Document


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, 2021
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, Illinois60606
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
6.25% Notes due 2023OFSSGThe Nasdaq Global Select Market
5.95% Notes due 2026OFSSIThe Nasdaq Global Select Market

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨Accelerated filer¨
Non-accelerated 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 May 10, 2021 was 13,411,962.



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.




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
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 FundCertain other funds, including other BDCs and registered investment companies managed by OFS Advisor
ASCAccounting Standards Codification, as issued by the FASB
ASUAccounting Standards Updates, as issued by the FASB
BDCBusiness Development Company under the 1940 Act
BLABusiness Loan Agreement, as amended, with Pacific Western Bank, as lender, which provides the Company with a senior secured revolving credit facility
BNP FacilityA secured revolving credit facility that provides for borrowings in an aggregate principal amount up to $150,000,000 issued pursuant to a Revolving Credit and Security Agreement by and among OFSCC-FS, the lenders from time to time parties thereto, BNP Paribas, as administrative agent, OFSCC-FS Holdings, LLC, a wholly owned subsidiary of the Company, as equityholder, the Company, as servicer, Citibank, N.A., as collateral agent and Virtus Group, LP, as collateral administrator
BoardThe Company's board of directors
CLOCollateralized loan obligation
CodeInternal Revenue Code of 1986, as amended
CompanyOFS Capital Corporation and its consolidated subsidiaries
DRIPDistribution reinvestment plan
EBITDAEarnings before interest, taxes, depreciation and amortization
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
GAAPAccounting principles generally accepted in the United States
HPCIHancock Park Corporate Income, Inc., a Maryland corporation and non-traded BDC for whom 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
Net Loan FeesThe cumulative amount of fees, such as 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 whom OFS Advisor serves as investment adviser
OFS AdvisorOFS Capital Management, LLC, a wholly owned subsidiary of OFSAM and registered investment advisor under the Investment Advisers Act of 1940, as amended
OFS ServicesOFS Capital Services, LLC, a wholly owned subsidiary of OFSAM and affiliate of OFS Advisor
OFSAMOrchard First Source Asset Management, LLC, a full-service provider of capital and leveraged finance solutions to U.S. corporations
OFSCC-FSOFSCC-FS, LLC, an indirect wholly owned subsidiary of the Company
OFSCC-FS AssetsAssets held by the Company through OFSCC-FS



TermExplanation or Definition
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 Notes
Prime RateUnited States Prime interest rate
PWB Credit FacilitySenior secured revolving credit facility between the Company and Pacific Western Bank, as lender
Reunderwriting AnalysisA discount rate method based upon a hypothetical recapitalization of the entity given its current operating performance and current market condition
RICRegulated investment company under the Code
SBAUnited States Small Business Administration
SBICA fund licensed under the SBA small business investment company program
SBIC AcquisitionThe Company's acquisition of the remaining ownership interests in SBIC I LP and OFS SBIC I GP, LLC on December 4, 2013
SBIC ActSmall Business Investment Act of 1958, as amended
SBIC I LPOFS SBIC I, LP, a wholly owned SBIC subsidiary of the Company
SECUnited States Securities and Exchange Commission
Securities ActSecurities Act of 1933, as amended
Secured Revolver AmendmentThe amended Business Loan Agreement with Pacific Western Bank, as lender, dated February 17, 2021
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 NotesCLO mezzanine debt and CLO subordinated debt positions
Synthetic Rating AnalysisA discount rate method that assigns a surrogate debt rating to the entity based on known industry standards for assigning such ratings and then estimates the discount rate based on observed market yields for actual rated debt
Transaction PriceThe cost of an arm's length transaction occurring in the same security
Unsecured NotesThe combination of the Unsecured Notes Due September 2023, the Unsecured Notes Due October 2026 and the Unsecured Notes Due February 2026
Unsecured Notes Due April 2025 The Company’s $50.0 million aggregate principal amount of 6.375% notes due April 30, 2025, which were redeemed on March 12, 2021
Unsecured Notes Due February 2026    The Company’s $125.0 million aggregate principal amount of 4.75% notes due February 10, 2026
Unsecured Notes Due October 2025The Company’s $48.5 million aggregate principal amount of 6.5% notes due October 30, 2025, which were redeemed on March 12, 2021
Unsecured Notes Due October 2026The Company's $54.3 million aggregate principal amount of 5.95% notes due October 31, 2026
Unsecured Notes Due September 2023The Company’s $25.0 million aggregate principal amount of 6.25% notes due September 30, 2023




Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
our ability and experience operating a BDC or an SBIC, or maintaining our tax treatment as a RIC under Subchapter M of the Code;
our dependence on key personnel;
our ability to maintain or develop referral relationships;
our ability to replicate historical results;
the ability of OFS Advisor to identify, invest in and monitor companies that meet our investment criteria;
the belief that the carrying amounts of our financial instruments, such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments and that such financial instruments are held with high credit quality institutions to mitigate the risk of loss due to credit risk;
actual and potential conflicts of interest with OFS Advisor and other affiliates of OFSAM;
constraint on investment due to access to material nonpublic information;
restrictions on our ability to enter into transactions with our affiliates;
our ability to comply with SBA regulations and requirements;
the use of borrowed money to finance a portion of our investments;
our ability to incur additional leverage pursuant to Section 61(a)(2) of the 1940 Act and the impact of such leverage on our net investment income and results of operations;
competition for investment opportunities;
our plans to focus on lower-yielding, first lien senior secured loans to larger borrowers and the impact on our risk profile, including our belief that the seniority of such loans in a borrower's capital structure may provide greater downside protection against the impact of the coronavirus ("COVID-19") pandemic;
the percentage of investments that will bear interest on a floating rate or fixed rate basis;
interest rate volatility, including the decommissioning of LIBOR;
the ability of SBIC I LP to make distributions enabling us to meet RIC requirements;
plans by SBIC I LP to repay its outstanding SBA debentures;
our ability to raise debt or equity capital as a BDC;
the timing, form and amount of any distributions from our portfolio companies;
the impact of a protracted decline in the liquidity of credit markets on our business;
the general economy and its impact on the industries in which we invest;
changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including with respect to changes from the impact of the COVID-19 pandemic; the length and duration of the COVID-19 pandemic in the United States as well as worldwide and the magnitude of the economic impact of the outbreak; the effect of the COVID-19 pandemic on our business, financial condition, results of operations and cash flows and those of our portfolio companies (including the expectation that a shift from cash interest to PIK interest will result from concessions granted to borrowers due to the COVID-19 pandemic), including our and their ability to achieve our respective objectives; the effect of the disruptions caused by the COVID-19 pandemic on our ability to continue to effectively manage our business (including our belief that new loan activity in the market in which we operate has slowed) and on the availability of equity and debt capital and our use of borrowed money to finance a portion of our investments;
1


the belief that we have sufficient levels of liquidity to support our existing portfolio companies and deploy capital in new investment opportunities;
the belief that one or more of our investments can be restored to accrual status in the near term, or otherwise;
uncertain valuations of our portfolio investments, including our belief that reverting back to an equal weighting of the Reunderwriting Analysis method and Synthetic Rating Analysis method more accurately captures certain data related to the observed return of market liquidity and the historic correlative relationship between these markets; and
the effect of new or modified laws or regulations governing our operations.
    Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include, among others, those described or identified in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in "Part II, Item 1A. Risk Factors" in this Quarterly Report on Form 10-Q. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.
    We have based the forward-looking statements on information available to us on the date of this Quarterly Report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The forward-looking statements and projections contained in this Quarterly Report on Form 10-Q are excluded from the safe harbor protection provided by Section 21E of the Exchange Act.
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,
2021
December 31,
2020
(unaudited)
Assets
Investments, at fair value:
Non-control/non-affiliate investments (amortized cost of $386,218 and $363,628, respectively)$352,837 $328,665 
Affiliate investments (amortized cost of $83,676 and $86,484, respectively)101,964 102,846 
Control investment (amortized cost of $11,009 and $10,911, respectively)11,298 10,812 
Total investments at fair value (amortized cost of $480,903 and $461,023, respectively)466,098 442,323 
Cash41,641 37,708 
Interest receivable519 1,298 
Receivable for investments sold474 — 
Prepaid expenses and other assets2,859 2,484 
Total assets$511,591 $483,813 
Liabilities
Revolving lines of credit$19,550 $32,050 
SBA debentures (net of deferred debt issuance costs of $922 and $1,088, respectively)94,583 104,182 
Unsecured notes (net of deferred debt issuance costs of $5,830 and $4,897 respectively)198,495 172,953 
Interest payable1,860 3,176 
Payable to adviser and affiliates (Note 3)2,798 3,252 
Payable for investments purchased32,927 8,411 
Accrued professional fees479 495 
Other liabilities429 338 
Total liabilities351,121 324,857 
Commitments and contingencies (Note 6)
Net assets
Preferred stock, par value of $0.01 per share, 2,000,000 shares authorized, -0- shares issued and outstanding as of March 31, 2021, and December 31, 2020, respectively$— $— 
Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,411,962 and 13,409,559 shares issued and outstanding as of March 31, 2021, and December 31, 2020, respectively134 134 
Paid-in capital in excess of par187,146 187,124 
Total distributable earnings (losses)(26,810)(28,302)
Total net assets160,470 158,956 
Total liabilities and net assets$511,591 $483,813 
Number of shares outstanding13,411,962 13,409,559 
Net asset value per share$11.96 $11.85 

