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Datascan Holdings, Inc. Preferred Equity2024-01-012024-03-310001487918Contract Datascan Holdings, Inc. Preferred Equity2023-12-310001487918Contract Datascan Holdings, Inc. Preferred Equity2024-03-310001487918Contract Datascan Holdings, Inc. Common Equity2024-01-012024-03-310001487918Contract Datascan Holdings, Inc. Common Equity2023-12-310001487918Contract Datascan Holdings, Inc. 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
or
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______

Commission file number 814-00813
OFS CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware46-1339639
State or Other Jurisdiction ofI.R.S. Employer Identification No.
Incorporation or Organization
10 S. Wacker Drive, Suite 2500, Chicago, Illinois
60606
Address of Principal Executive OfficesZip Code
(847) 734-2000
Registrant’s Telephone Number, Including Area Code
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareOFSThe Nasdaq Global Select Market
4.95% Notes due 2028OFSSHThe Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý     No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨Accelerated filer¨
Non-accelerated filerSmaller reporting company¨
Emerging growth company¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes  ¨     No  ý

The number of shares of the issuer’s Common Stock, $0.01 par value, outstanding as of April 30, 2024 was 13,398,078.



OFS CAPITAL CORPORATION

TABLE OF CONTENTS
 
 
Item 1.
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
Item 1.
Item 1A.
Item 2
Item 3.
Item 4.
Item 5.
Item 6.

OFS®, OFS Capital®, OFS Credit® and HPCI® are registered trademarks of Orchard First Source Asset Management, LLC. OFS Capital Management™ is a trademark of Orchard First Source Asset Management, LLC. All other trademarks or trade names referred to in this Quarterly Report on Form 10-Q are the property of their respective owners.



Defined Terms
We have used “we,” “us,” “our,” “our company” and “the Company” to refer to OFS Capital Corporation in this report. We also have used several other terms in this report, which are explained or defined below:
TermExplanation or Definition
1940 ActInvestment Company Act of 1940, as amended
Adjusted NII
A financial measure calculated and presented on a basis other than in accordance with GAAP and represents net investment income excluding the capital gains incentive fee
Administration AgreementAdministration Agreement between the Company and OFS Services dated November 7, 2012
Affiliated AccountAn account, other than the Company, managed by OFS Advisor or an affiliate of OFS Advisor
Affiliated Fund
Certain other funds, including other BDCs and registered investment companies managed by OFS Advisor or by registered investment advisers controlling, controlled by, or under common control with, OFS Advisor
ASCAccounting Standards Codification, as issued by the FASB
BDCBusiness Development Company under the 1940 Act
BLABusiness Loan Agreement, as amended, with Banc of California, as lender, which provides the Company with a senior secured revolving credit facility
BNP FacilityA secured revolving credit facility, as amended, that provides for borrowings in an aggregate principal amount up to $150,000,000 issued pursuant to a Revolving Credit and Security Agreement, as amended, by and among OFSCC-FS, the lenders from time to time parties thereto, BNP Paribas, as administrative agent, OFSCC-FS Holdings, LLC, a wholly owned subsidiary of the Company, as equityholder, the Company, as servicer, Citibank, N.A., as collateral agent and Virtus Group, LP, as collateral administrator
BoardThe Company’s board of directors
Banc of California Credit FacilityA senior secured revolving credit facility, as amended, with Banc of California (formerly known as Pacific Western Bank), as lender, that provides for borrowings to the Company in an aggregate principal amount up to $25,000,000
CLOCollateralized loan obligation
CodeInternal Revenue Code of 1986, as amended
CompanyOFS Capital Corporation and its consolidated subsidiaries
DRIPDividend reinvestment plan
EBITDAEarnings before interest, taxes, depreciation and amortization
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
FDIC
Federal Deposit Insurance Corporation
GAAPAccounting principles generally accepted in the United States
HPCIHancock Park Corporate Income, Inc., a Maryland corporation and non-traded BDC, for which OFS Advisor serves as investment adviser
ICTIInvestment company taxable income, which is generally net ordinary income plus net short-term capital gains in excess of net long-term capital losses
Indicative PricesMarket quotations, prices from pricing services or bids from brokers or dealers
Investment Advisory AgreementInvestment Advisory and Management Agreement between the Company and OFS Advisor dated November 7, 2012
LIBORLondon Interbank Offered Rate
NAVNet asset value. NAV is calculated as consolidated total assets less consolidated total liabilities and can be expressed in the aggregate or on a per share basis
Net Loan FeesThe cumulative amount of fees, such as origination fees, discounts, premiums and amendment fees that are deferred and recognized as income over the life of the loan
OCCIOFS Credit Company, Inc., a Delaware corporation and a non-diversified, closed-end management investment company, for which OFS Advisor serves as investment adviser



TermExplanation or Definition
OFS AdvisorOFS Capital Management, LLC, a wholly owned subsidiary of OFSAM and registered investment advisor under the Investment Advisers Act of 1940, as amended, focusing primarily on investments in middle market loans and broadly syndicated loans, debt and equity positions in CLOs and other structured credit investments
OFS ServicesOFS Capital Services, LLC, a wholly owned subsidiary of OFSAM and affiliate of OFS Advisor
OFSAMOrchard First Source Asset Management, LLC, a subsidiary of OFSAM Holdings and a full-service provider of capital and leveraged finance solutions to U.S. corporations
OFSAM HoldingsOrchard First Source Asset Management Holdings, LLC, a holding company consisting of asset management businesses, including OFS Advisor, a registered investment adviser focusing primarily on investments in middle market loans and broadly syndicated loans, debt and equity positions in CLOs and other structured credit investments, and OFS CLO Management, LLC and OFS CLO II Management, LLC, each a registered investment adviser focusing primarily on investments in broadly syndicated loans
OFSCC-FSOFSCC-FS, LLC, an indirect wholly owned subsidiary of the Company
OFSCC-FS AssetsAssets held by the Company through OFSCC-FS
OFSCC-MBOFSCC-MB, Inc., a wholly owned subsidiary taxed under subchapter C of the Code that generally holds the equity investments of the Company that are taxed as pass-through entities
OIDOriginal issue discount
OrderAn exemptive relief order from the SEC to permit us to co-invest in portfolio companies with Affiliated Funds in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions
ParentOFS Capital Corporation
PIKPayment-in-kind, non-cash interest or dividends payable as an addition to the loan or equity security producing the income
Portfolio Company InvestmentA debt or equity investment in a portfolio company. Portfolio Company Investments exclude Structured Finance Securities
Prime RateUnited States Prime interest rate
RICRegulated investment company under the Code
SBAUnited States Small Business Administration
SBICA fund licensed under the SBA Small Business Investment Company Program
SBIC I LPOFS SBIC I, LP, a wholly owned subsidiary of the Company
SECUnited States Securities and Exchange Commission
Securities ActSecurities Act of 1933, as amended
SOFRSecured Overnight Financing Rate
Stock Repurchase ProgramThe open market stock repurchase program for shares of the Company’s common stock under Rule 10b-18 of the Exchange Act
Structured Finance SecuritiesCLO mezzanine debt, CLO subordinated notes and CLO loan accumulation facility securities
Unsecured NotesThe Unsecured Notes Due February 2026 and the Unsecured Notes Due October 2028
Unsecured Notes Due February 2026    The Company’s $125.0 million aggregate principal amount of 4.75% notes due February 10, 2026
Unsecured Notes Due October 2028The Company’s $55.0 million aggregate principal amount of 4.95% notes due October 31, 2028



Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs and our assumptions. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “would”, “should”, “targets”, “projects” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
our ability and experience operating a BDC or maintaining our tax treatment as a RIC under Subchapter M of the Code;
our dependence on key personnel;
our ability to maintain or develop referral relationships;
our ability to replicate historical results;
the ability of OFS Advisor to identify, invest in and monitor companies that meet our investment criteria;
the belief that the carrying amounts of our financial instruments, such as cash, cash equivalents, receivables and payables approximate the fair value of such items due to the short maturity of such instruments and that such financial instruments are held with high credit quality institutions to mitigate the risk of loss due to credit risk;
actual and potential conflicts of interest with OFS Advisor and other affiliates of OFSAM Holdings;
constraint on investment due to access to material nonpublic information;
restrictions on our ability to enter into transactions with our affiliates;
the use of borrowed money to finance a portion of our investments;
our ability to incur additional leverage pursuant to Section 61(a)(2) of the 1940 Act and the impact of such leverage on our net investment income and results of operations;
competition for investment opportunities;
our plans to focus on providing first lien senior secured loans to larger borrowers and the impact of these plans on our risk profile, including our belief that the seniority of such loans in a borrower’s capital structure may provide greater downside protection against adverse economic changes, including those caused by the impacts of 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 on our business, our portfolio companies, our industry and the global economy;
the percentage of investments that will bear interest on a floating rate or fixed rate basis;
the holding period of our investments;
the impact of alternative reference rates on our business, including a reduction in the value of certain of our investments;
our ability to raise debt or equity capital as a BDC;
the timing, form and amount of any distributions from our portfolio companies;
the impact of a protracted decline in the liquidity of credit markets on our business;
the general economy and its impact on the industries in which we invest;
the impact of current political, economic and industry conditions, including changes in the interest rate environment, inflation, significant market volatility, supply chain and labor market disruptions, including those as a result of strikes, work stoppages or accidents, resource shortages and other conditions affecting the financial and capital markets, which, in turn, impacts our business prospects and the prospects of our portfolio companies;
the impact of the ongoing war between Russia and Ukraine, the escalated armed conflict in the Middle East and general uncertainty surrounding the financial and political stability of the United States, the United Kingdom, the European Union and China;
1


our ability to consummate credit facilities in the future on commercially reasonable terms, if at all;
the impact of information technology system failures, data security breaches, data privacy compliance, network disruptions, and cybersecurity attacks;
the belief that we have sufficient levels of liquidity to support our existing portfolio companies;
the belief that our cash and cash equivalent balances are not exposed to any significant credit risk as a result of the previous banking failures;
the fluctuation of the fair value of our investments due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value; and
the effect of new or modified laws or regulations governing our operations.
    Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include, among others, those described or identified in “Part I—Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 5, 2024. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.
    We have based the forward-looking statements on information available to us on the date of this Quarterly Report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The forward-looking statements and projections contained in this Quarterly Report on Form 10-Q are excluded from the safe harbor protection provided by Section 21E of the Exchange Act.
2


PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
OFS Capital Corporation and Subsidiaries
Consolidated Statements of Assets and Liabilities
(Dollar amounts in thousands, except per share data)
March 31,
2024
December 31,
2023
(unaudited)
Assets
Investments, at fair value:
Non-control/non-affiliate investments (amortized cost of $380,251 and $384,339, respectively)
$326,322 $333,456 
Affiliate investments (amortized cost of $18,786 and $19,191, respectively)
74,092 86,831 
Total investments, at fair value (amortized cost of $399,037 and $403,530, respectively)
400,414 420,287 
Cash and cash equivalents6,092 45,349 
Interest receivable2,532 2,217 
Prepaid expenses and other assets1,431 1,965 
Total assets$410,469 $469,818 
Liabilities
Revolving lines of credit$78,500 $90,500 
SBA debentures (net of deferred debt issuance costs of $0 and $20, respectively)
 31,900 
Unsecured Notes (net of deferred debt issuance costs of $2,423 and $2,667, respectively)
177,577 177,333 
Interest payable1,905 3,712 
Payable to adviser and affiliates (Note 3)3,380 3,556 
Accrued professional fees438 500 
Other liabilities269 313 
Total liabilities262,069 307,814 
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 March 31, 2024 and December 31, 2023, 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 March 31, 2024 and December 31, 2023, respectively
134 134 
Paid-in capital in excess of par184,841 184,841 
Total accumulated losses(36,575)(22,971)
Total net assets148,400 162,004 
Total liabilities and net assets$410,469 $469,818 
Number of shares outstanding13,398,078 13,398,078 
Net asset value per share$11.08 $12.09 

See Notes to Consolidated Financial Statements (unaudited).
3


OFS Capital Corporation and Subsidiaries
Consolidated Statements of Operations (unaudited)
(Dollar amounts in thousands, except per share data)
Three Months Ended March 31,
20242023
Investment income
Interest income:
Non-control/non-affiliate investments
$11,393 $13,393 
Dividend income:
Non-control/non-affiliate investments
10 2 
Affiliate investments
2,701 783 
Total dividend income
2,711 785 
Fee income:
Non-control/non-affiliate investments
129 105 
Total investment income
14,233 14,283 
Expenses
Interest expense4,572 4,874 
Base management fee1,523 1,894 
Income Incentive Fee1,399 1,238 
Professional fees414 436 
Administration fee394 482 
Other expenses335 409 
Total expenses8,637 9,333 
     Net investment income
5,596 4,950 
Net realized and unrealized gain (loss) on investments
Net realized gain (loss) on non-control/non-affiliate investments(581)167 
Net realized gain on affiliate investments1,379  
Income tax expense on net realized gains on investments (171)
Net unrealized depreciation on non-control/non-affiliate investments(3,047)(2,196)
Net unrealized appreciation (depreciation) on affiliate investments(12,333)2,338 
Net unrealized depreciation on control investment (1,104)
Deferred tax expense on net unrealized appreciation(63)(159)
Net loss on investments(14,645)(1,125)
Loss on extinguishment of debt (19)
Net increase (decrease) in net assets resulting from operations$(9,049)$3,806 
Net investment income per common share – basic and diluted
$0.42 $0.37 
Net increase (decrease) in net assets resulting from operations per common share – basic and diluted$(0.67)$0.28 
Distributions declared per common share$0.34 $0.33 
Basic and diluted weighted-average shares outstanding13,398,078 13,398,078 
See Notes to Consolidated Financial Statements (unaudited).
4

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


Preferred StockCommon StockPaid-in capital in excess of parTotal distributable earnings (losses)Total net assets
Number of sharesPar valueNumber of sharesPar value
Balances at December 31, 2022— $— 13,398,078 $134 $184,841 $(4,552)$180,423 
Net increase in net assets resulting from operations:
  Net investment income— — — — — 4,950 4,950 
  Net realized loss on investments, net of taxes— — — — — (4)(4)
Loss on extinguishment of debt— — — — — (19)(19)
  Net unrealized depreciation on investments, net of taxes— — — — — (1,121)(1,121)
  Dividends declared— — — — — (4,421)(4,421)
Net decrease for the three month period ended March 31, 2023— — — — — (615)(615)
Balances at March 31, 2023— $— 13,398,078 $134 $184,841 $(5,167)$179,808 
Balances at December 31, 2023— $— 13,398,078 $134 $184,841 $(22,971)$162,004 
Net decrease in net assets resulting from operations:
  Net investment income— — — — — 5,596 5,596 
  Net realized gain on investments, net of taxes— — — — — 798 798 
  Net unrealized depreciation on investments, net of taxes— — — — — (15,443)(15,443)
  Dividends declared— — — — — (4,555)(4,555)
Net decrease for the three month period ended March 31, 2024— — — — — (13,604)(13,604)
Balances at March 31, 2024— $— 13,398,078 $134 $184,841 $(36,575)$148,400 

See Notes to Consolidated Financial Statements (unaudited).
5


OFS Capital Corporation and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(Dollar amounts in thousands)
Three Months Ended March 31,
20242023
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations$(9,049)$3,806 
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:
Net realized gain on investments(798)(167)
Income tax expense on net realized investment gains 171 
Loss on extinguishment of debt
 19 
Net unrealized depreciation on investments, net of taxes15,443 1,121 
Amortization of Net Loan Fees
(298)(409)
Amendment fees collected
12 39 
Payment-in-kind interest and dividend income
(604)(462)
Accretion of interest income on Structured Finance Securities(2,093)(3,002)
Amortization of deferred debt issuance costs391 387 
Amortization of intangible asset
69 102 
Purchase and origination of portfolio investments
(7,339)(9,944)
Proceeds from principal payments on portfolio investments
9,854 1,791 
Proceeds from sale or redemption of portfolio investments
2,049 8,919 
Proceeds from distributions received from portfolio investments3,621 3,138 
Changes in operating assets and liabilities:
Interest receivable
(315)1 
Interest payable
(1,807)(1,843)
Payable to adviser and affiliates
(176)116 
Other assets and liabilities
258 174 
Net cash provided by operating activities9,218 3,957 
Cash flows from financing activities
Distributions paid to stockholders
(4,555)(4,421)
Borrowings under revolving lines of credit
3,000 12,300 
Repayments under revolving lines of credit
(15,000)(11,000)
Repayments of SBA debentures
(31,920)(5,000)
Net cash used in financing activities(48,475)(8,121)
Net decrease in cash and cash equivalents(39,257)(4,164)
Cash and cash equivalents
   Beginning of period45,349 14,937 
   End of period$6,092 $10,773 
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest
$5,987 $6,330 
See Notes to Consolidated Financial Statements (unaudited).
6

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments (unaudited)
March 31, 2024
(Dollar amounts in thousands)

Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Non-control/Non-affiliate Investments
Debt and Equity Investments
24 Seven Holdco, LLC (15)Temporary Help Services
First Lien Debt11.42%SOFR+6.00%1/28/202211/16/2027$8,798 $8,755 $8,474 5.7 %
Advantage Sales & Marketing Inc. (F/K/A Karman Buyer Corp) (14) (15)Advertising Agencies
First Lien Debt10.09%SOFR+4.50%3/2/202210/28/20272,254 2,233 2,261 1.5 
AIDC IntermediateCo 2, LLC (15)Computer Systems Design Services
First Lien Debt11.72%SOFR+6.25%7/22/20227/22/20271,975 1,946 1,994 1.3 
First Lien Debt11.71%SOFR+6.25%7/31/20237/22/202746 45 46  
2,021 1,991 2,040 1.3 
Allen Media, LLC (14) (15)Cable and Other Subscription Programming
First Lien Debt10.96%SOFR+5.50%3/2/20212/10/20273,720 3,717 3,260 2.2 
All Star Auto Lights, Inc. (4) (15) (21)Motor Vehicle Parts (Used) Merchant Wholesalers
First Lien Debt11.09%SOFR+5.50%12/19/20198/20/202522,801 22,683 22,801 15.4 
First Lien Debt11.09%SOFR+5.50%8/4/20228/20/20254,913 4,868 4,913 3.3 
27,714 27,551 27,713 18.7 
Astro One Acquisition Corporation (6) (10)Other Miscellaneous Nondurable Goods Merchant Wholesalers
Second Lien Debt14.07%SOFR+8.50%1/31/20229/17/20293,000 2,596 205 0.1 
Avison Young (15) (16)Nonresidential Property Managers
First Lien Debt 13.08%SOFR+7.50%11/25/20213/13/2028840 840 817 0.6 
First Lien Debt
7.08% cash / 6.50% PIK
SOFR+8.00%11/25/20213/12/20291,489 1,489 1,267 0.9 
First Lien Debt (6) (10)
7.08% cash / 6.50% PIK
SOFR+8.00%11/25/20213/12/2029502 502 54  
Common Equity (1,185 Class B units) (10) (13)
3/12/20241,400   
Preferred Equity (1,715 Class A units) 12.5% PIK (10) (13)
3/12/20241,269   
2,831 5,500 2,138 1.5 
BayMark Health Services, Inc. (15)Outpatient Mental Health and Substance Abuse Centers
Second Lien Debt14.07%SOFR+8.50%6/10/20216/11/20284,962 4,917 4,962 3.3 
Second Lien Debt14.07%SOFR+8.50%6/10/20216/11/20283,988 3,950 3,988 2.7 
8,950 8,867 8,950 6.0 
7

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2024
(Dollar amounts in thousands)

Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
BCPE North Star US Holdco 2, Inc. (F/K/A Dessert Holdings)Ice Cream and Frozen Dessert Manufacturing
Second Lien Debt12.69%SOFR+7.25%2/2/20226/8/2029$1,667 $1,646 $1,502 1.1 %
Boca Home Care Holdings, Inc. (20)Services for the Elderly and Persons with Disabilities
First Lien Debt (15)11.93%SOFR+6.50%2/25/20222/25/202710,900 10,810 10,583 7.1 
First Lien Debt (Revolver) (5)n/m (18)SOFR+6.50%2/25/20222/25/2027 (9)(37) 
Common Equity (1,290 Class A units) (10) (13)
2/25/20221,290 735 0.5 
Preferred Equity (3,446 Class A Units) 12.0% cash / 2.0% PIK
3/3/2023345 351 0.2 
10,900 12,436 11,632 7.8 
Clevertech Bidco, LLCCommodity Contracts Dealing
First Lien Debt (15)12.21%SOFR+6.75%11/3/202312/30/20273,190 3,104 3,138 2.1 
First Lien Debt (Revolver) (5)n/m (18)SOFR+6.75%11/3/202312/30/2027 (8)(5) 
3,190 3,096 3,133 2.1 
Constellis Holdings, LLC (10)Other Justice, Public Order, and Safety Activities
Common Equity (20,628 common shares)
3/27/2020703 45  
Convergint Technologies Holdings, LLCSecurity Systems Services (except Locksmiths)
Second Lien Debt12.19%SOFR+6.75%9/28/20183/30/20295,938 5,867 5,938 4.0 
Creation Technologies (15) (16)Bare Printed Circuit Board Manufacturing
First Lien Debt11.09%SOFR+5.50%9/24/202110/5/20281,965 1,955 1,881 1.3 
Diamond Sports Group, LLC (6) (14) (15)Television Broadcasting
Second Lien Debt (10)10.68%SOFR+5.25%11/19/20198/24/20261,935 1,935 56  
East West Manufacturing (15)Fluid Power Pump and Motor Manufacturing
First Lien Debt11.06%SOFR+5.75%2/11/202212/22/20281,925 1,912 1,879 1.3 
Electrical Components International, Inc.Current-Carrying Wiring Device Manufacturing
Second Lien Debt13.93%SOFR+8.50%4/8/20216/26/20263,679 3,474 3,576 2.4 
8

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2024
(Dollar amounts in thousands)

Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4) (19)Electrical Contractors and Other Wiring Installation Contractors
First Lien Debt7.50%N/A6/30/201712/31/2025$6,279 $6,279 $6,279 4.2 %
First Lien Debt (Revolver) (5)7.50%N/A11/29/202112/31/2025899 899 899 0.6 
Second Lien Debt (6) (10)
10.00% PIK
N/A6/30/201712/31/20268,042 6,585 2,595 1.7 
Equity Participation Rights (10) (17)12/31/20214,722   
15,220 18,485 9,773 6.5 
Excelin Home Health, LLC (4)Home Health Care Services
Second Lien Debt
18.00% PIK
N/A10/25/201812/31/20255,157 5,074 4,270 2.9 
Flow Service Partners Management, LLCPlumbing, Heating & Air-Conditioning Contractor
First Lien Debt (15)11.99%SOFR+6.50%2/28/20242/28/20293,491 3,456 3,456 2.3 
First Lien Debt (15)11.97%SOFR+6.50%2/28/20242/28/2029635 629 629 0.4 
First Lien Debt (Revolver) (5)n/m (18)SOFR+6.50%2/28/20242/28/2029 (6)(6) 
4,126 4,079 4,079 2.7 
GGC Aerospace Topco L.P. (10)Other Aircraft Parts and Auxiliary Equipment Manufacturing
Common Equity (368,852 Class A units)
12/29/2017450   
Common Equity (40,984 Class B units)
12/29/201750   
500   
GoTo Group (F/K/A LogMeIn, Inc.) (15)Data Processing, Hosting, and Related Services
First Lien Debt10.17%SOFR+4.75%3/26/20214/30/2028943 942 905 0.6 
First Lien Debt10.17%SOFR+4.75%3/26/20214/30/20281,302 1,302 1,005 0.7 
2,245 2,244 1,910 1.3 
Heritage Grocers Group, LLC. (F/K/A Tony's Fresh Market / Cardenas Markets) (14) (15)Supermarkets and Other Grocery (except Convenience) Stores
First Lien Debt12.16%SOFR+6.75%7/20/20228/1/20295,910 5,640 5,947 4.0 
Honor HN Buyer Inc.Services for the Elderly and Persons with Disabilities
First Lien Debt (15)11.21%SOFR+5.75%10/15/202110/15/20276,450 6,374 6,450 4.3 
First Lien Debt (15)11.21%SOFR+5.75%10/15/202110/15/20274,079 4,023 4,078 2.7 
First Lien Debt (Revolver) (5)13.25%Prime+4.75%10/15/202110/15/202795 86 95 0.1 
First Lien Debt (Delayed Draw) (5) (15)11.46%SOFR+6.00%3/31/202310/15/20272,699 2,676 2,699 1.8 
13,322 13,159 13,322 8.9 
Idera Inc.Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Second Lien Debt12.21%SOFR+6.75%1/27/20223/2/20294,000 4,000 4,000 2.8 
9

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2024
(Dollar amounts in thousands)

Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Inergex Holdings, LLC (11)Other Computer Related Services
First Lien Debt
12.58% cash / 2.00% PIK
SOFR+7.00%10/1/201810/1/2024$14,868 $14,811 $14,868 10.0 %
First Lien Debt (Revolver)
12.58% cash / 2.00% PIK
SOFR+7.00%10/1/201810/1/20242,344 2,323 2,344 1.6 
17,212 17,134 17,212 11.6 
Ivanti Software, Inc. (14) (15)Software Publishers
First Lien Debt9.84%SOFR+4.25%3/26/202112/1/20272,925 2,932 2,745 1.8 
JP Intermediate B, LLC (15)Drugs and Druggists' Sundries Merchant Wholesalers
First Lien Debt11.07%SOFR+5.50%1/14/202111/20/20274,697 4,525 3,438 2.4 
Kreg LLCOther Ambulatory Health Care Services
First Lien Debt (11) (15)
9.71% cash / 2.50% PIK
SOFR+4.25%12/20/202112/20/202617,248 17,180 16,004 10.8 
First Lien Debt (Revolver) (5)n/m (18)SOFR+6.25%12/20/202112/20/2026 (5)(96)(0.1)
17,248 17,175 15,908 10.7 
Medrina LLCAll Other Outpatient Care Centers
First Lien Debt (15)11.41%SOFR+6.25%10/20/202310/20/20292,228 2,177 2,212 1.5 
First Lien Debt (Delayed Draw) (5) (15)n/m (18)SOFR+6.25%10/20/202310/20/2029 (4)(4) 
First Lien Debt (Revolver) (5)n/m (18)SOFR+6.25%10/20/202310/20/2029 (7)(3) 
2,228 2,166 2,205 1.5 
Metasource, LLC (15)All Other Business Support Services
First Lien Debt
11.69% cash / 0.50% PIK
SOFR+6.25%5/17/20225/17/20272,751 2,718 2,696 1.8 
One GI LLCOffices of Other Holding Companies
First Lien Debt (15)12.18%SOFR+6.75%12/13/202112/22/20257,413 7,348 7,146 4.8 
First Lien Debt (15)12.18%SOFR+6.75%12/13/202112/22/20253,906 3,871 3,766 2.5 
First Lien Debt (Revolver)12.18%SOFR+6.75%12/13/202112/22/20251,444 1,432 1,392 0.9 
12,763 12,651 12,304 8.2 
Planet Bingo, LLC (F/K/A 3rd Rock Gaming Holdings, LLC) (6)Software Publishers
First Lien Debt6.50%N/A3/13/201812/31/202516,648 14,113 7,375 5.1 
10

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2024
(Dollar amounts in thousands)

Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
PM Acquisition LLC (10) (20)All Other General Merchandise Stores
Common Equity (499 units)
9/30/2017$499 $631 0.4 %
Reception Purchaser LLC (15)Transportation and Warehousing
First Lien Debt11.45%SOFR+6.00%4/28/20223/24/2028$2,516 2,491 2,096 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)10.19%SOFR+4.75%4/16/20214/27/20281,715 1,709 1,424 1.0 
Second Lien Debt13.19%SOFR+7.75%4/16/20214/27/20294,450 4,409 3,635 2.4 
6,165 6,118 5,059 3.4 
RPLF Holdings, LLC (10) (13)Software Publishers
Common Equity (345,339 Class A units)
1/17/2018  1,428 1.0 
RumbleOn, Inc. (15) (16)Other Industrial Machinery Manufacturing
First Lien Debt (11)
13.69% cash / 0.50% PIK
SOFR+8.25%8/31/20218/31/20262,596 2,524 2,396 1.6 
First Lien Debt (11)
14.19% cash / 0.50% PIK
SOFR+8.75%8/31/20218/31/2026783 775 723 0.5 
Warrants (warrants to purchase up to $218,000 in common stock) (10)
8/31/20218/14/2028 (12)200 42  
3,379 3,499 3,161 2.1 
Sentry Centers Holdings, LLC (10) (13)Convention and Trade Show Organizers
Preferred Equity (1,603 Series B units)
9/4/2020160 1  
Signal Parent, Inc. (14) (15)New Single-Family Housing Construction (except For-Sale Builders)
First Lien Debt8.93%SOFR+3.50%3/25/20214/3/20281,799 1,787 1,709 1.2 
Spear Education Holdings, LLC (15)Professional and Management Development Training
First Lien Debt12.95%SOFR+7.50%2/10/202312/15/20271,481 1,453 1,496 1.0 
11

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2024
(Dollar amounts in thousands)

Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
SSJA Bariatric Management LLC (6) (10) (15)Offices of Physicians and Mental Health Specialists
First Lien Debt10.71%SOFR+5.25%8/26/20198/26/2024$9,574 $9,563 $6,377 4.3 %
First Lien Debt10.71%SOFR+5.25%12/31/20208/26/20241,035 1,033 689 0.5 
First Lien Debt10.71%SOFR+5.25%12/8/20218/26/20242,607 2,600 1,736 1.2 
First Lien Debt (Revolver) (5)10.71%SOFR+5.25%8/26/20198/26/2024267 266 44  
13,483 13,462 8,846 6.0 
SS Acquisition, LLC (8) (15)Sports and Recreation Instruction
First Lien Debt12.33%SOFR+6.74%12/30/202112/30/20263,042 3,025 3,042 2.0 
First Lien Debt13.03%SOFR+7.59%12/30/202112/30/20261,460 1,450 1,460 1.0 
4,502 4,475 4,502 3.0 
Staples, Inc. (14) (15) (16)Business to Business Electronic Markets
First Lien Debt10.44%SOFR+5.00%6/24/20194/16/20262,862 2,837 2,840 1.9 
Tolemar Acquisition, Inc.Motorcycle, Bicycle, and Parts Manufacturing
First Lien Debt (15)11.43%SOFR+6.00%10/14/202110/14/202615,308 15,269 14,283 9.6 
First Lien Debt (Revolver) (5)11.43%SOFR+6.00%10/14/202110/14/2026592 585 419 0.3 
15,900 15,854 14,702 9.9 
TruGreen Limited PartnershipLandscaping Services
Second Lien Debt14.07%SOFR+8.50%5/13/202111/2/20284,500 4,587 4,316 2.9 
United Biologics Holdings, LLC (4) (10)Medical Laboratories
Preferred Equity (4,701 units)
4/16/20139   
Wellful Inc. (F/K/A KNS Acquisition Corp.) (14) (15)Electronic Shopping and Mail-Order Houses
First Lien Debt11.69%SOFR+6.25%4/16/20214/21/20276,563 6,539 5,776 3.9 
Total Debt and Equity Investments - Non-control/Non-affiliate Investments$280,089 $284,599 $248,430 167.3 %
Structured Finance Securities (16)
Apex Credit CLO 2020 Ltd. (7) (9)
Subordinated Notes13.49%N/A11/16/202010/20/2031$11,080 $10,027 $6,754 4.6 %
Apex Credit CLO 2021 Ltd (7) (9)
Subordinated Notes21.61%N/A5/28/20217/18/20348,630 6,840 5,738 3.9 
12

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2024
(Dollar amounts in thousands)

Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Apex Credit CLO 2022-1A (7) (9)
Subordinated Notes16.85%N/A4/28/20224/22/2033$10,726 $8,828 $6,673 4.5 %
Ares L CLO Ltd.
Mezzanine Debt - Class E11.23%SOFR+5.65%2/17/20221/15/20326,000 5,852 5,603 3.8 
Barings CLO 2019-I Ltd.
Mezzanine Debt - Class E12.44%SOFR+6.86%2/23/20224/15/20358,000 7,923 7,860 5.3 
Battalion CLO XI, Ltd.
Mezzanine Debt - Class E12.43%SOFR+6.85%4/25/20224/24/20346,000 5,933 5,561 3.7 
Brightwood Capital MM CLO 2023-1A, Ltd.
Mezzanine Debt - Class D11.85%SOFR+6.46%9/28/202310/15/2035915 890 925 0.6 
Mezzanine Debt - Class E15.75%SOFR+10.36%9/28/202310/15/20352,133 1,937 2,190 1.5 
Subordinated Notes (7) (9)14.56%N/A9/28/202310/15/20355,494 5,193 4,720 3.2 
8,542 8,020 7,835 5.3 
Dryden 53 CLO, Ltd. (7) (9)
Subordinated Notes - Income6.34%N/A10/26/20201/15/20312,700 1,194 540 0.4 
Subordinated Notes5.26%N/A10/26/20201/15/20312,159 975 431 0.3 
4,859 2,169 971 0.7 
Dryden 76 CLO, Ltd. (7) (9)
Subordinated Notes14.41%N/A9/27/201910/20/20322,750 2,363 1,815 1.2 
Flatiron CLO 18, Ltd. (7) (9)
Subordinated Notes8.38%N/A1/2/20194/17/20319,680 6,090 4,932 3.3 
Madison Park Funding XXIII, Ltd. (7) (9)
Subordinated Notes16.59%N/A1/8/20207/27/204710,000 5,360 4,578 3.1 
Madison Park Funding XXIX, Ltd. (7) (9)
Subordinated Notes12.93%N/A12/22/202010/18/20479,500 5,672 5,033 3.4 
Monroe Capital MML CLO X, Ltd.
Mezzanine Debt - Class E-R14.07%SOFR+8.75%4/22/20225/20/20341,000 965 1,022 0.7 
13

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2024
(Dollar amounts in thousands)

Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Octagon Investment Partners 39, Ltd. (7) (9)
Subordinated Notes3.81%N/A1/23/202010/20/2030$7,000 $3,782 $2,144 1.4 %
Park Avenue Institutional Advisers CLO Ltd 2021-1
Mezzanine Debt - Class E12.88%SOFR+7.30%1/26/20211/20/20341,000 983 1,003 0.7 
Redding Ridge 4 Ltd. (7) (9)
Subordinated Notes4.64%N/A3/4/20214/15/20301,300 864 518 0.3 
Regatta XXII Funding Ltd
Mezzanine Debt - Class E12.51%SOFR+7.19%5/6/20227/20/20353,000 2,978 3,038 2.0 
THL Credit Wind River 2019‐3 CLO Ltd (7) (9)
Subordinated Notes10.01%N/A4/5/20194/15/20317,000 4,701 2,620 1.8 
Trinitas CLO VIII (7) (9)
Subordinated Notes7.33%N/A3/4/20217/20/21175,200 2,748 1,267 0.9 
Venture 45 CLO Ltd.
Mezzanine Debt - Class E13.02%SOFR+7.70%4/18/20227/20/20353,000 2,945 2,670 1.8 
Wellfleet CLO 2018-2 Ltd. (7) (9)
Subordinated Notes7.33%N/A3/4/202110/20/20311,000 608 257 0.2 
Total Structured Finance Securities$125,267 $95,652 $77,892 52.6 %
Total Non-control/Non-affiliate Investments$405,356 $380,251 $326,322 219.9 %
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$7,572 $9,182 6.2 %
Common Equity (11,273 shares) (10)
6/28/2016104   
7,676 9,182 6.2 
DRS Imaging Services, LLC (10) (13) (20)Data Processing, Hosting, and Related Services
Common Equity (1,135 units)
3/8/20181,135 506 0.3 
14

