestment of stockholder distributions — — 17,919 — 179 — 179 Dividends declared — — — — — ( 15,564 ) ( 15,564 ) Repurchases of common stock — — ( 42,254 ) — ( 350 ) — ( 350 ) Net decrease for the year ended December 31, 2022 — — ( 24,335 ) — ( 272 ) ( 23,049 ) ( 23,321 ) Balances at December 31, 2022 — $ — 13,398,078 $ 134 $ 184,841 $ ( 4,552 ) $ 180,423 Net decrease in net assets resulting from operations: Net investment income — — — — — 20,160 20,160 Net realized losses on investments, net of taxes — — — — — ( 11,405 ) ( 11,405 ) Net unrealized depreciation on investments, net of deferred taxes — — — — — ( 9,007 ) ( 9,007 ) Loss on extinguishment of debts — — — — — ( 213 ) ( 213 ) Dividends declared — — — — — ( 17,954 ) ( 17,954 ) Net decrease for the year ended December 31, 2023 — — — — — ( 18,419 ) ( 18,419 ) Balances at December 31, 2023 — $ — 13,398,078 $ 134 $ 184,841 $ ( 22,971 ) $ 162,004 See Notes to Consolidated Financial Statements. 103 OFS Capital Corporation and Subsidiaries Consolidated Statements of Cash Flows (Dollar amounts in thousands) Year Ended December 31, 2023 2022 2021 Cash flows from operating activities Net increase (decrease) in net assets resulting from operations $ ( 465 ) $ ( 7,586 ) $ 56,864 Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: Net realized loss on investments 11,354 1,885 19,568 Net unrealized (appreciation) depreciation on investments, net of deferred taxes 9,007 24,064 ( 68,601 ) Income tax expense (benefit) from realized gains on investments 51 ( 155 ) 1,027 Loss on extinguishment of debt 213 144 4,591 Amortization and write-off of deferred offering costs 1,528 1,549 1,969 Amortization of intangible asset 408 409 222 Amortization of Net Loan Fees ( 1,836 ) ( 1,738 ) ( 2,442 ) Amendment fees collected 250 206 265 Payment-in-kind interest and dividend income ( 2,597 ) ( 976 ) ( 2,141 ) Accretion of interest income on Structured Finance Securities ( 10,857 ) ( 10,656 ) ( 9,861 ) Purchase and origination of portfolio investments ( 41,736 ) ( 154,167 ) ( 268,901 ) Proceeds from principal payments on portfolio investments 83,004 88,673 200,713 Proceeds from sale or redemption of portfolio investments 18,930 46,617 52,789 Distributions received from portfolio investments 14,483 12,173 12,656 Changes in operating assets and liabilities: Interest receivable ( 15 ) ( 727 ) ( 177 ) Interest payable ( 235 ) 262 509 Receivable for investments sold — 14,893 ( 14,893 ) Payable to investment adviser and affiliates ( 353 ) ( 2,308 ) 2,965 Payable for investments purchased — ( 8,788 ) 377 Other assets and liabilities 432 ( 828 ) 492 Net cash provided by (used in) operating activities 81,566 2,946 ( 12,009 ) Cash flows from financing activities Proceeds from offerings of Unsecured Notes, net of discounts — — 175,506 Redemptions of Unsecured Notes — — ( 177,850 ) Distributions paid to stockholders ( 17,954 ) ( 15,385 ) ( 12,071 ) Borrowings under revolving lines of credit 26,550 59,450 145,350 Repayments under revolving lines of credit ( 40,750 ) ( 54,750 ) ( 77,400 ) Repayments of SBA debentures ( 19,000 ) ( 19,000 ) ( 35,350 ) Payments of deferred debt issuance costs and other financing costs — ( 1,372 ) ( 836 ) Net cash provided by (used in) financing activities ( 51,154 ) ( 31,057 ) 17,349 Net increase (decrease) in cash 30,412 ( 28,111 ) 5,340 Cash — beginning of year 14,937 43,048 37,708 Cash — end of year $ 45,349 $ 14,937 $ 43,048 Supplemental Disclosure of Cash Flow Information: Cash paid during the period for interest $ 18,189 $ 15,214 $ 15,037 Reinvestment of stockholder distributions — 179 136 See Notes to Consolidated Financial Statements. 104 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2023 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Non-control/Non-affiliate Investments 24 Seven Holdco, LLC (15) Temporary Help Services First Lien Debt 11.45 % SOFR+ 6.00 % 1/28/2022 11/16/2027 $ 8,820 $ 8,776 $ 8,483 5.2 % Advantage Sales & Marketing Inc. (F/K/A Karman Buyer Corp) (14) (15) Advertising Agencies First Lien Debt 10.18 % SOFR+ 4.50 % 3/2/2022 10/28/2027 2,260 2,238 2,249 1.4 AIDC Intermediateco 2, LLC (15) Computer Systems Design Services First Lien Debt 11.80 % SOFR+ 6.25 % 7/22/2022 7/22/2027 1,980 1,948 1,974 1.2 First Lien Debt 11.78 % SOFR+ 6.25 % 7/31/2023 7/22/2027 46 45 46 — 2,026 1,993 2,020 1.2 Allen Media, LLC (14) (15) Cable and Other Subscription Programming First Lien Debt 11.00 % SOFR+ 5.50 % 3/2/2021 2/10/2027 3,729 3,726 3,325 2.1 All Star Auto Lights, Inc. (4) (15) (20) Motor Vehicle Parts (Used) Merchant Wholesalers First Lien Debt 10.97 % SOFR+ 5.50 % 12/19/2019 8/20/2025 22,861 22,719 22,853 14.1 First Lien Debt 10.96 % SOFR+ 5.50 % 8/4/2022 8/20/2025 4,925 4,872 4,923 3.0 27,786 27,591 27,776 17.1 Astro One Acquisition Corporation (6) Other Miscellaneous Nondurable Goods Merchant Wholesalers Second Lien Debt 14.11 % SOFR+ 8.50 % 1/31/2022 9/14/2029 3,000 2,596 110 0.1 Avison Young (6) (21) Nonresidential Property Managers First Lien Debt (15) 12.11 % SOFR+ 6.50 % 11/25/2021 1/31/2026 3,925 3,903 1,063 0.7 First Lien Debt 12.64 % SOFR+ 7.00 % 8/19/2022 1/31/2026 794 757 215 0.1 4,719 4,660 1,278 0.8 BayMark Health Services, Inc. (15) Outpatient Mental Health and Substance Abuse Centers Second Lien Debt 14.11 % SOFR+ 8.50 % 6/10/2021 6/11/2028 4,962 4,915 4,962 3.1 Second Lien Debt 14.12 % SOFR+ 8.50 % 6/10/2021 6/11/2028 3,988 3,948 3,988 2.5 8,950 8,863 8,950 5.6 105 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments (continued) December 31, 2023 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets BCPE North Star US Holdco 2, Inc. (F/K/A Dessert Holdings) Ice Cream and Frozen Dessert Manufacturing Second Lien Debt 12.72 % SOFR+ 7.25 % 2/2/2022 6/8/2029 $ 1,667 $ 1,645 $ 1,474 0.9 % Boca Home Care Holdings, Inc. (19) Services for the Elderly and Persons with Disabilities First Lien Debt (15) 11.96 % SOFR+ 6.50 % 2/25/2022 2/25/2027 10,972 10,874 10,597 6.5 First Lien Debt (Revolver) (5) n/m (18) SOFR+ 6.50 % 2/25/2022 2/25/2027 — ( 10 ) ( 44 ) — Common Equity ( 1,290 Class A units) (10) (13) 2/25/2022 1,290 827 0.5 Preferred Equity ( 3,446 Class A Units), 12.0 % cash / 2.0 % PIK 3/3/2023 345 344 0.2 10,972 12,499 11,724 7.2 Clevertech Bidco, LLC Commodity Contracts Dealing First Lien Debt (15) 12.25 % SOFR+ 6.75 % 11/3/2023 12/30/2027 3,198 3,106 3,106 1.9 First Lien Debt (Revolver) (5) n/m (18) SOFR+ 6.75 % 11/3/2023 12/30/2027 — ( 9 ) ( 9 ) — 3,198 3,097 3,097 1.9 Constellis Holdings, LLC (10) Other Justice, Public Order, and Safety Activities Common Equity ( 20,628 common shares) 3/27/2020 703 45 — Convergint Technologies Holdings, LLC Security Systems Services (except Locksmiths) Second Lien Debt 12.22 % SOFR+ 6.75 % 9/28/2018 3/30/2029 5,938 5,863 5,877 3.6 Creation Technologies (15) (21) Bare Printed Circuit Board Manufacturing First Lien Debt 11.18 % SOFR+ 5.50 % 9/24/2021 10/5/2028 1,970 1,959 1,851 1.1 Diamond Sports Group, LLC (6) (14) (15) Television Broadcasting Second Lien Debt 10.71 % SOFR+ 5.25 % 11/19/2019 8/24/2026 1,935 1,935 92 0.1 East West Manufacturing (15) Fluid Power Pump and Motor Manufacturing First Lien Debt 11.13 % SOFR+ 5.75 % 2/11/2022 12/22/2028 1,930 1,916 1,855 1.1 Electrical Components International, Inc. Current-Carrying Wiring Device Manufacturing Second Lien Debt 13.96 % SOFR+ 8.50 % 4/8/2021 6/26/2026 3,679 3,452 3,561 2.2 106 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments (continued) December 31, 2023 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4) (17) Electrical Contractors and Other Wiring Installation Contractors First Lien Debt 7.50 % N/A 6/30/2017 12/31/2025 $ 6,295 $ 6,295 $ 6,295 3.9 % Second Lien Debt (6) (10) 10.00 % PIK N/A 6/30/2017 12/31/2026 7,844 6,584 3,801 2.3 First Lien Debt (Revolver) (5) n/m (18) N/A 11/29/2021 12/31/2025 — — — — Equity Participation Rights (7) (10) 12/31/2021 4,722 — — 14,139 17,601 10,096 6.2 Excelin Home Health, LLC (4) Home Health Care Services Second Lien Debt 18.00 % PIK N/A 10/25/2018 12/31/2025 4,932 4,839 4,173 2.6 GGC Aerospace Topco L.P. (10) Other Aircraft Parts and Auxiliary Equipment Manufacturing Common Equity ( 368,852 Class A units) 12/29/2017 450 — — Common Equity ( 40,984 Class B units) 12/29/2017 50 — — 500 — — GoTo Group (F/K/A LogMeIn, Inc.) (14) (15) Data Processing, Hosting, and Related Services First Lien Debt 10.28 % SOFR+ 4.75 % 3/26/2021 8/31/2027 2,916 2,915 1,943 1.2 Heritage Grocers Group, LLC. (F/K/A Tony's Fresh Market / Cardenas Markets) (15) Supermarkets and Other Grocery (except Convenience) Stores First Lien Debt 12.20 % SOFR+ 6.75 % 7/20/2022 8/1/2029 5,925 5,641 5,925 3.7 Honor HN Buyer Inc Services for the Elderly and Persons with Disabilities First Lien Debt (15) 11.25 % SOFR+ 5.75 % 10/15/2021 10/15/2027 6,466 6,385 6,466 4.0 First Lien Debt (15) 11.25 % SOFR+ 5.75 % 10/15/2021 10/15/2027 4,089 4,029 4,089 2.5 First Lien Debt (Revolver) (5) 13.25 % Prime+ 4.75 % 10/15/2021 10/15/2027 95 85 95 0.1 First Lien Debt (Delayed Draw) (5) (15) 11.50 % SOFR+ 6.00 % 3/31/2023 10/15/2027 2,706 2,682 2,706 1.7 13,356 13,181 13,356 8.3 Idera Computer and Computer Peripheral Equipment and Software Merchant Wholesalers Second Lien Debt 12.28 % SOFR+ 6.75 % 1/27/2022 3/2/2029 4,000 4,000 3,850 2.4 107 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments (continued) December 31, 2023 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Inergex Holdings, LLC (11) Other Computer Related Services First Lien Debt 12.58 % cash / 1.00 % PIK SOFR+ 7.00 % 10/1/2018 10/1/2024 $ 14,868 $ 14,783 $ 14,868 9.2 % First Lien Debt (Revolver) 12.58 % cash / 1.00 % PIK SOFR+ 7.00 % 10/1/2018 10/1/2024 2,344 2,312 2,344 1.4 17,212 17,095 17,212 10.6 Ivanti Software, Inc. (14) (15) Software Publishers First Lien Debt 9.91 % SOFR+ 4.25 % 3/26/2021 12/1/2027 2,933 2,940 2,792 1.7 JP Intermediate B, LLC (15) Drugs and Druggists' Sundries Merchant Wholesalers First Lien Debt 11.14 % SOFR+ 5.50 % 1/14/2021 11/20/2027 4,697 4,513 3,368 2.1 Kreg LLC Other Ambulatory Health Care Services First Lien Debt (11) (15) 9.75 % cash / 2.50 % PIK SOFR+ 4.25 % 12/20/2021 12/20/2026 17,139 17,066 15,989 9.9 First Lien Debt (Revolver) (5) n/m (18) SOFR+ 6.25 % 12/20/2021 12/20/2026 — ( 6 ) ( 90 ) ( 0.1 ) 17,139 17,060 15,899 9.8 Medrina LLC All Other Outpatient Care Centers First Lien Debt (15) 11.74 % SOFR+ 6.25 % 10/20/2023 10/20/2029 2,234 2,180 2,180 1.3 First Lien Debt (Delayed Draw) (5) (15) n/m (18) SOFR+ 6.25 % 10/20/2023 10/20/2029 — ( 5 ) ( 5 ) — First Lien Debt (Revolver) (5) n/m (18) SOFR+ 6.25 % 10/20/2023 10/20/2029 — ( 8 ) ( 8 ) — 2,234 2,167 2,167 1.3 Metasource (15) All Other Business Support Services First Lien Debt 11.72 % cash / 0.50 % PIK SOFR+ 6.25 % 5/17/2022 5/17/2027 2,755 2,733 2,597 1.6 First Lien Debt (Delayed Draw) (5) n/m (18) SOFR+ 6.25 % 5/17/2022 5/17/2027 — ( 4 ) ( 69 ) — 2,755 2,729 2,528 1.6 One GI LLC Offices of Other Holding Companies First Lien Debt (15) 12.21 % SOFR+ 6.75 % 12/13/2021 12/22/2025 7,432 7,358 7,066 4.4 First Lien Debt (15) 12.21 % SOFR+ 6.75 % 12/13/2021 12/22/2025 3,916 3,876 3,723 2.3 First Lien Debt (Revolver) (5) n/m (18) SOFR+ 6.75 % 12/13/2021 12/22/2025 — ( 14 ) ( 71 ) — 11,348 11,220 10,718 6.7 108 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments (continued) December 31, 2023 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Planet Bingo, LLC (F/K/A 3rd Rock Gaming Holdings, LLC) (6) Software Publishers First Lien Debt 6.50 % N/A 3/13/2018 12/31/2025 $ 16,648 $ 14,113 $ 6,858 4.2 % PM Acquisition LLC All Other General Merchandise Stores Common Equity ( 499 units) (10) 9/30/2017 499 551 0.3 Reception Purchaser LLC (15) Transportation and Warehousing First Lien Debt 11.50 % SOFR+ 6.00 % 4/28/2022 3/24/2028 2,523 2,495 2,257 1.4 Redstone Holdco 2 LP (F/K/A RSA Security) (15) Computer and Computer Peripheral Equipment and Software Merchant Wholesalers First Lien Debt (14) 10.22 % SOFR+ 4.75 % 4/16/2021 4/27/2028 1,715 1,708 1,307 0.8 Second Lien Debt 13.22 % SOFR+ 7.75 % 4/16/2021 4/27/2029 4,450 4,407 3,272 2.0 6,165 6,115 4,579 2.8 RPLF Holdings, LLC (10) (13) Software Publishers Common Equity ( 345,339 Class A units) 1/17/2018 — 1,182 0.7 RumbleOn, Inc. (15) (21) Other Industrial Machinery Manufacturing First Lien Debt (11) 14.36 % Cash / 0.50 % PIK SOFR+ 8.75 % 8/31/2021 8/31/2026 2,858 2,769 2,633 1.6 First Lien Debt (11) 14.36 % Cash / 0.50 % PIK SOFR+ 8.75 % 8/31/2021 8/31/2026 862 854 795 0.5 Warrants (warrants to purchase up to $ 218,000 in common stock) 8/31/2021 8/14/2028 (12) 200 72 — 3,720 3,823 3,500 2.1 Sentry Centers Holdings, LLC (10) (13) Other Professional, Scientific, and Technical Services Preferred Equity ( 1,603 Series B units) 9/4/2020 160 77 — Signal Parent, Inc. (14) (15) New Single-Family Housing Construction (except For-Sale Builders) First Lien Debt 8.96 % SOFR+ 3.50 % 3/25/2021 4/3/2028 1,803 1,791 1,616 1.0 109 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments (continued) December 31, 2023 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Spear Education Holdings, LLC (15) First Lien Debt Professional and Management Development Training 13.00 % SOFR+ 7.50 % 2/10/2023 12/15/2027 $ 1,485 $ 1,455 $ 1,484 0.9 % SSJA Bariatric Management LLC (15) Offices of Physicians, Mental Health Specialists First Lien Debt 10.75 % SOFR+ 5.25 % 8/26/2019 8/26/2024 9,575 9,563 9,186 5.7 First Lien Debt 10.75 % SOFR+ 5.25 % 12/31/2020 8/26/2024 1,035 1,033 993 0.6 First Lien Debt 10.75 % SOFR+ 5.25 % 12/8/2021 8/26/2024 2,607 2,600 2,501 1.5 First Lien Debt (Revolver) (5) 10.75 % SOFR+ 5.25 % 8/26/2019 8/26/2024 200 199 173 0.1 13,417 13,395 12,853 7.9 SS Acquisition, LLC (8) (15) Sports and Recreation Instruction First Lien Debt 12.41 % SOFR+ 6.75 % 12/30/2021 12/30/2026 3,042 3,023 3,042 1.9 First Lien Debt 13.10 % SOFR+ 7.45 % 12/30/2021 12/30/2026 1,460 1,449 1,460 0.9 4,502 4,472 4,502 2.8 Staples, Inc. (14) (15) (21) Business to Business Electronic Markets First Lien Debt 10.46 % L+ 5.00 % 6/24/2019 4/16/2026 2,870 2,841 2,728 1.7 STS Operating, Inc. Industrial Machinery and Equipment Merchant Wholesalers Second Lien Debt 13.46 % SOFR+ 8.00 % 5/15/2018 4/30/2026 9,073 9,072 9,073 5.6 Tolemar Acquisition, INC. Motorcycle, Bicycle, and Parts Manufacturing First Lien Debt (15) 11.75 % SOFR+ 6.00 % 10/14/2021 10/14/2026 15,347 15,304 14,334 8.8 First Lien Debt (Revolver) (5) 11.75 % SOFR+ 6.00 % 10/14/2021 10/14/2026 592 585 422 0.3 15,939 15,889 14,756 9.1 TruGreen Limited Partnership Landscaping Services Second Lien Debt 14.14 % SOFR+ 8.50 % 5/13/2021 11/2/2028 4,500 4,592 4,287 2.6 United Biologics Holdings, LLC (4) (10) Medical Laboratories Preferred Equity ( 4,701 units) 4/16/2013 9 — — 110 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments (continued) December 31, 2023 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Wellful Inc. (F/K/A KNS Acquisition Corp.) (15) Electronic Shopping and Mail-Order Houses First Lien Debt 11.72 % SOFR+ 6.25 % 4/16/2021 4/21/2027 $ 6,606 $ 6,581 $ 6,313 3.9 Total Debt and Equity Investments $ 285,417 $ 287,218 $ 254,411 157.0 % Structured Finance Securities (21) Apex Credit CLO 2020 (9) (16) Subordinated Notes 14.89 % N/A 11/16/2020 10/20/2031 $ 11,080 $ 10,191 $ 7,031 4.3 % Apex Credit CLO 2021 Ltd (9) (16) Subordinated Notes 21.61 % N/A 5/28/2021 7/18/2034 8,630 6,977 5,711 3.5 Apex Credit CLO 2022-1A (9) (16) Subordinated Notes 17.30 % N/A 4/28/2022 4/22/2033 10,726 8,858 6,961 4.3 Ares L CLO Mezzanine Debt - Class E 11.31 % SOFR+ 5.65 % 2/17/2022 1/15/2032 6,000 5,832 5,474 3.4 Barings CLO 2019-I Ltd. Mezzanine Debt - Class E 12.52 % SOFR+ 6.86 % 2/23/2022 4/15/2035 8,000 7,918 7,725 4.8 Battalion CLO XI, Ltd. Mezzanine Debt - Class E 12.51 % SOFR+ 6.85 % 4/24/2022 4/24/2034 6,000 5,918 5,511 3.4 Brightwood Capital MM CLO 2023-1A, Ltd. Mezzanine Debt - Class D 11.85 % SOFR+ 6.46 % 9/28/2023 10/15/2035 915 888 888 0.5 Mezzanine Debt - Class E 15.75 % SOFR+ 10.36 % 9/28/2023 10/15/2035 2,133 1,929 1,929 1.2 Subordinated Notes (9) (16) 14.56 % N/A 9/28/2023 10/15/2035 5,494 5,018 5,018 3.1 8,542 7,835 7,835 4.8 Dryden 53 CLO, LTD. (9) (16) Subordinated Notes - Income 8.04 % N/A 10/26/2020 1/15/2031 2,700 1,280 622 0.3 Subordinated Notes 7.00 % N/A 10/26/2020 1/15/2031 2,159 1,046 497 0.3 4,859 2,326 1,119 0.7 111 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments (continued) December 31, 2023 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Dryden 76 CLO, Ltd. (9) (16) Subordinated Notes 16.12 % N/A 9/27/2019 10/20/2032 $ 2,750 $ 2,332 $ 1,779 1.1 % Flatiron CLO 18, Ltd. (9) (16) Subordinated Notes 7.62 % N/A 1/2/2019 4/17/2031 9,680 6,314 4,989 3.1 Madison Park Funding XXIII, Ltd. (9) (16) Subordinated Notes 16.45 % N/A 1/8/2020 7/27/2047 10,000 5,558 4,744 2.9 Madison Park Funding XXIX, Ltd. (9) (16) Subordinated Notes 13.78 % N/A 12/22/2020 10/18/2047 9,500 5,927 5,355 3.3 Monroe Capital MML CLO X, Ltd. Mezzanine Debt - Class E-R 14.12 % SOFR+ 8.75 % 4/22/2022 5/20/2034 1,000 961 967 0.6 Octagon Investment Partners 39, Ltd. (9) (16) Subordinated Notes 4.98 % N/A 1/23/2020 10/20/2030 7,000 3,962 2,171 1.3 Park Avenue Institutional Advisers CLO Ltd 2021-1 Mezzanine Debt - Class E 12.98 % SOFR+ 7.30 % 1/26/2021 1/20/2034 1,000 982 982 0.6 Redding Ridge 4 (9) (16) Subordinated Notes 7.46 % N/A 3/4/2021 4/15/2030 1,300 910 544 0.3 Regatta XXII Funding Ltd Mezzanine Debt - Class E 12.61 % SOFR+ 7.19 % 5/6/2022 7/20/2035 3,000 2,977 3,007 1.9 THL Credit Wind River 2019‐3 CLO Ltd. (9) (16) Subordinated Notes 10.59 % N/A 4/5/2019 4/15/2031 7,000 4,883 2,941 1.8 Trinitas CLO VIII (9) (16) Subordinated Notes 3.95 % N/A 3/4/2021 7/20/2117 5,200 2,891 1,352 0.8 112 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments (continued) December 31, 2023 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Venture 45 CLO Ltd. Mezzanine Debt - Class E 13.12 % SOFR+ 7.70 % 4/18/2022 7/20/2035 $ 3,000 $ 2,942 $ 2,579 1.6 % Wellfleet CLO 2018-2 (9) (16) Subordinated