See Notes to Consolidated Financial Statements.
3


OFS Capital Corporation and Subsidiaries
Consolidated Statements of Operations (unaudited)
(Dollar amounts in thousands, except per share data)
Three Months Ended March 31,
20212020
Investment income
Interest income:
Non-control/non-affiliate investments
$8,527 $9,072 
Affiliate investments
904 2,394 
Control investment
269 196 
Total interest income
9,700 11,662 
Payment-in-kind interest and dividend income:
Non-control/non-affiliate investments
318 261 
Affiliate investments
71 269 
Control investment
98 85 
Total payment-in-kind interest and dividend income
487 615 
Dividend income:
Affiliate investments
— 100 
Total dividend income
— 100 
Fee income:
Non-control/non-affiliate investments
267 485 
Affiliate investments
37 
Control investment
— 
Total fee income
304 493 
Total investment income
10,491 12,870 
Expenses
Interest expense4,825 4,922 
Management fee1,834 2,019 
Incentive fee— 883 
Professional fees387 648 
Administration fee568 520 
Other expenses327 347 
Total expenses before incentive fee waiver
7,941 9,339 
Incentive fee waiver (see Note 3)— (441)
Total expenses, net of incentive fee waiver
7,941 8,898 
     Net investment income
2,550 3,972 
Net realized and unrealized gain (loss) on investments
Net realized gain (loss) on non-control/non-affiliate investments
91 (8,973)
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes
1,518 (22,422)
Net unrealized appreciation (depreciation) on affiliate investments1,926 (2,924)
Net unrealized appreciation (depreciation) on control investment
388 (1,664)
Net gain (loss) on investments
3,923 (35,983)
Loss on extinguishment of debt
(2,299)(149)
Net increase (decrease) in net assets resulting from operations
$4,174 $(32,160)
Net investment income per common share – basic and diluted
$0.19 $0.30 
Net increase (decrease) in net assets resulting from operations per common share – basic and diluted
$0.31 $(2.41)
Distributions declared per common share$0.20 $0.34 
Basic and diluted weighted average shares outstanding13,409,033 13,377,008 
See Notes to Consolidated Financial Statements.
4

OFS Capital Corporation and Subsidiaries
Consolidated Statements of Changes in Net Assets (unaudited)
(Dollar amounts in thousands)


Preferred StockCommon StockPaid-in capital in excess of parTotal distributable earnings (losses)Total net assets
Number of sharesPar valueNumber of sharesPar value
Balances at January 1, 2020— — 13,376,836 $134 $187,305 $(20,812)$166,627 
Net decrease in net assets resulting from operations:
  Net investment income— — — — — 3,972 3,972 
  Net realized loss on investments— — — — — (8,973)(8,973)
Loss on extinguishment of debt— — — — — (149)(149)
  Net unrealized depreciation on investments, net of taxes— — — — — (27,010)(27,010)
  Tax reclassifications of permanent differences— — — — 18 (18)— 
Distributions to stockholders:
  Common stock issued from reinvestment of stockholder distributions
— — 15,693 — 64 — 64 
  Dividends declared— — — — — (4,548)(4,548)
Net increase (decrease) for the period ended March 31, 2020— — 15,693 — 82 (36,726)(36,644)
Balances at March 31, 2020— $— 13,392,529 $134 $187,387 $(57,538)$129,983 
Balances at January 1, 2021— $— 13,409,559 $134 $187,124 $(28,302)$158,956 
Net decrease in net assets resulting from operations:
  Net investment income— — — — — 2,550 2,550 
  Net realized gain on investments— — — — — 91 91 
  Loss on extinguishment of debt— — — — — (2,299)(2,299)
  Net unrealized appreciation on investments, net of taxes— — — — — 3,832 3,832 
Distributions to stockholders:
  Common stock issued from reinvestment of stockholder distributions
— — 3,103 — 27 — 27 
  Dividends declared— — — — — (2,682)(2,682)
Common stock repurchased under stock repurchase program— — (700)— (5)— (5)
Net increase for the period ended March 31, 2021— — 2,403 — 22 1,492 1,514 
Balances at March 31, 2021— $— 13,411,962 $134 $187,146 $(26,810)$160,470 
See Notes to Consolidated Financial Statements.
5


OFS Capital Corporation and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(Dollar amounts in thousands)
Three Months Ended March 31,
20212020
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations
$4,174 $(32,160)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:
Net realized (gain) loss on investments(91)8,973 
Loss on extinguishment of debt
2,299 — 
Net unrealized (appreciation) depreciation on investments, net of taxes(3,832)27,010 
Amortization of Net Loan Fees
(401)(407)
Amendment fees collected
97 — 
Payment-in-kind interest and dividend income
(487)(628)
Accretion of interest income on structured finance notes(2,278)(1,223)
Amortization of debt issuance costs
446 581 
Amortization of intangible asset
54 49 
Purchase and origination of portfolio investments
(68,498)(63,609)
Proceeds from principal payments on portfolio investments
48,609 37,204 
Proceeds from sale or redemption of portfolio investments
566 42,082 
Proceeds from distributions received from structured finance notes
2,621 1,353 
Changes in operating assets and liabilities:
Interest receivable
779 550 
Interest payable
(1,316)(1,312)
Payable to adviser and affiliates
(454)(873)
Receivable for investment sold
(474)(1,920)
Payable for investments purchased
24,516 (8,279)
Other assets and liabilities
(507)326 
Net cash provided by operating activities5,823 7,717 
Cash flows from financing activities
Distributions paid to stockholders
(2,655)(4,484)
Borrowings under revolving lines of credit
12,900 39,600 
Repayments under revolving lines of credit
(25,400)(38,000)
Repayments of SBA debentures
(9,765)(16,110)
Redemption of unsecured notes(98,525)— 
Proceeds from unsecured notes offering, net of discounts
121,791 — 
Payment of deferred financing costs
(231)— 
Repurchases of common stock under Stock Repurchase Program
(5)— 
Net cash used in financing activities(1,890)(18,994)
Net increase (decrease) in cash3,933 (11,277)
   Cash at beginning of period37,708 13,447 
   Cash at end of period$41,641 $2,170 
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest
$5,695 $5,801 
Reinvestment of distributions to stockholders
27 64 
See Notes to Consolidated Financial Statements.
6

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments (unaudited)
March 31, 2021
(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
AAdvantage Loyalty IP Ltd. and American Airlines, Inc. (14) (15)Scheduled Passenger Air Transportation
Senior Secured Loan5.50%(L +4.75%)3/10/20213/10/2028$364 $360 $373 0.2 %
Allen Media, LLC (14) (15)Cable and Other Subscription Programming
Senior Secured Loan5.70%(L +5.50%)3/2/20212/10/20272,927 2,929 2,928 1.8 
All Star Auto Lights, Inc. (4)Motor Vehicle Parts (Used) Merchant Wholesalers
Senior Secured Loan9.00%(L +8.00%)12/19/20198/20/202415,476 15,285 15,221 9.5 
Autokiniton US Holdings, Inc. (15)Automotive Parts and Accessories Stores
Senior Secured Loan5.00%(L +4.50%)3/26/20213/29/20281,714 1,710 1,710 1.1 
A&A Transfer, LLCConstruction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers
Senior Secured Loan (15)7.75%(L +6.50%)2/7/20202/7/202516,416 16,226 16,024 10.0 
Senior Secured Loan (Revolver) (5)n/m (18)(L +6.50%)2/7/20202/7/2025— (33)(47)— 
16,416 16,193 15,977 10.0 
Bass Pro Group, LLC (14) (15)Sporting Goods Stores
Senior Secured Loan5.00%(L +4.25%)2/26/20212/24/20285,739 5,729 5,755 3.6 
Baymark Health Services, Inc. (15)Outpatient Mental Health & Sub. Abuse Centers
Senior Secured Loan9.00%(L +8.00%)1/27/20215/18/20234,045 4,007 4,045 2.5 
Senior Secured Loan9.25%(L +8.25%)3/22/20183/1/20259,055 9,033 9,055 5.6 
13,100 13,040 13,100 8.1 %
Community Intervention Services, Inc. (4) (6) (11)Outpatient Mental Health and Substance Abuse Centers
Subordinated  Loan7.0% cash / 6.0% PIKN/A7/16/20151/16/2021 (22)10,378 7,639 105 0.1 
Confie Seguros Holdings II Co.Insurance Agencies and Brokerages
Senior Secured Loan8.62%(L +8.50%)7/7/201511/1/202512,638 12,466 12,452 7.8 
7

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2021
(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
Connect U.S. Finco LLC (14) (15)Taxi Service
Senior Secured Loan4.50%(L +3.50%)11/20/201912/11/2026$1,980 $1,980 $1,976 1.2 %
Constellis Holdings, LLC (10)Other Justice, Public Order, and Safety Activities
Common Equity (20,628 common shares)3/27/2020703 462 0.3 
Convergint Technologies Holdings, LLC (15)Security Systems Services (except Locksmiths)
Senior Secured Loan4.50%(L +3.75%)3/18/20213/18/20282,432 2,420 2,420 1.5 
Senior Secured Loan7.50%(L +6.75%)9/28/20183/18/20297,016 6,993 6,993 4.4 
9,448 9,413 9,413 5.9 
Corel Inc. (15)Software Publishers
Senior Secured Loan5.19%(L +5.00%)3/2/20217/2/20261,310 1,301 1,301 0.8 
Custom Truck One Source (14) (15)Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing
Senior Secured Loan4.36%(L +4.25%)9/30/20204/18/2025463 462 463 0.3 
Dexko Global Inc. (15)Motor Vehicle Body Manufacturing
Senior Secured Loan9.25%(L +8.25%)1/28/20217/24/20251,460 1,465 1,465 0.9 
DHX Media Ltd. (15)Motion Picture and Video Production
Senior Secured Loan5.00%(L +4.25%)3/19/20213/18/20282,500 2,450 2,450 1.5 
Diamond Sports Group, LLC (14) (15)Television Broadcasting
Senior Secured Loan3.36%(L +3.25%)11/19/20198/24/20261,970 1,972 1,368 0.9 
Eblens Holdings, Inc. (20)Shoe Store
Subordinated Loan (11)12.00% cash / 1.00% PIKN/A7/13/20171/13/20239,137 9,041 4,946 3.1 
Common Equity (71,250 Class A units) (10)7/13/2017713 — — 
9,137 9,754 4,946 3.1 
8