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2024
(Dollar amounts in thousands)

Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above Index (2)Initial Acquisition DateMaturityPrincipal AmountAmortized CostFair Value (3)Percent of Net Assets
Master Cutlery, LLC (4) (10) (20)Sporting and Recreational Goods and Supplies Merchant Wholesalers
Subordinated Loan (6) (11)
13.00% PIK
N/A4/17/20155/25/2024$10,062 $4,680 $250 0.2 %
Preferred Equity (3,723 Series A units), 8% PIK
4/17/20153,483   
Common Equity (15,564 units)
4/17/2015   
10,062 8,163 250 0.2 
Pfanstiehl Holdings, Inc. (4) (20) (21)Pharmaceutical Preparation Manufacturing
Common Equity (400 Class A shares)
1/1/2014217 63,077 42.5 
TalentSmart Holdings, LLC (10) (13) (20)Professional and Management Development Training
Common Equity (1,595,238 Class A shares)
10/11/20191,595 1,077 0.7 
Total Affiliate Investments$10,062 $18,786 $74,092 49.9 %
Total Investments$415,418 $399,037 $400,414 269.8 %
(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 March 31, 2024, the Company held loans with an aggregate fair value of $223,780, or 91% of the total loan portfolio, that bore interest at a variable rate indexed to SOFR or Prime, 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 March 31, 2024. 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 in 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 March 31, 2024, meaning the Company suspended recognition of all or a portion of income on the investment. See Note 4 for further details.
(7)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.
(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 March 31, 2024:
Portfolio CompanyReported Interest RateInterest Rate per Credit AgreementAdditional Interest per Annum
SS Acquisition, LLC12.33%11.83%0.50%
SS Acquisition, LLC13.03%11.83%1.20%
(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.
15

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2024
(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 March 31, 2024:
Portfolio CompanyInvestment TypeRange of PIK
Option
Range of Cash
Option
Maximum PIK
Rate Allowed
Inergex Holdings, LLCFirst Lien Debt
0% to 2.00%
12.58% to 14.58%
2.00%
Inergex Holdings, LLCFirst Lien Debt (Revolver)
0% to 2.00%
12.58% to 14.58%
2.00%
Kreg, LLCFirst Lien Debt
0% to 2.00%
9.71% to 11.71%
2.00%
Master Cutlery, LLCSubordinated Loan
0% to 13.00%
0% to 13.00%
13.00%
RumbleOn, Inc.First Lien Debt
0% to 0.50%
13.69% to 14.19%
0.50%
RumbleOn, Inc.First Lien Debt
0% to 0.50%
14.19% to 14.69%
0.50%
(12)Represents expiration date of the warrants.
(13)All or a 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 a portion thereof) held by OFSCC-FS. These assets are pledged as collateral of the BNP Facility and cannot be pledged under any debt obligation of the Parent.
(16)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 March 31, 2024, approximately 79% of the Company's assets were qualifying assets.
(17)Equity participation rights issued by an unaffiliated third party fully covered with underlying positions in the portfolio company.
(18)Not meaningful as there is no outstanding balance on the revolver or delayed draw facility. The Company earns unfunded commitment fees on undrawn revolving lines of credit balances, which are reported in fee income.
(19)The Company holds at least one seat on the portfolio company’s board of directors.
(20)The Company has an observer seat on the portfolio company’s board of directors.
(21)Portfolio company represents greater than 5% of total assets as of March 31, 2024.

See Notes to Consolidated Financial Statements (unaudited).
16

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments
December 31, 2023
(Dollar amounts in thousands)
Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above
Index (2)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized CostFair Value (3)Percent of
Net Assets
Non-control/Non-affiliate Investments
24 Seven Holdco, LLC (15)Temporary Help Services
First Lien Debt11.45%SOFR+6.00%1/28/202211/16/2027$8,820 $8,776 $8,483 5.2 %
Advantage Sales & Marketing Inc. (F/K/A Karman Buyer Corp) (14) (15)Advertising Agencies
First Lien Debt10.18%SOFR+4.50%3/2/202210/28/20272,260 2,238 2,249 1.4 
AIDC IntermediateCo 2, LLC (15)Computer Systems Design Services
First Lien Debt11.80%SOFR+6.25%7/22/20227/22/20271,980 1,948 1,974 1.2 
First Lien Debt11.78%SOFR+6.25%7/31/20237/22/202746 4546 
2,026 1,993 2,020 1.2 
Allen Media, LLC (14) (15)Cable and Other Subscription Programming
First Lien Debt11.00%SOFR+5.50%3/2/20212/10/20273,729 3,726 3,325 2.1 
All Star Auto Lights, Inc. (4) (15) (20)Motor Vehicle Parts (Used) Merchant Wholesalers
First Lien Debt10.97%SOFR+5.50%12/19/20198/20/202522,861 22,719 22,853 14.1 
First Lien Debt10.96%SOFR+5.50%8/4/20228/20/20254,925 4,8724,9233.0 
27,786 27,591 27,776 17.1 
Astro One Acquisition Corporation (6)Other Miscellaneous Nondurable Goods Merchant Wholesalers
Second Lien Debt14.11%SOFR+8.50%1/31/20229/14/20293,000 2,596 110 0.1 
Avison Young (6) (21)Nonresidential Property Managers
First Lien Debt (15)12.11%SOFR+6.50%11/25/20211/31/20263,925 3,903 1,063 0.7 
First Lien Debt12.64%SOFR+7.00%8/19/20221/31/2026794 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 Debt14.11%SOFR+8.50%6/10/20216/11/20284,962 4,915 4,962 3.1 
Second Lien Debt14.12%SOFR+8.50%6/10/20216/11/20283,988 3,948 3,988 2.5 
8,950 8,863 8,950 5.6 
17

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments
December 31, 2023
(Dollar amounts in thousands)
Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above
Index (2)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized CostFair Value (3)Percent of
Net Assets
BCPE North Star US Holdco 2, Inc. (F/K/A Dessert Holdings)Ice Cream and Frozen Dessert Manufacturing
Second Lien Debt12.72%SOFR+7.25%2/2/20226/8/2029$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%2/25/20222/25/202710,972 10,874 10,597 6.5 
First Lien Debt (Revolver) (5)n/m (18)SOFR+6.50%2/25/20222/25/2027 (10)(44) 
Common Equity (1,290 Class A units) (10) (13)
2/25/20221,290 827 0.5 
Preferred Equity (3,446 Class A Units), 12.0% cash / 2.0% PIK
3/3/2023345 344 0.2 
10,972 12,499 11,724 7.2 
Clevertech Bidco, LLCCommodity Contracts Dealing
First Lien Debt (15)12.25%SOFR+6.75%11/3/202312/30/20273,198 3,106 3,106 1.9 
First Lien Debt (Revolver) (5)n/m (18)SOFR+6.75%11/3/202312/30/2027 (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)
3/27/2020703 45  
Convergint Technologies Holdings, LLCSecurity Systems Services (except Locksmiths)
Second Lien Debt12.22%SOFR+6.75%9/28/20183/30/20295,938 5,863 5,877 3.6 
Creation Technologies (15) (21)Bare Printed Circuit Board Manufacturing
First Lien Debt11.18%SOFR+5.50%9/24/202110/5/20281,970 1,959 1,851 1.1 
Diamond Sports Group, LLC (6) (14) (15)Television Broadcasting
Second Lien Debt10.71%SOFR+5.25%11/19/20198/24/20261,935 1,935 92 0.1 
East West Manufacturing (15)Fluid Power Pump and Motor Manufacturing
First Lien Debt11.13%SOFR+5.75%2/11/202212/22/20281,930 1,916 1,855 1.1 
Electrical Components International, Inc.Current-Carrying Wiring Device Manufacturing
Second Lien Debt13.96%SOFR+8.50%4/8/20216/26/20263,679 3,452 3,561 2.2 
18

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments
December 31, 2023
(Dollar amounts in thousands)
Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above
Index (2)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized CostFair Value (3)Percent of
Net Assets
Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4) (17)Electrical Contractors and Other Wiring Installation Contractors
First Lien Debt7.50%N/A6/30/201712/31/2025$6,295 $6,295 $6,295 3.9 %
Second Lien Debt (6) (10)
10.00% PIK
N/A6/30/201712/31/20267,844 6,584 3,801 2.3 
First Lien Debt (Revolver) (5)n/m (18)N/A11/29/202112/31/2025    
Equity Participation Rights (7) (10)12/31/20214,722   
14,139 17,601 10,096 6.2 
Excelin Home Health, LLC (4)Home Health Care Services
Second Lien Debt
18.00% PIK
N/A10/25/201812/31/20254,932 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)
12/29/2017450   
Common Equity (40,984 Class B units)
12/29/201750   
500   
GoTo Group (F/K/A LogMeIn, Inc.) (14) (15)Data Processing, Hosting, and Related Services
First Lien Debt10.28%SOFR+4.75%3/26/20218/31/20272,916 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 Debt12.20%SOFR+6.75%7/20/20228/1/20295,925 5,641 5,925 3.7 
Honor HN Buyer IncServices for the Elderly and Persons with Disabilities
First Lien Debt (15)11.25%SOFR+5.75%10/15/202110/15/20276,466 6,385 6,466 4.0 
First Lien Debt (15)11.25%SOFR+5.75%10/15/202110/15/20274,089 4,029 4,089 2.5 
First Lien Debt (Revolver) (5)13.25%Prime+4.75%10/15/202110/15/202795 85 95 0.1 
First Lien Debt (Delayed Draw) (5) (15)11.50%SOFR+6.00%3/31/202310/15/20272,706 2,682 2,706 1.7 
13,356 13,181 13,356 8.3 
Idera Inc.Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Second Lien Debt12.28%SOFR+6.75%1/27/20223/2/20294,000 4,000 3,850 2.4 
19

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments
December 31, 2023
(Dollar amounts in thousands)
Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above
Index (2)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized CostFair Value (3)Percent of
Net Assets
Inergex Holdings, LLC (11)Other Computer Related Services
First Lien Debt
12.58% cash / 1.00% PIK
SOFR+7.00%10/1/201810/1/2024$14,868 $14,783 $14,868 9.2 %
First Lien Debt (Revolver)
12.58% cash / 1.00% PIK
SOFR+7.00%10/1/201810/1/20242,344 2,312 2,344 1.4 
17,212 17,095 17,212 10.6 
Ivanti Software, Inc. (14) (15)Software Publishers
First Lien Debt9.91%SOFR+4.25%3/26/202112/1/20272,933 2,940 2,792 1.7 
JP Intermediate B, LLC (15)Drugs and Druggists' Sundries Merchant Wholesalers
First Lien Debt11.14%SOFR+5.50%1/14/202111/20/20274,697 4,513 3,368 2.1 
Kreg LLCOther Ambulatory Health Care Services
First Lien Debt (11) (15)
9.75% cash / 2.50% PIK
SOFR+4.25%12/20/202112/20/202617,139 17,066 15,989 9.9 
First Lien Debt (Revolver) (5)n/m (18)SOFR+6.25%12/20/202112/20/2026 (6)(90)(0.1)
17,139 17,060 15,899 9.8 
Medrina LLCAll Other Outpatient Care Centers
First Lien Debt (15)11.74%SOFR+6.25%10/20/202310/20/20292,234 2,180 2,180 1.3 
First Lien Debt (Delayed Draw) (5) (15)n/m (18)SOFR+6.25%10/20/202310/20/2029 (5)(5) 
First Lien Debt (Revolver) (5)n/m (18)SOFR+6.25%10/20/202310/20/2029 (8)(8) 
2,234 2,167 2,167 1.3 
Metasource, LLC (15)All Other Business Support Services
First Lien Debt
11.72% cash / 0.50% PIK
SOFR+6.25%5/17/20225/17/20272,755 2,733 2,597 1.6 
First Lien Debt (Delayed Draw) (5)n/m (18)SOFR+6.25%5/17/20225/17/2027 (4)(69) 
2,755 2,729 2,528 1.6 
One GI LLCOffices of Other Holding Companies
First Lien Debt (15)12.21%SOFR+6.75%12/13/202112/22/20257,432 7,358 7,066 4.4 
First Lien Debt (15)12.21%SOFR+6.75%12/13/202112/22/20253,916 3,876 3,723 2.3 
First Lien Debt (Revolver) (5)n/m (18)SOFR+6.75%12/13/202112/22/2025 (14)(71) 
11,348 11,220 10,718 6.7 
20

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments
December 31, 2023
(Dollar amounts in thousands)
Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above
Index (2)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized CostFair Value (3)Percent of
Net Assets
Planet Bingo, LLC (F/K/A 3rd Rock Gaming Holdings, LLC) (6)Software Publishers
First Lien Debt6.50%N/A3/13/201812/31/2025$16,648 $14,113 $6,858 4.2 %
PM Acquisition LLCAll Other General Merchandise Stores
Common Equity (499 units) (10)
9/30/2017499 551 0.3 
Reception Purchaser LLC (15)Transportation and Warehousing
First Lien Debt11.50%SOFR+6.00%4/28/20223/24/20282,523 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%4/16/20214/27/20281,715 1,708 1,307 0.8 
Second Lien Debt13.22%SOFR+7.75%4/16/20214/27/20294,450 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%8/31/20218/31/20262,858 2,769 2,633 1.6 
First Lien Debt (11)
14.36% Cash / 0.50% PIK
SOFR+8.75%8/31/20218/31/2026862 854 795 0.5 
Warrants (warrants to purchase up to $218,000 in common stock)
8/31/20218/14/2028 (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)
9/4/2020160 77  
Signal Parent, Inc. (14) (15)New Single-Family Housing Construction (except For-Sale Builders)
First Lien Debt8.96%SOFR+3.50%3/25/20214/3/20281,803 1,791 1,616 1.0 
21

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments
December 31, 2023
(Dollar amounts in thousands)
Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above
Index (2)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized CostFair Value (3)Percent of
Net Assets
Spear Education Holdings, LLC (15)
First Lien DebtProfessional and Management Development Training13.00%SOFR+7.50%2/10/202312/15/2027$1,485 $1,455 $1,484 0.9 %
SSJA Bariatric Management LLC (15)Offices of Physicians, Mental Health Specialists
First Lien Debt10.75%SOFR+5.25%8/26/20198/26/20249,575 9,563 9,186 5.7 
First Lien Debt10.75%SOFR+5.25%12/31/20208/26/20241,035 1,033 993 0.6 
First Lien Debt10.75%SOFR+5.25%12/8/20218/26/20242,607 2,600 2,501 1.5 
First Lien Debt (Revolver) (5)10.75%SOFR+5.25%8/26/20198/26/2024200 199 173 0.1 
13,417 13,395 12,853 7.9 
SS Acquisition, LLC (8) (15)Sports and Recreation Instruction
First Lien Debt12.41%SOFR+6.75%12/30/202112/30/20263,042 3,023 3,042 1.9 
First Lien Debt13.10%SOFR+7.45%12/30/202112/30/20261,460 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 Debt10.46%L+5.00%6/24/20194/16/20262,870 2,841 2,728 1.7 
STS Operating, Inc.Industrial Machinery and Equipment Merchant Wholesalers
Second Lien Debt13.46%SOFR+8.00%5/15/20184/30/20269,073 9,072 9,073 5.6 
Tolemar Acquisition, INC.Motorcycle, Bicycle, and Parts Manufacturing
First Lien Debt (15)11.75%SOFR+6.00%10/14/202110/14/202615,347 15,304 14,334 8.8 
First Lien Debt (Revolver) (5)11.75%SOFR+6.00%10/14/202110/14/2026592 585 422 0.3 
15,939 15,889 14,756 9.1 
TruGreen Limited PartnershipLandscaping Services
Second Lien Debt14.14%SOFR+8.50%5/13/202111/2/20284,500 4,592 4,287 2.6 
United Biologics Holdings, LLC (4) (10)Medical Laboratories
Preferred Equity (4,701 units)
4/16/20139   
22

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments
December 31, 2023
(Dollar amounts in thousands)
Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above
Index (2)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized CostFair Value (3)Percent of
Net Assets
Wellful Inc. (F/K/A KNS Acquisition Corp.) (15)Electronic Shopping and Mail-Order Houses
First Lien Debt11.72%SOFR+6.25%4/16/20214/21/2027$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 Notes14.89%N/A11/16/202010/20/2031$11,080 $10,191 $7,031 4.3 %
Apex Credit CLO 2021 Ltd (9) (16)
Subordinated Notes21.61%N/A5/28/20217/18/20348,630 6,977 5,711 3.5 
Apex Credit CLO 2022-1A (9) (16)
Subordinated Notes17.30%N/A4/28/20224/22/203310,726 8,858 6,961 4.3 
Ares L CLO Ltd.
Mezzanine Debt - Class E11.31%SOFR+5.65%2/17/20221/15/20326,000 5,832 5,474 3.4 
Barings CLO 2019-I Ltd.
Mezzanine Debt - Class E12.52%SOFR+6.86%2/23/20224/15/20358,000 7,918 7,725 4.8 
Battalion CLO XI, Ltd.
Mezzanine Debt - Class E12.51%SOFR+6.85%4/24/20224/24/20346,000 5,918 5,511 3.4 
Brightwood Capital MM CLO 2023-1A, Ltd.
Mezzanine Debt - Class D11.85%SOFR+6.46%9/28/202310/15/2035915 888 888 0.5 
Mezzanine Debt - Class E15.75%SOFR+10.36%9/28/202310/15/20352,133 1,929 1,929 1.2 
Subordinated Notes (9) (16)14.56%N/A9/28/202310/15/20355,494 5,018 5,018 3.1 
8,542 7,835 7,835 4.8 
Dryden 53 CLO, LTD. (9) (16)
Subordinated Notes - Income8.04%N/A10/26/20201/15/20312,700 1,280 622 0.3 
Subordinated Notes7.00%N/A10/26/20201/15/20312,159 1,046 497 0.3 
4,859 2,326 1,119 0.7 
23