Notes 9.99 % N/A 3/4/2021 10/20/2031 1,000 627 270 0.2 Total Structured Finance Securities $ 125,267 $ 97,121 $ 79,045 48.8 % Total Non-control/Non-affiliate Investments $ 410,684 $ 384,339 $ 333,456 205.8 % Affiliate Investments Contract Datascan Holdings, Inc. (4) (19) Office Machinery and Equipment Rental and Leasing Preferred Equity ( 3,061 Series A shares) 10 % PIK 8/5/2015 $ 7,309 $ 10,312 6.4 % Common Equity ( 11,273 shares) (10) 6/28/2016 104 271 0.2 7,412 10,583 6.6 DRS Imaging Services, LLC (13) (19) Data Processing, Hosting, and Related Services Common Equity ( 1,135 units) 3/8/2018 1,135 393 0.2 Master Cutlery, LLC (4) (10) (19) Sporting and Recreational Goods and Supplies Merchant Wholesalers Subordinated Debt (6) (11) 13.00 % PIK N/A 4/17/2015 5/25/2024 9,749 4,680 — — Preferred Equity ( 3,723 Series A units), 8 % PIK 4/17/2015 3,483 — — Common Equity ( 15,564 units) 4/17/2015 — — — 9,749 8,163 — — Pfanstiehl Holdings, Inc. (4) (19) (20) Pharmaceutical Preparation Manufacturing Common Equity ( 400 Class A shares) 1/1/2014 217 70,927 43.8 TalentSmart Holdings, LLC (10) (13) (19) Professional and Management Development Training Common Equity ( 1,595,238 Class A shares) 10/11/2019 1,595 1,136 0.7 113 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments (continued) December 31, 2023 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets TRS Services, LLC (4) (19) Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance Preferred Equity ( 1,937,191 Class A units), 11 % PIK 12/10/2014 $ 97 $ 2,507 1.5 % Common Equity ( 3,000,000 units) (10) 12/10/2014 572 1,285 0.8 669 3,792 2.3 Total Affiliate Investments $ 9,749 $ 19,191 $ 86,831 53.6 % Total Investments $ 420,432 $ 403,530 $ 420,287 259.4 % (1) Equity ownership may be held in shares or units of companies affiliated with the portfolio company. The Company’s investments are generally classified as “restricted securities” as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144. (2) As of December 31, 2023, the Company held loans with an aggregate fair value of $ 230,185 , or 92 % of the total loan portfolio, that bore interest at a variable rate indexed to LIBOR (L), Prime or SOFR, and reset monthly, quarterly, or semi-annually. For each variable-rate investment, the Company has provided the spread over the reference rate and current interest rate in effect as of December 31, 2023. Unless otherwise noted, all investments with a stated PIK rate require interest payments with the issuance of additional securities as payment of the entire PIK provision. (3) Unless otherwise noted with footnote 14, fair value was determined using significant unobservable inputs for all of the Company’s investments and are considered Level 3 under GAAP. See Note 5 for further details. (4) Investments (or portion thereof) held by SBIC I LP. These assets were pledged as collateral of the SBA debentures and could not be pledged under any debt obligation of the Company. (5) Subject to unfunded commitments. See Note 6 . (6) Investment was on non-accrual status as of December 31, 2023, meaning the Company suspended recognition of all or a portion of income on the investment. See Note 4 for further details. (7) Equity participation rights issued by unaffiliated third party fully covered with underlying positions in the portfolio company. (8) The Company entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it agreed to receive its payment after the repayment of certain co‑lenders pursuant to a payment waterfall. The table below provides additional details as of December 31, 2023: Portfolio Company Reported Interest Rate Interest Rate per Credit Agreement Additional Interest per Annum SS Acquisition, LLC 12.41 % 11.89 % 0.51 % SS Acquisition, LLC 13.10 % 11.89 % 1.21 % (9) The rate disclosed on subordinated note investments is the estimated effective yield, generally established at purchase, and reevaluated upon the receipt of the initial distribution and each subsequent quarter thereafter. The estimated effective yield is based upon projected amounts and timing of future distributions and the projected amounts and timing of terminal principal payments at the time of estimation. The estimated effective yield and investment cost may ultimately not be realized. Projected cash flows, including the amounts and timing of terminal principal payments, which generally are projected to occur prior to the contractual maturity date, were utilized in deriving the effective yield of the investments. (10) Non-income producing. 114 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments (continued) December 31, 2023 (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. The interest rate in the schedule represents the current interest rate in effect for these investments. The following table provides additional details on these PIK investments, including the maximum annual PIK interest rate allowed as of December 31, 2023: Portfolio Company Investment Type Range of PIK Option Range of Cash Option Maximum PIK Rate Allowed Inergex Holdings, LLC First Lien Debt 0 % to 1.00 % 12.58 % to 13.58 % 1.00 % Inergex Holdings, LLC First Lien Debt (Revolver) 0 % to 1.00 % 12.58 % to 13.58 % 1.00 % Kreg LLC First Lien Debt 0 % to 2.00 % 9.75 % to 11.75 % 2.00 % Master Cutlery, LLC Subordinated Debt 0 % to 13.00 % 0 % to 13.00 % 13.00 % RumbleOn, Inc. First Lien Debt 0 % to 0.50 % 14.36 % to 14.86 % 0.50 % (12) Represents expiration date of the warrants. (13) All or portion of investment held by a wholly owned subsidiary subject to income tax. (14) Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP. See Note 5 for further details. (15) Investments (or portion thereof) held by OFSCC-FS. These assets are pledged as collateral of the BNP Facility and cannot be pledged under any 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 note investments. CLO subordinated note positions are entitled to recurring distributions, which are generally equal to the residual cash flow of payments received on underlying securities less contractual payments to debt holders and fund expenses. (17) The Company holds at least one seat on the portfolio company’s board of directors. (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. (19) The Company has an observer seat on the portfolio company’s board of directors. (20) Portfolio company at fair value represents greater than 5% of total assets at December 31, 2023. (21) 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, 2023, approximately 81 % of the Company's assets were qualifying assets. See Notes to Consolidated Financial Statements. 115 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Non-control/Non-affiliate Investments 24 Seven Holdco, LLC (15) (22) Temporary Help Services First Lien Debt 10.39 % L+ 6.00 % 1/28/2022 11/16/2027 $ 8,910 $ 8,854 $ 8,821 4.9 % Advantage Sales & Marketing Inc. (F/K/A Karman Buyer Corp) (14) (15) Advertising Agencies First Lien Debt 8.28 % L+ 4.50 % 3/2/2022 10/28/2027 2,284 2,256 1,898 1.1 AIDC Intermediateco 2, LLC (15) Computer Systems Design Services First Lien Debt 10.44 % SOFR+ 6.25 % 7/22/2022 7/22/2027 2,000 1,959 1,943 1.1 Allen Media, LLC (14) (15) Cable and Other Subscription Programming First Lien Debt 10.23 % SOFR+ 5.50 % 3/2/2021 2/10/2027 3,768 3,763 3,103 1.7 All Star Auto Lights, Inc. (4) (15) (21) Motor Vehicle Parts (Used) Merchant Wholesalers First Lien Debt 12.00 % L+ 7.25 % 12/19/2019 8/20/2025 23,098 22,863 22,890 12.7 First Lien Debt 11.76 % L+ 7.25 % 8/4/2022 8/20/2025 4,975 4,889 4,930 2.7 28,073 27,752 27,820 15.4 Astro One Acquisition Corporation Other Miscellaneous Nondurable Goods Merchant Wholesalers Second Lien Debt 13.23 % L+ 8.50 % 1/31/2022 9/14/2029 3,000 2,680 2,246 1.2 Asurion, LLC (14) Communication Equipment Repair and Maintenance Second Lien Debt 9.63 % L+ 5.25 % 6/28/2022 1/31/2028 2,000 1,766 1,572 0.9 Atlantis Holding, LLC (14) (15) Electronics and Appliance Stores First Lien Debt 11.83 % SOFR+ 7.25 % 3/29/2022 3/31/2029 8,316 8,037 8,102 4.5 Avison Young (22) Nonresidential Property Managers First Lien Debt 10.19 % SOFR+ 5.75 % 11/25/2021 1/31/2026 3,946 3,926 3,475 1.9 First Lien Debt (15) 11.44 % SOFR+ 7.00 % 8/19/2022 1/31/2026 798 755 732 0.4 4,744 4,681 4,207 2.3 116 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets BayMark Health Services, Inc. (15) Outpatient Mental Health and Substance Abuse Centers Second Lien Debt 13.23 % L+ 8.50 % 6/10/2021 6/11/2028 $ 4,962 $ 4,904 $ 4,861 2.7 % Second Lien Debt (Delayed Draw) (5) 13.23 % L+ 8.50 % 6/10/2021 6/11/2028 3,988 3,883 3,814 2.1 8,950 8,787 8,675 4.8 BCPE North Star US Holdco 2, Inc. (F/K/A Dessert Holdings) Ice Cream and Frozen Dessert Manufacturing Second Lien Debt 11.98 % L+ 7.25 % 2/2/2022 6/8/2029 1,667 1,641 1,540 0.9 Boca Home Care Holdings, Inc. (20) Services for the Elderly and Persons with Disabilities First Lien Debt (Delayed Draw) (15) 11.33 % SOFR+ 6.50 % 2/25/2022 2/25/2027 9,548 9,469 9,201 5.1 First Lien Debt (Revolver) (5) n/m ( 18 ) SOFR+ 1.00 % 2/25/2022 2/25/2027 — ( 11 ) ( 47 ) — Common Equity ( 1,290 Class A units) (10) (13) 2/25/2022 1,290 1,098 0.6 9548 10748 10252 5.7 Constellis Holdings, LLC (10) Other Justice, Public Order, and Safety Activities Common Equity ( 20,628 common shares) 3/27/2020 703 32 — Convergint Technologies Holdings, LLC Security Systems Services (except Locksmiths) Second Lien Debt 11.07 % SOFR+ 6.75 % 9/28/2018 3/30/2029 5,938 5,849 5,767 3.2 Creation Technologies (15) (22) Bare Printed Circuit Board Manufacturing First Lien Debt 9.25 % L+ 5.50 % 9/24/2021 10/5/2028 1,990 1,977 1,854 1.0 Diamond Sports Group, LLC (14) (15) Television Broadcasting 117 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets First Lien Debt 12.32 % SOFR+ 8.00 % 3/9/2022 5/25/2026 252 246 240 0.1 Second Lien Debt (6) 7.57 % SOFR+ 3.25 % 11/19/2019 8/24/2026 1,935 1,935 248 0.1 2187 2181 488 0.2 East West Manufacturing (15) Fluid Power Pump and Motor Manufacturing First Lien Debt 10.07 % SOFR+ 5.75 % 2/11/2022 12/22/2028 $ 1,950 $ 1,933 $ 1,873 1.0 % First Lien Debt (Delayed Draw) (5) n/m (18) SOFR+ 2.88 % 2/11/2022 12/22/2028 — ( 3 ) ( 11 ) — 1950 1930 1862 1.0 Electrical Components International, Inc. Current-Carrying Wiring Device Manufacturing Second Lien Debt 12.88 % L+ 8.50 % 4/8/2021 6/26/2026 3,679 3,360 3,468 1.9 EnergySolutions, LLC (15) Hazardous Waste Treatment and Disposal First Lien Debt 8.48 % L+ 3.75 % 7/8/2021 5/9/2025 1,768 1,765 1,652 0.9 Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4) (19) Electrical Contractors and Other Wiring Installation Contractors First Lien Debt 7.50 % N/A 6/30/2017 12/31/2025 6,359 6,359 6,359 3.5 Second Lien Debt (6) (10) 10.00 % PIK N/A 6/30/2017 12/31/2026 7,098 6,584 2,887 1.6 First Lien Debt (Revolver) (5) n/m (18) N/A 11/29/2021 12/31/2025 — — — — Equity Participation Rights (10) (23) 12/31/2021 4,722 — — 13,457 17,665 9,246 5.1 Excelin Home Health, LLC (4) Home Health Care Services Second Lien Debt 14.23 % cash / 1.25 % PIK L+ 9.50 % 10/25/2018 9/30/2025 4,277 4,210 3,987 2.2 GGC Aerospace Topco L.P. Other Aircraft Parts and Auxiliary Equipment Manufacturing Common Equity ( 368,852 Class A units) (10) 12/29/2017 450 0 — Common Equity ( 40,984 Class B units) (10) 12/29/2017 50 0 — 500 — — GoTo Group (F/K/A LogMeIn, Inc.). (14) (15) Data Processing, Hosting, and Related Services First Lien Debt 9.14 % L+ 4.75 % 3/26/2021 8/31/2027 2,946 2,945 1,909 1.1 118 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Heritage Grocers Group, LLC. (F/K/A Tony's Fresh Market / Cardenas Markets) (15) Supermarkets and Other Grocery (except Convenience) Stores First Lien Debt 11.44 % SOFR+ 6.75 % 7/20/2022 8/1/2029 5,985 5,647 5,532 3.1 Honor HN Buyer Inc (15) Services for the Elderly and Persons with Disabilities First Lien Debt 10.48 % SOFR+ 5.75 % 10/15/2021 10/15/2027 6,532 6,428 6,426 3.6 First Lien Debt (Delayed Draw) (5) 10.48 % SOFR+ 5.75 % 10/15/2021 10/15/2027 1,904 1,812 1,762 1.0 First Lien Debt (Revolver) (5) n/m (18) SOFR+ 5.75 % 10/15/2021 10/15/2027 — ( 12 ) ( 12 ) — 8436 8228 8176 4.6 Idera Computer and Computer Peripheral Equipment and Software Merchant Wholesalers Second Lien Debt 10.50 % L+ 6.75 % 1/27/2022 3/2/2029 $ 4,000 $ 4,000 $ 3,732 2.1 % Inergex Holdings, LLC Other Computer Related Services First Lien Debt (11) 12.15 % cash / 2.00 % PIK L+ 7.00 % 10/1/2018 10/1/2024 14,868 14,669 14,868 8.2 First Lien Debt (Revolver) (5) n/m (18) L+ 7.00 % 10/1/2018 10/1/2024 — ( 73 ) — — 14,868 14,596 14,868 8.2 Ivanti Software, Inc. (14) (15) Software Publishers First Lien Debt 9.01 % L+ 4.25 % 3/26/2021 12/1/2027 2,963 2,972 2,359 1.3 JP Intermediate B, LLC (15) Drugs and Druggists' Sundries Merchant Wholesalers First Lien Debt 9.91 % L+ 5.50 % 1/14/2021 11/15/2025 5,369 5,227 4,622 2.6 119 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Kreg LLC (15) Other Ambulatory Health Care Services First Lien Debt 10.98 % cash / 0.50 % PIK SOFR+ 6.25 % 12/20/2021 12/20/2026 16,550 16,452 15,675 8.7 First Lien Debt (Revolver) (5) n/m (18) SOFR+ 6.25 % 12/20/2021 12/20/2026 — ( 8 ) ( 71 ) — 16,550 16,444 15,604 8.7 Metasource (15) All Other Business Support Services First Lien Debt 10.69 % SOFR+ 6.25 % 5/17/2022 5/17/2027 $ 2,779 $ 2,754 $ 2,592 1.4 % First Lien Debt (Delayed Draw) (5) n/m (18) SOFR+ 6.25 % 5/17/2022 5/17/2027 — ( 8 ) ( 81 ) — 2,779 2,746 2,511 1.4 Milrose Consultants, LLC (4) (21) Administrative Management and General Management Consulting Services First Lien Debt (15) 11.33 % SOFR+ 6.50 % 7/16/2019 7/16/2025 27,172 27,151 26,700 14.8 First Lien Debt (Revolver) (5) 11.33 % SOFR+ 6.50 % 7/16/2019 7/16/2025 476 470 448 0.2 27,648 27,621 27,148 15.0 One GI LLC Offices of Other Holding Companies First Lien Debt (15) 11.13 % L+ 6.75 % 12/13/2021 12/22/2025 7,508 7,395 7,039 3.9 First Lien Debt (Delayed Draw) (5) (15) 11.14 % L+ 6.75 % 12/13/2021 12/22/2025 3,946 3,866 3,698 2.0 First Lien Debt (Revolver) (5) n/m (18) L+ 6.75 % 12/13/2021 12/22/2025 — ( 21 ) ( 90 ) — 11,454 11,240 10,647 5.9 Planet Bingo, LLC (F/K/A 3rd Rock Gaming Holdings, LLC) Software Publishers First Lien Debt (6) 4.00 % N/A 3/13/2018 1/1/2024 16,648 14,113 6,864 3.8 PM Acquisition LLC All Other General Merchandise Stores Common Equity ( 499 units) (10) (13) 9/30/2017 499 967 0.5 120 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets RC Buyer, Inc. Other Automotive Mechanical and Electrical Repair and Maintenance Second Lien Debt 11.23 % L+ 6.50 % 6/24/2022 7/30/2029 1,125 1,083 1,064 0.6 Reception Purchaser LLC (15) Transportation and Warehousing First Lien Debt 10.42 % SOFR+ 6.00 % 4/28/2022 3/24/2028 2,548 2,514 2,501 1.4 Redstone Holdco 2 LP (F/K/A RSA Security) (15) Computer and Computer Peripheral Equipment and Software Merchant Wholesalers First Lien Debt (14) 9.11 % L+ 4.75 % 4/16/2021 4/27/2028 $ 2,769 $ 2,756 $ 1,931 1.1 % Second Lien Debt 12.11 % L+ 7.75 % 4/16/2021 4/27/2029 4,450 4,400 3,350 1.9 7,219 7,156 5,281 3.0 RPLF Holdings, LLC (10) (13) Software Publishers Common Equity ( 345,339 Class A units) 1/17/2018 492 406 0.2 RumbleOn, Inc. (15) (22) Other Industrial Machinery Manufacturing First Lien Debt 12.98 % L+ 8.25 % 8/31/2021 8/31/2026 3,985 3,817 3,617 2.0 First Lien Debt (Delayed Draw) (5) 12.98 % L+ 8.25 % 8/31/2021 8/31/2026 1,202 1,186 1,042 0.6 Warrants (warrants to purchase up to $ 600,000 in common stock) 8/31/2021 7/25/2023 (12) 200 — — 5,187 5,203 4,659 2.6 Sentry Centers Holdings, LLC (10) (13) Other Professional, Scientific, and Technical Services Preferred Equity ( 1,603 Series B units) 9/4/2020 160 80 — Signal Parent, Inc. (14) (15) New Single-Family Housing Construction (except For-Sale Builders) First Lien Debt 7.89 % L+ 3.50 % 3/25/2021 4/3/2028 1,822 1,807 1,566 0.9 Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.) (15) Child Day Care Services Second Lien Debt 12.98 % L+ 8.25 % 7/26/2018 7/30/2026 6,399 6,375 6,182 3.4 SSJA Bariatric Management LLC (15) Offices of Physicians, Mental Health Specialists 121 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets First Lien Debt 9.98 % SOFR+ 5.25 % 8/26/2019 8/26/2024 9,675 9,643 9,513 5.3 First Lien Debt 9.98 % SOFR+ 5.25 % 12/31/2020 8/26/2024 1,045 1,041 1,028 0.6 First Lien Debt 9.98 % SOFR+ 5.25 % 12/8/2021 8/26/2024 2,633 2,617 2,589 1.4 First Lien Debt (Revolver) (5) n/m (18) SOFR+ 5.25 % 8/26/2019 8/26/2024 — ( 2 ) ( 11 ) — 13,353 13,299 13,119 7.3 SS Acquisition, LLC (15) Sports and Recreation Instruction First Lien Debt (8) 11.10 % SOFR+ 6.85 % 12/30/2021 12/30/2026 3,042 3,017 2,988 1.7 First Lien Debt (Delayed Draw) (5) 11.84 % SOFR+ 7.59 % 12/30/2021 12/30/2026 1,217 1,205 1,184 0.7 4,259 4,222 4,172 2.4 Staples, Inc. (14) (15) (22) Business to Business Electronic Markets First Lien Debt 9.44 % L+ 5.00 % 6/24/2019 4/16/2026 $ 2,900 $ 2,858 $ 2,689 1.5 % STS Operating, Inc. Industrial Machinery and Equipment Merchant Wholesalers Second Lien Debt 12.38 % L+ 8.00 % 5/15/2018 4/30/2026 9,073 9,071 9,073 5.0 The Escape Game, LLC (4) Other amusement and recreation industries First Lien Debt 11.38 % L+ 7.00 % 12/21/2021 12/22/2024 16,333 16,333 16,497 9.1 First Lien Debt (Revolver) (5) n/m (18) L+ 7.00 % 12/21/2021 12/22/2024 — ( 31 ) — — 16,333 16,302 16,497 9.1 Thryv, Inc. (14) (15) Directory and Mailing List Publishers First Lien Debt 12.88 % L+ 8.50 % 2/18/2021 3/1/2026 3,978 3,910 3,930 2.2 Tolemar Acquisition, INC. (15) Motorcycle, Bicycle, and Parts Manufacturing First Lien Debt 9.32 % L+ 5.75 % 10/14/2021 10/14/2026 15,504 15,445 15,504 8.6 First Lien Debt (Revolver) (5) 12.25 % Prime + 4.75 % 10/14/2021 10/14/2026 438 428 438 0.2 15,942 15,873 15,942 8.8 TruGreen Limited Partnership Landscaping Services Second Lien Debt 12.91 % L+ 8.50 % 5/13/2021 11/2/2028 4,500 4,611 4,226 2.3 122 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets United Biologics Holdings, LLC (4) (10) Medical Laboratories Preferred Equity ( 4,701 units) 4/16/2013 8 24 — Warrants ( 3,976 units) 7/26/2012 4/16/2023 (12) 9 11 — 17 35 — Wellful Inc. (F/K/A KNS Acquisition Corp.) (15) Electronic Shopping and Mail-Order Houses First Lien Debt 10.42 % L+ 6.25 % 4/16/2021 4/21/2027 6,781 6,747 6,515 3.6 Yahoo / Verizon Media (14) (15) Internet Publishing and Broadcasting and Web Search Portals First Lien Debt 9.88 % L+ 5.50 % 7/21/2021 9/1/2027 $ 3,127 $ 3,100 $ 2,843 1.6 % Total Debt and Equity Investments $ 342,699 $ 344,143 $ 314,253 174.2 % Structured Finance Securities (22) Apex Credit CLO 2020 (9) (16) Subordinated Notes 19.26 % 11/16/2020 10/20/2031 $ 11,080 $ 9,915 $ 7,996 4.4 % Apex Credit CLO 2021 Ltd (9) (16) Subordinated Notes 18.54 % 5/28/2021 7/18/2034 8,630 7,198 6,141 3.4 Apex Credit CLO 2022-1A (9) (16) Subordinated Notes 16.48 % 4/28/2022 4/22/2033 10,726 8,389 8,611 4.8 Ares L CLO Mezzanine Debt - Class E 9.73 % L+ 5.65 % 2/17/2022 1/15/2032 6,000 5,749 5,272 2.9 Barings CLO 2019-I Ltd. Mezzanine Debt - Class E 10.94 % L+ 6.86 % 2/23/2022 4/15/2035 8,000 7,899 7,308 4.1 123 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Battalion CLO XI, Ltd. Mezzanine Debt - Class E 11.17 % L+ 6.85 % 4/24/2022 4/24/2034 6,000 5,855 5,445 3.0 Brightwood Capital MM CLO 2022-1, LTD (17) Loan accumulation facility 14.50 % 1/5/2022 12/31/2032 8,500 8,500 8,299 4.6 Dryden 53 CLO, LTD. (9) (16) Subordinated Notes - Income 23.00 % 10/26/2020 1/15/2031 $ 2,700 $ 1,499 $ 1,029 0.5 % Subordinated Notes 22.97 % 10/26/2020 1/15/2031 2,159 1,199 823 0.5 4,859 2,698 1,852 1.0 Dryden 76 CLO, Ltd. (9) (16) Subordinated Notes 19.75 % 9/27/2019 10/20/2032 2,750 2,266 2,030 1.1 Elevation CLO 2017-7, Ltd. (7) (9) (16) Subordinated Notes 0 % 2/6/2019 7/15/2030 5,449 1,311 118 0.1 Flatiron CLO 18, Ltd. (9) (16) Subordinated Notes 20.94 % 1/2/2019 4/17/2031 9,680 6,907 5,587 3.1 Madison Park Funding XXIII, Ltd. (9) (16) Subordinated Notes 23.69 % 1/8/2020 7/27/2047 10,000 6,112 5,319 2.9 Madison Park Funding XXIX, Ltd. (9) (16) Subordinated Notes 19.83 % 12/22/2020 10/18/2047 9,500 6,459 5,645 3.1 Monroe Capital MML CLO X, Ltd. Mezzanine Debt - Class E-R 13.03 % SOFR+ 8.75 % 4/22/2022 5/20/2034 1,000 945 874 0.5 Octagon Investment Partners 39, Ltd. (9) (16) Subordinated Notes 18.97 % 1/23/2020 10/20/2030 7,000 4,504 3,202 1.8 124 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Park Avenue Institutional Advisers CLO Ltd 2021-1 Mezzanine Debt - Class E 11.54 % L+ 7.30 % 1/26/2021 1/20/2034 1,000 978 910 0.5 Redding Ridge 4 (9) (16) Subordinated Notes 17.49 % 3/4/2021 4/15/2030 1,300 1,034 695 0.4 Regatta II Funding Mezzanine Debt - Class DR2 11.03 % L+ 6.95 % 6/5/2020 1/15/2029 800 778 738 0.4 Regatta XXII Funding Ltd Mezzanine Debt - Class E 11.24 % SOFR+ 7.19 % 5/6/2022 7/20/2035 $ 3,000 $ 2,971 $ 2,990 1.7 % THL Credit Wind River 2019‐3 CLO Ltd. (9) (16) Subordinated Notes 14.24 % 4/5/2019 4/15/2031 7,000 5,347 3,926 2.2 Trinitas CLO VIII (9) (16) Subordinated Notes 23.02 % 3/4/2021 7/20/2117 5,200 3,060 2,216 1.2 Venture 45 CLO Ltd. Mezzanine Debt - Class E 11.66 % SOFR+ 7.70 % 4/18/2022 7/20/2035 3,000 2,931 2,876 1.6 Wellfleet CLO 2018-2 (9) (16) Subordinated Notes 23.88 % 3/4/2021 10/20/2031 1,000 670 471 0.3 Total Structured Finance Securities $ 131,474 $ 102,477 $ 88,518 49.1 % Total Non-control/Non-affiliate Investments $ 474,173 $ 446,620 $ 402,771 223.2 % 125 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Affiliate Investments Contract Datascan Holdings, Inc. (4) (20) Office Machinery and Equipment Rental and Leasing Preferred Equity ( 3,061 Series A shares) 10 % PIK 8/5/2015 $ 6,315 $ 6,202 3.4 % Common Equity ( 11,273 shares) (10) 6/28/2016 104 510 0.3 6,419 6,712 3.7 DRS Imaging Services, LLC (10) (13) (20) Data Processing, Hosting, and Related Services Common Equity ( 1,135 units) 3/8/2018 1,135 1,568 0.9 Master Cutlery, LLC (4) (10) (20) Sporting and Recreational Goods and Supplies Merchant Wholesalers Subordinated Loan (6) (11) 13.00 % PIK N/A 4/17/2015 7/20/2023 $ 8,578 $ 4,680 $ 122 0.1 % Preferred Equity ( 3,723 Series A units), 8 % PIK 4/17/2015 3,483 — — Common Equity ( 15,564 units) 4/17/2015 — — — 8,578 8,163 122 0.1 Pfanstiehl Holdings, Inc. (4) (10) (20) (21) Pharmaceutical Preparation Manufacturing Common Equity ( 400 Class A shares) 1/1/2014 217 85,456 47.4 TalentSmart Holdings, LLC (10) (13) (20) Professional and Management Development Training Common Equity ( 1,595,238 Class A shares) 10/11/2019 1,595 953 0.5 TRS Services, LLC (4) (20) Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance Preferred Equity ( 1,937,191 Class A units), 11 % PIK 12/10/2014 — 1,890 1.0 Common Equity ( 3,000,000 units) 12/10/2014 572 — — 572 1,890 1.0 Total Affiliate Investments $ 8,578 $ 18,101 $ 96,701 53.6 % Control Investment 126 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) Portfolio Company (1) Investment Type Industry Interest Rate (2) Spread Above Index (2) Initial Acquisition Date Maturity Principal Amount Amortized Cost Fair Value (3) Percent of Net Assets Eblens Holdings, Inc. (20) Shoe Store Subordinated Loan (6) 13.00 % PIK N/A 7/13/2017 10/3/2025 $ 4,945 $ 4,605 $ 1,104 0.6 % Subordinated Loan (6) 13.00 % PIK N/A 7/13/2017 10/3/2025 4,945 4,605 — — Common Equity ( 356 Class A units) (10) 10/3/2022 950 — — 9,890 10,160 1,104 0.6 Total Control Investment $ 9,890 $ 10,160 $ 1,104 0.6 % Total Investments $ 492,641 $ 474,880 $ 500,576 277.4 % (1) Equity ownership may be held in shares or units of companies affiliated with the portfolio company. The Company’s investments are generally classified as “restricted securities” as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144. (2) At December 31, 2022, the Company held loans with an aggregate principal amount of $ 312,595 , or 87 % of the total loan portfolio, that bore interest at a variable rate indexed to LIBOR (L) or SOFR, and reset monthly, quarterly, or semi-annually. For each variable-rate investment, the Company has provided the spread over the reference rate and current interest rate in effect at December 31, 2022. Unless otherwise noted, all investments with a stated PIK rate require interest payments with the issuance of additional securities as payment of the entire PIK provision. (3) Unless otherwise noted with footnote 14, fair value was determined using significant unobservable inputs for all of the Company’s investments and are considered Level 3 under GAAP. See Note 5 for further details. (4) Investments (or portion thereof) held by SBIC I LP. These assets were pledged as collateral of the SBA debentures and could not be pledged under any debt obligation of the Company. (5) Subject to unfunded commitments. See Note 6 . (6) Investment was on non-accrual status as of December 31, 2022, meaning the Company suspended recognition of all or a portion of income on the investment. See Note 4 for further details . (7) As of December 31, 2022, the effective accretable yield was estimated to be 0 %, as the aggregate amount of projected distributions, including projected distributions related to liquidation of the underlying portfolio upon the security's anticipated optional redemption, was less than current amortized cost. Projected distributions are periodically monitored and re-evaluated. All actual distributions were recognized as reductions to amortized cost until such time, if and when occurring, a future aggregate amount of then-projected distributions exceeds the security's then-current amortized cost. (8) The Company entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it agreed to receive its payment after the repayment of certain co‑lenders pursuant to a payment waterfall. The table below provides additional details as of December 31, 2022: Portfolio Company Reported Interest Rate Interest Rate per Credit Agreement Additional Interest per Annum SS Acquisition, LLC 11.10 % 10.49 % 0.61 % SS Acquisition, LLC (Delayed Draw) 11.84 % 10.49 % 1.35 % (9) The rate disclosed on subordinated note investments was the estimated effective yield, generally established at purchase and re-evaluated upon receipt of distributions, and based upon projected amounts and timing of future distributions and the projected amount and timing of terminal principal payments at the time of estimation. The estimated yield and investment cost may ultimately not be realized. (10) Non-income producing. (11) The interest rate on these investments contains a PIK provision, whereby the issuer had the option to make interest payments in cash or with the issuance of additional securities as payment of the entire PIK provision. The interest rate in the schedule represents the current interest rate in effect for these investments. The following table provides additional details on these PIK investments, including the maximum annual PIK interest rate allowed as of December 31, 2022: Portfolio Company Investment Type Range of PIK Option Range of Cash Option Maximum PIK Rate Allowed Inergex Holdings, LLC Senior Secured Loan 0 % to 2.00 % 12.15 % to 14.15 % 2.00 % Master Cutlery, LLC Senior Secured Loan 0 % to 13.00 % 0 % to 13.00 % 13.00 % (12) Represents expiration date of the warrants. 127 OFS Capital Corporation and Subsidiaries Consolidated Schedule of Investments December 31, 2022 (Dollar amounts in thousands) (13) All or portion of investment held by a wholly owned subsidiary subject to income tax. (14) Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP. See Note 5 for further details. (15) Investments (or portion thereof) held by OFSCC-FS. These assets were pledged as collateral of the BNP Facility and could not 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 note investments. CLO subordinated note positions are entitled to recurring distributions, which are generally equal to the residual cash flow of payments received on underlying securities less contractual payments to debt holders and fund expenses. (17) Loan accumulation facilities are financing structures intended to aggregate loans that are expected to form part of the portfolio of a future CLO vehicle. Reported yields represent an estimated yield to be earned on the investment. Income notes associated with loan accumulation facilities generally pay returns equal to the income earned on facility assets, less costs of debt financing and manager costs and expenses. In January 2023, the Company prospectively adjusted the estimated yield on this position to 0.00 % due to an adverse change in estimated cash flows in accordance with ASC 325-40. As of December 31, 2022, the fair value of the loan accumulation facility was determined by a probability weighted net asset value (“NAV”) analysis. (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. (19) The Company holds at least one seat on the portfolio company’s board of directors. (20) The Company has an observer seat on the portfolio company’s board of directors. (21) Portfolio company at fair value represents greater than 5% of total assets at December 31, 2022. (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, 2022, approximately 80 % 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. 128 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Note 1. Organization OFS Capital Corporation (and collectively with its subsidiaries, the “Company”), a Delaware corporation, is an externally managed, closed-end, non-diversified management investment company. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (“1940 Act”). 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 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, subordinated (i.e., residual or equity) notes and loan accumulation facility securities (collectively referred to as “Structured Finance Securities”). 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, 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. OFS Advisor also serves as the investment adviser for Hancock Park Corporate Income, Inc. (“HPCI”), a Maryland corporation and a BDC. HPCI’s investment objective is similar to that of the Company. OFS Advisor also serves as the investment adviser for OFS Credit Company, Inc. (“OCCI”), a non-diversified, externally managed, closed-end management investment company that is registered as an investment company under the 1940 Act and that primarily invests in Structured Finance Securities. Additionally, OFS Advisor serves as the investment adviser to separately-managed accounts and sub-advisor to investment companies managed by an affiliate. 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. OFS SBIC I LP (“SBIC I LP”), the Company’s wholly owned and consolidated investment company subsidiary licensed under the U.S. Small Business Administration’s (“SBA”) small business investment company program (“SBIC Program”), was subject to SBA regulatory requirements under the Small Business Investment Act of 1958, as amended (“SBIC Act”) for the period covered by the Consolidated Financial Statements. Note 2. 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 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. Reclassifications : Certain prior period amounts may have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes thereto. Reclassifications did not impact net increase (decrease) in net assets resulting from operations, total assets, total liabilities or total net assets, or consolidated statements of changes in net assets and consolidated statements of cash flows classifications. Principles of consolidation: The Company consolidates majority-owned investment company subsidiaries. The Company does not own any controlled operating company whose business consists of providing services to the Company, which would also require consolidation. All intercompany balances and transactions are eliminated upon consolidation. Fair value of financial instruments: The Company applies fair value accounting to all of its financial instruments in accordance with ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), 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 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 financial instrument. Highest priority is given to prices for identical financial instruments quoted in active markets (Level 1) and the lowest priority is given to unobservable valuation inputs (Level 3). The availability of observable inputs can vary significantly and is affected by many factors, including the type of product, whether the product is 129 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) new to the market, whether the product is traded on an active exchange or in the secondary market, and the current market conditions. To the extent that the valuation is based on unobservable inputs, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3 (i.e., those instruments valued using unobservable inputs), which comprise the majority of the Company’s investments. See Note 5 for details. Changes to the Company’s and OFS Advisor's valuation policies are reviewed and approved by management and the Company’s board of directors (the “Board”). As the Company’s investments change, markets change, new products develop, and valuation inputs become more or less observable, the Company will continue to refine its valuation methodologies. See Note 5 for more detailed disclosures of the Company’s fair value measurements of its financial instruments. Investment classification: The Company classifies its investments in accordance with the 1940 Act. Under the 1940 Act, “Control Investments” are defined as investments in those companies in which the Company owns more than 25% of the voting securities or has rights to maintain greater than 50% of board representation, “Affiliate Investments” are defined as investments in those companies in which the Company owns between 5% and 25% of the voting securities, and “Non-Control/Non-Affiliate Investments” are those that neither qualify as Control Investments nor Affiliate Investments. Significant Subsidiaries : The Company evaluates the issuers of its Control Investments for significance in accordance with Rules 3-09 and 4-08(g) of Regulation S-X. No issuers of Control Investments were considered a significant subsidiary under these rules as of or for the years ended December 31, 2023, 2022 and 2021. Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of investment income, expenses, gains and losses during the reporting period. Actual results could differ significantly from those estimates. Reportable segments: The Company has a single reportable segment and single operating segment structure. Cash: The Company’s cash balances are maintained with a member bank of the Federal Deposit Insurance Corporation (“FDIC”), and at times, such balances exceed the FDIC insurance limits. The Company does not believe its cash balances are exposed to any significant credit risk. As of December 31, 2023 and 2022, cash includes aggregate amounts totaling $ 45,349 and 14,937 , respectively, held in cash and cash equivalent accounts at US Bank N.A. and Citibank N.A. In addition, the Company’s use of cash held by SBIC I LP was limited by SBA regulation and use of cash held by OFSCC-FS is limited by the terms and conditions of the BNP Facility, including but not limited to, the payment of interest expense and principal on the outstanding borrowings. Revenue recognition: Interest income : Interest income from the Company’s loan and CLO debt investments is recognized on an accrual basis and reported as an interest receivable until collected. Interest income is accrued based on the outstanding principal amount on the consolidated schedule of investments and the contractual terms of the debt investment. Certain of the Company’s investments contain a payment-in-kind interest income provision (“PIK interest”). The PIK interest, computed at the contractual rate specified in the applicable investment agreement, is added to the principal balance of the investment, rather than being paid in cash. PIK interest on such investments is generally due at the maturity of the investment. Recognition of cash and PIK interest includes assessments of collectability. The Company discontinues the accrual of interest income, including PIK interest, when there is reasonable doubt that the interest income will be collected. See Non-Accrual Loans section. Loan origination fees, original issue discount (“OID”), market discount or premium, and loan amendment fees (collectively, “Net Loan Fees”) are recorded as an adjustment to the amortized cost of the investment, and accreted or amortized as an adjustment to interest income over the life of the respective debt investment using a method that approximates the effective interest method. When the Company receives a loan principal payment, the unamortized Net Loan Fees related to the paid principal is accelerated and recognized in interest income. The Company may also acquire or receive equity, warrants or other equity-related securities in connection with the Company’s acquisition of, subsequent amendment or restructuring to, debt investments. The Company determines the cost basis of the equity investment based on its relative fair value to the fair value of debt investments and other securities or consideration received. Any resulting difference between the face amount of the debt and its recorded cost resulting from the assignment of value to the equity investment is treated as OID, and accreted into interest income as described above. 