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2021
(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)Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan7.50% cash / 3.50% PIKN/A6/30/20176/30/2022$17,300 $17,221 $12,670 7.9 %
Preferred Equity (238,095 Series B units) (10)6/30/2017300 — — 
Preferred Equity (13,315 Series C units) (10)8/13/201813 — — 
17,300 17,534 12,670 7.9 
Excelin Home Health, LLCHome Health Care Services
Senior Secured Loan11.50%(L +9.50%)10/25/20184/25/20244,250 4,203 4,250 2.6 
GGC Aerospace Topco L.P.Other Aircraft Parts and Auxiliary Equipment Manufacturing
Senior Secured Loan9.75%(L +9.75%)12/29/20179/8/20245,000 4,936 4,239 2.5 
Common Equity (368,852 Class A units) (10)12/29/2017450 166 0.1 
Common Equity (40,984 Class B units) (10)12/29/201750 — 
5,000 5,436 4,412 2.6 
Inergex Holdings, LLCOther Computer Related Services
Senior Secured Loan8.00%(L +7.00%)10/1/201810/1/202416,408 16,216 16,408 10.1 
Senior Secured Loan (Revolver) (5)n/m (18)(Prime + 7.00%)10/1/201810/1/2024— (16)— — 
16,408 16,200 16,408 10.1 
Innovacare, Inc. (14) (15)Direct Health and Medical Insurance Carriers
Senior Secured Loan6.75%(L +5.75%)1/25/202112/26/20262,961 2,968 2,968 1.8 
Intouch Midco Inc. (15)All Other Professional, Scientific, and Technical Services
Senior Secured Loan4.86%(L +4.75%)12/20/20198/24/20252,056 1,998 2,006 1.3 
Ivanti Software, Inc. (14)Software Publishers
Senior Secured Loan5.75%(L +4.75%)3/26/202112/1/20273,000 3,019 3,016 1.9 
I&I Sales Group, LLCMarketing Consulting Services
Senior Secured Loan (15)9.50%(L +8.50%)12/30/20207/10/20255,325 5,237 5,275 3.3 
Senior Secured Loan (Revolver) (5)n/m (18)(L +8.50%)12/30/20207/10/2025— (3)(1)— 
5,325 5,234 5,274 3.3 
9

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2021
(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
JP Intermediate B, LLC (14) (15)Drugs and Druggists' Sundries Merchant Wholesalers
Senior Secured Loan6.50%(L +5.50%)1/14/202111/15/2025$3,980 $3,782 $3,816 2.4 %
LogMeIn, Inc. (14)Data Processing, Hosting, and Related Services
Senior Secured Loan4.85%(L +4.75%)3/26/20218/31/20272,500 2,497 2,496 1.6 
Micro Holding Corp (14)Internet Publishing and Broadcasting and Web Search Portals
Senior Secured Loan3.61%(L +3.50%)3/26/20219/15/20242,000 2,003 2,003 1.2 
Milrose Consultants, LLC (4) (8)Administrative Management and General Management Consulting Services
Senior Secured Loan7.61%(L +6.61%)7/16/20197/16/202522,574 22,377 23,026 14.3 
My Alarm Center, LLC (10)Security Systems Services (except Locksmiths)
Preferred Equity (335 Class Z units) (13)9/12/2018325 — — 
Preferred Equity (1,485 Class A units), 8% PIK (4) (13)7/14/20171,571 — — 
Preferred Equity (1,198 Class B units) (4) 7/14/20171,198 — — 
Common Equity (64,149 units) (4) (13)7/14/2017— — — 
3,094 — — 
Online Tech Stores, LLC (4) (6)Stationary & Office Supply Merchant Wholesaler
Subordinated Loan13.50% PIKN/A2/1/20188/1/202319,504 16,142 94 0.1 
Panther BF Aggregator 2 LP (14) (15) (19)Other Commercial and Service Industry Machinery Manufacturing
Senior Secured Loan3.36%(L +3.25%)11/19/20194/30/20261,934 1,934 1,934 1.2 
Parfums Holding Company, Inc.Cosmetics, Beauty Supplies, and Perfume Stores
Senior Secured Loan (14) (15)4.11%(L +4.00%)6/25/20196/30/20241,537 1,536 1,527 1.0 
10

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2021
(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
Pelican Products, Inc.Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan8.75%(L +7.75%)9/24/20185/1/2026$6,249 $6,249 $6,249 3.9 %
Pike Corp. (14) (15)Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan3.13%(L +3.00%)9/17/20201/21/2028136 136 136 0.1 
PM Acquisition LLC (20)All Other General Merchandise Stores
Senior Secured Loan11.50% cash / 2.5% PIKN/A9/30/201710/29/20214,731 4,712 4,731 2.9 
Common Equity (499 units) (10) (13)9/30/2017499 523 0.3 
4,731 5,211 5,254 3.2 
Quest Software US Holdings Inc. (14) (15)Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Senior Secured Loan4.46%(L +4.25%)6/25/20195/16/20251,965 1,951 1,966 1.2 
Resource Label Group, LLCCommercial Printing (except Screen and Books)
Senior Secured Loan9.50%(L +8.50%)6/7/201711/26/20234,821 4,792 4,821 3.1 
RPLF Holdings, LLC (10) (13)Software Publishers
Common Equity (254,110 Class A units)1/17/2018492 604 0.4 
Sentry Centers Holdings, LLC (10) (13)Convention and Trade Show Organizers
Preferred Equity (2,248 Series A units)9/4/202051 — — 
Preferred Equity (1,603 Series B units)9/4/2020160 28 — 
Common Equity (269 units) 9/4/2020— — 
214 28 — 
Signal Parent, Inc.New Single-Family Housing Construction (except For-Sale Builders)
Senior Secured Loan4.25%(L +3.50%)3/25/20214/21/2028600 596 596 0.4 
SourceHOV Tax, Inc. (4) (8)Other Accounting Services
Senior Secured Loan7.61%(L +6.11%)3/16/20203/17/202519,892 19,751 20,161 12.7 
11

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2021
(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
Southern Technical Institute, LLC (4) (10)Colleges, Universities, and Professional Schools
Equity appreciation rights6/27/2018$— $4,789 3.0 %
Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.,) (15)Child Day Care Services
Senior Secured Loan8.45%(L +8.25%)7/26/20187/30/20265,216 5,150 4,667 2.9 
SSJA Bariatric Management LLC (15)Offices of Physicians, Mental Health Specialists
Senior Secured Loan6.25%(L +5.25%)8/26/20198/26/20249,850 9,782 9,781 6.2 
Senior Secured Loan6.25%(L +5.25%)12/31/20208/26/20241,064 1,054 1,057 0.8 
Senior Secured Loan (Revolver) (5)n/m (18)(L +5.25%)8/26/20198/26/2024— (5)(4)— 
10,914 10,831 10,834 7.0 
Stancor, L.P. (4)Pump and Pumping Equipment Manufacturing
Preferred Equity (1,250,000 Class A units), 8% PIK (10)8/19/20141,501 1,264 0.8 
Staples, Inc. (14) (15)Business to Business Electronic Markets
Senior Secured Loan5.21%(L +5.00%)6/24/20194/16/20262,952 2,887 2,885 1.8 
STS Operating, Inc.Industrial Machinery and Equipment Merchant Wholesalers
Senior Secured Loan (14) (15)5.25%(L +4.25%)5/16/201812/11/2024624 623 611 0.4 
Senior Secured Loan9.00%(L +8.00%)5/15/20184/30/20269,073 9,070 8,732 5.4 
9,697 9,693 9,343 5.8 
Sunshine Luxembourg VII SARL (14) (15)Pharmaceutical Preparation Manufacturing
Senior Secured Loan4.50%(L +3.75%)11/20/201910/1/20261,980 1,980 1,980 1.2 
Tailwind Smith Cooper Intermediate Corporation (14) (15)Fabricated Pipe and Pipe Fitting Manufacturing
Senior Secured Loan5.11%(L +5.00%)2/23/20215/28/20262,593 2,548 2,543 1.6 
12

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2021
(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
Tank Holding Corp. (14) (15)Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan3.36%(L +3.25%)6/24/20193/26/2026$1,970 $1,977 $1,946 1.2 %
Senior Secured Loan5.75%(L +5.00%)12/18/20203/26/2026893 880 899 0.6 
2,863 2,857 2,845 1.8 
The Escape Game, LLC (4)Other amusement and recreation industries
Senior Secured Loan9.75%(L +8.75%)12/22/201712/31/20212,333 2,329 2,312 1.4 
Senior Secured Loan9.75%(L +8.75%)2/14/202012/22/20227,000 6,976 6,937 4.3 
Senior Secured Loan9.75%(L +8.75%)7/18/201912/22/20227,000 7,000 6,937 4.3 
Senior Secured Loan (Delayed Draw)8.00%(L +7.00%)7/20/201812/31/20214,667 4,665 4,588 2.9 
21,000 20,970 20,774 12.9 
Thryv, Inc. (14) (15)Directory and Mailing List Publishers
Senior Secured Loan9.50%(L +8.50%)2/18/20213/1/20262,647 2,578 2,657 1.7 
United Biologics Holdings, LLC (4) (10)Medical Laboratories
Preferred Equity (151,787 units)4/16/201323 — 
Warrants (29,374 units) 7/26/20123/5/2022 (12)82 10 — 
91 33 — 
United Natural Foods (14) (15)General Line Grocery Merchant Wholesalers
Senior Secured Loan3.61%(L +3.50%)6/9/202010/22/2025283 273 283 0.2 
Wastebuilt Environmental Solutions, LLC (4)Industrial Supplies Merchant Wholesalers
Senior Secured Loan7.00% / 7.25% PIK(L +12.75%)10/11/201810/11/20247,400 7,206 7,272 4.5 
Weight Watchers International, Inc. (14) (15)Diet and Weight Reducing Centers
Senior Secured Loan5.50%(L +4.75%)6/10/202011/29/2024470 470 470 0.3 
West Corporation (14) (15)All Other Telecommunications
Senior Secured Loan4.50%(L +3.50%)2/26/202110/10/2024997 980 961 0.6 
Xperi (14) (15)Semiconductor and Related Device Manufacturing
Senior Secured Loan4.11%(L +4.00%)6/1/20206/1/2025426 395 427 0.3 
13