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments
December 31, 2023
(Dollar amounts in thousands)
Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above
Index (2)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized CostFair Value (3)Percent of
Net Assets
Dryden 76 CLO, Ltd. (9) (16)
Subordinated Notes16.12%N/A9/27/201910/20/2032$2,750 $2,332 $1,779 1.1 %
Flatiron CLO 18, Ltd. (9) (16)
Subordinated Notes7.62%N/A1/2/20194/17/20319,680 6,314 4,989 3.1 
Madison Park Funding XXIII, Ltd. (9) (16)
Subordinated Notes16.45%N/A1/8/20207/27/204710,000 5,558 4,744 2.9 
Madison Park Funding XXIX, Ltd. (9) (16)
Subordinated Notes13.78%N/A12/22/202010/18/20479,500 5,927 5,355 3.3 
Monroe Capital MML CLO X, Ltd.
Mezzanine Debt - Class E-R14.12%SOFR+8.75%4/22/20225/20/20341,000 961 967 0.6 
Octagon Investment Partners 39, Ltd. (9) (16)
Subordinated Notes4.98%N/A1/23/202010/20/20307,000 3,962 2,171 1.3 
Park Avenue Institutional Advisers CLO Ltd 2021-1
Mezzanine Debt - Class E12.98%SOFR+7.30%1/26/20211/20/20341,000 982 982 0.6 
Redding Ridge 4 Ltd. (9) (16)
Subordinated Notes7.46%N/A3/4/20214/15/20301,300 910 544 0.3 
Regatta XXII Funding Ltd
Mezzanine Debt - Class E12.61%SOFR+7.19%5/6/20227/20/20353,000 2,977 3,007 1.9 
THL Credit Wind River 2019‐3 CLO Ltd. (9) (16)
Subordinated Notes10.59%N/A4/5/20194/15/20317,000 4,883 2,941 1.8 
Trinitas CLO VIII (9) (16)
Subordinated Notes3.95%N/A3/4/20217/20/21175,200 2,891 1,352 0.8 
24

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments
December 31, 2023
(Dollar amounts in thousands)
Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above
Index (2)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized CostFair Value (3)Percent of
Net Assets
Venture 45 CLO Ltd.
Mezzanine Debt - Class E13.12%SOFR+7.70%4/18/20227/20/2035$3,000 $2,942 $2,579 1.6 %
Wellfleet CLO 2018-2 Ltd. (9) (16)
Subordinated Notes9.99%N/A3/4/202110/20/20311,000 627 270 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) 10.0% PIK
8/5/2015$7,309 $10,312 6.4 %
Common Equity (11,273 shares) (10)
6/28/2016104 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)
3/8/20181,135 393 0.2 
Master Cutlery, LLC (4) (10) (19)Sporting and Recreational Goods and Supplies Merchant Wholesalers
Subordinated Debt (6) (11)
13.00% PIK
N/A4/17/20155/25/20249,749 4,680   
Preferred Equity (3,723 Series A units), 8.0% PIK
4/17/20153,483   
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)
1/1/2014217 70,927 43.8 
TalentSmart Holdings, LLC (10) (13) (19)Professional and Management Development Training
Common Equity (1,595,238 Class A shares)
10/11/20191,595 1,136 0.7 
25

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments
December 31, 2023
(Dollar amounts in thousands)
Portfolio Company (1)
Investment Type
IndustryInterest Rate (2)Spread Above
Index (2)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized CostFair Value (3)Percent of
Net Assets
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), 11.0% PIK
12/10/2014$97 $2,507 1.5 %
Common Equity (3,000,000 units) (10)
12/10/2014572 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 CompanyReported Interest RateInterest Rate per Credit AgreementAdditional Interest per Annum
SS Acquisition, LLC12.41%11.89%0.51%
SS Acquisition, LLC13.10%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.
26

OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments
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 CompanyInvestment TypeRange of PIK
Option
Range of Cash
Option
Maximum PIK
Rate Allowed
Inergex Holdings, LLCFirst Lien Debt
0% to 1.00%
12.58% to 13.58%
1.00%
Inergex Holdings, LLCFirst Lien Debt (Revolver)
0% to 1.00%
12.58% to 13.58%
1.00%
Kreg LLCFirst Lien Debt
0% to 2.00%
9.75% to 11.75%
2.00%
Master Cutlery, LLCSubordinated 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 a 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 a 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.
27

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)

Note 1. Organization
OFS Capital Corporation, a Delaware corporation, is an externally managed, closed-end, non-diversified management investment company. The Company has elected to be regulated as a BDC under the 1940 Act. In addition, for income tax purposes, the Company has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code.
The Company’s investment objective is to provide stockholders with both current income and capital appreciation primarily through debt investments and, to a lesser extent, equity investments.
OFS Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company. In addition, OFS Advisor serves as the investment adviser to HPCI, a non-traded BDC with an investment strategy and objective similar to that of the Company. OFS Advisor also serves as the investment adviser to 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 make investments directly or through one or more of its subsidiaries: OFSCC-FS, SBIC I LP or OFSCC-MB.
OFSCC-FS, an indirect wholly owned and consolidated subsidiary of the Company, is a special-purpose vehicle formed in April 2019 for the purpose of acquiring senior secured loan investments. OFSCC-FS has debt financing through its BNP Facility, which provides OFSCC-FS with borrowing capacity of up to $150,000, subject to a borrowing base and other covenants.
SBIC I LP is an investment company subsidiary previously licensed under the SBA’s small business investment company program that was subject to SBA regulations and policies. On March 1, 2024, SBIC I LP fully repaid its outstanding SBA debentures and, on April 17, 2024, surrendered its license to operate as a SBIC.
OFSCC-MB is a wholly owned and consolidated subsidiary taxed under subchapter C of the Code that generally holds the Company’s equity investments in portfolio companies that are taxed as pass-through entities.
Note 2. Summary of Significant Accounting Policies
Basis of presentation: The Company is an investment company as defined in the accounting and reporting guidance under ASC Topic 946, Financial Services–Investment Companies. The accompanying interim consolidated financial statements of the Company and related financial information have been prepared in accordance with GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q, and Articles 6, 10 and 12 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. However, in the opinion of management, the consolidated financial statements include all adjustments, consisting only of normal and recurring accruals and adjustments, necessary for fair presentation as of, and for, the periods presented. These consolidated financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 5, 2024. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.
Significant Accounting Policies: The following information supplements the description of significant accounting policies contained in Note 2 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Reclassifications: Certain prior period amounts have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes thereto. Reclassifications did not impact net increase (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.
Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.
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 the year, the Company exceeds the federally insured limits. The Company places cash deposits only with high credit quality
28

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
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 sum of the Company’s recorded investments and the unfunded commitments disclosed in Note 6.
Cash and cash equivalents: The Company’s cash and cash equivalent balances are maintained with a member bank of the FDIC, and at times, such balances exceed the FDIC insurance limit. The Company does not believe its cash and cash equivalent balances are exposed to any significant credit risk. Cash and cash equivalent balances are held in US Bank Trust Company, National Association and Citibank N.A. money market deposit accounts. In addition, the Company’s use of cash and cash equivalents held by SBIC I LP was limited by SBA regulation and use of cash and cash equivalents 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.
Note 3. Related Party Transactions
Investment Advisory and Management Agreement: OFS Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company pursuant to the Investment Advisory Agreement. The continuation of the Investment Advisory Agreement was most recently approved by the Board on April 3, 2024. Under the terms of the Investment Advisory Agreement, which are in accordance with the 1940 Act and subject to the overall supervision of the Board, OFS Advisor is responsible for sourcing potential investments, conducting research and diligence on potential investments and equity sponsors, analyzing investment opportunities, structuring investments, and monitoring investments and portfolio companies on an ongoing basis.
OFS Advisor’s services under the Investment Advisory Agreement are not exclusive to the Company and OFS Advisor is free to furnish similar services to other entities, including other funds affiliated with OFS Advisor, so long as its services to the Company are not impaired. OFS Advisor also serves as the investment adviser or sub-adviser to various clients, including HPCI and OCCI.
OFS Advisor receives fees for providing services to the Company, consisting of two components: a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 1.75% and based on the average value of the Company’s total assets (other than cash and cash equivalents but including assets purchased with borrowed amounts and assets owned by any consolidated entity) at the end of the two most recently completed calendar quarters, adjusted for any share issuances or repurchases during the quarter.
For the years ended December 31, 2024 and 2023, OFS Advisor agreed to reduce its base management fee attributable to all of the 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 and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest or dividend feature (such as OID, debt instruments with PIK interest, equity investments with accruing or PIK dividend and zero coupon securities), accrued income that the Company has not yet received in cash.
Pre-incentive fee net investment income is expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter and adjusted for any share issuances or repurchases during such quarter.
The incentive fee with respect to pre-incentive fee net income is 20.0% of the amount, if any, by which the pre-incentive fee net investment income for the immediately preceding calendar quarter exceeds a 2.0% hurdle rate (which is 8.0% annualized) and a “catch-up” provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, OFS Advisor receives no incentive fee until the net investment income equals the hurdle rate of 2.0%, but then receives, as a “catch-up,” 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
29

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
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), 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. Since inception through March 31, 2024, the Company has not made a Capital Gains Fee payment.
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). As of March 31, 2024 and December 31, 2023, there were no accrued Capital Gains Fees.
License Agreement: The Company entered into a license agreement with OFSAM under which OFSAM has granted the Company a non-exclusive, royalty-free license to use the name “OFS.”
Administration Agreement: OFS Services furnishes the Company with office facilities and equipment, necessary software licenses and subscriptions, and clerical, bookkeeping and record keeping services at such facilities pursuant to the Administration Agreement. The continuation of the Administration Agreement was most recently approved by the Board on April 3, 2024. Under the Administration Agreement, OFS Services performs, or oversees the performance of, the Company’s required administrative services, which include being responsible for the financial records that the Company is required to maintain and preparing reports to its stockholders and all other reports and materials required to be filed with the SEC or any other regulatory authority. In addition, OFS Services assists the Company in determining and publishing its net asset value, oversees the preparation and filing of its tax returns and the printing and dissemination of reports to its stockholders, and generally oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. Under the Administration Agreement, OFS Services also provides managerial assistance on the Company’s behalf to those portfolio companies that have accepted the Company’s offer to provide such assistance. Payment under the Administration Agreement is equal to an amount based upon the Company’s allocable portion of OFS Services’s overhead in performing its obligations under the Administration Agreement, including, but not limited to, rent, information technology services and the Company’s allocable portion of the cost of its officers, including its chief executive officer, chief financial officer, chief compliance officer, chief accounting officer and their respective staffs. To the extent that OFS Services outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to OFS Services.
Equity Ownership: As of March 31, 2024, affiliates of OFS Advisor held approximately 3,022,183 shares of common stock, which is approximately 22.6% of the Company’s outstanding shares of common stock.
30

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
Expenses recognized under agreements with OFS Advisor and OFS Services and distributions paid to affiliates for the three months ended March 31, 2024 and 2023 are presented below:
Three Months Ended March 31,
20242023
Base management fee$1,523 $1,894 
Income Incentive Fee1,399 1,238 
Administration fee394 482 
Distributions paid to affiliates1,028 997 
Note 4. Investments
As of March 31, 2024, the Company had loans to 43 portfolio companies, of which approximately 84% were first lien debt investments and 16% were second lien debt investments, at fair value. The Company also had equity investments in 15 portfolio companies and 21 investments in Structured Finance Securities. As of March 31, 2024, the Company’s investments consisted of the following:
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
First lien debt investments(1)
$224,462 56.2 %151.3 %$206,153 51.3 %138.9 %
Second lien debt investments49,039 12.3 32.9 39,043 9.8 26.2 
Subordinated debt investments4,680 1.2 3.2 250 0.1 0.2 
Preferred equity12,838 3.2 8.7 9,534 2.4 6.4 
Common equity, warrants and other(2)
12,365 3.1 8.3 67,541 16.9 45.5 
  Total Portfolio Company Investments303,384 76.0 204.4 322,521 80.5 217.2 
Structured Finance Securities95,653 24.0 64.5 77,893 19.5 52.6 
Total investments$399,037 100.0 %268.9 %$400,414 100.0 %269.8 %
(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 $144,947 and $135,793, respectively.
(2)    Includes the Company’s investment in Pfanstiehl Holdings, Inc. See “Note 4—Portfolio Concentration” for additional information.
Geographic composition is determined by the location of the corporate headquarters of the portfolio company. All international investments are denominated in US dollars. As of March 31, 2024 and December 31, 2023, the Company’s investment portfolio was domiciled as follows:
March 31, 2024December 31, 2023
Amortized CostFair ValueAmortized CostFair Value
United States$297,884 $320,383 $301,749 $339,964 
Canada(1)
5,500 2,138 4,660 1,278 
Cayman Islands(1)(2)
87,631 70,057 89,286 71,210 
Jersey(1)(2)
8,022 7,836 7,835 7,835 
Total investments$399,037 $400,414 $403,530 $420,287 
(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.
31

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
As of March 31, 2024, the industry composition of the Company’s investment portfolio was as follows:
Percentage of TotalPercentage of Total
IndustryAmortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Administrative and Support and Waste Management and Remediation Services$22,087 5.5 %14.9 %$21,425 5.3 %14.4 %
Construction24,351 6.0 16.4 15,561 3.8 10.5 
Education Services7,523 1.9 5.1 7,075 1.7 4.7 
Finance and Insurance3,096 0.8 2.1 3,133 0.8 2.1 
Health Care and Social Assistance72,348 18.1 48.8 65,133 16.3 43.9 
Information26,076 6.5 17.6 17,280 4.3 11.6 
Management of Companies and Enterprises12,651 3.2 8.5 12,304 3.1 8.3 
Manufacturing29,056 7.5 19.6 89,777 22.4 60.5 
Professional, Scientific, and Technical Services21,358 5.4 14.3 21,513 5.4 14.5 
Public Administration703 0.2 0.5 45   
Real Estate and Rental and Leasing13,176 3.3 8.9 11,320 2.8 7.6 
Retail Trade12,678 3.1 8.5 12,354 3.1 8.3 
Transportation and Warehousing2,491 0.6 1.7 2,096 0.5 1.4 
Wholesale Trade55,790 13.9 37.5 43,505 11.0 29.4 
Total Portfolio Company Investments$303,384 76.0 %204.4 %$322,521 80.5 %217.2 %
Structured Finance Securities95,653 24.0 64.5 77,893 19.5 52.6 
Total investments$399,037 100.0 %268.9 %$400,414 100.0 %269.8 %
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 TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
First lien debt investments(1)
$220,941 54.7 %136.4 %$202,792 48.3 %125.1 %
Second lien debt investments57,848 14.3 35.7 48,521 11.5 30.0 
Subordinated debt investments4,680 1.2 2.9    
Preferred equity11,403 2.8 7.0 13,240 3.2 8.2 
Common equity, warrants and other11,537 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 Securities97,121 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.
32

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
As of December 31, 2023, the industry compositions of the Company’s debt and equity investments were as follows:
Percentage of TotalPercentage of Total
IndustryAmortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Administrative and Support and Waste Management and Remediation Services$22,119 5.5 %13.6 %$21,252 5.2 %13.0 %
Construction19,393 4.8 12.0 11,712 2.8 7.2 
Education Services7,523 1.9 4.7 7,122 1.7 4.4 
Finance and Insurance3,097 0.8 1.9 3,097 0.7 1.9 
Health Care and Social Assistance72,013 17.8 44.5 69,122 16.5 42.6 
Information26,763 6.6 16.5 16,586 4.0 10.4 
Management of Companies and Enterprises11,219 2.8 6.9 10,718 2.6 6.6 
Manufacturing29,402 7.3 18.1 97,924 23.2 60.5 
Other Services (except Public Administration)670 0.2 0.4 3,792 0.9 2.3 
Professional, Scientific, and Technical Services21,327 5.3 13.2 21,481 5.1 13.2 
Public Administration703 0.2 0.4 45   
Real Estate and Rental and Leasing12,072 3.0 7.5 11,861 2.8 7.3 
Retail Trade12,721 3.1 7.9 12,789 3.0 7.9 
Transportation and Warehousing2,495 0.7 1.5 2,257 0.5 1.6 
Wholesale Trade64,892 15.9 40.0 51,484 12.2 31.8 
Total debt and equity investments$306,409 75.9 %189.1 %$341,242 81.2 %210.6 %
Structured Finance Securities97,121 24.1 59.9 79,045 18.8 48.8 
Total investments$403,530 100.0 %249.0 %$420,287 100.0 %259.4 %
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. Depending upon management’s judgment, interest payments subsequently received on non-accrual investments may be recognized as income or applied to amortized cost. 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. For the three months ended March 31, 2024, loans to one portfolio company with an aggregate amortized cost and fair value of $13,462 and $8,846, respectively, were placed on non-accrual status. The aggregate amortized cost and fair value of loans on non-accrual status as of March 31, 2024 was $43,872 and $19,381, respectively, and as of December 31, 2023 was $34,568 and $12,140, respectively.
Portfolio Concentration: As of March 31, 2024, the Company’s common equity investment in Pfanstiehl Holdings, Inc., a global manufacturer of high-purity pharmaceutical ingredients, accounted for 15.8% and 42.5% of its total portfolio at fair value and its total net assets, respectively.
As of March 31, 2024, the Company’s first lien debt investments in All Star Auto Lights, Inc., a nationwide wholesaler of motor vehicle parts, accounted for approximately 6.9% and 18.7% of its total portfolio at fair value and net assets, respectively.
As of March 31, 2024, approximately 4.8% and 12.9% of the Company’s total portfolio at fair value and net assets, respectively, were comprised of Structured Finance Securities managed by a single adviser.