130 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Interest income - Structured Finance Securities : Structured Finance Securities include CLO mezzanine debt, CLO subordinated notes and loan accumulation facility positions. Interest income from investments in CLO subordinated securities is recognized on the basis of the estimated effective yield to expected redemption utilizing estimated cash flows in accordance with ASC Subtopic 325-40, Beneficial Interests in Securitized Financial Assets . The Company monitors the expected cash flows from its CLO subordinated notes, and the accretable yields are generally established at purchase, and reevaluated upon the receipt of the initial distribution and each subsequent quarter thereafter. 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 due to economic and credit market conditions, and the effect of these changes could be material. Interest income from investments in loan accumulation facilities is recognized on an accrual basis based on an estimated yield. Income notes associated with loan accumulation facilities generally pay returns equal to the actual income earned on facility assets less costs of senior financing and manager costs. Interest income is generally received upon the earlier of the closing of the CLO securitization or liquidation of the underlying portfolio. The Company periodically evaluates the realizability of such amounts and, if necessary, subsequently adjusts the estimated yield. Dividend income : Dividend income on common equity securities in limited liability companies, partnerships, and other private entities, generally payable in cash, is accrued at the time dividends are declared (in the absence of a formal ex-dividend or record date). Declared dividends payable in cash are reported as dividends receivable until collected. Distributions in excess of current or accumulated net income of the underlying portfolio company are recorded as return of capital and, correspondingly, as a reduction in the cost of the investment. Dividend income on preferred equity investments is accrued based on the contractual terms of the preferred equity investment, subject to assessments of collectability (including fair value coverage). Dividends on preferred equity securities may be payable in cash or in additional preferred securities. Non-cash dividends payable in additional preferred securities (“PIK dividends”) are recorded as an adjustment (i.e., increase) to the cost basis of the investment. The Company discontinues accrual of PIK dividends when there is reasonable doubt that the income will ultimately be collected. Fee income : The Company generates fee revenue in the form of syndication, prepayment, and other contractual fees, that are recognized as the related services are rendered. In the general course of its business, the Company receives certain fees, such as management fees, from portfolio companies which are non-recurring in nature. Prepayment fees are received on certain loans when repaid prior to their scheduled due date, which are recognized as earned when received. Syndication fees are received for capital structuring, loan syndication or advisory services from certain portfolio companies, which are recognized as earned upon closing of the investment. The Company also earns unfunded commitment fees on undrawn revolving lines of credit and delayed draw facility commitments. Investment transactions and net realized and unrealized gains and losses on investments : Investment transactions are reported on a trade-date basis. Unsettled trades as of the statement of assets and liabilities date are included in receivable for investments sold and payable for investments purchased, as applicable. 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 on the trade date. Investments are valued at fair value in accordance with ASC 820 as determined in good faith by OFS Advisor, as the valuation designee, under the oversight of the Board. The Company reports changes in the fair value of investments, relative to the amortized cost of investments, as net unrealized appreciation (depreciation) on investments in the consolidated statements of operations. Non-accrual loans : Management reviews, for placement on non-accrual status, all loans and CLO mezzanine debt investments that become past due on principal and interest, and/or when there is reasonable doubt that principal or interest will be collected. When a loan is placed on non-accrual status, accrued and unpaid cash interest is reversed. Additionally, Net Loan Fees are no longer recognized 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 amortized cost 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 and interest payments and, in the judgment of management, it is probable that the Company will collect all principal and interest from the investment. See Note 4 for further information on loans on non-accrual status as of December 31, 2023 and December 31, 2022. Income taxes: The Company has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code. To qualify as a RIC, the Company must, among other things, meet certain source of income and asset diversification requirements, and timely distribute at least 90% of its investment company taxable income (“ICTI”) annually to its 131 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) stockholders. The Company has made, and intends to continue to make, requisite distributions to its stockholders, which generally relieves the Company from U.S. federal income taxes. Depending on the level of ICTI earned in a tax year, the Company may choose to retain ICTI in an amount less than that which would trigger U.S. federal income tax liability under Subchapter M of the Code. However, the Company would be liable for a 4% excise tax on such undistributed income. Such spillover income increases the Company’s RIC distribution requirement in the following year. An excise tax liability is recognized when the Company determines its estimated current year annual ICTI, capital gain net income, and any undistributed ICTI and capital gain net income from the prior year, as defined in the Code, exceeds distributions paid during the calendar year. For the years ended December 31, 2023, 2022 and 2021, the Company accrued U.S. federal excise taxes of $ 0 , $ 100 and $ 0 , respectively. 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. For U.S. federal income tax purposes, OFSCC-MB is not consolidated with the RIC and is taxed as a C-Corporation. See Note 8 for further information. The Company evaluates tax positions taken in the course of preparing its tax returns to determine whether they are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold could result in greater and undistributed ICTI, income and excise tax expense, and, if involving multiple years, a re-assessment of the Company’s RIC status. GAAP requires recognition of accrued interest and penalties related to uncertain tax benefits as income tax expense. There were no uncertain income tax positions at December 31, 2023, 2022 and 2021. The current and prior three tax years remain subject to examination by U.S. federal and most state tax authorities. Distributions: Distributions to common stockholders are recognized on the record date. The timing of distributions as well as the amount to be paid out as a distribution is determined by the Board each quarter. Distributions from net investment income and net realized gains are determined in accordance with the Code. Net realized capital gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for investment. Distributions paid in excess of current and accumulated ICTI and not capital gains are considered returns of capital to stockholders. The Company has adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes and the Company declares a cash distribution, then stockholders who have not “opted out” of the DRIP will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. The Company may use newly issued shares under the guidelines of the DRIP, or the Company may purchase shares in the open market in connection with its obligations under the plan. Deferred debt issuance costs: Deferred debt issuance costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. Deferred debt issuance costs are presented as a direct reduction of the related debt liability on the consolidated statements of assets and liabilities, except for deferred debt issuance costs associated with the Company’s revolving line of credit arrangements, which are included in prepaid expenses and other assets on the consolidated statements of assets and liabilities. Unamortized deferred debt issuance costs included in prepaid expenses and other assets on the consolidated statements of assets and liabilities as of December 31, 2023 and 2022, were $ 1,062 and $ 1,316 , respectively. Deferred debt issuance costs are amortized to interest expense over the term or expected term of the related debt. 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 the intangible asset on a straight-line basis over its estimated useful life. During the first quarter of 2022, the Company changed its estimate of the useful life to terminate on March 1, 2024, due to early redemptions of SBA debentures. The Company recognized amortization of $ 408 , $ 409 and $ 222 for the years ended December 31, 2023, 2022, and 2021, 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 carrying value of the intangible asset, net of accumulated amortization, was $ 69 and $ 477 at December 31, 2023 and 2022, respectively, is included in prepaid expenses and other assets in the consolidated statements of assets and liabilities. Interest expense: Contractual interest expense on the Company’s borrowings is recognized on an accrual basis as incurred. See Note 7 for further information. Concentration of credit risk: Aside from the Company’s investments, financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits at financial institutions. At various times during 132 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) the year, the Company exceeds the federally insured limits. The Company places cash deposits only with high credit quality institutions which OFS Advisor believes will mitigate the risk of loss due to credit risk. If borrowers completely fail to perform according to the terms of the contracts, the amount of loss due to credit risk from the Company’s investments is equal to the Company’s recorded investment and the unfunded commitments disclosed in Note 6 . New Accounting Pronouncements and Rule Issuances In June 2022, the FASB issued Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). ASU 2022-03 clarifies guidance for fair value measurement of an equity security subject to a contractual sale restriction and establishes new disclosure requirements for such equity securities. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023 and for interim periods within those fiscal years, with early adoption permitted. The Company has concluded that this guidance will not have a material impact on its consolidated financial statements. In December 2023, the FASB issued Income Taxes (Topic 740), Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 amend Topic 740 to, among other things, require on an annual basis, the disclosure of additional income tax information related to the Company’s effective tax rate reconciliation and income taxes paid. ASU 2023-09 is intended to enhance the transparency by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. ASU 2023-09 amendments are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact, if any, ASU 2023-09 will have on its consolidated financial statements. Note 3. Related Party Transactions Investment Advisory and Management Agreement: OFS Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company pursuant to an agreement dated November 7, 2012 (“Investment Advisory Agreement”). The Investment Advisory Agreement was most recently re-approved on April 5, 2023. Under the terms of the Investment Advisory Agreement, which are in accordance with the 1940 Act and subject to the overall supervision of the Board, OFS Advisor is responsible for sourcing potential investments, conducting research and diligence on potential investments and equity sponsors, analyzing investment opportunities, structuring investments, and monitoring investments and portfolio companies on an ongoing basis. OFS Advisor is a wholly owned subsidiary of OFSAM and a registered investment advisor under the Investment Advisers Act of 1940, as amended. OFS Advisor’s services under the Investment Advisory Agreement are not exclusive to the Company and OFS Advisor is free to furnish similar services to other entities, including other BDCs affiliated with OFS Advisor, so long as its services to the Company are not impaired. OFS Advisor also serves as the investment adviser or sub-adviser to various clients, including HPCI and OCCI. OFS Advisor receives fees for providing services, consisting of two components: a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 1.75 % and based on the average value of the Company’s total assets (other than cash and cash equivalents but including assets purchased with borrowed amounts and including assets owned by any consolidated entity) at the end of the two most recently completed calendar quarters, adjusted for any share issuances or repurchases during the quarter. For the years ended December 31, 2023, 2022 and 2021, OFS Advisor agreed to reduce its base management fee attributable to all assets held through OFSCC-FS (“OFSCC-FS Assets”) to 0.25 % per quarter ( 1.00 % annualized) of the average value of the OFSCC-FS Assets (other than cash and cash equivalents but including assets purchased with borrowed amounts) at the end of the two most recently completed calendar quarters. OFS Advisor’s base management fee reduction is renewable on an annual basis and OFS Advisor is not entitled to recoup the amount of the base management fee reduced with respect to the OFSCC-FS Assets. OFS Advisor most recently renewed the agreement to reduce its base management fee for the 2024 calendar year on January 8, 2024. The incentive fee has two parts. 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). Pre-incentive fee net investment income includes, in the case of investments with a deferred 133 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) interest or dividend feature (such as OID, debt instruments with PIK interest, equity investments with accruing or PIK dividend and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income is expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter and adjusted for any share issuances or repurchases during such quarter. The incentive fee with respect to pre-incentive fee net income is 20.0 % of the amount, if any, by which the pre-incentive fee net investment income for the immediately preceding calendar quarter exceeds a 2.0 % hurdle rate (which is 8.0 % annualized) and a “catch-up” provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, OFS Advisor receives no incentive fee until the net investment income equals the hurdle rate of 2.0 %, but then receives, as a “catch-up,” 100.0 % of the pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.5 %. The effect of this provision is that, if pre-incentive fee net investment income exceeds 2.5 % in any calendar quarter, OFS Advisor will receive 20.0 % of the pre-incentive fee net investment income. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter in which the Company incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the quarterly minimum hurdle rate, the Company will pay the applicable incentive fee even if the Company has incurred a loss in that quarter due to realized and unrealized capital losses. The Company’s net investment income used to calculate this part of the incentive fee is also included in the amount of the Company’s gross assets used to calculate the base management fee. These calculations are appropriately prorated for any period of less than three months. The second part of the incentive fee (the “Capital 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, 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). License Agreement: The Company entered into a license agreement with OFSAM under which OFSAM has agreed to grant the Company a non-exclusive, royalty-free license to use the name “OFS.” Administration Agreement: OFS Services furnishes the Company with office facilities and equipment, necessary software licenses and subscriptions, and clerical, bookkeeping and record keeping services at such facilities pursuant to an Administration Agreement. The Administration Agreement was most recently re-approved by the Board on April 5, 2023. Under the Administration Agreement, OFS Services performs, or oversees the performance of, the Company’s required administrative services, which include being responsible for the financial records that the Company is required to maintain and preparing reports to its stockholders and all other reports and materials required to be filed with the SEC or any other regulatory authority. In addition, OFS Services assists the Company in determining and publishing its net asset value, oversees the preparation and filing of its tax returns and the printing and dissemination of reports to its stockholders, and generally oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. Under the Administration Agreement, OFS Services also provides managerial assistance on the Company’s behalf to those portfolio companies that have accepted the Company’s offer to provide such assistance. Payment under the Administration Agreement is equal to an amount based upon the Company’s allocable portion of OFS Services’s overhead in performing its obligations under the Administration Agreement, including, but not limited to, rent, information technology services and the Company’s allocable portion of the cost of its officers, including its chief executive officer, chief financial officer, chief compliance officer, chief accounting officer, and their respective staffs. To the extent that OFS Services 134 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to OFS Services. Equity Ownership: As of December 31, 2023, affiliates of OFS Advisor held 3,022,184 shares of common stock, which is approximately 23 % of the Company's outstanding shares of common stock. Expenses recognized under agreements with OFS Advisor and OFS Services and distributions paid to affiliates for the years ended December 31, 2023, 2022 and 2021 are presented below: December 31, 2023 2022 2021 Base management fees $ 7,218 $ 7,979 $ 7,669 Incentive fees: Income Incentive Fee 5,040 2,276 2,352 Capital Gains Fee (1) — ( 1,916 ) 1,916 Administration fees 1,680 1,742 1,758 Distributions paid to affiliates 4,049 3,503 2,764 (1) As of December 31, 2021, the Capital Gains Fee of $ 1,916 was accrued in accordance with GAAP, inclusive of net unrealized appreciation as of the determination date. The Capital Gains Fee payable to the Advisor under the Investment Advisory Agreement does not include net unrealized appreciation, and accordingly no amount was payable or due to the Advisor as of December 31, 2021. During the year ended December 31, 2022, the Company reversed the previously accrued Capital Gains Fees of $ 1,916 due to a reduction in net unrealized appreciation on the investment portfolio. 135 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Note 4. Investments As of December 31, 2023, the Company had loans to 44 portfolio companies, of which 81 % were first lien debt investments and 19 % were second lien debt investments, at fair value. The Company also held equity investments in 15 portfolio companies and 21 investments in Structured Finance Securities. At December 31, 2023, the Company’s investments consisted of the following: Percentage of Total Percentage of Total Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets First lien debt investments (1) $ 220,941 54.7 % 136.4 % $ 202,792 48.3 % 125.1 % Second lien debt investments 57,848 14.3 35.7 48,521 11.5 30.0 Subordinated debt investments 4,680 1.2 2.9 — — — Preferred equity 11,403 2.8 7.0 13,240 3.2 8.2 Common equity, warrants and other 11,537 2.9 7.1 76,689 18.2 47.3 Total debt and equity investments $ 306,409 75.9 % 189.1 % $ 341,242 81.2 % 210.6 % Structured Finance Securities 97,121 24.1 59.9 79,045 18.8 48.8 Total $ 403,530 100.0 % 249.0 % $ 420,287 100.0 % 259.4 % (1) Includes unitranche investments (which are loans that combine both senior and subordinated debt, in a first lien position) with an amortized cost and fair value of $ 141,291 and $ 131,271 , respectively. As of December 31, 2023, the Company had loans on non-accrual status with an aggregate amortized cost and fair value of $ 34,568 and $ 12,140 , respectively. Geographic composition is determined by the location of the corporate headquarters of the portfolio company. As of December 31, 2023 and 2022, the Company's investment portfolio was domiciled as follows: December 31, 2023 December 31, 2022 Amortized Cost Fair Value Amortized Cost Fair Value United States of America $ 301,749 $ 339,964 $ 367,723 $ 407,851 Canada (1) 4,660 1,278 4,680 4,207 Cayman Islands (1)(2) 89,286 71,210 102,477 88,518 Jersey (1)(2) 7,835 7,835 — — Total investments $ 403,530 $ 420,287 $ 474,880 $ 500,576 (1) Represents non-qualifying assets under Section 55(a) of the 1940 Act. (2) Investments domiciled in the Cayman Islands and Jersey represent certain Structured Finance Securities held by the Company. These investments generally represent beneficial interests in underlying portfolios of debt investments in companies domiciled in the United States. As of December 31, 2023, the industry compositions of the Company’s debt and equity investments were as follows: Percentage of Total Percentage of Total Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets Administrative and Support and Waste Management and Remediation Services All Other Business Support Services $ 2,729 0.7 % 1.7 % $ 2,528 0.6 % 1.6 % Convention and Trade Show Organizers 160 — 0.1 77 — — Landscaping Services 4,592 1.1 2.8 4,287 1.0 2.6 Security Systems Services (except Locksmiths) 5,863 1.5 3.6 5,877 1.4 3.6 Temporary Help Services 8,776 2.2 5.4 8,483 2.0 5.2 Construction Electrical Contractors and Other Wiring Installation Contractors 17,602 4.4 10.9 10,096 2.4 6.2 136 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 New Single-Family Housing Construction (except For-Sale Builders) $ 1,791 0.4 % 1.1 % $ 1,616 0.4 % 1.0 % Education Services Professional and Management Development Training 3,050 0.8 1.9 2,620 0.6 1.6 Sports and Recreation Instruction 4,473 1.1 2.8 4,502 1.1 2.8 Finance and Insurance Commodity Contracts Dealing 3,097 0.8 1.9 3,097 0.7 1.9 Health Care and Social Assistance All Other Outpatient Care Centers 2,167 0.5 1.3 2,167 0.5 1.3 Home Health Care Services 4,839 1.2 3.0 4,173 1.0 2.6 Medical Laboratories 9 — — — — — Offices of Physicians, Mental Health Specialists 13,395 3.3 8.3 12,852 3.1 7.9 Other Ambulatory Health Care Services 17,060 4.2 10.5 15,900 3.8 9.8 Outpatient Mental Health and Substance Abuse Centers 8,863 2.2 5.5 8,950 2.1 5.5 Services for the Elderly and Persons with Disabilities 25,680 6.4 15.9 25,080 6.0 15.5 Information Cable and Other Subscription Programming 3,726 0.9 2.3 3,325 0.8 2.1 Data Processing, Hosting, and Related Services 4,050 1.0 2.5 2,337 0.6 1.4 Software Publishers 17,052 4.2 10.5 10,832 2.6 6.8 Television Broadcasting 1,935 0.5 1.2 92 — 0.1 Management of Companies and Enterprises Offices of Other Holding Companies 11,219 2.8 6.9 10,718 2.6 6.6 Manufacturing Bare Printed Circuit Board Manufacturing 1,959 0.5 1.2 1,851 0.4 1.1 Current-Carrying Wiring Device Manufacturing 3,452 0.9 2.1 3,561 0.8 2.2 Fluid Power Pump and Motor Manufacturing 1,916 0.5 1.2 1,855 0.4 1.1 Ice Cream and Frozen Dessert Manufacturing 1,645 0.4 1.0 1,474 0.4 0.9 Motorcycle, Bicycle, and Parts Manufacturing 15,889 3.9 9.8 14,756 3.5 9.1 Other Aircraft Parts and Auxiliary Equipment Manufacturing 500 0.1 0.3 — — — Other Industrial Machinery Manufacturing 3,824 0.9 2.4 3,500 0.8 2.2 Pharmaceutical Preparation Manufacturing 217 0.1 0.1 70,927 16.9 43.9 Other Services (except Public Administration) Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance 670 0.2 0.4 3,792 0.9 2.3 Professional, Scientific, and Technical Services Advertising Agencies 2,238 0.6 1.4 2,249 0.5 1.4 137 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 Computer Systems Design Services $ 1,994 0.5 % 1.2 % $ 2,020 0.5 % 1.2 % Other Computer Related Services 17,095 4.2 10.6 17,212 4.1 10.6 Public Administration Other Justice, Public Order, and Safety Activities 703 0.2 0.4 45 — — Real Estate and Rental and Leasing Nonresidential Property Managers 4,660 1.2 2.9 1,278 0.3 0.8 Office Machinery and Equipment Rental and Leasing 7,412 1.8 4.6 10,583 2.5 6.5 Retail Trade Electronic Shopping and Mail-Order Houses 6,581 1.6 4.1 6,313 1.5 3.9 Supermarkets and Other Grocery (except Convenience) Stores 5,641 1.4 3.5 5,925 1.4 3.7 All Other General Merchandise Stores 499 0.1 0.3 551 0.1 0.3 Transportation and Warehousing Transportation and Warehousing 2,495 0.7 1.5 2,257 0.5 1.6 Wholesale Trade Business to Business Electronic Markets 2,841 0.7 1.8 2,728 0.6 1.7 Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 10,116 2.5 6.2 8,429 2.0 5.2 Drugs and Druggists' Sundries Merchant Wholesalers 4,513 1.1 2.8 3,368 0.8 2.1 Industrial Machinery and Equipment Merchant Wholesalers 9,072 2.2 5.6 9,073 2.2 5.6 Motor Vehicle Parts (Used) Merchant Wholesalers 27,591 6.8 17.0 27,776 6.6 17.1 Other Miscellaneous Nondurable Goods Merchant Wholesalers 2,596 0.6 1.6 110 — 0.1 Sporting and Recreational Goods and Supplies Merchant Wholesalers 8,163 2.0 5.0 — — — Total debt and equity investments $ 306,409 75.9 % 189.1 % 341,242 81.2 % 210.6 % Structured Finance Securities 97,121 24.1 59.9 79,045 18.8 48.8 Total investments $ 403,530 100.0 % 249.0 % 420,287 100.0 % 259.4 % 138 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) As of December 31, 2022, the Company had loans to 52 portfolio companies, of which 81 % were first lien debt investments and 19 % were second lien debt investments, at fair value. The Company also held equity investments in 16 portfolio companies and 23 investments in Structured Finance Securities. At December 31, 2022, the Company’s investments consisted of the following: Percentage of Total Percentage of Total Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets First lien debt investments (1) $ 269,206 56.7 % 149.2 % $ 253,617 50.7 % 140.6 % Second lien debt investments 66,352 14.0 36.8 58,019 11.6 32.1 Subordinated debt investments 13,890 2.9 7.7 1,226 0.2 0.7 Preferred equity 9,966 2.1 5.5 8,196 1.6 4.5 Common equity, warrants and other 12,989 2.7 7.2 91,000 18.2 50.4 Total debt and equity investments $ 372,403 78.4 % 206.4 % $ 412,058 82.3 % 228.3 % Structured Finance Securities 102,477 21.6 56.8 88,518 17.7 49.1 Total $ 474,880 100.0 % 263.2 % $ 500,576 100.0 % 277.4 % (1) Includes unitranche investments (which are loans that combine both senior and subordinated debt, in a first lien position) with an amortized cost and fair value of $ 156,354 and $ 146,384 , respectively. At December 31, 2022, the Company had loans on non-accrual status with an aggregate amortized cost and fair value of $ 36,522 and $ 11,225 , respectively. As of December 31, 2022, the industry compositions of the Company’s debt and equity investments were as follows: Percentage of Total Percentage of Total Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets Administrative and Support and Waste Management and Remediation Services All Other Business Support Services $ 2,745 0.6 % 1.5 % $ 2,511 0.5 % 1.4 % Convention and Trade Show Organizers 160 — 0.1 80 — — Hazardous Waste Treatment and Disposal 1,765 0.4 1.0 1,652 0.3 0.9 Landscaping Services 4,611 1.0 2.6 4,226 0.8 2.3 Security Systems Services (except Locksmiths) 5,849 1.2 3.2 5,767 1.2 3.2 Temporary Help Services 8,854 1.9 4.9 8,821 1.8 4.9 Arts, Entertainment, and Recreation Other Amusement and Recreation Industries 16,303 3.4 9.0 16,497 3.3 9.1 Construction Electrical Contractors and Other Wiring Installation Contractors 17,666 3.7 9.8 9,247 1.8 5.1 New Single-Family Housing Construction (except For-Sale Builders) 1,807 0.4 1.0 1,566 0.3 0.9 Education Services Professional and Management Development Training 1,595 0.3 0.9 953 0.2 0.5 Sports and Recreation Instruction 4,222 0.9 2.3 4,172 0.8 2.3 Health Care and Social Assistance Child Day Care Services 6,375 1.3 3.5 6,182 1.2 3.4 Home Health Care Services 4,210 0.9 2.3 3,987 0.8 2.2 Medical Laboratories 17 — — 35 — — Offices of Physicians, Mental Health Specialists 13,299 2.8 7.4 13,119 2.6 7.3 Other Ambulatory Health Care Services 16,444 3.5 9.1 15,604 3.1 8.6 139 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 Outpatient Mental Health and Substance Abuse Centers $ 8,787 1.9 % 4.9 % $ 8,675 1.7 % 4.8 % Services for the Elderly and Persons with Disabilities 18,977 4.0 10.5 18,427 3.7 10.2 Information Cable and Other Subscription Programming 3,763 0.8 2.1 3,103 0.6 1.7 Data Processing, Hosting, and Related Services 4,080 0.9 2.3 3,477 0.7 1.9 Directory and Mailing List Publishers 3,910 0.8 2.2 3,930 0.8 2.2 Internet Publishing and Broadcasting and Web Search Portals 3,100 0.7 1.7 2,843 0.6 1.6 Software Publishers 17,577 3.7 9.7 9,629 1.9 5.3 Television Broadcasting 2,182 0.5 1.2 488 0.1 0.3 Management of Companies and Enterprises Offices of Other Holding Companies 11,240 2.4 6.2 10,646 2.1 5.9 Manufacturing Bare Printed Circuit Board Manufacturing 1,977 0.4 1.1 1,854 0.4 1.0 Current-Carrying Wiring Device Manufacturing 3,360 0.7 1.9 3,468 0.7 1.9 Fluid Power Pump and Motor Manufacturing 1,931 0.4 1.1 1,862 0.4 1.0 Ice Cream and Frozen Dessert Manufacturing 1,641 0.3 0.9 1,540 0.3 0.9 Motorcycle, Bicycle, and Parts Manufacturing 15,873 3.3 8.8 15,942 3.2 8.8 Other Aircraft Parts and Auxiliary Equipment Manufacturing 500 0.1 0.3 — — — Other Industrial Machinery Manufacturing 5,203 1.1 2.9 4,660 0.9 2.6 Pharmaceutical Preparation Manufacturing 217 — 0.1 85,456 17.1 47.4 Other Services (except Public Administration) Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance 572 0.1 0.3 1,890 0.4 1.0 Communication Equipment Repair and Maintenance 1,766 0.4 1.0 1,572 0.3 0.9 Other Automotive Mechanical and Electrical Repair and Maintenance 1,083 0.2 0.6 1,064 0.2 0.6 Professional, Scientific, and Technical Services Administrative Management and General Management Consulting Services 27,621 5.8 15.3 27,148 5.4 15.0 Advertising Agencies 2,256 0.5 1.3 1,898 0.4 1.1 Computer Systems Design Services 1,959 0.4 1.1 1,943 0.4 1.1 Other Computer Related Services 14,595 3.1 8.1 14,868 3.0 8.2 Public Administration Other Justice, Public Order, and Safety Activities 703 0.1 0.4 32 — — Real Estate and Rental and Leasing Nonresidential Property Managers 4,680 1.0 2.6 4,207 0.8 2.3 Office Machinery and Equipment Rental and Leasing 6,418 1.4 3.6 6,713 1.3 3.7 140 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 Retail Trade Electronic Shopping and Mail-Order Houses $ 6,747 1.4 % 3.7 % $ 6,515 1.3 % 3.6 % Electronics and Appliance Stores 8,037 1.7 4.5 8,102 1.6 4.5 Shoe Store 10,160 2.1 5.6 1,104 0.2 0.6 Supermarkets and Other Grocery (except Convenience) Stores 5,647 1.2 3.1 5,532 1.1 3.1 All Other General Merchandise Stores 499 0.1 0.3 967 0.2 0.5 Transportation and Warehousing Transportation and Warehousing 2,514 0.5 1.4 2,501 0.5 1.4 Wholesale Trade Business to Business Electronic Markets 2,858 0.6 1.6 2,689 0.5 1.5 Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 11,156 2.3 6.2 9,013 1.8 5.0 Drugs and Druggists' Sundries Merchant Wholesalers 5,227 1.1 2.9 4,622 0.9 2.6 Industrial Machinery and Equipment Merchant Wholesalers 9,071 1.9 5.0 9,073 1.8 5.0 Motor Vehicle Parts (Used) Merchant Wholesalers 27,751 5.8 15.4 27,821 5.6 15.4 Other Miscellaneous Nondurable Goods Merchant Wholesalers 2,680 0.6 1.5 2,246 0.4 1.2 Sporting and Recreational Goods and Supplies Merchant Wholesalers 8,163 1.7 4.4 122 — 0.1 Total debt and equity investments $ 372,403 78.4 % 206.4 % 412,058 82.3 % 228.3 % Structured Finance Securities 102,477 21.6 56.8 88,518 17.7 49.1 Total investments $ 474,880 100.0 % 263.2 % 500,576 100.0 % 277.4 % Portfolio Concentration: As of December 31, 2023, the Company’s common equity investment in Pfanstiehl Holdings, Inc., a global manufacturer of high-purity pharmaceutical ingredients, accounted for 16.9 % and 43.8 % of its total portfolio at fair value and its total net assets, respectively. As of December 31, 2022, the Company’s common equity investment in Pfanstiehl Holdings, Inc. accounted for 17.1 % and 47.4 % of its total portfolio at fair value and its total net assets, respectively. Note 5. Fair Value of Financial Instruments Investments The Company’s investments are carried at fair value and determined in accordance with ASC 820 and a documented valuation policy that is applied in a consistent manner. On September 7, 2022, pursuant to Rule 2a-5 of the 1940 Act (“Rule 2a-5”), the Board designated OFS Advisor as the valuation designee to perform fair value determinations relating to the Company’s investments, commencing with the quarter ended September 30, 2022, and the Board maintains oversight of OFS Advisor in its capacity as valuation designee, as prescribed in Rule 2a-5. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair values are determined with models or other valuation techniques, valuation inputs, and assumptions that market participants would use in pricing an asset or liability. Valuation inputs are organized in a hierarchy that gives the highest priority to prices for identical assets or liabilities quoted in active markets (Level 1) and the lowest priority to fair values based on unobservable inputs (Level 3). The three levels of inputs in the fair value hierarchy are described below: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. 141 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Level 2: Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability, and situations where there is little, if any, market activity for the asset or liability at the measurement date. The inputs into the determination of fair value are based upon the best information under the circumstances and may require management to exercise significant judgment or estimation. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. The Company generally categorizes its investment portfolio into Level 3, and to a lesser extent Level 2, of the hierarchy. The Company assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the measurement date. The following table presents the Company’s transfers of Level 2 and Level 3 debt investments for the years ended December 31, 2023 and 2022, respectively: Year Ended December 31, 2023 2022 Transfers from Level 2 to Level 3 $ — $ 3,218 Transfers from Level 3 to Level 2 1,616 — Certain of the Company’s investments are exchanged in the non-public market among banks, CLOs and other institutional investors for loans to large U.S. corporations. The Company classifies these loan investments as Level 2 when a sufficient number of market quotations or indicative prices from pricing services or broker/dealers (collectively, “Indicative Prices”) are available, and the depth of the market is sufficient, in management's judgment, to transact at those prices in amounts approximating the Company’s investment position at the measurement date. 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 a period of time, generally up to three months after the transaction date or until the initial payment date, in the case of new issue Structured Finance Securities. Portfolio investments with a fair value of $ 22,874 and $ 0 , respectively, were valued at their Transaction Prices at December 31, 2023 and December 31, 2022. Investments that are not valued using Indicative Prices or Transaction Prices are typically valued using two different valuation techniques. The Company typically estimates the fair value of debt investments by a discounted cash flows technique in which a current price is imputed for the investment based upon an assessment of the expected market yield (or discount rate) for similarly structured investments with a similar level of risk. The Company considers the current contractual interest rate, the maturity and other terms of the investment relative to risk of the portfolio company and various market indices. A key determinant of portfolio-company risk is the leverage through the investment relative to earnings metrics of the portfolio company. The fair value of Structured Finance Securities are also estimated primarily by discounted cash flow techniques. In valuing such investments, the Company considers CLO performance metrics, including prepayment rates, default rates, loss-on-default and recovery rates, and other metrics, as well as estimated market yields provided by a recognized industry pricing service as a primary source for discounted cash flow fair value estimates, supplemented by actual trades executed in the market at or around period-end, as well as the Indicative Prices provided by broker-dealers in its estimate of the fair value of such investments. The Company also considers the operating metrics, typically included in the governing documents of CLO vehicles, including collateralization tests, concentration limits, defaults, restructuring activity and prepayment rates on the underlying loans, if applicable. The fair value of the Company’s equity investments, as well as certain of its impaired debt investments, are generally estimated through analysis of the portfolio company's enterprise value under a market approach. Enterprise value means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The primary method for determining enterprise value under the market approach involves a multiple analysis, whereby appropriate multiples are applied to an earnings metric of the portfolio company, typically earnings before net interest expense, income tax expense, depreciation and amortization (“EBITDA”) or revenue. EBITDA and revenue multiples are typically determined based upon review of market comparable transactions and publicly traded comparable companies, if any. 142 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) The Company may also utilize other portfolio-company earnings metrics to determine enterprise value, such as forecast EBITDA or revenue, or a weighting of multiple factors. At times, the Company may also use a discounted cash flow technique to value its equity securities. Application of these valuation methodologies involves a significant degree of judgment by management. Due to the inherent uncertainty of determining the fair value of Level 3 investments, the fair value of the investments may differ significantly from the values that would have been used had a ready market or observable inputs existed for such investments and may differ materially from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions, or otherwise are less liquid than publicly traded instruments. If the Company were 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 and incur a realized capital loss. The Company’s investments are subject to market risk as a result of economic and political developments, including impacts from elevated interest and inflation rates, the ongoing war between Russia and Ukraine, the escalated armed conflict in the Middle East, instability in the U.S. and international banking systems, the risk of recession or a shutdown of U.S government services and related market volatility. Market risk is directly impacted by the volatility and liquidity in the markets in which certain investments are traded and can affect the fair value of the Company’s investments. The Company’s investments are also subject to interest rate risk. Changes in interest rates, including any potential interest rate reductions approved by the U.S. Federal Reserve, may impact both our cost of funding and the valuation of our investment portfolio. The following tables present the Company’s investment portfolio measured at fair value on a recurring basis as of December 31, 2023 and 2022, respectively. Security Level 1 Level 2 Level 3 Fair Value at December 31, 2023 Debt investments $ — $ 16,053 $ 235,260 $ 251,313 Equity investments — — 89,929 89,929 Structured Finance Securities — — 79,045 79,045 $ — $ 16,053 $ 404,234 $ 420,287 Security Level 1 Level 2 Level 3 Fair Value at December 31, 2022 Debt investments $ — $ 30,823 $ 282,039 $ 312,862 Equity investments — — 99,196 99,196 Structured Finance Securities — — 88,518 88,518 $ — $ 30,823 $ 469,753 $ 500,576 143 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) The following tables provide the primary quantitative information about valuation techniques and the Company’s unobservable inputs to its Level 3 fair value measurements as of December 31, 2023 and 2022. The Company may make changes to the valuation techniques, among techniques otherwise commonly used in accordance with its valuation policies, and/or the weighting of techniques used for particular investments based on changes in facts-and-circumstances and depending on the availability of, or changes in, information in order to produce the best estimate of fair value as of the measurement date. In addition to the techniques and unobservable inputs noted in the tables below and in accordance with OFS Advisor’s valuation policy, OFS Advisor, as valuation designee, may also use other valuation techniques and methodologies when determining the fair value measurements of the Company’s investment assets. Fair Value at December 31, 2023 Valuation technique Unobservable inputs Range (Weighted average) Debt investments: First lien $ 161,211 Discounted cash flow Discount rates 9.55 % - 24.40 % ( 12.61 %) 8,136 Market approach EBITDA multiples 3.14 x - 6.00 x ( 3.59 x) 6,295 Market approach Revenue multiples 0.40 x - 0.40 x ( 0.40 x) 11,189 Market approach Transaction Price Second lien 36,495 Discounted cash flow Discount rates 10.45 % - 21.68 % ( 13.29 %) 8,084 Market approach Revenue multiples 0.40 x - 1.20 x ( 0.67 x) 3,850 Market approach Transaction Price Subordinated — Market approach NAV liquidation (2) Structured Finance Securities: Subordinated notes (1) 44,965 Discounted cash flow Discount rates 16.00 % - 50.00 % ( 28.64 %) Constant default rate 2.00 % - 2.00 % ( 2.00 %) Recovery rate 65.00 % - 65.00 % ( 65.00 %) Mezzanine debt (1) 26,245 Discounted cash flow Discount margin 7.15 % - 10.60 % ( 8.36 %) Constant default rate 2.00 % - 3.00 % ( 2.04 %) Recovery rate 65.00 % - 65.00 % ( 65.00 %) Subordinated notes 5,018 Market Approach Transaction Price Mezzanine debt 2,817 Market Approach Transaction Price Equity investments: Preferred equity 13,163 Market approach EBITDA multiples 7.50 x - 8.00 x ( 7.60 x) Preferred equity 77 Market approach Revenue multiples 0.13 x - 3.25 x ( 3.25 x) Common equity, warrants and other (3) 70,927 Discounted cash flow Discount rates 11.50 % - 11.50 % ( 11.50 %) Market approach EBITDA multiples 12.00 x - 13.25 x ( 12.63 x) Common equity, warrants and other 5,369 Market approach EBITDA multiples 5.75 x - 16.50 x ( 9.57 x) Common equity, warrants and other 393 Market approach Revenue multiples 0.40 x - 0.70 x ( 0.70 x) $ 404,234 (1) The cash flows utilized in the discounted cash flow calculations assume: (i) liquidation of (a) certain distressed investments and (b) all investments currently in default held by the issuing CLO at their current market prices; and (ii) redeployment of proceeds at the issuing CLO’s assumed reinvestment rate. (2) NAV liquidation represents the fair value, or estimated expected residual value, of the investment. (3) Two valuation techniques were weighted to determinate the fair value. 144 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Fair Value at December 31, 2022 Valuation technique Unobservable inputs Range (Weighted average) Debt investments: First lien $ 211,390 Discounted cash flow Discount rates 10.21 % - 17.52 % ( 12.50 %) 13,223 Market approach Revenue multiples 0.46 x - 0.70 x ( 0.58 x) Second lien 53,312 Discounted cash flow Discount rates 11.82 % - 20.71 % ( 14.68 %) 2,887 Market approach Revenue multiples 0.46 x - 0.46 x ( 0.46 x) Subordinated 1,226 Market approach EBITDA multiples 10.50 x - 10.50 x ( 10.50 x) Structured Finance Securities: Subordinated notes (1) 53,688 Discounted cash flow Discount rates 12.50 % - 34.00 % ( 22.14 %) Constant default rate 2.00 % - 2.00 % ( 2.00 %) Recovery rate 65.00 % - 65.00 % ( 65.00 %) Mezzanine debt 26,413 Discounted cash flow Discount margin 7.25 % - 11.60 % ( 8.58 %) Constant default rate 2.00 % - 3.00 % ( 2.03 %) Recovery rate 65.00 % - 65.00 % ( 65.00 %) Subordinated notes 118 Market approach NAV liquidation (2) Loan accumulation facility 8,299 Market approach Probability weighted NAV analysis Equity investments: Preferred equity 6,202 Market approach EBITDA multiples 7.25 x - 7.25 x ( 7.25 x) Preferred equity 1,901 Market approach Revenue multiples 0.15 x - 0.87 x ( 0.87 x) Common equity, warrants and other 91,070 Market approach EBITDA multiples 3.72 x - 11.75 x ( 9.63 x) Common equity, warrants and other 24 Market approach Revenue multiples 0.15 x - 0.87 x ( 0.15 x) $ 469,753 (1) The cash flows utilized in the discounted cash flow calculations assume: (i) liquidation of (a) certain distressed investments and (b) all investments currently in default held by the issuing CLO at their current market prices; and (ii) redeployment of proceeds at the issuing CLO’s assumed reinvestment rate. (2) NAV liquidation represents the fair value, or estimated expected residual value, of the investment. 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 enterprise value 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 enterprise value 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 enterprise value 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. 145 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) The following tables present changes in investments measured at fair value using Level 3 inputs for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 First Lien Debt Investments Second Lien Debt Investments Subordinated Debt Investments Preferred Equity Common Equity and Warrants Structured Finance Securities Total Level 3 assets, December 31, 2022 $ 224,614 $ 56,199 $ 1,226 $ 8,196 $ 91,000 $ 88,518 $ 469,753 Net realized loss on investments ( 68 ) ( 185 ) ( 9,210 ) — ( 844 ) ( 1,257 ) ( 11,564 ) Net change in unrealized appreciation (depreciation) on investments ( 4,378 ) ( 1,031 ) 7,984 3,608 ( 12,861 ) ( 4,117 ) ( 10,795 ) Amortization of net loan origination fees 1,095 427 — — — 233 1,755 Accretion of interest income on Structured Finance Securities — — — — — 10,857 10,857 Capitalized PIK interest and dividends 806 655 — 1,136 — — 2,597 Amendment fees ( 134 ) ( 116 ) — — — — ( 250 ) Purchase and origination of portfolio investments 33,393 — — 345 356 7,642 41,736 Proceeds from principal payments on portfolio investments ( 65,184 ) ( 6,507 ) — — — ( 9,355 ) ( 81,046 ) Sale and redemption of portfolio investments ( 1,697 ) ( 1,013 ) — — — — ( 2,710 ) Distributions received from portfolio investments — — — ( 45 ) ( 962 ) ( 13,476 ) ( 14,483 ) Transfers from Level 3 to Level 2 ( 1,616 ) — — — — — ( 1,616 ) Level 3 assets, December 31, 2023 $ 186,831 $ 48,429 $ — $ 13,240 $ 76,689 $ 79,045 $ 404,234 146 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Year Ended December 31, 2022 First Lien Debt Investments Second Lien Debt Investments Subordinated Debt Investments Preferred Equity Common Equity and Warrants Structured Finance Securities Total Level 3 assets, December 31, 2021 $ 215,343 $ 45,770 $ 17,943 $ 3,765 $ 83,486 $ 75,201 $ 441,508 Net realized loss on investments ( 336 ) — — ( 51 ) ( 325 ) — ( 712 ) Net change in unrealized appreciation (depreciation) on investments ( 6,598 ) ( 2,772 ) ( 8,536 ) 4,016 9,133 ( 14,209 ) ( 18,966 ) Amortization of net loan origination fees 1,112 220 6 — — 244 1,582 Accretion of interest income on Structured Finance Securities — — — — — 10,656 10,656 Capitalized PIK interest and dividends 264 188 58 466 — — 976 Amendment fees ( 185 ) ( 21 ) — — — — ( 206 ) Purchase and origination of portfolio investments 77,348 14,981 — — 2,240 43,198 137,767 Proceeds from principal payments on portfolio investments ( 57,162 ) ( 2,167 ) ( 8,245 ) — — ( 14,399 ) ( 81,973 ) Sale and redemption of portfolio investments ( 8,390 ) — — — ( 3,534 ) — ( 11,924 ) Distributions received from portfolio investments — — — — — ( 12,173 ) ( 12,173 ) Transfers from Level 2 to Level 3 3,218 — — — — — 3,218 Level 3 assets, December 31, 2022 $ 224,614 $ 56,199 $ 1,226 $ 8,196 $ 91,000 $ 88,518 $ 469,753 The net unrealized appreciation (depreciation) reported in the Company’s consolidated statements of operations for the years ended December 31, 2023 and 2022, attributable to the Company’s Level 3 assets still held at those respective year ends was as follows: Year Ended December 31, 2023 2022 Debt investments $ ( 5,765 ) $ ( 17,947 ) Equity investments ( 10,186 ) 21,692 Structured Finance Securities ( 5,553 ) ( 14,162 ) Net unrealized depreciation on investments held $ ( 21,504 ) $ ( 10,417 ) 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 financial instruments. The senior secured revolving credit facility between the Company and Banc of California (formally known as Pacific Western Bank), as lender (“Banc of California 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 equity holder, 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. 147 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) The following tables present the fair value measurements of the Company’s debt and the level within the fair value hierarchy of the significant unobservable inputs used to determine such fair values as of December 31, 2023 and 2022: December 31, 2023 Description Level 1 (1) Level 2 Level 3 (2) Total Banc of California Credit Facility $ — $ — $ — $ — BNP Facility — — 90,500 90,500 OFS Capital Corporation 4.75 % Notes due 2026 — — 116,688 116,688 OFS Capital Corporation 4.95 % Notes due 2028 48,565 — — 48,565 SBA-guaranteed debentures — — 30,904 30,904 Total debt $ 48,565 $ — $ 238,092 $ 286,657 December 31, 2022 Description Level 1 (1) Level 2 Level 3 (2) Total Banc of California Credit Facility $ — $ — $ — $ — BNP Facility — — 104,700 104,700 OFS Capital Corporation 4.75 % Notes due 2026 — — 109,037 109,037 OFS Capital Corporation 4.95 % Notes due 2028 47,058 — — 47,058 SBA-guaranteed debentures — — 49,470 49,470 Total debt $ 47,058 $ — $ 263,207 $ 310,265 (1) For Level 1 measurements, fair value is estimated by using the closing price of the security on the Nasdaq Global Select Market. (2) 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. The following are the carrying values and fair values of the Company’s debt as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Description Carrying Value (1) Fair Value Carrying Value (1) Fair Value Banc of California Credit Facility $ — $ — $ — $ — BNP Facility 90,500 90,500 104,700 104,700 OFS Capital Corporation 4.75 % Notes due 2026 123,322 116,688 122,547 109,037 OFS Capital Corporation 4.95 % Notes due 2028 54,011 48,565 53,806 47,058 SBA-guaranteed debentures 31,900 30,904 50,697 49,470 Total debt $ 299,733 $ 286,657 $ 331,750 $ 310,265 (1) Carrying value is calculated as the outstanding principal amount less unamortized deferred debt issuance costs. See Note 2 for details. 148 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Note 6. Commitments and Contingencies The following table shows the Company’s outstanding commitments to fund investments in portfolio companies as of December 31, 2023: Portfolio Company Investment Type Commitment Boca Home Care Holdings, Inc. First Lien Debt (Revolver) $ 1,290 Clevertech Bidco, LLC First Lien Debt (Revolver) 294 Envocore Holding, LLC (F/K/A LRI Holding, LLC) First Lien Debt (Revolver) 2,569 Honor HN Buyer Inc. First Lien Debt (Revolver) 664 Honor HN Buyer Inc. First Lien Debt (Delayed Draw) 1,833 Kreg LLC First Lien Debt (Revolver) 1,337 Medrina LLC First Lien Debt (Revolver) 319 Medrina LLC First Lien Debt (Delayed Draw) 447 Metasource, LLC First Lien Debt (Delayed Draw) 1,200 One GI LLC First Lien Debt (Revolver) 1,444 SSJA Bariatric Management LLC First Lien Debt (Revolver) 467 Tolemar Acquisition, Inc. First Lien Debt (Revolver) 1,982 $ 13,846 Legal and regulatory proceedings: From time to time, the Company is involved in legal proceedings in the normal course of its business. Although the outcome of such litigation cannot be predicted with any certainty, management is of the opinion, based on the advice of legal counsel, that final disposition of any litigation should not have a material adverse effect on the financial position of the Company as of December 31, 2023. Additionally, the Company is subject to periodic inspection by regulators to assess compliance with applicable BDC regulations. 