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2021
(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
Total Debt and Equity Investments$325,181 $324,610 $291,207 181.8 %
Structured Finance Note Investments
Apex Credit CLO 2020 Ltd. (7)
Subordinated Notes14.16% (9)11/16/202011/19/2031 (17)$11,080 $ 9,786 (16)$9,631 6.0 %
Dryden 53 CLO, LTD. (7)
Income Notes23.93% (9)10/26/20201/15/2031 (17)2,700 1,739 (16)1,892 1.2 
Subordinated Notes23.90% (9)10/26/20201/15/2031 (17)2,159 1,391 (16)1,513 0.9 
4,859 3,130 3,405 2.1 
Dryden 76 CLO, Ltd. (7)
Subordinated Notes17.90% (9)9/27/201910/20/2032 (17)2,750 2,260 (16)2,274 1.4 
Elevation CLO 2017-7, Ltd. (7)
Subordinated Notes13.54% (9)2/6/20197/15/2030 (17)10,000 6,745 (16)5,975 3.7 
Flatiron CLO 18, Ltd. (7)
Subordinated Notes19.60% (9)1/2/20194/17/2031 (17)9,680 7,185 (16)7,727 4.8 
Madison Park Funding XXIII, Ltd. (7)
Subordinated Notes21.23% (9)1/8/20207/27/2047 (17)10,000 6,545 (16)7,049 4.4 
Madison Park Funding XXIX, Ltd. (7)
Subordinated Notes18.81% (9)12/22/202010/18/2047 (17)9,500 7,401 (16)7,439 4.6 
Monroe Capital MML CLO X, Tranche E
Mezzanine bond - Class E9.03%(L +8.85%)3/10/20218/20/2031 (17)1,000 940 1,019 0.6 
Monroe Capital MML CLO X, LTD.
Mezzanine bond - Class E7.52%(L +7.30%)8/7/20201/20/2034 (17)1,000 970 1,000 0.6 
14

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2021
(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)
Subordinated Notes18.42% (9)1/23/202010/20/2030 (17)$7,000 5,097 (16)$5,452 3.4 %
Redding Ridge 4 (7)
Subordinated Notes13.92% (9)3/4/20214/15/2030 (17)1,300 1,169 (16)1,155 0.7 
Regatta II Funding
Mezzanine bond - Class DR27.19%(L +6.95%)6/5/20201/15/2029 (17)800 706 778 0.5 
THL Credit Wind River 2019‐3 CLO Ltd (7)
Subordinated Notes14.65% (9)4/5/20194/15/2031 (17)7,000 5,730 (16)4,734 3.0 
Trinitas CLO VIII (7)
Subordinated Notes15.34% (9)3/4/20217/20/2031 (17)5,200 3,267 (16)3,310 2.1 
Wellfleet CLO 2018-2 (7)
Subordinated Notes14.45% (9)3/4/202110/20/2031 (17)1,000 677 (16)682 0.4 
Total Structured Finance Note Investments$82,169 $61,608 $61,630 38.3 %
Total Non-control/Non-affiliate Investments$407,350 $386,218 $352,837 220.1 %
Affiliate Investments
3rd Rock Gaming Holdings, LLC (20)Software Publishers
Senior Secured Loan (6)8.50% cash / 1.0% PIK(L +7.50%)3/13/20183/12/202319,256 17,333 7,000 4.4 
Common Equity (2,547,250 units) (10) (13)3/13/20182,547 — — 
19,256 19,880 7,000 4.4 
Chemical Resources Holdings, Inc. (20)Custom Compounding of Purchased Resins
Senior Secured Loan (4) (8)9.09%(L +7.59%)1/25/20191/25/202413,743 13,639 13,842 8.6 
Common Equity (1,832 Class A shares) (10) (13)1/25/20191,814 3,267 2.0 
13,743 15,453 17,109 10.6 
15

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2021
(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
Contract Datascan Holdings, Inc. (4) (20)Office Machinery and Equipment Rental and Leasing
Preferred Equity (3,061 Series A shares), 10% PIK 8/5/2015$5,849 $2,728 1.7 %
Common Equity (11,273 shares) (10)6/28/2016104 41 — 
5,953 2,769 1.7 
DRS Imaging Services, LLC (20)Data Processing, Hosting, and Related Services
Common Equity (1,135 units) (10) (13)3/8/20181,135 1,872 1.2 
Master Cutlery, LLC (4) (10) (20)Sporting and Recreational Goods and Supplies Merchant Wholesalers
Subordinated Loan (6) (11)13.00%N/A4/17/20157/20/20226,936 4,764 657 0.4 
Preferred Equity (3,723 Series A units), 8% PIK 4/17/20153,483 — — 
Common Equity (15,564 units)4/17/2015— — — 
6,936 8,247 657 0.4 
NeoSystems Corp. (4) (20)Other Accounting Services
Preferred Equity (521,962 convertible shares), 10% PIK 8/14/20141,926 3,231 2.0 
Pfanstiehl Holdings, Inc. (4) (20) (21)Pharmaceutical Preparation Manufacturing
Common Equity (400 Class A shares)1/1/2014217 37,174 23.2 
Professional Pipe Holdings, LLC (19)Plumbing, Heating, and Air-Conditioning Contractors
Senior Secured Loan9.75% cash / 1.50% PIK(L +8.75%)3/23/20183/23/20235,720 5,612 5,499 3.4 
Common Equity (1,414 Class A units) (10)3/23/20181,414 976 0.6 
5,720 7,026 6,475 4.0 
TalentSmart Holdings, LLC (20)Professional and Management Development Training
Common Equity (1,595 Class A shares) (10) (13)10/11/20191,595 1,017 0.6 
16

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2021
(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
TRS Services, LLC (4) (10) (20)Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance
Preferred Equity (2,088,305 Class A units), 11% PIK 12/10/2014$— $822 0.5 %
Common Equity (3,000,000 units) (10)12/10/2014572 — — 
572 822 0.5 
TTG Healthcare, LLC (20)Diagnostic Imaging Centers
Senior Secured Loan (4)8.50%(L +7.50%)3/1/201911/28/202519,554 19,363 19,623 12.2 
Preferred Equity ( 2,309 Class B units) (10) (13)3/1/20192,309 4,215 2.6 
19,554 21,672 23,838 14.8 
Total Affiliate Investments$65,209 $83,676 $101,964 63.4 %
Control Investment
MTE Holding Corp. (4) (19)Travel Trailer and Camper Manufacturing
Subordinated Loan (to Mirage Trailers, LLC, a controlled, consolidated subsidiary of MTE Holding Corp.)11.00% cash / 5.00% PIK(L +10.00%)11/25/201511/25/20217,940 7,940 7,940 4.9 
Common Equity (554 shares) (10)11/25/20153,069 3,358 2.1 
7,940 11,009 11,298 7.0 
Total Control Investment$7,940 $11,009 $11,298 7.0 %
Total Investments$480,499 $480,903 $466,099 290.5 %

(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)Substantially all of the investments that bear interest at a variable rate are indexed to LIBOR (L) at March 31, 2021, and reset monthly, quarterly, or semi-annually. Variable-rate loans with an aggregate cost of $325,622 include LIBOR reference rate floor provisions of generally 0.75% to 1.75%; at March 31, 2021, the reference rate on such instruments was generally below the stated floor provisions. For each investment, the Company has provided the spread over the reference rate and current interest rate in effect at March 31, 2021. Unless otherwise noted, all investments with a stated PIK rate require interest payments with the issuance of additional securities as payment of the entire PIK provision.
(3)Unless otherwise noted with footnote 14, fair value was determined using significant unobservable inputs for all of the Company's investments and are considered Level 3 under GAAP. See Note 5 for further details.
(4)Investments (or portion thereof) held by SBIC I LP. These assets are pledged as collateral of the SBA debentures and cannot be pledged under any debt obligation of the Company.
(5)Subject to unfunded commitments. See Note 6 for further details.
(6)Investment was on non-accrual status as of March 31, 2021, meaning the Company has suspended recognition of all or a portion of income on the investment. See Note 4 for further details.
(7)CLO subordinated debt positions are entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying securities less contractual payments to debt holders and fund expenses.
17

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
March 31, 2021
(Dollar amounts in thousands)

(8)The Company has entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it has agreed to receive its payment after the repayment of certain co‑lenders pursuant to a payment waterfall. The table below provides additional details as of March 31, 2021:
Portfolio CompanyReported Interest RateInterest Rate per Credit AgreementAdditional Interest per Annum
Chemical Resources Holdings, Inc. 9.09%7.50%1.59%
Milrose Consultants, LLC7.61%7.00%0.61%
SourceHOV Tax, Inc.7.61%7.00%0.61%

(9)The rate disclosed is the estimated effective yield, generally established at purchase and re-evaluated upon receipt of distributions, and based upon projected amounts and timing of future distributions and the projected amount and timing of terminal principal payments at the time of estimation. The estimated yield and investment cost may ultimately not be realized.
(10)Non-income producing.
(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, 2021:
Portfolio CompanyInvestment TypeRange of PIK
Option
Range of Cash
Option
Maximum PIK
Rate Allowed
Community Intervention Services, Inc.Subordinated Loan0% to 6.00%13.00% to 7.00%6.00%
Eblens Holdings, Inc. Subordinated Loan0% or 1.00%13.00% or 12.00%1.00%
Master Cutlery, LLCSubordinated Loan0% to 13.00%13.00% to 0%13.00%

(12)Represents expiration date of the warrants.
(13)All or portion of investment held by a wholly-owned subsidiary of the Company subject to income tax.
(14)Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP. See Note 5 for further details.
(15)Investments (or portion thereof) held by OFSCC-FS. These assets are pledged as collateral of the BNP Facility and cannot be pledged under any debt obligation of the Company.
(16)Amortized cost reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO subordinated debt investments.
(17)Maturity date represents the contractual maturity date of the structured finance notes. Projected cash flows, including the projected amount and timing of terminal principal payments which may be projected to occur prior to the contractual maturity date, were utilized in deriving the effective yield of the investments.
(18)Not meaningful as there is no outstanding balance on the revolver. The Company earns unfunded commitment fees on undrawn revolving lines of credit balances, which are reported in fee income.
(19)The Company holds at least one seat on the portfolio company’s board of directors.
(20)The Company has an observer seat on the portfolio company’s board of directors.
(21)Portfolio company represents greater than 5% of total assets at March 31, 2021.
(22)In April 2021, the loan was sold for $105,000.