33

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
Note 5. Fair Value of Financial Instruments
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. 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, 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.
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 three months ended March 31, 2024 and 2023:
Three Months Ended March 31,
20242023
Transfers from Level 2 to Level 3$1,910 $ 
Transfers from Level 3 to Level 211,723 3,809 
Transfers between levels during the reporting periods were due to availability of reliable Indicative Prices in those periods.
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.
34

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
The following tables present the Company’s investment portfolio measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023:
SecurityLevel 1Level 2Level 3Fair Value as of March 31, 2024
Debt investments$ $26,017 $219,429 $245,446 
Equity investments  77,075 77,075 
Structured Finance Securities  77,893 77,893 
$ $26,017 $374,397 $400,414 
SecurityLevel 1Level 2Level 3Fair Value as of December 31, 2023
Debt investments$ $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 
35

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
The following tables provides the primary quantitative information about valuation techniques and the Company’s unobservable inputs to its Level 3 fair value measurements as of March 31, 2024 and December 31, 2023. 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 as of March 31, 2024Valuation techniqueUnobservable inputsRange
(Weighted average)
Debt investments:
First lien$150,563 Discounted cash flow Discount rates
9.75% - 25.18% (12.85%)
18,371 Market approach EBITDA multiples
3.00x - 9.00x (5.38x)
7,178 Market approachRevenue multiples
0.40x - 0.40x (0.40x)
4,080 Market approachTransaction Price
Second lien31,917 Discounted cash flowDiscount rates
11.02% - 19.12% (13.48%)
6,865 Market approachRevenue multiples
0.40x - 0.93x (0.73x)
205 Market approach
Net asset value liquidation(2)
Subordinated250 Market approach
Net asset value liquidation(2)
Structured Finance Securities:
Subordinated notes(1)
48,022 Discounted cash flowDiscount rates
15.00% - 49.50% (26.17%)
Constant default rate
2.00% - 3.00% (2.10%)
Recovery rate
65.00% - 65.00% (65.00%)
Mezzanine debt29,871 Discounted cash flowDiscount margin
6.25% - 10.00% (8.07%)
Constant default rate
2.00% - 3.00% (2.14%)
Recovery rate
65.00% - 65.00% (65.00%)
Equity investments:
Preferred equity9,534 Market approachEBITDA multiples
7.00x - 7.75x (7.74x)
Common equity, warrants and other67,035 Market approachEBITDA multiples
6.00x - 16.00x (12.94x)
Common equity, warrants and other506 Market approachRevenue multiples
0.40x - 0.70x (0.70x)
$374,397 
(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) Net asset value liquidation represents the fair value, or estimated expected residual value, of the investment.

36

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
Fair Value at December 31, 2023Valuation techniqueUnobservable inputsRange
(Weighted average)
Debt investments:
First lien$161,211 Discounted cash flowDiscount rates
9.55% - 24.40% (12.61%)
8,136 Market approachEBITDA multiples
3.14x - 6.00x (3.59x)
6,295 Market approachRevenue multiples
0.40x - 0.40x (0.40x)
11,189 Market approachTransaction Price
Second lien36,495 Discounted cash flowDiscount rates
10.45% - 21.68% (13.29%)
8,084 Market approachRevenue multiples
0.40x - 1.20x (0.67x)
3,850 Market approachTransaction Price
Subordinated Market approach
NAV liquidation(2)
Structured Finance Securities:
Subordinated notes(1)
44,965 Discounted cash flowDiscount 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 flowDiscount 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 notes5,018 Market ApproachTransaction Price
Mezzanine debt2,817 Market ApproachTransaction Price
Equity investments:
Preferred equity13,163 Market approachEBITDA multiples
7.50x - 8.00x (7.60x)
Preferred equity77 Market approachRevenue multiples
0.13x - 3.25x (3.25x)
Common equity, warrants and other(3)
70,927 Discounted cash flowDiscount rates
11.50% - 11.50% (11.50%)
Market approachEBITDA multiples
12.00x - 13.25x (12.63x)
Common equity, warrants and other5,369 Market approachEBITDA multiples
5.75x - 16.50x (9.57x)
Common equity, warrants and other393 Market approachRevenue multiples
0.40x - 0.70x (0.70x)
$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.
Averages in the preceding two tables were weighted by the fair value of the related instruments.
Changes in market credit spreads or events impacting the credit quality of the underlying portfolio company (both of which could impact the discount rate), as well as changes in 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 the wide range of approaches in 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.
37

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
The following tables present changes in investments measured at fair value using Level 3 inputs for the three months ended March 31, 2024 and March 31, 2023:
Three Months Ended March 31, 2024
First Lien Debt InvestmentsSecond Lien Debt
Investments
Subordinated
Debt
Investments
Preferred EquityCommon Equity, Warrants and OtherStructured Finance SecuritiesTotal
Level 3 assets, December 31, 2023$186,831 $48,429 $ $13,240 $76,689 $79,045 $404,234 
Net realized gain on investments   572 807  1,379 
Net unrealized appreciation (depreciation) on investments(1,047)(634)250 (5,140)(9,976)316 (16,231)
Amortization of Net Loan Fees191 41    60 292 
Accretion of interest income on Structured Finance Securities     2,093 2,093 
Capitalized PIK interest and dividends117 224  263   604 
Amendment fees received(12)     (12)
Purchase and origination of portfolio investments7,339      7,339 
Proceeds from principal payments on portfolio investments(745)(9,073)    (9,818)
Sale and redemption of portfolio investments   (670)(1,379) (2,049)
Conversion from debt investments to equity investments(2,669)  1,269 1,400   
Proceeds from distributions received from portfolio investments     (3,621)(3,621)
Transfers from Level 3 to Level 2(11,723)     (11,723)
Transfers from Level 2 to Level 31,910      1,910 
Level 3 assets, March 31, 2024$180,192 $38,987 $250 $9,534 $67,541 $77,893 $374,397 
38

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
Three Months Ended March 31, 2023
First Lien Debt InvestmentsSecond Lien Debt
Investments
Subordinated
Debt
Investments
Preferred EquityCommon Equity, Warrants and OtherStructured Finance SecuritiesTotal
Level 3 assets, December 31, 2022$224,614 $56,199 $1,226 $8,196 $91,000 $88,518 $469,753 
Net realized gain (loss) on investments(68)(72)  470  330 
Net unrealized appreciation (depreciation) on investments(1,574)(374)(1,097)1,617 2,089 (2,380)(1,719)
Amortization of Net Loan Fees200 113    59 372 
Accretion of interest income on Structured Finance Securities     3,002 3,002 
Capitalized PIK interest and dividends213 13  236   462 
Amendment fees received(7)(32)    (39)
Purchase and origination of portfolio investments9,772   172   9,944 
Proceeds from principal payments on portfolio investments(1,335)     (1,335)
Sale and redemption of portfolio investments(1,697)(1,013)    (2,710)
Proceeds from distributions received from portfolio investments    (962)(2,176)(3,138)
Transfers from Level 3 to Level 2(3,809)     (3,809)
Level 3 assets, March 31, 2023$226,309 $54,834 $129 $10,221 $92,597 $87,023 $471,113 
The net unrealized appreciation (depreciation) reported in the Company’s consolidated statements of operations for the three months ended March 31, 2024 and 2023, attributable to the Company’s Level 3 assets still held at those respective period ends, was as follows:
Three Months Ended March 31,
20242023
Debt investments$(1,054)$(2,068)
Equity investments(11,995)3,705 
Structured Finance Securities315 (2,383)
Net unrealized depreciation on investments held$(12,734)$(746)
39

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
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, cash equivalents, receivables and payables approximate the fair value of such items due to the short maturity of such financial instruments. The Banc of California Credit Facility and BNP Facility are variable rate instruments and fair value is estimated to approximate carrying value.
The following table sets forth carrying values and fair values of the Company’s debt as of March 31, 2024 and December 31, 2023:
As of March 31, 2024As of December 31, 2023
Description
Carrying Value(1)
Fair Value
Carrying Value(1)
Fair Value
Banc of California Credit Facility$ $ $ $ 
BNP Facility78,500 78,500 90,500 90,500 
Unsecured Notes Due February 2026123,516 116,998 123,322 116,688 
Unsecured Notes Due October 202854,061 49,324 54,011 48,565 
SBA-guaranteed debentures
  31,900 30,904 
Total debt$256,077 $244,822 $299,733 $286,657 
(1) Carrying value is calculated as the outstanding principal amount less unamortized deferred debt issuance costs.
The following tables present the fair value measurements of the Company's debt and the level within the fair value hierarchy of the significant unobservable inputs utilized by the Company to determine such fair values as of March 31, 2024 and December 31, 2023:
March 31, 2024
Description
Level 1(1)
Level 2
Level 3(2)
Total
Banc of California Credit Facility$ $ $ $ 
BNP Facility  78,500 78,500 
Unsecured Notes Due February 2026  116,998 116,998 
Unsecured Notes Due October 202849,324   49,324 
Total debt, at fair value$49,324 $ $195,498 $244,822 
December 31, 2023
Description
Level 1(1)
Level 2
Level 3(2)
Total
Banc of California Credit Facility$ $ $ $ 
BNP Facility  90,500 90,500 
Unsecured Notes Due February 2026  116,688 116,688 
Unsecured Notes Due October 202848,565   48,565 
SBA-guaranteed debentures
  30,904 30,904 
Total debt, at fair value$48,565 $ $238,092 $286,657 
(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.

40

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
Note 6. Commitments and Contingencies
The following table shows the Company’s outstanding commitments to fund investments in portfolio companies as of March 31, 2024:
Portfolio CompanyInvestment TypeCommitment
Boca Home Care Holdings, Inc.First Lien Debt (Revolver)$1,290 
Clevertech Bidco, LLCFirst Lien Debt (Revolver)294 
Envocore Holding, LLC (F/K/A LRI Holding, LLC)First Lien Debt (Revolver)1,670 
Flow Service Partners Management, LLCFirst Lien Debt (Revolver)636 
Honor HN Buyer Inc.First Lien Debt (Revolver)664 
Honor HN Buyer Inc.First Lien Debt (Delayed Draw)1,833 
Kreg LLCFirst Lien Debt (Revolver)1,337 
Medrina LLCFirst Lien Debt (Revolver)319 
Medrina LLCFirst Lien Debt (Delayed Draw)447 
SSJA Bariatric Management LLCFirst Lien Debt (Revolver)400 
Tolemar Acquisition, Inc.First Lien Debt (Revolver)1,982 
$10,872 
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 March 31, 2024.
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 for general indemnification. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company believes the risk of any material obligation under these indemnifications to be low.
Note 7. Borrowings
SBA Debentures: On March 1, 2024, SBIC I LP fully repaid its outstanding SBA debentures totaling $31,920 that were contractually due March 1, 2025, and, on April 17, 2024, surrendered its license to operate as a SBIC.
For the three months ended March 31, 2024 and 2023, the components of interest expense, cash paid for interest, effective interest rates and average outstanding balances for the SBA debentures were as follows:
Three Months Ended March 31,
20242023
Stated interest expense$151 $348 
Amortization of debt issuance costs20 46 
   Total interest and debt financing costs$171 $394 
Cash paid for interest expense$457 $725 
Effective interest rate3.25 %3.21 %
Average outstanding balance$21,046 $49,198 
BNP Facility: On June 20, 2019, OFSCC-FS entered into the BNP Facility, which provides for borrowings in an aggregate principal amount up to $150,000, subject to a borrowing base and other covenants. The reinvestment period of the BNP Facility ends on June 20, 2025 and the facility is scheduled to mature on June 20, 2027.
The BNP Facility is collateralized by all the assets held by OFSCC-FS. OFSCC-FS and the Company have each made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.
41

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
As of March 31, 2024 and December 31, 2023, OFSCC-FS had outstanding debt of $78,500 and $90,500, respectively. As of March 31, 2024, the unused commitment under the BNP Facility was $71,500.
For the three months ended March 31, 2024 and 2023, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the BNP Facility were as follows:
Three Months Ended March 31,
20242023
Stated interest expense(1)
$1,865 $1,908 
Amortization of debt issuance costs95 95 
   Total interest and debt financing costs$1,960 $2,003 
Cash paid for interest expense$1,882 $1,905 
Effective interest rate8.72 %7.63 %
Average outstanding balance$89,916 $105,030 
(1) Stated interest expense includes unused fees.
Banc of California Credit Facility: On March 7, 2018, the Company entered into the Banc of California Credit Facility. 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%. Fees and legal costs incurred in connection with the Banc of California Credit Facility are amortized over the expected life of the facility.
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 as 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 LP, and the Company’s partnership interests in SBIC I LP. The Company has made customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.
As of March 31, 2024 and December 31, 2023, the Company had $-0- and $-0-, respectively, of outstanding debt under the Banc of California Credit Facility. As of March 31, 2024, the unused commitment under the Banc of California Credit Facility was $25,000.
For the three months ended March 31, 2024 and 2023, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the Banc of California Credit Facility were as follows:
Three Months Ended March 31,
20242023
Stated interest expense$ $66 
Amortization of debt issuance costs31 1 
   Total interest and debt financing costs$31 $67 
Cash paid for interest expense$ $51 
Effective interest rate
n/m(1)
n/m(1)
Average outstanding balance$ $2,669 
(1) Not meaningful due to a minimal average outstanding balance relative to the size of the total commitment and unused fees incurred during the periods.
Unsecured NotesAs of March 31, 2024 and December 31, 2023, the Company had the following Unsecured Notes outstanding:
Unsecured Notes Due February 2026: On February 10, 2021 and March 18, 2021, the Company issued $125,000 in aggregate principal of unsecured notes. The Unsecured Notes Due February 2026 bear interest at a rate of 4.75% per year payable semi-annually and mature on February 10, 2026. 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.
42

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
Unsecured Notes Due October 2028: On October 28, 2021 and November 1, 2021, the Company issued $55,000 in aggregate principal of unsecured notes. The Unsecured Notes Due October 2028 bear interest at a rate of 4.95% per year payable semi-annually and mature on October 31, 2028. The Company may redeem the Unsecured Notes Due October 2028 in whole or in part at any time, or from time to time.
The Unsecured Notes are direct unsecured obligations and rank equal in right of payment with all current and future unsecured indebtedness of the Company. Because the Unsecured Notes are not secured by any of the Company’s assets, they are effectively subordinated to all existing and future secured unsubordinated indebtedness (or any indebtedness that is initially unsecured as to which the Company subsequently grants a security interest), to the extent of the value of the assets securing such indebtedness, including, without limitation, borrowings under the Banc of California Credit Facility.
The indenture governing the Unsecured Notes contains certain covenants, including: (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 unless the Company’s asset coverage, as defined in the 1940 Act, is at least 150% at the time of such capital transaction and after deducting the amount of such transaction.
For the three months ended March 31, 2024 and 2023, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the Unsecured Notes were as follows:
Three Months Ended March 31,
20242023
Stated interest expense$2,165 $2,165 
Amortization of debt issuance costs245 245 
   Total interest and debt financing costs$2,410 $2,410 
Cash paid for interest expense$3,648 $3,649 
Effective interest rate5.35 %5.35 %
Average outstanding balance$180,000 $180,000 
The following table shows the scheduled maturities of the principal balances of the Company’s outstanding borrowings as of March 31, 2024:
 Payments due by period
TotalLess than
1 year
1 to 3 years3 to 5 yearsAfter 5 years
Banc of California Credit Facility(1)
$ $ $ $ $ 
Unsecured Notes180,000  125,000 55,000  
BNP Facility78,500   78,500  
Total$258,500 $ $125,000 $133,500 $ 
(1) As of March 31, 2024, the Banc of California Credit Facility had an outstanding balance of $-0- and is scheduled to mature on February 28, 2026.
For the three months ended March 31, 2024 and 2023, the average dollar borrowings and weighted average effective interest rate on the Company’s outstanding borrowings were as follows:
Three Months Ended March 31,
20242023
Average dollar borrowings$290,963 $336,897 
Weighted average effective interest rate6.29 %5.79 %
43

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
Note 8. Financial Highlights
The following is a schedule of financial highlights for the three months ended March 31, 2024 and 2023:
Three Months Ended
March 31,
20242023
Per share operating performance:
Net asset value per share at beginning of period$12.09 $13.47 
Net investment income(1)
0.42 0.37 
Net realized gain on investments, net of taxes(1)
0.06  
Net unrealized depreciation on investments, net of taxes(1)
(1.15)(0.09)
  Total income (loss) from operations(0.67)0.28 
Distributions declared(0.34)(0.33)
Net asset value per share at end of period$11.08 $13.42 
Per share market value, end of period$9.93 $10.29 
Total return based on market value(2)(3)
(12.3)%4.6 %
Total return based on net asset value(3)(4)
(5.2)%2.8 %
Shares outstanding at end of period13,398,078 13,398,078 
Weighted average shares outstanding13,398,078 13,398,078 
Ratio/Supplemental Data (dollar amounts in thousands)
Average net asset value(5)
$155,202 $180,116 
Net asset value at end of period$148,400 $179,808 
Net investment income$5,596 $4,950 
Ratio of total expenses to average net assets(6)
22.3 %20.7 %
Ratio of total expenses and loss on extinguishment of debt to average net assets(6)
22.3 %20.7 %
Ratio of net investment income to average net assets(6)
14.4 %11.0 %
Ratio of loss on extinguishment of debt to average net assets(3)
0.0%0.0%
Portfolio turnover(7)
1.8 %2.0 %
(1)Calculated on the average share method.
(2)Calculated as ending market value less beginning market value, adjusted for distributions reinvested at prices based on the Company’s DRIP for the respective distributions.
(3)Not annualized.
(4)Calculated as ending net asset value less beginning net asset value, adjusted for distributions reinvested at prices based on the Company’s DRIP for the respective distributions.
(5)Based on the average of the net asset value at the beginning and end of the indicated period and, if applicable, the preceding calendar quarters.
(6)Annualized.
(7)Portfolio turnover rate is calculated using the lesser of period-to-date sales, portfolio investment distributions and principal payments or period-to-date purchases over the average of the invested assets at fair value.