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 low. Note 7. Borrowings SBA Debentures: The SBIC Program enabled SBIC I LP to obtain leverage by issuing SBA-guaranteed debentures, subject to issuance of a capital commitment by the SBA and customary procedures. These debentures were non-recourse to the Company, had a ten-year maturity and a fixed interest rate at a market-driven spread over ten-year U.S. Treasury Notes. Effective November 26, 2013, the Company received exemptive relief from the SEC 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. During the year ended December 31, 2023, SBIC I LP redeemed $ 19,000 of SBA debentures that were contractually due March 1, 2025. The Company recognized a loss on extinguishment of debt of $ 213 related to the acceleration of unamortized deferred borrowing costs and prepaid (or breakage) interest on the redeemed debentures. As of December 31, 2023 and 2022, SBIC I LP had outstanding SBA debentures of $ 31,920 and $ 50,920 , respectively. See Note 12 for additional information concerning the Company’s outstanding SBA debentures. On a stand-alone basis, SBIC I LP held $ 149,698 and $ 176,521 in assets at December 31, 2023 and 2022, respectively, which accounted for approximately 32 % and 34 % of the Company’s total consolidated assets, respectively. 149 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) The following table shows the Company’s outstanding SBA debentures payable as of December 31, 2023 and 2022: Fixed Interest Rate SBA debentures outstanding Pooling Date Maturity Date December 31, 2023 December 31, 2022 March 25, 2015 March 1, 2025 2.872 % $ 31,920 $ 50,920 SBA debentures outstanding 31,920 50,920 Unamortized debt issuance costs ( 20 ) ( 223 ) SBA debentures outstanding, net of unamortized deferred debt issuance costs $ 31,900 $ 50,697 For the years ended December 31, 2023, 2022 and 2021, the components of interest expense, cash paid for interest, effective interest rates and average outstanding balances for the SBA debentures were as follows: Year Ended December 31, 2023 2022 2021 Stated interest expense $ 1,236 $ 1,552 $ 2,627 Amortization of debt issuance costs 162 188 209 Total interest and debt financing costs $ 1,398 $ 1,740 $ 2,836 Cash paid for interest expense $ 1,418 $ 1,739 $ 2,978 Effective interest rate 3.25 % 3.22 % 3.27 % Average outstanding balance $ 43,046 $ 53,991 $ 86,710 Unsecured Notes: The Outstanding Unsecured Notes totaled $ 180,000 and $ 180,000 in aggregate principal debt at December 31, 2023 and 2022, respectively. During the years ended December 31, 2023 and 2022, the Company did not issue, redeem or repurchase any Unsecured Notes. Issuances during the year ended December 31, 2021 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 $ 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 . Redemptions during the year 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 $ 25,000 aggregate principal amount of 6.25 % notes due September 30, 2023 (“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 acceleration of unamortized deferred borrowing costs on the redemption of unsecured notes. The Unsecured Notes Due February 2026 and the Unsecured Notes Due October 2028 (together, the “Outstanding Unsecured Notes”), were outstanding at December 31, 2023 and are direct unsecured obligations and rank equal in right of payment with all current and future unsecured indebtedness of the Company. Because the Outstanding 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 150 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) the value of the assets securing such indebtedness, including, without limitation, borrowings under the Banc of California Credit Facility and BNP Facility. The indenture governing the Outstanding Unsecured Notes contains certain covenants: (i) prohibiting additional borrowings, including through the issuance of additional debt securities, unless the Company's asset coverage, as defined in the 1940 Act, after giving effect to any exemptive relief granted to the Company by the SEC, equals at least 150 % after such borrowings; and (ii) prohibiting (a) the declaration of any cash dividend or distribution upon any class of the Company’s capital stock (except to the extent necessary for the Company to maintain its treatment as a RIC under Subchapter M of the Code), or (b) the purchase of any capital stock if the Company’s asset coverage, as defined in the 1940 Act, were below 150 % at the time of such capital transaction and after deducting the amount of such transaction. For the years ended December 31, 2023, 2022 and 2021, the components of interest expense, cash paid for interest, effective interest rates and average outstanding balances for the Outstanding Unsecured Notes were as follows: Year Ended December 31, 2023 2022 2021 Stated interest expense $ 8,660 $ 8,663 $ 11,160 Amortization of debt issuance costs 981 1,029 1,403 Total interest and debt financing costs $ 9,641 $ 9,692 $ 12,563 Cash paid for interest expense $ 8,660 $ 8,683 $ 10,384 Effective interest rate 5.36 % 5.38 % 6.03 % Average outstanding balance $ 180,000 $ 180,000 $ 208,240 As of December 31, 2023, the Outstanding Unsecured Notes had the following terms and balances: Unsecured Notes Principal Unamortized Discount and Issuance Costs Stated Interest Rate (1) Effective Interest Rate (2) Maturity (3) Unsecured Notes Due February 2026 $ 125,000 $ 1,678 4.75 % 5.39 % February 10, 2026 Unsecured Notes Due October 2028 55,000 989 4.95 % 5.32 % October 31, 2028 Total $ 180,000 $ 2,667 (1) The weighted-average fixed cash interest rate on the Unsecured Notes as of December 31, 2023 was 4.81 %. (2) The effective interest rate on the Unsecured Notes includes deferred debt issuance cost amortization. (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. Banc of California Credit Facility : The Company is party to a business loan agreement (“BLA”) with Banc of California, as lender, to provide the Company with a $ 25,000 senior secured revolving credit facility. The Banc of California Credit Facility is available for general corporate purposes including investment funding and is scheduled to mature on February 28, 2026. The maximum availability of the Banc of California 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 Banc of California Credit Facility is guaranteed by OFSCC-MB and secured by all of our and OFSCC-MB’s current and future assets, excluding assets held by OFSCC-FS and SBIC I, and our partnership interests in SBIC I. The Banc of California Credit Facility bears interest at a variable rate of the Prime Rate plus a 0.25 % margin, with a 5.00 % floor, and includes an annual commitment fee of $ 125 . As of December 31, 2023, the stated interest rate of the Banc of California Credit Facility was 8.75 %. As of December 31, 2023, the Banc of California Credit Facility’s effective interest rate, including deferred financing cost amortization and commitment fees, was 9.25 %. Unamortized debt issuance costs included in prepaid expenses and other assets on the consolidated statements of assets and liabilities as of December 31, 2023 and 2022, were $ 122 and $ 1 , respectively. As of December 31, 2023 and 2022, the Company had $ 0 and $ 0 outstanding debt under the Banc of California Credit Facility, respectively, and $ 25,000 and $ 25,000 of availability under the terms of the borrowing base, respectively. 151 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) On February 17, 2021, the Company amended the Banc of California Credit Facility to among other things: (i) increase the maximum amount available from $ 20,000 to $ 25,000 ; (ii) decrease the interest rate floor from 5.25 % per annum to 5.00 % per annum; (iii) modify certain financial performance covenants; and (iv) extend the maturity date from February 28, 2021 to February 28, 2023. On November 15, 2021, the Company amended the Banc of California Credit Facility to decrease the interest rate floor from 5.0 % to 4.0 %, effective as of November 1, 2021. On April 22, 2022, the Company amended the Banc of California Credit Facility to: (i) increase the maximum amount available under the Banc of California Credit Facility from $ 25,000 to $ 35,000 ; and (ii) extend the maturity date of the Banc of California Credit Facility from February 28, 2023 to February 28, 2024. On December 15, 2022, the Company amended the Banc of California Credit Facility to: (i) reduce the maximum amount available under the Banc of California Credit Facility from $ 35,000 to $ 25,000 ; and (ii) eliminate the No Net Losses covenant, which restricted net losses (defined as income after adjustments to the investment portfolio for gains and losses, realized and unrealized, also shown as net increase (decrease) in net assets resulting from operations) in more than two quarters during the prior four quarters then ended. On December 15, 2023, the Company amended the Banc of California Credit Facility to: (i) extend the maturity date from February 28, 2024 to February 28, 2026; (ii) increase the interest rate floor from 4.00 % to 5.00 %; and (iii) eliminate the 0.50 % unused line fee and replace it with an annual commitment fee of 0.50 %. 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 ratio of total liabilities divided by NAV. The BLA also contains customary events of default, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-default to other indebtedness, bankruptcy, change in investment advisor, and the occurrence of a material adverse change in our financial condition. For the years ended December 31, 2023, 2022 and 2021, the components of interest expense, cash paid for interest, effective interest rates and average outstanding balances for the Banc of California Credit Facility were as follows: Year Ended December 31, 2023 2022 2021 Stated interest expense (1) $ 147 $ 128 $ 101 Amortization of debt issuance costs 5 5 19 Total interest and debt financing costs $ 152 $ 133 $ 120 Cash paid for interest expense $ 145 $ 131 $ 81 Effective interest rate (2) 8.51 % 6.93 % 4.01 % Average outstanding balance $ 1,249 $ 714 $ 1,810 (1) Stated interest expense includes unused fees. (2) Unused fees were excluded from the calculation. BNP Facility: OFSCC-FS is party to the BNP Facility, which provides for borrowings in an aggregate principal amount up to $ 150,000 , of which $ 90,500 was drawn as of December 31, 2023. Borrowings under the BNP Facility bear interest of SOFR plus an applicable spread, which is determined on the basis of industry-recognized portfolio company metrics at the time of funding. The BNP Facility will mature on the earlier of June 20, 2027 or upon certain other events defined in the credit agreement which result in accelerated maturity. Borrowings under the BNP Facility are secured by substantially all of the assets held by OFSCC-FS, which were $ 158,308 and $ 173,692 , or 34 % and 33 % of the Company’s total consolidated assets at December 31, 2023 and 2022, respectively. On June 24, 2022, OFSCC-FS amended the BNP Facility to, among other things: (i) extend the reinvestment period under the BNP Facility for three years from June 20, 2022 to June 20, 2025; (ii) extend the maturity date under the BNP Facility from June 20, 2024 to June 20, 2027; (iii) convert the benchmark interest rate from LIBOR to SOFR; (iv) increase the applicable margin by 0.40 % on all classes of loans; and (v) increase the applicable margin floor from 1.925 % to 2.65 %. 152 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) As of December 31, 2023 and 2022, the Company had $ 90,500 and $ 104,700 outstanding debt under the BNP Facility, respectively, and $ 59,500 and $ 45,300 of availability under the terms of the borrowing base, respectively. OFSCC-FS also pays an unused fee up to 0.75 % depending on the size of the unused portion of the BNP Facility. At December 31, 2023, the cash interest rate on the BNP Facility was 8.04 %. OFSCC-FS incurred fees to the lenders as well as legal costs to establish and amend the BNP Facility, which are amortized over the expected life of the facility. Unamortized debt issuance costs included in prepaid expenses and other assets on the consolidated statements of assets and liabilities as of December 31, 2023 and 2022 were $ 941 and $ 1,315 , respectively. For the years ended December 31, 2023, 2022 and 2021, the components of interest expense, cash paid for interest, effective interest rates and average outstanding balances for the BNP Facility were as follows: Year Ended December 31, 2023 2022 2021 Stated interest expense (1) $ 7,911 $ 5,133 $ 1,658 Amortization of debt issuance costs 380 327 338 Total interest and debt financing costs $ 8,291 $ 5,460 $ 1,996 Cash paid for interest expense $ 7,966 $ 4,661 $ 1,594 Effective interest rate 8.29 % 4.42 % 4.20 % Average outstanding balance $ 100,062 $ 123,632 $ 47,481 (1) Stated interest expense includes unused fees. The average dollar borrowings and average interest rate for all Company debt during the years ended December 31, 2023, 2022 and 2021, were as follows: Year ended Average Dollar Borrowings Weighted-Average Interest Rate December 31, 2023 $ 324,357 6.01 % December 31, 2022 358,337 4.75 December 31, 2021 344,241 5.09 As of December 31, 2023, the Company’s debt liabilities are scheduled to mature as follows: Principal Due by Year Debt liabilities Total 2024 2025 2026 2027 2028 Banc of California Credit Facility $ — $ — $ — $ — $ — $ — BNP Facility 90,500 — — — 90,500 — SBA Debentures (1) 31,920 — 31,920 — — — Unsecured Notes 180,000 — — 125,000 — 55,000 Total $ 302,420 $ — $ 31,920 $ 125,000 $ 90,500 $ 55,000 (1) See Note 12 for additional information concerning the Company’s outstanding SBA debentures. Note 8. Federal Income Tax Filing status: The Company has elected to be taxed as a RIC under Subchapter M of the Code. In order to maintain its status as a RIC, the Company is required to distribute annually to its stockholders at least 90% of its ICTI, as defined by the Code. Additionally, to avoid a 4% U.S. federal excise tax on undistributed earnings the Company is required to distribute each calendar year the sum of (i) 98% of its ordinary income for such calendar year, (ii) 98.2% of its net capital gains for the one-year period ending October 31 of that calendar year, and (iii) any income recognized, but not distributed, in preceding years and on which the Company paid no U.S. federal income tax. Maintenance of the Company's RIC status also requires adherence to certain source of income and asset diversification requirements. 153 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) OFSCC-MB, an entity taxed as a corporation under Subchapter C of the Code, is consolidated in the Company’s GAAP financial statements but is not included in the determination of ICTI or the RIC compliance requirements of the Company. The income of OFSCC-MB, net of applicable income taxes, is not included in the Company’s ICTI until distributed by OFSCC-MB, which may result in timing and character differences between the Company’s GAAP and tax-basis net investment income and realized gains and losses. Taxable income and distributions: As of December 31, 2023, the Company met the source of income and asset diversification requirements, and intends to continue to meet these requirements. For the year ended December 31, 2023, the Company had no net accrued excise tax expense related to estimated undistributed income; however, as of December 31, 2023, the Company had an accrued liability for estimated excise taxes of $ 100 . The Company’s ICTI differs from the net increase (decrease) in net assets resulting from operations primarily due to differences in income recognition on the unrealized appreciation/depreciation of investments, income recognition for CLO subordinated note investments, income from Company’s equity investments in pass-through entities, capital gains and losses and the net creation or utilization of capital loss carryforwards. The distributions paid to stockholders are reported as ordinary income, long-term capital gains and returns of capital. The tax character of distributions paid (1) were as follows: Year Ended December 31, 2023 (1) 2022 2021 Ordinary taxable income $ 17,954 $ 15,564 $ 12,207 Long-term capital gain — — — Return of capital — — — Total distributions to common stockholders $ 17,954 $ 15,564 $ 12,207 (1) The calculation of 2023 U.S. federal taxable income is based on certain estimated amounts, including information received from third parties and, as a result, actual 2023 U.S. federal taxable income will not be finally determined until the Company’s 2023 U.S. federal tax return is filed in 2024 (and, therefore, such estimate is subject to change). Tax-basis components of distributable earnings (accumulated losses) as of December 31, 2023 and 2022, were as follows: December 31, 2023 2022 Ordinary income (RIC) $ 3,468 $ 3,551 Undistributed earnings and profits (OFSCC-MB; C-Corporation) 2,075 2,606 Net operating loss carryforward (OFSCC-MB; C-Corporation) 140 — Capital loss carryforwards: RIC – short-term, non-expiring ( 5,109 ) ( 3,683 ) RIC – long-term, non-expiring ( 44,664 ) ( 34,335 ) 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 $ 0 , $ 101 and $ 2,142 for the years ended December 31, 2023, 2022 and 2021, respectively. These reclassifications have no effect on total net assets or net asset value per common share. 