See Notes to Consolidated Financial Statements.
18

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments
December 31, 2020
(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
All Star Auto Lights, Inc. (4)Motor Vehicle Parts (Used) Merchant Wholesalers
Senior Secured Loan8.50%(L +7.50%)12/19/20198/20/2024$14,293 $14,167 $13,581 8.5 %
A&A Transfer, LLCConstruction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers
Senior Secured Loan (15)8.25%(L +6.50%)2/7/20202/7/202516,632 16,427 16,798 10.6 
Senior Secured Loan (Revolver) (5)n/m (18)(L +6.50%)2/7/20202/7/2025— (35)(21)— 
16,632 16,392 16,777 10.6 
Bass Pro Group, LLC (14) (15)Sporting Goods Stores
Senior Secured Loan5.75%(L +5.00%)6/24/20199/25/20242,954 2,907 2,968 1.9 
BayMark Health Services, Inc.Outpatient Mental Health and Substance Abuse Centers
Senior Secured Loan9.25%(L +8.25%)3/22/20183/1/20254,000 3,976 4,000 2.5 
Community Intervention Services, Inc. (4) (6) (11)Outpatient Mental Health and Substance Abuse Centers
Subordinated  Loan7.00% cash / 6.00% PIKN/A7/16/20151/16/202110,225 7,639 105 0.1 
Confie Seguros Holdings II Co.Insurance Agencies and Brokerages
Senior Secured Loan8.73%(L +8.50%)7/7/201511/1/20259,678 9,544 9,302 5.9 
Connect U.S. Finco LLC (14) (15)Taxi Service
Senior Secured Loan5.50%(L +4.50%)11/20/201912/11/20261,985 1,976 1,997 1.3 
Constellis Holdings, LLC (10)Other Justice, Public Order, and Safety Activities
Common Equity (20,628 common shares)3/27/2020703 676 0.4 
Convergint Technologies Holdings, LLCSecurity Systems Services (except Locksmiths)
Senior Secured Loan7.50%(L +6.75%)9/28/20182/2/20263,481 3,437 3,390 2.1 
Custom Truck One Source (14) (15)Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing
Senior Secured Loan4.40%(L +4.25%)9/30/20204/18/2025497 496 499 0.3 
19

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 2020
(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
Diamond Sports Group, LLC (14) (15)Television Broadcasting
Senior Secured Loan3.40%(L +3.25%)11/19/20198/24/2026$1,975 $1,977 $1,758 1.1 %
DuPage Medical Group (15)Offices of Physicians, Mental Health Specialists
Senior Secured Loan7.75%(L +7.00%)8/22/20178/15/202510,098 10,159 10,098 6.4 
Eblens Holdings, Inc. (20)Shoe Store
Subordinated  Loan (11)12.00% cash / 1.00% PIKN/A7/13/20171/13/20239,114 9,035 4,368 2.7 
Common Equity (71,250 Class A units) (10)7/13/2017713 — — 
9,114 9,748 4,368 2.7 
Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4)Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan7.50% cash / 3.50% PIK(L +7.50%)6/30/20176/30/202217,150 17,055 12,668 8.0 
Preferred Equity (238,095 Series B units) (10)6/30/2017300 — — 
Preferred Equity (13,315 Series C units) (10)8/13/201813 — — 
17,150 17,368 12,668 8.0 
Excelin Home Health, LLCHome Health Care Services
Senior Secured Loan11.50%(L +9.50%)10/25/20184/25/20244,250 4,199 4,250 2.7 
GGC Aerospace Topco L.P.Other Aircraft Parts and Auxiliary Equipment Manufacturing
Senior Secured Loan9.75%(L +9.50%)12/29/20179/8/20245,000 4,931 4,102 2.6 
Common Equity (368,852 Class A units) (10)12/29/2017450 166 0.1 
Common Equity (40,984 Class B units) (10)12/29/201750 — 
5,000 5,431 4,275 2.7 
Inergex Holdings, LLCOther Computer Related Services
Senior Secured Loan8.00%(L +7.00%)10/1/201810/1/202416,422 16,265 15,913 9.9 
Senior Secured Loan (Revolver) (5)n/m (18)(L +7.00%)10/1/201810/1/2024— (18)87 0.1 
16,422 16,247 16,000 10.0 
Institutional Shareholder Services, Inc.Administrative Management and General Management Consulting Services
Senior Secured Loan8.75%(L +8.50%)3/4/20193/5/20276,244 6,099 6,244 3.9 
Intouch Midco Inc. (15)All Other Professional, Scientific, and Technical Services
Senior Secured Loan4.90%(L +4.75%)12/20/20198/24/20251,980 1,921 1,905 1.2 
20

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 2020
(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
I&I Sales Group, LLCMarketing Consulting Services
Senior Secured Loan (15)9.50%(L +8.50%)12/30/20207/10/2025$5,325 $5,232 $5,232 3.3 %
Senior Secured Loan (Revolver) (5)n/m (18)(L +8.50%)12/30/20207/10/2025— (3)(3)— 
5,325 5,229 5,229 3.3 
Milrose Consultants, LLC (4) (8)Administrative Management and General Management Consulting Services
Senior Secured Loan7.62%(L +6.62%)7/16/20197/16/202522,574 22,404 22,485 14.0 
My Alarm Center, LLC (10)Security Systems Services (except Locksmiths)
Preferred Equity (335 Class Z units) (13)9/12/2018325 97 0.1 
Preferred Equity (1,485 Class A units), 8% PIK (4) (13)7/14/20171,571 — — 
Preferred Equity (1,198 Class B units) (4)7/14/20171,198 — — 
Common Equity (64,149 units) (4) (13)7/14/2017— — — 
3,094 97 0.1 
Online Tech Stores, LLC (4) (6)Stationery and Office Supplies Merchant Wholesalers
Subordinated Loan13.50% PIKN/A2/1/20188/1/202318,360 16,129 2,426 1.5 
Panther BF Aggregator 2 LP (14) (15) (19)Other Commercial and Service Industry Machinery Manufacturing
Senior Secured Loan3.65%(L +3.50%)11/19/20194/30/20261,939 1,925 1,936 1.2 
Parfums Holding Company, Inc.Cosmetics, Beauty Supplies, and Perfume Stores
Senior Secured Loan (14) (15)4.23%(L +4.00%)6/25/20196/30/20241,537 1,536 1,530 1.0 
Senior Secured Loan9.75%(L +8.75%)11/16/20176/30/20255,171 5,202 5,171 3.3 
6,708 6,738 6,701 4.3 
Pelican Products, Inc.Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan8.75%(L +7.75%)9/24/20185/1/20266,055 6,059 5,994 3.8 
Pike Corp. (14) (15)Electrical Contractors and Other Wiring Installation Contractors
Senior Secured Loan3.14%(L +3.00%)9/17/20207/24/2026469 469 469 0.3 
21

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 2020
(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
PM Acquisition LLC (20)All Other General Merchandise Stores
Senior Secured Loan11.50% cash / 2.50% PIKN/A9/30/201710/29/2021$4,780 $4,753 $4,780 3.0 %
Common Equity (499 units) (10) (13)9/30/2017499 280 0.2 
4,780 5,252 5,060 3.2 
Quest Software US Holdings Inc. (14) (15)Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Senior Secured Loan4.46%(L +4.25%)6/25/20195/16/20251,970 1,955 1,942 1.2 
Resource Label Group, LLCCommercial Printing (except Screen and Books)
Senior Secured Loan9.50%(L +8.50%)6/7/201711/26/20234,821 4,789 4,812 3.0 
Rocket Software, Inc. (15)Software Publishers
Senior Secured Loan8.46%(L +8.25%)11/20/201811/28/20266,275 6,190 6,241 3.9 
RPLF Holdings, LLC (10) (13)Software Publishers
Common Equity (254,110 Class A units)1/17/2018492 605 0.4 
Sentry Centers Holdings, LLC (10) (13)Other Professional, Scientific, and Technical Services
Preferred Equity (2,248 Series A units)9/4/202051 47 — 
Preferred Equity (1,603 Series B units)9/4/2020160 160 0.1 
Common Equity (269 units)9/4/2020— 
214 210 0.1 
SkyMiles IP Ltd. and Delta Air Lines, Inc. (14) (15)Scheduled Passenger Air Transportation
Senior Secured Loan4.75%(L +3.75%)9/15/202010/20/2027500 495 520 0.3 
SourceHOV Tax, Inc. (4) (8)Other Accounting Services
Senior Secured Loan7.61%(L +6.11%)3/16/20203/16/202519,892 19,742 19,988 12.6 
Southern Technical Institute, LLC (4) (10)Colleges, Universities, and Professional Schools
Equity appreciation rights6/27/2018— 4,295 2.7 
22

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 2020
(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
Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.)Child Day Care Services
Senior Secured Loan8.50%(L +8.25%)7/26/20187/30/2026$5,216 $5,178 $4,656 2.9 %
SSJA Bariatric Management LLC (15)Offices of Physicians, Mental Health Specialists
Senior Secured Loan6.00%(L +5.00%)8/26/20198/26/20249,875 9,803 9,647 6.1 
Senior Secured Loan6.25%(L +5.25%)12/31/20208/26/20241,067 1,056 1,042 0.7 
Senior Secured Loan (Revolver) (5)n/m (18)(L +5.00%)8/26/20198/26/2024— (5)15 — 
10,942 10,854 10,704 6.8 
Stancor, L.P. (4)Pump and Pumping Equipment Manufacturing
Preferred Equity (1,250,000 Class A units), 8% PIK (10)8/19/20141,501 1,281 0.8 
Staples, Inc. (14) (15)Business to Business Electronic Markets
Senior Secured Loan5.21%(L +5.00%)6/24/20194/16/20262,960 2,891 2,875 1.8 
STS Operating, Inc.Industrial Machinery and Equipment Merchant Wholesalers
Senior Secured Loan (14) (15)5.25%(L +4.25%)5/16/201812/11/2024625 626 601 0.4 
Senior Secured Loan9.00%(L +8.00%)5/15/20184/30/20269,073 9,070 8,578 5.4 
9,698 9,696 9,179 5.8 
Sunshine Luxembourg VII SARL (14) (15)Pharmaceutical Preparation Manufacturing
Senior Secured Loan5.00%(L +4.00%)11/20/20199/25/20261,980 1,988 1,992 1.3 
Tank Holding Corp. (15)Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan (14)5.50%(L +4.00%)6/24/20193/26/20261,975 1,981 1,942 1.2 
Senior Secured Loan3.40%(L +3.25%)12/18/20203/26/2026896 882 882 0.6 
2,871 2,863 2,824 1.8 
The Escape Game, LLC (4)Other amusement and recreation industries
Senior Secured Loan9.75%(L +8.75%)7/18/201912/22/20227,000 6,973 6,647 4.2 
Senior Secured Loan9.75%(L +8.75%)12/22/201712/31/20212,333 2,329 2,216 1.4 
Senior Secured Loan8.00%(L +7.00%)7/20/201812/31/20214,667 4,665 4,463 2.8 
Senior Secured Loan (Delayed Draw)9.75%(L +8.75%)7/20/201812/22/20227,000 7,000 6,647 4.2 
21,000 20,967 19,973 12.6 
23