44

OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
Note 9. 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.
The following table summarizes distributions declared and paid for the three months ended March 31, 2024 and 2023:
Date DeclaredRecord DatePayment DateAmount
Per Share
Cash
Distribution
Three Months Ended March 31, 2024
February 28, 2024March 18, 2024March 28, 2024$0.34 $4,555 
(1)
$0.34 $4,555 
Three Months Ended March 31, 2023
February 28, 2023March 24, 2023March 31, 2023$0.33 $4,421 
(1)
$0.33 $4,421 
(1) During the three months ended March 31, 2024 and 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. Accordingly, the Company purchased shares to satisfy the DRIP obligation as follows:
Number of Shares PurchasedAverage Price Paid Per ShareTotal Amount Paid
Three Months Ended March 31, 2024
January 1, 2024 through March 31, 20248,530$10.04 $86 
Three Months Ended March 31, 2023
January 1, 2023 through March 31, 20235,096$10.43 $53 
Distributions in excess of the Company’s current and accumulated ICTI would be treated first as a return of capital to the extent of the stockholder’s adjusted tax basis, and any remaining distributions would be treated as a capital gain. The determination of the tax attributes of the Company’s distributions is made annually as of the end of its fiscal year based upon its estimated ICTI for the full year and distributions paid for the full year. Each year, a statement on Form 1099-DIV identifying the tax character of distributions is mailed to the Company’s stockholders.
Stock Repurchase Program:
The Company maintains a Stock Repurchase Program under which the Company may acquire up to $10,000 of its outstanding common stock. On April 30, 2024, the Board extended the Stock Repurchase Program for an additional two-year period ending May 22, 2026, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program may be extended, modified or discontinued at any time for any reason.
During the three months ended March 31, 2024 and March 31, 2023, no shares of common stock were repurchased under the Stock Repurchase Program.
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OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
Note 10. Consolidated Schedule of Investments In and Advances To Affiliates
Three Months Ended March 31, 2024
Name of Portfolio CompanyInvestment Type (1)Net Realized GainNet change in unrealized appreciation/(depreciation)Interest DividendsFeesTotal Income (2) December 31, 2023, Fair ValueGross
Additions (3)
Gross
Reductions (4)
March 31, 2024, Fair Value (5)
Affiliate Investments
Contract Datascan Holdings, Inc.Preferred Equity (7)$ $(1,393)$ $263 $ $263 $10,312 $263 $(1,393)$9,182 
Common Equity (6) (271)    271  (271) 
 (1,664) 263  263 10,583 263 (1,664)9,182 
DRS Imaging Services, LLCCommon Equity (6) 113     393 113  506 
Master Cutlery, LLCSubordinated Loan (6) 250      250  250 
Preferred Equity (6)          
Common Equity (6)          
 250      250  250 
Pfanstiehl Holdings, IncCommon Equity (7,850) 547  547 70,927  (7,850)63,077 
TalentSmart Holdings, LLCCommon Equity (6) (59)    1,136  (59)1,077 
TRS Services, LLCPreferred Equity572 (2,410) 1,891  1,891 2,507  (2,507) 
Common Equity (6)807 (713)    1,285  (1,285) 
1,379 (3,123) 1,891  1,891 3,792  (3,792) 
Total Affiliate Investments$1,379 $(12,333)$ $2,701 $ $2,701 $86,831 $626 $(13,365)$74,092 
(1)Principal balance, interest rate and maturity of debt investments, and ownership detail for equity investments are presented in the consolidated schedule of investments. The Company’s investments are generally classified as “restricted securities” as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144.
(2)Represents the total amount of interest, fees or dividends included in income for the three months ended March 31, 2024.
(3)Gross additions include increases in cost basis of investments resulting from a new portfolio investment, PIK interest, fees and dividends, accretion of Net Loan Fees, and net increases in unrealized 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 recognized as income include PIK dividends contractually earned but not declared.
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OFS Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(Dollar amounts in thousands, except per share data)
Note 11. Subsequent Events
On April 30, 2024, the Board declared a distribution of $0.34 per share for the second quarter of 2024, payable on June 28, 2024 to stockholders of record as of June 18, 2024.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. For additional overview information on the Company, see “Item 1. Business” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Overview
Key performance metrics per common share are presented below:
March 31, 2024December 31, 2023
Net asset value$11.08 $12.09 
Three Months Ended
March 31, 2024December 31, 2023
Net investment income$0.42 $0.35 
Net decrease in net assets resulting from operations(0.67)(0.31)
Distributions paid0.34 0.34 
Our NAV per common share decreased from $12.09 at December 31, 2023 to $11.08 at March 31, 2024, primarily due to net unrealized depreciation on investments of $1.15 per common share. For the quarter ended March 31, 2024, net investment income of $0.42 per common share exceeded our quarterly distribution of $0.34 per common share during such period.
For the quarter ended March 31, 2024, total investment income increased to $14.2 million from $13.5 million in the prior quarter, primarily due to an increase of $2.4 million in dividend income. Dividend income increased due to non-recurring dividends from our equity investments in TRS Services, LLC and Pfanstiehl Holdings, Inc. of $1.9 million and $0.5 million, respectively. For the quarter ended March 31, 2024, total interest income decreased to $11.4 million from $12.9 million in the prior quarter, primarily due to a smaller average investment portfolio at cost. See “—Results of Operations” for additional information.
Our total outstanding debt decreased from $302.4 million at December 31, 2023 to $258.5 million at March 31, 2024, due to the full repayment of our outstanding SBA debentures totaling $31.9 million and net repayments of $12.0 million on our BNP Facility. For the quarter ended March 31, 2024, our weighted-average debt interest costs increased to 6.3% compared to 6.2% for the quarter ended December 31, 2023. As of March 31, 2024, approximately 52% of our outstanding debt matures in 2027 and beyond, 70% of our outstanding debt carries fixed interest rates and 70% of our outstanding debt is unsecured.
For the quarter ended March 31, 2024, we recognized a net loss on investments of $14.6 million, primarily due to net unrealized depreciation of $15.4 million. For the quarter ended March 31, 2024, our net unrealized depreciation of $15.4 million was primarily related to net unrealized depreciation of $7.9 million on our common equity of Pfanstiehl Holdings, Inc, and net unrealized depreciation of $4.1 million on our debt investments in SSJA Bariatric Management LLC, which was placed on non-accrual status during the quarter. As of March 31, 2024, our loan portfolio had non-accrual loans with an aggregate fair value of $19.4 million, or 4.8% of our total investments at fair value. See “—Portfolio Composition and Investment Activity” for additional information.
As of March 31, 2024, our asset coverage ratio of 157% exceeded the minimum asset coverage requirement of 150% under the 1940 Act, and we remained in compliance with all applicable covenants under our outstanding debt facilities. As of March 31, 2024, we had unused commitments of $25.0 million under our Banc of California Credit Facility, as well as $71.5 million under our BNP Facility, each of which are subject to a borrowing base and other covenants. As of March 31, 2024, we had unfunded commitments of $10.9 million to nine portfolio companies. See “—Liquidity and Capital Resources” for additional information.
On April 30, 2024, the Board declared a distribution of $0.34 per share for the second quarter of 2024, payable on June 28, 2024 to stockholders of record as of June 18, 2024.
Critical Accounting Policies and Significant Estimates
Our critical accounting policies and estimates are those relating to revenue recognition and fair value estimates. Management has discussed the development and selection of each critical accounting policy and estimate with the Audit
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Committee of the Board. For descriptions of our revenue recognition and fair value policies, see “Item 8. Financial Statements—Notes to Consolidated Financial Statements—Note 2” and “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2023.
The following table illustrates the impact of our fair value measures if we selected the low or high end of the range of values for all investments as of March 31, 2024 (dollar amounts in thousands):
Investment Type
Range of Fair Value
Low-endHigh-end
Debt investments:   
First lien$206,153 $201,779 $210,389 
Second lien39,043 38,057 40,657 
Subordinated250 250 250 
Structured Finance Securities:
Subordinated notes
48,022 45,284 50,759 
Mezzanine debt
29,871 29,303 30,440 
Equity investments:
Preferred equity
9,534 7,822 11,238 
Common equity, warrants and other
67,541 64,529 70,552 
$400,414 $387,024 $414,285 
Related Party Transactions
We have entered into a number of business relationships with affiliated or related parties, including the following:
The Investment Advisory Agreement with OFS Advisor to manage our operating and investment activities. Under the Investment Advisory Agreement we have agreed to pay OFS Advisor an annual base management fee based on the average value of our total assets (other than cash and cash equivalents but including assets purchased with borrowed amounts and including assets owned by any consolidated entity) as well as an incentive fee based on our investment performance. See “Item 1—Financial Statements–Note 3”.
The Administration Agreement with OFS Services, an affiliate of OFS Advisor, to provide us with the office facilities and administrative services necessary to conduct our operations. See “Item 1—Financial Statements–Note 3”.
A license agreement with OFSAM, the parent company of OFS Advisor, under which OFSAM has agreed to grant us a non-exclusive, royalty-free license to use the name “OFS.” Under this agreement, we have a right to use the “OFS” name for so long as OFS Advisor or one of its affiliates remains our investment adviser. Other than with respect to this limited license, we have no legal right to the “OFS” name. This license agreement will remain in effect for so long as the Investment Advisory Agreement with OFS Advisor is in effect.
OFS Advisor’s services under the Investment Advisory Agreement are not exclusive to us and OFS Advisor is free to furnish similar services to other entities, including other funds advised or sub-advised by OFS Advisor, so long as its services to us are not impaired. OFS Advisor also serves as the investment adviser to other funds, including HPCI and OCCI. Additionally, OFS Advisor provides sub-advisory services to various funds, including: (i) CMFT Securities Investments, LLC, a wholly owned subsidiary of CIM Real Estate Finance Trust, Inc., a corporation that qualifies as a real estate investment trust; and (ii) CIM Real Assets & Credit Fund, an externally managed registered investment company that operates as an interval fund that invests primarily in a combination of real estate, credit and related investments. 
For the years ended December 31, 2024 and 2023, OFS Advisor agreed to reduce its base management fee attributable to all of the 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.
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The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with certain affiliates absent an order from the SEC permitting the BDC to do so. On August 4, 2020, we received our existing Order, which superseded a previous order that we received on October 12, 2016, and provides us with greater flexibility to enter into co-investment transactions with certain Affiliated Funds in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions. We are generally permitted to co-invest with Affiliated Funds if, under the terms of the Order, a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including that: (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned; and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.
In addition, we may file an application for an amendment to our existing Order to permit us to co-invest in our existing portfolio companies with certain affiliates that are private funds even if such other funds had not previously invested in such existing portfolio companies, subject to certain conditions. However, if filed, there is no guarantee that such application will be granted.
Conflicts may arise when we make an investment in conjunction with an investment being made by an Affiliated Account, or in a transaction where an Affiliated Account has already made an investment. Investment opportunities are, from time to time, appropriate for more than one account in the same, different or overlapping securities of a portfolio company’s capital structure. Conflicts arise in determining the terms of investments, particularly where these accounts may invest in different types of securities in a single portfolio company. Potential conflicts arise when addressing, among other things, questions as to whether payment obligations and covenants should be enforced, modified or waived, or whether debt should be restructured, modified or refinanced. For a discussion of the risks associated with conflicts of interest, see “Item 1. Business—Regulation—Conflicts of Interest”, “Item 1A. Risk Factors—Risks Related to OFS Advisor and its Affiliates —We have potential conflicts of interest related to the purchases and sales that OFS Advisor makes on our behalf and/or on behalf of Affiliated Accounts” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Portfolio Composition and Investment Activity
Portfolio Composition
As of March 31, 2024, the fair value of our debt investment portfolio totaled $245.4 million in 43 portfolio companies, of which approximately 84% and 16% were first lien and second lien loans, respectively. We also had equity investments in 15 portfolio companies with a fair value of approximately $77.1 million and 21 investments in Structured Finance Securities with a fair value of $77.9 million. As of March 31, 2024, we had unfunded commitments of $10.9 million to nine portfolio companies. Set forth in the tables and charts below is selected information with respect to our portfolio as of March 31, 2024 and December 31, 2023.
The following table presents our investment portfolio by each wholly owned legal entity within the consolidated group as of March 31, 2024 and December 31, 2023 (dollar amounts in thousands):
March 31, 2024December 31, 2023
Amortized CostFair ValueAmortized CostFair Value
OFS Capital Corporation (Parent)$166,734 $137,185 $175,146 $143,750 
SBIC I LP60,162 107,201 60,385 121,167 
OFSCC-FS168,829 153,016 165,109 152,582 
OFSCC-MB3,312 3,012 2,890 2,788 
Total investments
$399,037 $400,414 $403,530 $420,287 
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The following table presents our ten largest investments by portfolio company based on fair value as of March 31, 2024 (dollar amounts in thousands):
Portfolio CompanyTypeAmortized CostFair Value% of Total Portfolio, at Fair Value
Pfanstiehl Holdings, Inc.Equity$217 $63,077 15.8 %
All Star Auto Lights, Inc.Debt27,551 27,713 6.9 
Inergex Holdings, LLCDebt17,134 17,212 4.3 
Kreg LLCDebt17,175 15,908 4.0 
Tolemar Acquisition, Inc.Debt15,854 14,703 3.7 
Honor HN Buyer Inc.Debt13,159 13,321 3.3 
One GI LLCDebt12,651 12,304 3.1 
Boca Home Care Holdings, Inc.Debt and Equity12,436 11,632 2.9 
Envocore Holding, LLC (F/K/A LRI Holding, LLC)Debt and Equity18,486 9,773 2.4 
Contract Datascan Holdings, Inc.Equity7,676 9,182 2.3 
  Total $142,339 $194,825 48.7 %
As of March 31, 2024, our common equity investment in Pfanstiehl Holdings, Inc., a global manufacturer of high-purity pharmaceutical ingredients, accounted for 15.8% and 42.5% of our total portfolio at fair value and our total net assets, respectively. The value of this investment is substantially comprised of unrealized appreciation of $62.9 million.
As of March 31, 2024, our first lien debt investments in All Star Auto Lights, Inc. accounted for approximately 6.9% and 18.7% of our total portfolio at fair value and net assets, respectively.
As of March 31, 2024, approximately 4.8% and 12.9% of our total portfolio at fair value and net assets, respectively, were comprised of Structured Finance Securities managed by a single adviser.
A deterioration or improvement in the operating performance of these portfolio investments or other factors underlying the valuation of these investments could have a material impact on our NAV.
Portfolio Yields
The following table presents weighted-average yield metrics for our portfolio as of March 31, 2024 and December 31, 2023:
For the Three Months Ended
March 31, 2024December 31, 2023
Weighted-average performing income yield(1):
Debt investments12.9 %14.2 %
Structured Finance Securities13.0 %13.9 %
Interest-bearing investments13.0 %14.1 %
Weighted-average realized yield(2):
Interest-bearing investments11.6 %12.8 %
(1)    Performing income yield is calculated as (a) the actual amount earned on performing interest-bearing investments, including interest, prepayment fees and amortization of Net Loan Fees, divided by (b) the weighted-average of total performing interest-bearing investments at amortized cost.
(2)    Realized yield is calculated as (a) the actual amount earned on interest-bearing investments, including interest, prepayment fees and amortization of Net Loan Fees, divided by (b) the weighted-average of total interest-bearing investments at amortized cost, in each case, including debt investments on non-accrual status and non-income producing Structured Finance Securities.
For the three months ended March 31, 2024, the weighted average performing income yield on interest-bearing investments decreased primarily due to changes in non-accrual investment activity quarter-over-quarter, as well as other non-recurring OID acceleration and prepayment fees earned in the prior quarter.
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Weighted-average yields of our investments are not the same as a return on investment for our stockholders, but rather the gross investment income from our investment portfolio before the payment of all of our fees and expenses. There can be no assurance that the weighted average yields will remain at their current levels.
Portfolio Company Investments
The following table summarizes the composition of our Portfolio Company Investments as of March 31, 2024 and December 31, 2023 (dollar amounts in thousands):
March 31, 2024December 31, 2023
Amortized CostFair ValueAmortized CostFair Value
First lien debt investments(1)
$224,462 $206,153 $220,941 $202,792 
Second lien debt investments49,039 39,043 57,848 48,521 
Subordinated debt investments4,680 250 4,680 — 
Preferred equity12,838 9,534 11,403 13,240 
Common equity, warrants and other12,365 67,541 11,537 76,689 
  Total Portfolio Company Investments
$303,384 $322,521 $306,409 $341,242 
Number of portfolio companies53 53 55 55 
(1) As of March 31, 2024 and December 31, 2023, first lien debt investments include 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 $144.9 million and $135.8 million, respectively, and $141.3 million and $131.3 million, respectively.
As of March 31, 2024, approximately 100% of our loan portfolio and 61% of our total portfolio consisted of first lien and second lien loans, based on fair value. We believe the seniority of our debt investments in the borrowers’ capital structures may provide greater downside protection against adverse economic changes, including those caused by the 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.
As of March 31, 2024, the three largest industries of our Portfolio Company Investments by fair value, were: (1) Manufacturing (27.8%); (2) Health Care and Social Assistance (20.2%); and (3) Wholesale Trade (13.5%), totaling an aggregate of approximately 61.5% of our Portfolio Company Investment portfolio. For a full summary of our investment portfolio by industry, see “Item 1—Financial Statements–Note 4.”
Structured Finance Securities
The following table summarizes the composition of our Structured Finance Securities as of March 31, 2024 and December 31, 2023 (dollar amounts in thousands):
March 31, 2024December 31, 2023
Amortized CostFair ValueAmortized CostFair Value
Subordinated notes$65,247 $48,022 $66,774 $49,985 
Mezzanine debt30,406 29,871 30,347 29,060 
Total Structured Finance Securities$95,653 $77,893 $97,121 $79,045 
Number of Structured Finance Securities21 21 21 21 
As of March 31, 2024, we had no non-performing Structured Finance Securities. Non-performing Structured Finance Securities are securities that have not been optionally redeemed and have an effective yield of 0.0%, as remaining residual distributions are anticipated to be recognized as a return of capital.
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Investment Activity
The following is a summary of our investment activity for the three months ended March 31, 2024 (dollar amounts in thousands):
 Three Months Ended
March 31, 2024
Investments in debt and equity securities$7,339 
Investments in Structured Finance Securities— 
Total investment purchases and originations$7,339 
Proceeds from principal payments$9,854 
Proceeds from investments sold or redeemed2,049 
Proceeds from distributions received from portfolio investments3,621 
Total proceeds from principal payments, sales or redemptions, and distributions received from portfolio investments$15,524 
Non-Cash Investment Activity
During the three months ended March 31, 2024, our first lien debt investment in GoTo Group underwent a restructuring whereby our first lien debt investment was exchanged at a price equal to 77% of par for new first lien debt investments in the company. We recognized a realized loss of $0.7 million on the debt restructure corresponding to the amount forgiven upon the exchange.
During the three months ended March 31, 2024, we restructured our first lien debt investments in Avison Young to, among other things, exchange our first lien debt investments for new first lien debt investments, preferred equity and common equity. The cost of the existing first lien debt investments was ascribed to the new investments received in the exchange, and no realized loss was recognized. We also invested an incremental $0.8 million in new-issue first lien debt.
Risk Monitoring
We categorize debt investments into seven risk categories based on relevant information about the ability of borrowers to service their debt. For additional information regarding our risk categories, see “Item 1. Business—Portfolio Review/Risk Monitoring” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 5, 2024. The following table shows the classification of our debt investments, excluding Structured Finance Securities, by credit risk rating as of March 31, 2024 and December 31, 2023 (dollar amounts in thousands):
Debt Investments as of
March 31, 2024December 31, 2023
Risk CategoryAmortized CostFair Value% of Debt Investments, at Fair ValueAmortized CostFair Value% of Debt Investments, at Fair Value
1 (Low Risk)$— $— — %$— $— — %
2 (Below Average Risk)
— — — — — — 
3 (Average)210,467 205,090 83.6 230,338 223,394 88.9 
4 (Special Mention)44,389 32,470 13.2 25,147 19,581 7.8 
5 (Substandard)14,113 7,375 3.0 18,772 8,136 3.2 
6 (Doubtful)9,212 511 0.2 9,212 202 0.1 
7 (Loss)— — — — — — 
$278,181 $245,446 100.0 %$283,469 $251,313 100.0 %
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. Depending upon management’s judgment, interest payments subsequently received on non-accrual investments may be recognized as income or applied to amortized cost. 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
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principal and interest from the investment. For the three months ended March 31, 2024, loans to one portfolio company with an aggregate amortized cost and fair value of $13.5 million and $8.8 million, respectively, were placed on non-accrual status.
As of March 31, 2024
The following table shows the classification of our debt investments on non-accrual status (dollar amounts in thousands):
March 31, 2024
Amortized CostFair Value
First lien debt$28,077 $16,275 
Second lien debt11,115 2,856 
Subordinated debt4,680 250 
Total$43,872 $19,381 
As of December 31, 2023
The following table shows the classification of our debt investments on non-accrual status (dollar amounts in thousands):
December 31, 2023
Amortized CostFair Value
First lien debt$18,772 $8,136 
Second lien debt11,115 4,003 
Subordinated debt4,680 — 
Total$34,567 $12,139 
    