154 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) The estimated tax-basis cost of investments and associated tax-basis gross unrealized appreciation (depreciation) inherent in the fair value of investments as of December 31, 2023 and 2022, were as follows: December 31, 2023 2022 Tax-basis amortized cost of investments $ 399,056 $ 473,716 Tax-basis gross unrealized appreciation on investments 83,007 92,230 Tax-basis gross unrealized depreciation on investments ( 61,776 ) ( 65,370 ) Tax-basis net unrealized appreciation on investments 21,231 26,860 Fair value of investments $ 420,287 $ 500,576 Deferred taxes: 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 and estimated state tax burdens 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. The tax-basis unrealized appreciation (depreciation) of investments by tax entity inherent in the fair value of investments as of December 31, 2023 and 2022, were as follows: December 31, 2023 2022 Total net unrealized appreciation on investments held by RIC entities $ 21,453 $ 27,494 OFSCC-MB (C-Corp): Gross unrealized appreciation on investments 1,180 144 Gross unrealized depreciation on investments ( 1,402 ) ( 778 ) Total net unrealized depreciation on investments on investments held by OFSCC-MB ( 222 ) ( 634 ) Total tax-basis net unrealized appreciation on investments $ 21,231 $ 26,860 Deferred tax assets and liabilities as of December 31, 2023 and 2022, were as follows: December 31, 2023 2022 Total deferred tax assets $ 328 $ 205 Valuation allowance on deferred tax assets — ( 124 ) Total deferred tax liabilities ( 397 ) ( 81 ) 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. 155 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Note 9. Financial Highlights The following is a schedule of financial highlights for each year in the five-year period ended December 31, 2023: Year Ended December 31, 2023 2022 2021 2020 2019 Per share operating performance: Net asset value per share at beginning of year $ 13.47 $ 15.18 $ 11.85 $ 12.46 $ 13.10 Net investment income (1) 1.50 1.37 1.00 0.92 1.43 Net realized loss on investments, net of taxes (1) ( 0.85 ) ( 0.13 ) ( 1.54 ) ( 0.75 ) ( 0.29 ) Net unrealized appreciation (depreciation) on investments, net of deferred taxes (1) ( 0.67 ) ( 1.79 ) 5.12 0.25 ( 0.42 ) Loss on extinguishment of debt (1) ( 0.02 ) ( 0.01 ) ( 0.34 ) ( 0.06 ) — Loss on impairment of goodwill (1) — — — ( 0.08 ) — Total from operations ( 0.04 ) ( 0.56 ) 4.24 0.28 0.72 Distributions declared ( 1.34 ) ( 1.16 ) ( 0.91 ) ( 0.86 ) ( 1.36 ) Issuance/repurchase of common stock (2) — 0.01 — ( 0.03 ) — Net asset value per share at end of year $ 12.09 $ 13.47 $ 15.18 $ 11.85 $ 12.46 Per share market value, end of period $ 11.70 $ 10.15 $ 10.90 $ 7.15 $ 11.17 Total return based on market value (3) 30.2 % 4.4 % 66.8 % ( 24.0 ) % 18.3 % Total return based on net asset value (4) 1.4 % ( 0.6 ) % 40.2 % 13.6 % 6.7 % Shares outstanding at end of period 13,398,078 13,398,078 13,422,413 13,409,559 13,376,836 Weighted-average shares outstanding 13,398,078 13,417,410 13,413,861 13,394,005 13,364,244 Ratio/Supplemental Data (in thousands except ratios) Average net asset value (5) $ 173,265 $ 194,068 $ 178,628 $ 148,175 $ 171,889 Net asset value at end of year $ 162,004 $ 180,423 $ 203,744 $ 158,956 $ 166,627 Net investment income $ 20,160 $ 18,352 $ 13,450 $ 12,295 $ 19,098 Ratio of total expenses, net to average net assets (6) 21.2 % 15.7 % 19.2 % 22.4 % 19.4 % Ratio of total expenses, net and losses on impairment of goodwill and extinguishment of debt to average net assets (7) 21.4 % 15.7 % 21.8 % 23.7 % — % Ratio of net investment income to average net assets (8) 11.6 % 9.5 % 7.5 % 8.3 % 11.1 % Ratio of goodwill impairment loss to average net assets — % — % — % 0.7 % — % Ratio of loss on extinguishment of debt to average net assets 0.1 % 0.1 % 2.6 % 0.6 % — % Portfolio turnover (9) 8.8 % 28.0 % 54.9 % 28.1 % 21.2 % (1) Calculated on the average share method. (2) The issuance/repurchase of common stock on a per share basis reflects the net asset value change as a result of DRIP issuances or shares repurchased pursuant to the Stock Repurchase Program. (3) Calculated as ending market value less beginning market value, adjusted for distributions reinvested at prices based on the Company’s dividend reinvestment plan for the respective distributions. (4) Calculated as ending net asset value less beginning net asset value, adjusted for distributions reinvested at the Company’s dividend reinvestment plan for the respective distributions. (5) Based on the average of the net asset value at the beginning of the indicated period and the end of each calendar quarter within the period indicated. (6) Ratio of total expenses before incentive fee waiver to average net assets was 22.7 % for the year ended December 31, 2020. (7) Ratio of total expenses before incentive fee waiver and losses on impairment of goodwill and extinguishment of debt to average net assets was 24.0 % for the year ended December 31, 2020. (8) Ratio of net investment income before incentive fee waiver to average net assets was 8.0 % for the year ended December 31, 2020. (9) Portfolio turnover rate is calculated using the lesser of year-to-date sales, Structured Finance Security distributions and principal payments or year-to-date purchases over the average of the invested assets at fair value at the beginning of the indicated period and the end of each calendar quarter within the period indicated. 156 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Note 10. Capital Transactions Distributions: The Company intends to make quarterly distributions to stockholders that represent, over time, substantially all of its net investment income. In addition, although the Company may distribute at least annually net realized capital gains, net of taxes if any, out of assets legally available for such distribution, the Company may also retain such capital gains for investment through a deemed distribution. If the Company makes a deemed distribution, stockholders will be treated for U.S. federal income tax purposes as if they had received an actual distribution of the capital gains, net of taxes. The Company may be limited in its ability to make distributions due to the BDC asset coverage requirements of the 1940 Act. In addition, distributions from OFSCC-FS to the Company are restricted by the terms and conditions of the BNP Facility. At December 31, 2023 and December 31, 2022, OFSCC-FS had cash of $ 3,973 and $ 3,706 , respectively, of which $ 0 and $ 0 were available for distribution to the Company at December 31, 2023 and 2022, respectively. At December 31, 2023, SBIC I LP was limited on its use of cash under restrictions imposed by SBA regulations. At December 31, 2023, SBIC I LP had cash of $ 27,951 , of which $ 12,756 was available for distribution to the Company. See Note 12 for additional information concerning the Company’s outstanding SBA debentures. The following table summarizes distributions declared and paid for the years ended December 31, 2023, 2022 and 2021: Date Declared Record Date Payment Date Amount Per Share Cash Distribution DRIP Shares Issued DRIP Shares Value Year ended December 31, 2023 February 28, 2023 March 24, 2023 March 31, 2023 $ 0.33 $ 4,421 — $ — (1) May 2, 2023 June 23, 2023 June 30, 2023 0.33 4,422 — — (1) August 1, 2023 September 22, 2023 September 29, 2023 0.34 4,555 — — (1) October 31, 2023 December 22, 2023 December 29, 2023 0.34 4,556 — — (1) $ 1.34 $ 17,954 — $ — Year ended December 31, 2022 March 1, 2022 March 24, 2022 March 31, 2022 $ 0.28 $ 3,719 3,016 $ 39 May 3, 2022 June 23, 2022 June 30, 2022 0.29 3,850 4,348 43 August 2, 2022 September 23, 2022 September 30, 2022 0.29 3,849 5,529 46 November 1, 2022 December 23, 2022 December 30, 2022 0.30 3,967 5,026 51 $ 1.16 $ 15,385 17,919 $ 179 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 38 November 2, 2021 December 24, 2021 December 31, 2021 0.25 3,317 3,440 38 $ 0.91 $ 12,071 13,554 $ 136 (1) During the year ended December 31, 2023, the Company directed the DRIP plan administrator to purchase shares on the open market in order to satisfy the DRIP obligation to deliver shares of common stock. The following table represents DRIP participation for the years ended December 31, 2023, 2022 and 2021, respectively: For the Year Ended Total DRIP Participation DRIP Shares Issued Number of Shares Purchased Average Value Per Share December 31, 2023 $ 281 — 25,690 $ 10.94 December 31, 2022 179 17,919 — 9.98 December 31, 2021 136 13,554 — 10.04 Since the Company’s initial public offering in 2012 and through December 31, 2023, distributions to stockholders total $ 166,281 , or $ 13.99 per share on a cumulative basis. Distributions of current year or accumulated prior years ICTI will be characterized as distributions of ordinary income. 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 estimated ICTI and 157 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) distributions paid for the full year. 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: The Company is authorized to acquire up to $ 10,000 of its outstanding common stock through May 22, 2024 (the “Stock Repurchase Program”). Under the Stock Repurchase Program, the Company may repurchase shares in open-market transactions, including through block purchases, depending on prevailing market conditions and other factors. The Company expects the Stock Repurchase Program to be in place through May 22, 2024, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program may be extended, modified or discontinued at any time for any reason. The following table summarizes the shares of common stock the Company repurchased under the Stock Repurchase Program (amount in thousands except shares): Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of the Program Maximum Dollar Value of Shares That May Yet be Purchased Under the Program Weighted Average Discount to NAV Prior to Repurchase May 22, 2018 through December 31, 2018 300 $ 10.29 300 $ 9,997 21.5 % January 1, 2019 through December 31, 2019 — — — — — January 1, 2020 through December 31, 2020 — — — — — January 1, 2021 through December 31, 2021 700 6.70 700 9,992 43.3 January 1, 2022 through December 31, 2022 42,254 8.30 42,254 9,642 41.6 January 1, 2023 through December 31, 2023 — — — — — Total 43,254 $ 8.29 43,254 158 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Note 11. Consolidated Schedule of Investments In and Advances To Affiliates Year Ended December 31, 2023 Name of Portfolio Company Investment Type (1) Net Realized Gain (Loss) Net unrealized appreciation/ (depreciation) on investments Interest Dividends Fees Total Income (2) December 31, 2022, Fair Value (5) Gross Additions (3) Gross Reductions (4) December 31, 2023, Fair Value (5) Control Investment Eblens Holdings, Inc. Subordinated Debt (6) $ ( 4,605 ) $ 3,501 $ — $ — $ — $ — $ 1,104 $ — $ ( 1,104 ) $ — Subordinated Debt (6) ( 4,605 ) 4,605 — — — — — — — — Common Equity (6) ( 1,306 ) 950 — — — — — 356 ( 356 ) — ( 10,516 ) 9,056 — — — — 1,104 356 ( 1,460 ) — Total Control Investment ( 10,516 ) 9,056 — — — — 1,104 356 ( 1,460 ) — Affiliate Investments Contract Datascan Holdings, Inc. Preferred Equity (7) $ — $ 3,116 $ — $ 994 $ — $ 994 $ 6,202 $ 4,110 $ — $ 10,312 Common Equity (6) — ( 240 ) — — — — 510 — ( 239 ) 271 — 2,876 — 994 — 994 6,712 4,110 ( 239 ) 10,583 DRS Imaging Services, LLC Common Equity — ( 1,175 ) — 35 — 35 1,568 — ( 1,175 ) 393 Master Cutlery, LLC Subordinated Debt (6) — ( 122 ) — — — — 122 — ( 122 ) — Preferred Equity (6) — — — — — — — — — — Common Equity (6) — — — — — — — — — — — ( 122 ) — — — — 122 — ( 122 ) — Pfanstiehl Holdings, Inc. Common Equity — ( 14,529 ) — 546 — 546 85,456 — ( 14,529 ) 70,927 TalentSmart Holdings, LLC Common Equity (6) — 184 — — — — 953 183 — 1,136 159 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Year Ended December 31, 2023 Name of Portfolio Company Investment Type (1) Net Realized Gain (Loss) Net unrealized appreciation/ (depreciation) on investments Interest Dividends Fees Total Income (2) December 31, 2022, Fair Value (5) Gross Additions (3) Gross Reductions (4) December 31, 2023, Fair Value (5) TRS Services, Inc. Preferred Equity (7) $ — $ 520 $ — $ 191 $ — $ 191 $ 1,890 $ 662 $ ( 45 ) $ 2,507 Common Equity (6) — 1,285 — — — — — 1,285 — 1,285 — 1,805 — 191 — 191 1,890 1,947 ( 45 ) 3,792 Total Affiliate Investments — ( 10,961 ) — 1,766 — 1,766 96,701 6,240 ( 16,110 ) 86,831 Total Control and Affiliate Investments $ ( 10,516 ) $ ( 1,905 ) $ — $ 1,766 $ — $ 1,766 $ 97,805 $ 6,596 $ ( 17,570 ) $ 86,831 (1) Principal balance of debt investments and ownership detail for equity investments are shown in the consolidated schedule of investments. The Company’s investments are generally classified as “restricted securities” as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144. (2) Represents the total amount of interest, fees or dividends included in 2023 income for the portion of the year ended December 31, 2023, that an investment was included in Control or Affiliate Investment categories, respectively. (3) Gross additions include increases in cost basis resulting from a new portfolio investment, PIK interest, fees and dividends, accretion of OID, and net increases in unrealized net appreciation or decreases in net unrealized depreciation. (4) Gross reductions include decreases in the cost basis of investments resulting from principal repayments and sales, and net decreases in net unrealized appreciation or net increases in net unrealized depreciation. (5) Fair value was determined using significant unobservable inputs. See Note 5 for further details. (6) Non-income producing. (7) Dividends credited to income include (or portion thereof) dividends contractually earned but not declared. 160 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Year Ended December 31, 2022 Name of Portfolio Company Investment Type (1) Net Realized Gain (Loss) Net unrealized appreciation/ (depreciation) on investments Interest Dividends Fees Total Income (2) December 31, 2021, Fair Value (5) Gross Additions (3) Gross Reductions (4) December 31, 2022, Fair Value (5) Control Investment Eblens Holdings, Inc. Subordinated Debt $ — $ ( 3,013 ) $ — $ — $ — $ — $ — $ 4,117 $ ( 3,013 ) $ 1,104 Subordinated Debt — — — — — — — — — — Common Equity (6) — ( 950 ) — — — — — 950 ( 950 ) — — ( 3,963 ) — — — — — 5,067 ( 3,963 ) 1,104 MTE Holding Corp. Subordinated Debt — — 141 — 6 147 8,195 35 ( 8,230 ) — Common Equity 278 ( 1,685 ) — 45 — 45 4,753 — ( 4,753 ) — 278 ( 1,685 ) 141 45 6 192 12,948 35 ( 12,983 ) — Total Control Investment 278 ( 5,648 ) 141 45 6 192 12,948 5,102 ( 16,946 ) 1,104 Affiliate Investments Contract Datascan Holdings, Inc. Preferred Equity (7) $ — $ 2,988 $ — $ 466 $ — $ 466 $ 2,748 $ 3,454 $ — $ 6,202 Common Equity (6) — 485 — — — — 25 485 — 510 — 3,473 — 466 — 466 2,773 3,939 — 6,712 DRS Imaging Services, LLC Common Equity (6) — 280 — — — — 1,289 279 — 1,568 Master Cutlery, LLC Subordinated Debt (6) $ — $ ( 561 ) $ — $ — $ — $ — $ 699 $ — $ ( 577 ) $ 122 Preferred Equity (6) — — — — — — — — — — Common Equity (6) — — — — — — — — — — — ( 561 ) — — — — 699 — ( 577 ) 122 161 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Year Ended December 31, 2022 Name of Portfolio Company Investment Type (1) Net Realized Gain (Loss) Net unrealized appreciation/ (depreciation) on investments Interest Dividends Fees Total Income (2) December 31, 2021, Fair Value (5) Gross Additions (3) Gross Reductions (4) December 31, 2022, Fair Value (5) Pfanstiehl Holdings, Inc. Common Equity — 19,716 — — — — 65,740 19,716 — 85,456 TalentSmart Holdings, LLC Common Equity (6) — ( 141 ) — — — — 1,095 — ( 142 ) 953 TRS Services, Inc. Preferred Equity (6) — 902 — 102 — 102 988 902 — 1,890 Common Equity (6) — — — — — — — — — — — 902 — 102 — 102 988 902 — 1,890 Total Affiliate Investments — 23,667 — 568 — 568 72,584 24,837 ( 720 ) 96,701 Total Control and Affiliate Investments $ 278 $ 18,019 $ 141 $ 613 $ 6 $ 760 $ 85,532 $ 29,939 $ ( 17,666 ) $ 97,805 (1) Principal balance of debt investments and ownership detail for equity investments are shown in the consolidated schedule of investments. The Company’s investments are generally classified as “restricted securities” as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144. (2) Represents the total amount of interest, fees or dividends included in 2022 income for the portion of the year ended December 31, 2022, that an investment was included in Control or Affiliate Investment categories, respectively. (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. Gross additions also include transfers of portfolio companies, at fair value, out of the non-affiliate/non-control classification to the control classification during the period. (4) Gross reductions include decreases in the cost basis of investments resulting from principal repayments and sales, and net decreases in net unrealized appreciation or net increases in net unrealized depreciation. (5) Fair value was determined using significant unobservable inputs. See Note 5 for further details. (6) Non-income producing. (7) Dividends credited to income include (or portion thereof) dividends contractually earned but not declared. 162 OFS Capital Corporation and Subsidiaries Notes to Consolidated Financial Statements (Dollar amounts in thousands, except per share data) Note 12. Subsequent Events Not Disclosed Elsewhere On February 28, 2024, the Company’s Board declared a distribution of $ 0.34 per share for the first quarter of 2024, payable on March 28, 2024 to stockholders of record as of March 18, 2024. On March 1, 2024, SBIC I LP fully repaid its outstanding SBA debentures totaling $ 31,920 that were contractually due March 1, 2025, and requested the approval of the SBA to surrender its license to operate as a SBIC. 163 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.