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 2020
(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
Truck Hero, Inc. (15)Truck Trailer Manufacturing
Senior Secured Loan9.25%(L +8.25%)5/30/20174/21/2025$8,174 $8,118 $8,174 5.1 %
United Biologics Holdings, LLC (4) (10)Medical Laboratories
Preferred Equity (151,787 units)4/16/201326 — 
Warrants (29,374 units)7/26/20123/5/2022 (12)82 12 — 
91 38 — 
United Natural Foods (14) (15)General Line Grocery Merchant Wholesalers
Senior Secured Loan4.40%(L +4.25%)6/9/202010/22/2025286 275 284 0.2 
Wastebuilt Environmental Solutions, LLC (4)Industrial Supplies Merchant Wholesalers
Senior Secured Loan10.25%(L +8.75%)10/11/201810/11/20247,000 6,908 5,476 3.4 
Weight Watchers International, Inc. (14) (15)Diet and Weight Reducing Centers
Senior Secured Loan5.50%(L +4.75%)6/10/202011/29/2024477 477 479 0.3 
Xperi (14) (15)Semiconductor and Related Device Manufacturing
Senior Secured Loan4.15%(L +4.00%)6/1/20206/1/2025433 399 434 0.3 
Total Debt and Equity Investments$306,683 $307,768 $272,240 171.3 %
Structured Finance Note Investments
Apex Credit CLO 2020 (7)
Subordinated Notes14.16% (9)11/16/202011/19/2031 (17)11,080 9,461 (16)10,006 6.3 
Dryden 53 CLO, LTD. (7)
Income Notes16.68% (9)10/26/20201/15/2031 (17)2,700 1,779 1,967 1.2 
Subordinated Notes16.68% (9)10/26/20201/15/2031 (17)2,159 1,423 (16)1,573 1.0 
4,859 3,202 3,540 2.2 
Dryden 76 CLO, Ltd. (7)
Subordinated Notes18.68% (9)9/27/201910/20/2032 (17)2,750 2,282 (16)2,235 1.4 
24

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 2020
(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
Elevation CLO 2017-7, Ltd. (7)
Subordinated Notes12.32% (9)2/6/20197/15/2030 (17)$10,000 $ 6,955 (16)$6,226 3.9 %
Flatiron CLO 18, Ltd. (7)
Subordinated Notes20.73% (9)1/2/20194/17/2031 (17)9,680 7,265 (16)7,702 4.8 
Madison Park Funding XXIII, Ltd. (7)
Subordinated Notes21.99% (9)1/8/20207/27/2047 (17)10,000 6,654 (16)7,129 4.5 
Madison Park Funding XXIX, Ltd. (7)
Subordinated Notes14.22% (9)12/22/202010/18/2047 (17)9,500 7,529 (16)7,569 4.8 
Monroe Capital MML CLO X, LTD.
Mezzanine bond - Class E9.08%(L +8.85%)8/7/20208/20/2031 (17)863 802 838 0.5 
Octagon Investment Partners 39, Ltd. (7)
Subordinated Notes20.81% (9)1/23/202010/20/2030 (17)7,000 5,173 (16)5,493 3.5 
Park Avenue Institutional Advisers CLO 2017-1
Mezzanine bond - Class D6.44%(L +6.22%)6/5/202011/14/2029 (17)100 83 95 0.1 
Regatta II Funding
Mezzanine bond - Class DR27.19%(L +6.95%)6/5/20201/15/2029 (17)800 695 768 0.5 
THL Credit Wind River 2019‐3 CLO Ltd. (7)
Subordinated Notes14.69% (9)4/5/20194/15/2031 (17)7,000 5,759 (16)4,824 3.0 
Total Structured Finance Note Investments$73,632 $55,860 $56,425 35.5 %
Total Non-control/Non-affiliate Investments$380,315 $363,628 $328,665 206.8 %
25

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 2020
(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
Affiliate Investments
3rd Rock Gaming Holdings, LLC (20)Software Publishers
Senior Secured Loan (6)8.50% cash / 1.00% PIK(L +7.50%)3/13/20183/12/2023$20,858 $19,570 $9,258 5.8 %
Common Equity (2,547,250 units) (10) (13)3/13/20182,547 — — 
20,858 22,117 9,258 5.8 
Chemical Resources Holdings, Inc. (20)Custom Compounding of Purchased Resins
Senior Secured Loan (4)(8)9.22%(L +7.72%)1/25/20191/25/202413,743 13,630 13,744 8.6 
Common Equity (1,832 Class A shares) (10) (13)1/25/20191,814 3,420 2.2 
13,743 15,444 17,164 10.8 
Contract Datascan Holdings, Inc. (4)(20)Office Machinery and Equipment Rental and Leasing
Preferred Equity (3,061 Series A shares) 10% PIK8/5/20155,849 2,690 1.7 
Common Equity (11,273 shares) (10)6/28/2016104 46 — 
5,953 2,736 1.7 
DRS Imaging Services, LLC (20)Data Processing, Hosting, and Related Services
Common Equity (1,135 units) (10) (13)3/8/20181,135 1,749 1.1 
Master Cutlery, LLC (4) (10)(20)Sporting and Recreational Goods and Supplies Merchant Wholesalers
Subordinated Loan (6)13.00% (11)N/A4/17/20157/20/20226,759 4,764 346 0.2 
Preferred Equity (3,723 Series A units), 8% PIK4/17/20153,483 — — 
Common Equity (15,564 units)4/17/2015— — — 
6,759 8,247 346 0.2 
NeoSystems Corp. (4)(20)Other Accounting Services
Preferred Equity (521,962 convertible shares) 10% PIK8/14/20141,879 2,250 1.4 
Pfanstiehl Holdings, Inc. (4)(20)(21)Pharmaceutical Preparation Manufacturing
Common Equity (400 Class A shares)1/1/2014217 36,221 22.8 
26

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 2020
(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
Professional Pipe Holdings, LLC (19)Plumbing, Heating, and Air-Conditioning Contractors
Senior Secured Loan9.75% cash / 1.50% PIK(L +8.75%)3/23/20183/23/2023$6,263 $6,193 $6,086 3.8 %
Common Equity (1,414 Class A units) (10)3/23/20181,414 1,208 0.8 
6,263 7,607 7,294 4.6 
TalentSmart Holdings, LLC (20)Professional and Management Development Training
Common Equity (1,595,238 Class A shares) (10) (13)10/11/20191,595 1,306 0.8 
TRS Services, LLC (4)(20)Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance
Preferred Equity (1,937,191 Class A units), 11% PIK12/10/2014— 915 0.6 
Common Equity (3,000,000 units) (10)12/10/2014572 — — 
572 915 0.6 
TTG Healthcare, LLC (20)Diagnostic Imaging Centers
Senior Secured Loan (4)8.50%(L +7.50%)3/1/201911/28/202519,603 19,409 19,530 12.3 
Preferred Equity ( 2,309 Class B units) (10) (13)3/1/20192,309 4,077 2.6 
19,603 21,718 23,607 14.9 
Total Affiliate Investments$67,226 $86,484 $102,846 64.7 %
Control Investment
MTE Holding Corp. (4)(19)Travel Trailer and Camper Manufacturing
Subordinated Loan (to Mirage Trailers, LLC, a controlled, consolidated subsidiary of MTE Holding Corp.)11.00% cash / 5.00% PIK(L +10.00%)11/25/201511/25/20217,842 7,842 7,822 4.9 
Common Equity (554 shares) (10)11/25/20153,069 2,990 1.9 
7,842 10,911 10,812 6.8 
Total Control Investment$7,842 $10,911 $10,812 6.8 %
Total Investments$455,383 $461,023 $442,323 278.3 %
(1)Equity ownership may be held in shares or units of companies affiliated with the portfolio company. The Company's investments are generally classified as "restricted securities" as such term is defined under Regulation S-X Rule 6-03(f) or Securities Act Rule 144.
27

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued
December 31, 2020
(Dollar amounts in thousands)