Results of Operations
Our key financial measures are described in “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Key Financial Measures” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 5, 2024. The following is a discussion of the key financial measures that management employs in reviewing the performance of our operations.
We do not believe that our historical operating performance is necessarily indicative of our future results of operations. We are primarily focused on debt investments in middle-market and larger companies in the United States and, to a lesser extent, equity investments, including warrants and other minority equity securities, and Structured Finance Securities. This approach differs from our historical investment concentration in that we now also focus on the debt of larger U.S. companies and Structured Finance Securities. Moreover, as a BDC and a RIC, we are also subject to certain constraints on our operations, including, but not limited to, limitations imposed by the 1940 Act and the Code. For the reasons described above, the results of operations described below may not necessarily be indicative of the results we expect to report in future periods.
Net increase (decrease) in net assets resulting from operations can vary substantially from period to period for various reasons, including the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, annual comparisons of net increase (decrease) in net assets resulting from operations may not be meaningful.
The following analysis compares our quarterly results of operations to the preceding quarter, as well as our year-to-date results of operations to the corresponding period in the prior year. We believe a comparison of our current quarterly results to the preceding quarter is more meaningful and transparent than a comparison to the corresponding prior-year quarter as our results of operations are not influenced by seasonal factors the latter comparison is designed to elicit and highlight.
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Comparison of the three months ended March 31, 2024 and December 31, 2023 and comparison of the three months ended March 31, 2024 and 2023
Consolidated operating results for the three months ended March 31, 2024 and December 31, 2023, and the three months ended March 31, 2024 and 2023 are as follows (in thousands):
Three Months EndedThree Months Ended
March 31, 2024December 31, 2023March 31, 2024March 31, 2023
Investment income
Interest income:
Cash interest income$8,217 $8,742 $8,217 $9,698 
PIK interest income342 851 342 226 
Net Loan Fee amortization
298 493 298 409 
Accretion of interest income on CLO subordinated notes2,093 2,323 2,093 3,002 
Other interest income
443 475 443 58 
Total interest income11,393 12,884 11,393 13,393 
Dividend income:
Cash dividends2,449 10 2,449 549 
Preferred equity PIK dividends262 332 262 236 
Total dividend income2,711 342 2,711 785 
Fee income:
Syndication fees106 — 106 36 
Prepayment and other fees
23 257 23 69 
Total fee income129 257 129 105 
Total investment income14,233 13,483 14,233 14,283 
Total expenses8,637 8,787 8,637 9,333 
Net investment income5,596 4,696 5,596 4,950 
Net loss on investments(14,645)(8,805)(14,645)(1,125)
Net increase (decrease) in net assets resulting from operations$(9,049)$(4,109)$(9,049)$3,806 
Investment Income
For the three months ended March 31, 2024, total investment income increased to $14.2 million from $13.5 million in the prior quarter, primarily due to an increase in total dividend income of $2.4 million, partially offset by a decrease in total interest income of $1.5 million.
Interest income decreased $1.5 million during the three months ended March 31, 2024 compared to the prior quarter, primarily due to a decrease in contractual cash and PIK interest income of $0.6 million and $0.4 million, respectively. The decrease in contractual interest income was primarily due to the impacts of non-accrual activity quarter-over-quarter.
Dividend income increased $2.4 million during the three months ended March 31, 2024 compared to the prior quarter, primarily due to an increase in cash dividends. The increase in cash dividends was due to non-recurring dividends from TRS Services, LLC and Pfanstiehl Holdings, Inc. of $1.9 million and $0.5 million, respectively.
During the three months ended March 31, 2024, we exited our equity investments in TRS Services, LLC for gross proceeds of $3.9 million, recognizing $1.9 million of accumulated preferred dividends and a realized gain of $1.4 million.
Fee income is primarily comprised of unused fees, prepayment fees and syndication fees that generally result from periodic transactions rather than from holding portfolio investments, and are considered non-recurring. We receive syndication fees on investments where OFS Advisor sources, structures, and arranges the lending group. For the three months ended March 31, 2024, total fee income decreased $0.1 million compared to the prior quarter due to a decrease in prepayment fees during the current quarter.
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Expenses
Operating expenses for the three months ended March 31, 2024 and December 31, 2023, and the three months ended March 31, 2024 and 2023 are presented below (in thousands):
Three Months EndedThree Months Ended
March 31, 2024December 31, 2023March 31, 2024March 31, 2023
Interest expense$4,572 $4,684 $4,572 $4,874 
Base management fee1,523 1,645 1,523 1,894 
Income Incentive Fee1,399 1,174 1,399 1,238 
Professional fees414 419 414 436 
Administration fee394 379 394 482 
Other expenses335 486 335 409 
Total expenses$8,637 $8,787 $8,637 $9,333 
Comparison of the three months ended March 31, 2024 and December 31, 2023
Interest expense for the three months ended March 31, 2024 decreased $0.1 million compared to the prior quarter, primarily due to a decrease in our average outstanding debt balances. During the three months ended March 31, 2024, we fully repaid our outstanding SBA debentures totaling $31.9 million and reduced the total amount outstanding under the BNP Facility by $12.0 million.
Management fee expense for the three months ended March 31, 2024 decreased $0.1 million compared to the prior quarter, primarily due to a decrease in the average quarterly investment portfolio, at fair value, to $410.4 million from $438.8 million.
Incentive fees for the three months ended March 31, 2024 increased $0.2 million compared to the prior quarter, primarily due to an increase in our net investment income related to the non-recurring dividend income recognized during the current quarter.
Net realized and unrealized gain (loss) on investments
Net loss on investments, inclusive of realized and unrealized gains (losses), by investment type for the three months ended March 31, 2024 and December 31, 2023, and the three months ended March 31, 2024 and 2023 were as follows (in thousands):
Three Months EndedThree Months Ended
March 31, 2024December 31, 2023March 31, 2024March 31, 2023
Debt investments$(1,248)$(2,089)$(1,248)$(2,540)
Equity investments(13,649)(4,694)(13,649)4,128 
Structured Finance Securities315 (1,956)315 (2,383)
Current/deferred income tax expense (benefit)(63)(66)(63)(330)
Total net loss on investments$(14,645)$(8,805)$(14,645)$(1,125)
Net loss on investments for the three months ended March 31, 2024 and December 31, 2023
Three months ended March 31, 2024
For the three months ended March 31, 2024, we recognized a net loss on investments of $14.6 million, primarily due to net unrealized depreciation of $15.4 million. For the quarter ended March 31, 2024, our net unrealized depreciation of $15.4 million was primarily related to net unrealized depreciation of $7.9 million on our common equity in Pfanstiehl Holdings, Inc,
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and net unrealized depreciation of $4.1 million on our debt investments in SSJA Bariatric Management LLC, which were placed on non-accrual status during the quarter.
Three months ended December 31, 2023
During the three months ended December 31, 2023, our portfolio experienced net losses of $8.8 million, primarily due to net unrealized depreciation of $5.1 million on our equity investments.
During the three months ended December 31, 2023, our common equity investment in Pfanstiehl Holdings, Inc. experienced net unrealized depreciation of $6.2 million.
Non-GAAP Financial Measure – Adjusted Net Investment Income
During the three months ended March 31, 2024 and December 31, 2023, we did not recognize a Capital Gains Fee that would require the disclosure of Adjusted Net Investment Income for these periods. For additional information on Adjusted NII, see “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Non-GAAP Financial Measure - Adjusted Net Investment Income” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 5, 2024.
Liquidity and Capital Resources
As of March 31, 2024, we held cash and cash equivalents of $6.1 million, which includes $1.1 million held by SBIC I LP and $2.5 million held by OFSCC-FS. Our use of cash and cash equivalents held by SBIC I LP was restricted by SBA regulation. Distributions from OFSCC-FS to the Parent are restricted by the terms and conditions of the BNP Facility. During the three months ended March 31, 2024, the Parent received $2.8 million in cash distributions from OFSCC-FS.
As of March 31, 2024, we had an unused commitment of $25.0 million under our Banc of California Credit Facility, as well as an unused commitment of $71.5 million under our BNP Facility, both of which are subject to a borrowing base requirements and other covenants. As of March 31, 2024, we had unfunded commitments of $10.9 million to nine portfolio companies.
The Parent was permitted to make unsecured loans to SBIC I LP, the aggregate of which could not exceed $35 million at any given time, and no interest could be charged on the unpaid principal balance. On February 28, 2024, the Parent made a $3.5 million unsecured loan to SBIC I LP in order for SBIC I LP to have sufficient cash to fully redeem its outstanding SBA debentures totaling $31.9 million. On March 15, 2024, SBIC I LP repaid its $3.5 million unsecured loan to the Parent.
As of March 31, 2024, the aggregate amount outstanding of the senior securities issued by us was $258.5 million, for which our asset coverage was 157%, exceeding our minimum asset coverage requirement of 150% under the 1940 Act. The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness.
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Sources and Uses of Cash
We generate operating cash flows from net investment income and the net proceeds from liquidation of portfolio investments, and use cash in our operations in the net purchase of portfolio investments and payment of expenses. Significant variations may exist between net investment income and cash from net investment income, primarily due to the recognition of non-cash investment income, including certain Net Loan Fee amortization, PIK interest and PIK dividends, which generally will not be fully realized in cash until we exit the investment, as well as accreted interest income on Structured Finance Securities, which may not coincide with cash distributions from these investments. As discussed in “Item 1.—Financial Statements—Note 3,” we pay OFS Advisor a quarterly incentive fee with respect to our pre-incentive fee net investment income, which may include investment income that we have not received in cash. In addition, we must distribute substantially all of our taxable income, which approximates, but will not always equal, the cash we generate from net investment income to maintain our RIC tax treatment. We also obtain cash to fund investments or general corporate activities from the issuance of securities and our revolving lines of credit. These principal sources and uses of cash and liquidity are presented below (in thousands):
 Three Months Ended March 31,
 20242023
Cash from net investment income(1)
$3,126 $3,055 
Net repayments and sales of portfolio investments(1)
6,092 902 
Net cash provided by operating activities9,218 3,957 
Distributions paid to stockholders(2)
(4,555)(4,421)
Net borrowings (repayments) under revolving lines of credit(12,000)1,300 
Repayments of SBA debentures(31,920)(5,000)
Net cash used in financing activities(48,475)(8,121)
Net decrease in cash and cash equivalents$(39,257)$(4,164)
(1)    Net purchases and originations/repayments and sales of portfolio investments includes the purchase and origination of portfolio investments, proceeds from principal payments on portfolio investments, proceeds from sale or redemption of portfolio investments, changes in receivable for investments sold, payable from investments purchased as reported in our statements of cash flows, as well as differences in proceeds from distributions received from Structured Finance Securities relative to accretion of interest income on Structured Finance Securities. Cash from net investment income includes all other cash flows from operating activities reported in our statements of cash flows.
(2)    The determination of the tax attributes of our distributions is made annually as of the end of our fiscal year based upon our ICTI for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of our distributions for a full year.
Cash from net investment income
Cash from net investment income of $3.1 million for the three months ended March 31, 2024 remained consistent compared to the three months ended March 31, 2023.
Net (purchases and originations) / repayments and sales of portfolio investments
During the three months ended March 31, 2024, net sales and repayments of portfolio investments of $6.1 million were primarily due to $13.4 million of cash we received from amortized cost repayments, sales on our portfolio investments and the net proceeds from distributions received from Structured Finance Securities and accretion of interest income on Structured Finance Securities, partially offset by $7.3 million of cash we used to purchase portfolio investments. During the three months ended March 31, 2023, net purchases and originations of portfolio investments of $0.9 million were primarily due to $9.9 million of cash we used to purchase portfolio investments, partially offset by $10.8 million of cash we received from amortized cost repayments, sales on our portfolio investments and the net proceeds from distributions received from Structured Finance Securities and accretion of interest income on Structured Finance Securities. See “—Portfolio Composition and Investment Activity—Investment Activity.”
Borrowings
SBA Debentures
SBIC I LP had an SBIC license that allowed it to obtain leverage by issuing SBA-guaranteed debentures. On March 1, 2024, SBIC I LP fully repaid its outstanding SBA debentures totaling $31.9 million and, on April 17, 2024, surrendered its
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license to operate as a SBIC. As of March 31, 2024 and December 31, 2023, SBIC I LP had outstanding debentures of $0.0 million and $31.9 million, respectively.
Banc of California Credit Facility
We are party to the BLA with Banc of California, as lender, to provide us with a senior secured revolving credit facility, or the Banc of California Credit Facility, which is available for general corporate purposes including investment funding. 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 (as defined in the BLA) 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 LP and the our partnership interests in SBIC I LP.
The BLA contains customary terms and conditions, including, without limitation, affirmative and negative covenants, such as information reporting requirements, a minimum tangible net asset value, a minimum quarterly net investment income after incentive fees, a debt/worth ratio and a net loss restriction. The BLA also contains customary events of default, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-default to other indebtedness, bankruptcy, change in investment advisor, and the occurrence of a material adverse change in our financial condition. As of March 31, 2024, we were in compliance in all material respects with the applicable covenants under the Banc of California Credit Facility.
    As of March 31, 2024, we had $-0- outstanding and an unused commitment of $25.0 million under the Banc of California Credit Facility, subject to a borrowing base and other covenants. As of March 31, 2024, the effective interest rate on the Banc of California Credit Facility was 9.25%.
On December 15, 2023, we 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%.
Unsecured Notes
    As of March 31, 2024 and December 31, 2023, we had $180.0 million in Unsecured Notes. The Unsecured Notes are direct unsecured obligations and rank equal in right of payment with all of our current and future unsecured indebtedness. Because the Unsecured Notes are not secured by any of our assets, they are effectively subordinated to all existing and future secured unsubordinated indebtedness (or any indebtedness that is initially unsecured as to which we subsequently grant a security interest), to the extent of the value of the assets securing such indebtedness, including, without limitation, borrowings under the Banc of California Credit Facility and BNP Facility.
    In order to, among other things, reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may, from time to time, purchase the Unsecured Notes for cash in open market purchases and/or privately negotiated transactions. We will evaluate any such transactions in light of then-existing market conditions, taking into account our current liquidity, prospects for future access to capital, contractual restrictions and other factors. The amounts involved in any such transactions, individually or in the aggregate, may be material. During the three months ended March 31, 2024, no outstanding Unsecured Notes were repurchased.
BNP Facility
     On June 20, 2019, OFSCC-FS entered into the BNP Facility, which provides for borrowings in an aggregate principal amount up to $150.0 million, of which $78.5 million was drawn as of March 31, 2024. Borrowings under the BNP Facility bear interest based on SOFR for the relevant interest period, plus an applicable spread (subject to an effective floor of 2.65%). The reinvestment period of the BNP Facility ends on June 20, 2025 and the facility is scheduled to mature on June 20, 2027. Borrowings under the BNP Facility are secured by substantially all of the assets held by OFSCC-FS. As of March 31, 2024, we were in compliance in all material respects with the applicable covenants under the BNP Facility.
As of March 31, 2024, the effective interest rate on the BNP Facility was 8.80% and the unused commitment under the facility was $71.5 million.
On a stand-alone basis, as of March 31, 2024 and December 31, 2023, OFSCC-FS held approximately $157.3 million and $158.3 million in total assets, respectively, which accounted for approximately 38% and 34% of our total consolidated assets, respectively.
Other Liquidity Matters 
We expect to fund the growth of our investment portfolio utilizing our current borrowings, follow-on equity offerings, and issuances of senior securities or future borrowings to the extent permitted by the 1940 Act. We cannot assure stockholders that our plans to raise capital will be successful or available to us on favorable terms, if at all. In addition, we intend to
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distribute to our stockholders substantially all of our taxable income in order to satisfy the requirements applicable to RICs under Subchapter M of the Code. Consequently, we may not have the funds or the ability to fund new investments or make additional investments in our portfolio companies. The illiquidity of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded value and incur a capital loss.
As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our assets, as defined by the 1940 Act, are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Under the relevant SEC rules, the term “eligible portfolio company” includes all private companies, companies whose securities are not listed on a national securities exchange, and certain public companies that have listed their securities on a national securities exchange and have a market capitalization of less than $250 million, in each case organized in the United States. Conversely, we may invest up to 30% of our portfolio in opportunistic investments not otherwise eligible under BDC regulations. Specifically, as part of this 30% basket, we may consider investments in investment funds that are operating pursuant to certain exceptions to the 1940 Act and in advisers to similar investment funds, as well as in debt or equity of middle-market portfolio companies located outside of the United States and debt and equity of public companies that do not meet the definition of eligible portfolio companies because their market capitalization of publicly traded equity securities exceeds the levels provided for in the 1940 Act. We have, and may continue to, make opportunistic investments in Structured Finance Securities and other non-qualifying assets, consistent with our investment strategy. As of March 31, 2024, approximately 79% of our investments were qualifying assets.
On May 3, 2018, our Board, including a required majority (as such term is defined in Section 57(o) of the 1940 Act) thereof, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, effective May 3, 2019, our minimum required asset coverage ratio decreased from 200% to 150%.
    On May 22, 2018, the Board authorized the Stock Repurchase Program under which we could acquire up to $10.0 million of our outstanding common stock through the two-year period ending May 22, 2020. On each of May 4, 2020 and May 3, 2022, our Board extended the Stock Repurchase Program for additional two-year periods. On April 30, 2024, our Board extended the Stock Repurchase Program for the two-year period ending on May 22, 2026. Under the extended Stock Repurchase Program, we are authorized to repurchase shares in open-market transactions, including through block purchases, depending on prevailing market conditions and other factors. We expect the Stock Repurchase Program to be in place through May 22, 2026, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program does not obligate us to acquire any specific number of shares, and all repurchases will be made in accordance with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases. The Stock Repurchase Program may be extended, modified or discontinued at any time for any reason. We have provided our stockholders with notice of our intention to repurchase shares of our common stock in accordance with 1940 Act requirements. We retire all shares of common stock that we purchased in connection with the Stock Repurchase Program. During the three months ended March 31, 2024, we did not make any repurchases of common stock on the open market under the Stock Repurchase Program. As of March 31, 2024, the approximate dollar value of shares remaining that may be purchased under the program was $9.6 million.
    As a BDC, we are generally not permitted to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if the Board determines that such sale is in the best interests of us and our stockholders, and if our stockholders approve such sale. On July 19, 2023, our stockholders approved a proposal to authorize us, with approval of our Board, to sell or otherwise issue shares of our common stock (during a twelve-month period) at a price below our then-current net asset value per share in one or more offerings, subject to certain limitations (including that the cumulative number of shares sold pursuant to such authority does not exceed 25% of our then outstanding common stock immediately prior to each such sale). We have not sold any shares below net asset value pursuant to the proposal approved by our stockholders.
We continue to monitor the current banking environment. If the banks and financial institutions with whom we have credit facilities enter into receivership, undergo consolidation or become insolvent in the future, our liquidity may be reduced significantly. At various times, our cash balances at third-party financial institutions exceed the federally insured limit. Our cash and cash equivalent balances are retained in custodian accounts with U.S. Bank Trust Company, National Association and Citibank N.A., and we do not believe they are exposed to any significant credit risk.
Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations
As of March 31, 2024, we had $6.1 million of cash and cash equivalents, as well unused commitments of $25.0 million under our Banc of California Credit Facility and $71.5 million under our BNP Facility, respectively, to meet our short-term contractual obligations. As of March 31, 2024, we had $10.9 million in outstanding commitments to fund portfolio investments that can be funded with our current cash or credit facilities.
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Long-term contractual obligations, such as our BNP Facility that matures in 2027 and had $78.5 million outstanding as of March 31, 2024, can be repaid by selling OFSCC-FS portfolio investments that have a fair value of $153.0 million as of March 31, 2024. The OFSCC-FS portfolio includes broadly syndicated loans in larger portfolio companies that generally can be sold over a relatively short period to generate cash. We cannot, however, be certain that this source of funds will be available and upon terms acceptable to us in sufficient amounts in the future. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than its current fair value and incur significant realized losses on our invested capital.
As of March 31, 2024, we had $180.0 million of outstanding Unsecured Notes, of which $125.0 million mature on February 10, 2026. The Unsecured Notes Due February 2026 can be repaid by selling portfolio investments or by issuing additional senior securities to refinance the debt.
As of March 31, 2024, approximately 52% of our outstanding debt matures in 2027 and beyond, 70% of our outstanding debt carries fixed interest rates and 70% of our outstanding debt is unsecured.
Off-Balance Sheet Arrangements
We have entered into contracts with third parties under which we have material future commitments—the Investment Advisory Agreement, pursuant to which OFS Advisor has agreed to serve as our investment adviser, and the Administration Agreement, pursuant to which OFS Services has agreed to furnish us with the facilities and administrative services necessary to conduct our day-to-day operations.
We may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized on the balance sheet. There is no guarantee that these amounts will be funded to the borrowing party now or in the future. We continue to believe that we have sufficient levels of liquidity to support our existing portfolio companies and will meet these unfunded commitments by using our cash on hand or utilizing our available borrowings under the Banc of California Credit Facility and BNP Facility. In addition, we generally hold broadly syndicated loans in larger portfolio companies that can be sold over a relatively short period to generate cash. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than its current fair value and incur significant realized losses on our invested capital.
Distributions
We are taxed as a RIC under the Code. In order to maintain our tax treatment as a RIC, we are required to distribute annually to our stockholders at least 90% of our ICTI, as defined by the Code. Additionally, to avoid a 4% excise tax on undistributed earnings we are required to distribute each calendar year the sum of: (i) 98% of our ordinary income for such calendar year; (ii) 98.2% of our net capital gains for the one-year period ending October 31 of that calendar year; and (iii) any income recognized, but not distributed, in preceding years and on which we paid no federal income tax. Maintenance of our RIC status requires adherence to certain source of income and asset diversification requirements. Generally, a RIC is entitled to deduct dividends it pays to its stockholders from its income to determine “taxable income”. Taxable income includes our taxable interest, dividend and fee income, and taxable net capital gains. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as gains or losses are not included in taxable income until they are realized. In addition, gains realized for financial reporting purposes may differ from gains included in taxable income as a result of our election to recognize gains using installment sale treatment, which generally results in the deferment of gains for tax purposes until notes or other amounts, including amounts held in escrow received as consideration from the sale of investments, are collected in cash. Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, which includes contractual PIK interest, and the amortization of discounts and fees. Cash collections of income resulting from contractual PIK interest and dividends or the amortization of discounts and fees generally occur upon the repayment of the loans or debt securities that include such items. Non-cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation, and amortization expense.
Our Board maintains a variable dividend policy with the objective of distributing quarterly distributions in an amount not less than 90-100% of our taxable quarterly income or potential annual income for a particular year. In addition, during the year, we may pay a special dividend, such that we may distribute approximately all of our annual taxable income in the year it was earned, while maintaining the option to spill over our excess taxable income to a following year. We may choose to retain a portion of our taxable income in any year and pay the 4% U.S. federal excise tax on the retained amounts. Each year, a statement on Form 1099-DIV identifying the source of the distribution is mailed to the Company’s stockholders.
Recent Developments    
On April 30, 2024, our Board declared a distribution of $0.34 per share for the second quarter of 2024, payable on June 28, 2024 to stockholders of record as of June 18, 2024.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including changes in interest rates and the valuations of our investment portfolio. The economic effects of the ongoing war between Russia and Ukraine, the escalated armed conflict in the Middle East, elevated interest and inflation rates, ongoing supply chain and labor market disruptions, including those as a result of strikes, work stoppages or accidents, instability in the U.S. and international banking systems and the risk of recession or a shutdown of U.S. government services has introduced significant volatility in the financial markets, and the effects of this volatility has impacted and could continue to impact our market risks. For additional information concerning risks and their potential impact on our business and our operating results, seePart I—Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on March 5, 2024.
Investment Valuation Risk
Because there is not a readily available market value for most of the investments in our portfolio, we value a significant portion of our portfolio investments at fair value as determined in good faith by OFS Advisor, as valuation designee, based, in part, on independent third-party valuation firms that have been engaged at the direction of OFS Advisor to assist in the valuation of each portfolio investment without a readily available market quotation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, some investments may be subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than its current fair value. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Estimates” as well as Notes 2 and 5 to our consolidated financial statements for the three months ended March 31, 2024 for more information relating to our investment valuation.
Interest Rate Risk
Changes in interest rates, including any potential interest rate reductions approved by the U.S. Federal Reserve, may affect both our cost of funding and the valuation of our investment portfolio. As of March 31, 2024, 91% of our loan portfolio, at fair value, bore interest at floating interest rates and contain interest rate re-set provisions that adjust applicable interest rates to current rates on a periodic basis.
Our Unsecured Notes bear interest at fixed rates. As of March 31, 2024, our Banc of California Credit Facility and BNP Facility have floating interest rate provisions based on the Prime Rate and SOFR, respectively.
If interest rates are reduced by the U.S. Federal Reserve, the difference between the total interest income earned and the total interest expense incurred may be compressed, reducing our net income and potentially adversely affecting our operating results.
Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates as of March 31, 2024. As of March 31, 2024, 1-month and 3-month SOFR were 5.33% and 5.30%, respectively, and certain loan contracts in our investment portfolio have not reset to the current market rate. Assuming that the interim and unaudited consolidated balance sheet as of March 31, 2024 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following tables show the annualized impact of hypothetical changes in interest rate indices (in thousands).
Basis point increaseInterest incomeInterest expenseNet change
25$608 $(196)$412 
501,255 (393)863 
751,902 (589)1,313 
1002,549 (785)1,764 
1253,196 (981)2,215 
Basis point decreaseInterest incomeInterest expenseNet change
25$(683)$196 $(487)
50(1,330)393 (937)
75(1,977)589 (1,388)
100(2,624)785 (1,839)
125(3,271)981 (2,290)
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Although we believe that the foregoing analysis is indicative of our net interest margin sensitivity to interest rate changes as of March 31, 2024, it does not adjust for potential changes in the credit market, credit quality, size and composition of the assets in our portfolio, and other business developments, including borrowings under our credit facilities, that could affect net increase in net assets resulting from operations, or net income. Accordingly, no assurances can be given that actual results would not differ materially from the statement above.
Credit Risk
We generally endeavor to minimize our risk of exposure by limiting the counterparties with whom we enter into financial transactions to reputable financial institutions. As of March 31, 2024 and December 31, 2023, we held our cash balances with third-party financial institutions, and such balances are in excess of the Federal Deposit Insurance Corporation insured limit. We seek to mitigate this exposure by monitoring the credit standing of these financial institutions.
Inflation Risk
Inflation is likely to continue in the near to medium-term, particularly in the U.S., with the possibility that monetary policy may continue to tighten in response. Persistent inflationary pressures could affect our portfolio companies’ profit margins and their ability to service their debt.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures 
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2024. The term “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the foregoing evaluation of our disclosure controls and procedures as of March 31, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting 
During the quarter ended March 31, 2024, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We, OFS Advisor and OFS Services, are not currently subject to any material pending legal proceedings threatened against us as of March 31, 2024. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business, including the enforcement of our rights under contracts with our portfolio companies. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our business, financial condition, results of operations or cash flows.
Item 1A. Risk Factors
Investing in our common stock may be speculative and involves a high degree of risk. In addition to the other information contained in this Quarterly Report on Form 10-Q, including our financial statements, and the related notes, schedules and exhibits, you should carefully consider the risk factors described in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report on Form 10-K”), filed on March 5, 2024, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K. The risks previously disclosed in the Annual Report on Form 10-K should be read together with the other information disclosed elsewhere in this Quarterly Report on Form 10-Q and our other reports filed with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Sales of Unregistered Securities, Use of Proceeds
None.
Issuer Purchases of Equity Securities
On May 22, 2018, the Board authorized the Company to initiate the Stock Repurchase Program under which the Company could acquire up to $10.0 million of its outstanding common stock through the two-year period ending May 22, 2020.
On each of May 4, 2020 and May 3, 2022, our Board extended the Stock Repurchase Program for additional two-year periods. On April 30, 2024, the Board extended the Stock Repurchase Program for the two-year period ending May 22, 2026. Under the extended Stock Repurchase Program, the Company is authorized to repurchase shares in open-market transactions, including through block purchases, depending on prevailing market conditions and other factors. The Company expects the Stock Repurchase Program to be in place through May 22, 2026, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program does not obligate the Company to acquire any specific number of shares, and all repurchases will be made in accordance with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases. The Stock Repurchase Program may be extended, modified or discontinued at any time for any reason. The Company retires all shares of common stock that it purchases in connection with the Stock Repurchase Program. As of March 31, 2024, the approximate dollar value of shares remaining that may be purchased under the program was $9.6 million.
During the three months ended March 31, 2024, the Company did not make any repurchases of its common stock on the open market under the Stock Repurchase Program.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Other Information
Rule 10b5-1 Trading Plans
During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Price Range of Common Stock and Distributions
The Company’s common stock is traded on the Nasdaq Global Select Market under the symbol “OFS”. The following table lists the high and low sale price for the Company’s common stock, NAV per share, and the cash distributions per share that were declared on its common stock for each fiscal quarter during the last two most recently completed fiscal years and each full fiscal quarter of the current fiscal year. The last reported sale price for our common stock on the Nasdaq Global Select Market on March 31, 2024 was $9.93 per share.
NAV Per Share(1)
Price RangePremium (Discount) of High Sales Price to NAVPremium (Discount) of Low Sales Price to NAVCash Distribution per Share
PeriodHighLow
Fiscal 2024
First Quarter$11.08 $12.07 $9.53 8.9 %-14.0 %$0.34 
Fiscal 2023
Fourth Quarter$12.09 $12.41 $9.69 2.6 %-19.9 %$0.34 
Third Quarter
$12.74 $12.44 $9.51 -2.4 %-25.4 %$0.34 
Second Quarter$12.94 $11.01 $9.10 -14.9 %-29.7 %$0.33 
First Quarter$13.42 $10.92 $9.60 -18.6 %-28.5 %$0.33 
Fiscal 2022
Fourth Quarter$13.47 $11.25 $8.03 -16.5 %-40.4 %$0.30 
Third Quarter
$13.58 $11.50 $7.54 -15.3 %-44.5 %$0.29 
Second Quarter$14.57 $13.47 $9.72 -7.5 %-33.3 %$0.29 
First Quarter$15.52 $13.18 $9.40 -15.1 %-39.4 %$0.28 
(1)NAV per share is determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices. The NAVs shown are based on outstanding shares at the end of each period.
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Item 6. Exhibits
Listed below are the exhibits that are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):
Incorporated by Reference
Exhibit
Number
 DescriptionForm and SEC File No.Filing Date with SECFiled with this 10-Q
3.1Form N-2/A
(333-166363)
March 18, 2011
3.2Form 10-KMarch 26, 2013
3.3Form N-2/A
(333-166363)
March 18, 2011
31.1 *
31.2 *
32.1 
32.2 
101Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.*
104Cover Page Interactive Data File (embedded within the Inline XBRL document)*
*Filed herewith
Furnished herewith

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SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Dated: May 2, 2024OFS CAPITAL CORPORATION
   
 By:/s/ Bilal Rashid
 Name:Bilal Rashid
 Title:Chief Executive Officer
   
 By:/s/ Jeffrey A. Cerny
 Name:Jeffrey A. Cerny
 Title:Chief Financial Officer

67
Document

Exhibit 31.1
 
Certification of Chief Executive Officer
 
I, Bilal Rashid, Chief Executive Officer of OFS Capital Corporation certify that:
 
1. I have reviewed this quarterly report on Form 10-Q of OFS Capital Corporation (the “Registrant”);
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
 
4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
 
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
 
5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
 
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
 
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
 
Dated this 2nd day of May, 2024.
 
By:/s/ Bilal Rashid 
 Bilal Rashid 
 Chief Executive Officer 


Document

Exhibit 31.2
 
Certification of Chief Financial Officer
 
I, Jeffrey A. Cerny, Chief Financial Officer of OFS Capital Corporation certify that:
 
1. I have reviewed this quarterly report on Form 10-Q of OFS Capital Corporation (the “Registrant”);
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
 
4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
 
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
 
5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
 
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
 
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
 
Dated this 2nd day of May, 2024.
 
By:/s/ Jeffrey A. Cerny 
 Jeffrey A. Cerny 
 Chief Financial Officer 


Document

Exhibit 32.1
 
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350 , as adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q for the period ended March 31, 2024 (the “Report”) of OFS Capital Corporation (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Bilal Rashid, the Chief Executive Officer of the Registrant, hereby certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, that:
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
 
  /s/ Bilal Rashid
 Name:Bilal Rashid
 Date:May 2, 2024


Document

Exhibit 32.2
 
Certification of Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350 , as adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q for the period ended March 31, 2024 (the “Report”) of OFS Capital Corporation (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Jeffrey A. Cerny, the Chief Financial Officer of the Registrant, hereby certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, that:
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
 
  /s/ Jeffrey A. Cerny
 Name:Jeffrey A. Cerny
 Date:May 2, 2024