(2)Substantially all of the investments that bear interest at a variable rate are indexed to LIBOR (L), generally between 0.75% and 1.0% at December 31, 2020, and reset monthly, quarterly, or semi-annually. Variable-rate loans with an aggregate cost of $328,736 include LIBOR reference rate floor provisions of generally 0.75% to 1.0% at December 31, 2020, the reference rate on such instruments was generally below the stated floor provisions. For each investment, the Company has provided the spread over the reference rate and current interest rate in effect at December 31, 2020. Unless otherwise noted, all investments with a stated PIK rate require interest payments with the issuance of additional securities as payment of the entire PIK provision.
(3)Unless otherwise noted with footnote 14, fair value was determined using significant unobservable inputs for all of the Company's investments and are considered Level 3 under GAAP. See Note 5 for further details.
(4)Investments (or portion thereof) held by SBIC I LP. These assets are pledged as collateral of the SBA debentures and cannot be pledged under any debt obligation of the Company.
(5)Subject to unfunded commitments. See Note 6 for further details.
(6)Investment was on non-accrual status as of December 31, 2020, meaning the Company has suspended recognition of all or a portion of income on the investment. See Note 4 for further details.
(7)CLO subordinated debt positions are entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying securities less contractual payments to debt holders and fund expenses.
(8)The Company has entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it has agreed to receive its payment after the repayment of certain co‑lenders pursuant to a payment waterfall. The table below provides additional details as of December 31, 2020:
Portfolio CompanyReported Interest RateInterest Rate per Credit AgreementAdditional Interest per Annum
Chemical Resources Holdings, Inc.9.17%7.50%1.67%
Milrose Consultants, LLC7.62%7.00%0.62%
SourceHOV Tax, Inc.7.61%7.00%0.61%
(9)The rate disclosed is the estimated effective yield, generally established at purchase and re-evaluated upon receipt of distributions, and based upon projected amounts and timing of future distributions and the projected amount and timing of terminal principal payments at the time of estimation. The estimated yield and investment cost may ultimately not be realized.
(10)Non-income producing.
(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, 2020:
Portfolio CompanyInvestment TypeRange of PIK
Option
Range of Cash
Option
Maximum PIK
Rate Allowed
Community Intervention Services, Inc.Subordinated Loan0% or 6.00%13.00% or 7.00%6.00%
Eblens Holdings, Inc. Subordinated Loan0% or 1.00%13.00% or 12.00%1.00%
Master Cutlery, LLCSubordinated Loan0% to 13.00%13.00% to 0%13.00%
(12)Represents expiration date of the warrants.
(13)All or portion of investment held by a wholly-owned subsidiary of the Company subject to income tax.
(14)Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP. See Note 5 for further details.
(15)Investments (or portion thereof) held by OFSCC-FS. These assets are pledged as collateral of the BNP Facility and cannot be pledged under any other debt obligation of the Company.
(16)Amortized cost reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO subordinated debt investments.
(17)Maturity date represents the contractual maturity date of the Structured Finance Notes. Projected cash flows, including the projected amount and timing of terminal principal payments which may be projected to occur prior to the contractual maturity date, were utilized in deriving the effective yield of the investments.
(18)Not meaningful as there is no outstanding balance on the revolver. The Company earns unfunded commitment fees on undrawn revolving lines of credit balances, which are reported in fee income.
(19)The Company holds at least one seat on the portfolio company’s board of directors.
(20)The Company has an observer seat on the portfolio company’s board of directors.
(21)Portfolio company represents greater than 5% of total assets at December 31, 2020.

See Notes to Consolidated Financial Statements.
28

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Note 1. Organization
OFS Capital Corporation, a Delaware corporation, is an externally managed, closed-end, non-diversified management investment company. The Company has elected to be regulated as a BDC under the 1940 Act. In addition, for income tax purposes, the Company has elected to be treated as a RIC under Subchapter M of the Code.
The Company’s investment objective is to provide stockholders with both current income and capital appreciation primarily through debt investments and, to a lesser extent, equity investments. OFS Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company.
In addition, OFS Advisor serves as the investment adviser for HPCI, a non-traded BDC with an investment strategy and objective similar to that of the Company. OFS Advisor also serves as the investment adviser for OCCI, a non-diversified, externally managed, closed-end management investment company that has registered as an investment company under the 1940 Act, and that primarily invests in the equity tranche of CLOs.
The Company may make investments directly or through one of its subsidiaries: SBIC I LP, OFSCC-FS or OFSCC-MB.
SBIC I LP is an investment company subsidiary licensed under the SBA's small business investment company program. The Company is limited to follow-on investments in current portfolio companies held through SBIC I LP. SBIC I LP is subject to SBA regulatory requirements, including: limitations on the businesses and industries in which it can invest; requirements to invest at least 25% of its regulatory capital in eligible smaller businesses, as defined under the SBIC Act; limitations on the financing terms of investments; and capitalization thresholds that may limit distributions to the Company. SBIC I LP is subject to periodic audits and examinations of its financial statements. SBIC I LP is repaying over time its outstanding SBA debentures prior to their scheduled maturity dates.
OFSCC-FS is a special-purpose vehicle formed in April 2019 for the purpose of acquiring senior secured loan investments. OFSCC-FS has debt financing through its BNP Facility which provides OFSCC-FS with borrowing capacity of up to $150,000.
OFSCC-MB is a wholly-owned subsidiary taxed under subchapter C of the Code and 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 thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.
Significant Accounting Policies: The following information supplements the description of significant accounting policies contained in Note 2 to the Company's consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
Reclassifications: Certain prior period amounts have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes thereto. Reclassifications did not impact net increase in net assets resulting from operations, total assets, total liabilities or total net assets, or consolidated statements of changes in net assets and consolidated statements of cash flows classifications.
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 its debt instruments, including investments in Structured Finance Notes of CLOs, financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits at financial institutions. At various times during the year, the Company may exceed the federally insured limits. The Company
29

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
places cash deposits only with high credit quality institutions which OFS Advisor believes will mitigate the risk of loss due to credit risk. The amount of loss due to credit risk from debt investments if borrowers completely fail to perform according to the terms of the contracts, is equal to the Company's recorded investment in debt instruments and the unfunded loan commitments as disclosed in Note 6. The collateral or other security for those instruments proved to be of no value to the Company.
Note 3. Related Party Transactions
Investment Advisory and Management Agreement: OFS Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company pursuant to the Investment Advisory Agreement. The continuation of the Investment Advisory Agreement was most recently approved by the Board on April 1, 2021. Under the terms of the Investment Advisory Agreement, which are in accordance with the 1940 Act and subject to the overall supervision of the Board, OFS Advisor is responsible for sourcing potential investments, conducting research and diligence on potential investments and equity sponsors, analyzing investment opportunities, structuring investments, and monitoring investments and portfolio companies on an ongoing basis.
OFS Advisor’s services under the Investment Advisory Agreement are not exclusive to the Company and OFS Advisor is free to furnish similar services to other entities, including other funds affiliated with OFS Advisor, so long as its services to the Company are not impaired. OFS Advisor also serves as the investment adviser or collateral manager to CLO funds and other companies, including HPCI and OCCI.
OFS Advisor receives fees for providing services, consisting of two components: a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 1.75% and based on the average value of the Company’s total assets (other than cash but including assets purchased with borrowed amounts and assets owned by any consolidated entity) at the end of the two most recently completed calendar quarters, adjusted for any share issuances or repurchases during the quarter. OFS Advisor has elected to exclude the value of the intangible asset and goodwill resulting from the SBIC Acquisition from the base management fee calculation.
Effective January 1, 2020, OFS Advisor agreed to reduce a portion of its base management fee by reducing the portion of such fee from 0.4375% per quarter (1.75% annualized) to 0.25% per quarter (1.00% annualized) of the average value of the portion of the OFSCC-FS Assets at the end of the two most recently completed calendar quarters. The base management fee reduction by OFS Advisor is renewable on an annual basis and the amount of the base management fee reduced with respect to the OFSCC-FS Assets shall not be subject to recoupment by OFS Advisor; On February 16, 2021, OFS Advisor renewed the waiver through December 31, 2021.
The incentive fee has two parts. The first part ("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 (defined below) and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest or dividend feature (such as OID, debt instruments with PIK interest, equity investments with accruing or PIK dividend and zero coupon securities), accrued income that the Company has not yet received in cash.
Pre-incentive fee net investment income is expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter and adjusted for any share issuances or repurchases during such quarter.
The incentive fee with respect to pre-incentive fee net income is 20.0% of the amount, if any, by which the pre-incentive fee net investment income for the immediately preceding calendar quarter exceeds a 2.0% hurdle rate (which is 8.0% annualized) and a “catch-up” provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, OFS Advisor receives no incentive fee until the net investment income equals the hurdle rate of 2.0%, but then receives, as a “catch-up,” 100.0% of the pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.5%. The effect of this provision is that, if pre-incentive fee net investment income exceeds 2.5% in any calendar quarter, OFS Advisor will receive 20.0% of the pre-incentive fee net investment income.
Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive
30

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
fee in a quarter in which the Company incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the quarterly minimum hurdle rate, the Company will pay the applicable incentive fee even if the Company has incurred a loss in that quarter due to realized and unrealized capital losses. The Company’s net investment income used to calculate this part of the incentive fee is also included in the amount of the Company’s gross assets used to calculate the base management fee. These calculations are appropriately prorated for any period of less than three months.
The second part of the incentive fee (the “Capital Gain Fee”) is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 20.0% of the Company’s aggregate realized capital gains, if any, on a cumulative basis from the date of the election to be a BDC through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation through the end of such year, less all previous amounts paid in respect of the Capital Gain Fee.
The Company accrues the Capital Gain Fee if, on a cumulative basis, the sum of net realized capital gains and (losses) plus net unrealized appreciation and (depreciation) is positive. If, on a cumulative basis, the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation) decreases during a period, the Company will reverse any excess Capital Gain Fee previously accrued such that the amount of Capital Gains Fee accrued is no more than 20% of the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation).
On May 4, 2020, OFS Advisor agreed to irrevocably waive the receipt of $441 in Income Incentive Fees (based on net investment income) related to net investment income, that it would otherwise be entitled to receive under the Investment Advisory Agreement for the three months ended March 31, 2020. As a result of the voluntary fee waiver, the Company incurred Income Incentive Fee expense of $442 for the three months ended March 31, 2020, which is equal to half the Income Incentive Fee expense the Company would have incurred for the three months ended March 31, 2020. The voluntary fee waiver did not include Capital Gain Fees, which was $0 for the three months ended March 31, 2020.
License Agreement: The Company is party to a license agreement with OFSAM under which OFSAM has granted the Company a non-exclusive, royalty-free license to use the name “OFS.”
Administration Agreement: OFS Services furnishes the Company with office facilities and equipment, necessary software licenses and subscriptions, and clerical, bookkeeping and record keeping services at such facilities pursuant to the Administration Agreement. 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, 2021, affiliates of OFS Advisor held 3,033,257 shares of common stock, which is approximately 23% of the Company's outstanding shares of common stock.
31

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(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, 2021 and 2020, are presented below:
Three Months Ended March 31,
20212020
Base management fees$1,834 $2,019 
Incentive fees:
Income Incentive Fee— 883 
Incentive fee waiver— (441)
Administration fee expense568 520 
Distributions paid to affiliates607 1,031 
Note 4. Investments
As of March 31, 2021, the Company had loans to 59 portfolio companies, of which 96% were senior secured loans and 4% were subordinated loans, at fair value, as well as equity investments in 10 of these portfolio companies. The Company also held equity investments in thirteen portfolio companies in which it did not hold a debt investment and fifteen investments in Structured Finance Notes. At March 31, 2021, the Company's investments consisted of the following:
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Senior secured debt investments (1)
$339,615 70.7 %211.6 %$324,150 69.5 %201.9 %
Subordinated debt investments45,526 9.5 28.4 13,742 2.9 8.6 
Preferred equity18,695 3.9 11.7 12,311 2.6 7.7 
Common equity, warrants and other15,459 3.2 9.6 54,266 11.6 33.8 
  Total debt and equity investments419,295 87.3 261.3 404,469 86.6 252.0 
Structured Finance Notes61,608 12.7 38.4 61,630 13.4 38.5 
Total investments$480,903 100.0 %299.7 %$466,099 100.0 %290.5 %
(1)    Includes debt investments, typically referred to as unitranche, in which the Company has entered into contractual arrangements with co‑lenders whereby, subject to certain conditions, the Company has agreed to receive its principal payments after the repayment of certain co‑lenders pursuant to a payment waterfall. Amortized cost and fair value of these investments were $55,767 and $57,029, respectively.
32

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Geographic composition is determined by the location of the corporate headquarters of the portfolio company. As of March 31, 2021 and December 31, 2020, the Company's investment portfolio was domiciled as follows:
March 31, 2021December 31, 2020
Amortized CostFair ValueAmortized CostFair Value
United States of America$409,586 $394,756 $399,278 $380,004 
Canada5,749 5,757 1,921 1,905 
Cayman Islands1
61,608 61,630 55,860 56,425 
Luxembourg1,980 1,976 1,976 1,997 
Switzerland1,980 1,980 1,988 1,992 
Total investments$480,903 $466,099 $461,023 $442,323 
(1) Cayman Island investments represent Structured Finance Notes held by the Company. These investments generally represent beneficial interests in underlying portfolios of debt investments in companies domiciled in the United States of America.
As of March 31, 2021, the industry composition of the Company’s investment portfolio was as follows:
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Administrative and Support and Waste Management and Remediation Services
Convention and Trade Show Organizers$214 — %0.1 %$28 — %— %
Security Systems Services (except Locksmiths)12,507 2.6 %7.8 9,413 2.0 6.0 
Arts, Entertainment, and Recreation
Other Amusement and Recreation Industries20,970 4.4 13.1 20,774 4.5 12.9 
Construction
Electrical Contractors and Other Wiring Installation Contractors17,670 3.7 11.0 12,806 2.7 8.0 
New Single-Family Housing Construction (except For-Sale Builders)596 0.1 0.4 596 0.1 0.4 
Plumbing, Heating, and Air-Conditioning Contractors7,026 1.5 4.4 6,475 1.4 4.0 
Education Services
Colleges, Universities, and Professional Schools— — — 4,789 1.0 3.0 
Professional and Management Development Training1,595 0.3 1.0 1,017 0.2 0.6 
Finance and Insurance
Direct Health and Medical Insurance Carriers2,968 0.6 1.8 2,968 0.6 1.8 
Insurance Agencies and Brokerages12,466 2.6 7.8 12,452 2.7 7.8 
Health Care and Social Assistance
Child Day Care Services5,150 1.1 3.2 4,667 1.0 2.9 
Diagnostic Imaging Centers21,672 4.5 13.5 23,838 5.1 14.9 
Home Health Care Services4,203 0.9 2.6 4,250 0.9 2.5 
Medical Laboratories91 — 0.1 33 — — 
Offices of Physicians, Mental Health Specialists10,831 2.3 6.7 10,834 2.3 6.8 
33

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Outpatient Mental Health and Substance Abuse Centers$20,679 4.3 %12.9 %$13,205 2.8 %8.2 %
Information
All Other Telecommunications980 0.2 0.6 961 0.2 0.6 
Cable and Other Subscription Programming2,929 0.6 1.8 2,928 0.6 1.8 
Data Processing, Hosting, and Related Services3,632 0.8 2.3 4,368 0.9 2.7 
Directory and Mailing List Publishers2,578 0.5 1.6 2,657 0.6 1.7 
Internet Publishing and Broadcasting and Web Search Portals2,003 0.4 1.2 2,003 0.4 1.2 
Motion Picture and Video Production2,450 0.5 1.5 2,450 0.5 1.5 
Software Publishers24,692 5.1 15.5 11,921 2.6 7.4 
Television Broadcasting1,972 0.4 1.2 1,368 0.3 0.9 
Manufacturing
Commercial Printing (except Screen and Books)4,792 1.0 3.0 4,821 1.0 3.0 
Custom Compounding of Purchased Resins15,453 3.2 9.6 17,109 3.7 10.7 
Other Aircraft Parts and Auxiliary Equipment Manufacturing5,436 1.1 3.4 4,412 0.9 2.7 
Fabricated Pipe and Pipe Fitting Manufacturing2,548 0.5 1.6 2,543 0.5 1.6 
Motor Vehicle Body Manufacturing1,465 0.3 0.9 1,465 0.3 0.9 
Other Commercial and Service Industry Machinery Manufacturing1,934 0.4 1.2 1,934 0.4 1.2 
Pharmaceutical Preparation Manufacturing2,197 0.5 1.4 39,154 8.4 24.4 
Pump and Pumping Equipment Manufacturing1,501 0.3 0.9 1,264 0.3 0.8 
Semiconductor and Related Device Manufacturing395 0.1 0.2 427 0.1 0.3 
Travel Trailer and Camper Manufacturing11,009 2.3 6.9 11,298 2.4 7.0 
Unlaminated Plastics Profile Shape Manufacturing9,106 1.9 5.7 9,094 2.0 5.7 
Other Services (except Public Administration)
Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance572 0.1 0.4 822 0.2 0.5 
Diet and Weight Reducing Centers470 0.1 0.3 470 0.1 0.3 
Professional, Scientific, and Technical Services
Administrative Management and General Management Consulting Services22,377 4.7 13.9 23,026 4.9 14.3 
All Other Professional, Scientific, and Technical Services1,998 0.4 1.2 2,006 0.4 1.3 
Marketing Consulting Services5,234 1.1 3.3 5,274 1.1 3.3 
Other Accounting Services21,677 4.5 13.5 23,392 5.0 14.6 
Other Computer Related Services16,200 3.4 10.1 16,408 3.5 10.2 
Public Administration
34

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Other Justice, Public Order, and Safety Activities$703 0.1 %0.4 %$462 0.1 %0.3 %
Real Estate and Rental and Leasing
Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing462 0.1 0.3 463 0.1 0.3 
Office Machinery and Equipment Rental and Leasing5,953 1.2 3.7 2,769 0.6 1.7 
Retail Trade
Automotive Parts and Accessories Stores1,710 0.4 1.1 1,710 0.4 1.1 
Cosmetics, Beauty Supplies, and Perfume Stores1,536 0.3 1.0 1,527 0.3 1.0 
Shoe store9,754 2.0 6.1 4,946 1.1 3.1 
Sporting Goods Stores5,729 1.2 3.6 5,755 1.2 3.6 
All Other General Merchandise Stores5,211 1.1 3.2 5,254 1.1 3.3 
Transportation and Warehousing
Scheduled Passenger Air Transportation360 0.1 0.2 373 0.1 0.2 
Taxi Service1,980 0.4 1.2 1,976 0.4 1.2 
Wholesale Trade
Business to Business Electronic Markets2,887 0.6 1.8 2,885 0.6 1.8 
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers1,951 0.4 1.2 1,966 0.4 1.2 
Construction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers16,193 3.4 10.1 15,977 3.4 10.0 
Drugs and Druggists' Sundries Merchant Wholesalers3,782 0.8 2.4 3,816 0.8 2.4 
General Line Grocery Merchant Wholesalers273 0.1 0.2 283 0.1 0.2 
Industrial Machinery and Equipment Merchant Wholesalers9,693 2.0 6.0 9,343 2.0 5.8 
Industrial Supplies Merchant Wholesalers7,206 1.5 4.5 7,272 1.6 4.5 
Motor Vehicle Parts (Used) Merchant Wholesalers15,285 3.2 9.5 15,221 3.3 9.5 
Sporting and Recreational Goods and Supplies Merchant Wholesalers8,247 1.7 5.1 657 0.1 0.4 
Stationary & Office Supply Merchant Wholesaler16,142 3.4 10.1 94 — 0.1 
    Total debt and equity investments$419,295 87.3 %261.3 %$404,469 86.3 %252.1 %
Structured Finance Notes61,608 12.7 38.4 61,630 13.7 21.7 
Total investments$480,903 100.0 %299.7 %$466,099 100.0 %273.8 %
35

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
As of December 31, 2020, the Company had loans to 49 portfolio companies, of which 95% were senior secured loans and 5% were subordinated loans, at fair value, as well as equity investments in 10 of these portfolio companies. The Company also held an equity investment in 13 portfolio companies in which it did not hold a debt investment, as well as 12 investments in Structured Finance Notes. At December 31, 2020, investments consisted of the following:
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Senior secured debt investments$325,647 70.6 %204.9 %$306,304 69.2 %192.7 %
Subordinated debt investments45,409 9.8 28.6 15,067 3.4 9.5 
Preferred equity18,648 4.0 11.7 11,543 2.6 7.3 
Common equity, warrants and other15,459 3.4 9.7 52,984 12.0 33.3 
  Total debt and equity investments405,163 87.8 %254.9 %385,898 87.2 %242.8 %
Structured Finance Notes55,860 12.2 35.1 56,425 12.8 35.5 
Total$461,023 100.0 %290.0 %$442,323 100.0 %278.3 %
Geographic composition is determined by the location of the corporate headquarters of the portfolio company. As of December 31, 2020, the industry compositions of the Company’s debt and equity investments were as follows:
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Administrative and Support and Waste Management and Remediation Services
Convention and Trade Show Organizers$214 — %0.1 %$210 — %0.1 %
Security Systems Services (except Locksmiths)6,531 1.4 4.1 3,487 0.8 2.2 
Arts, Entertainment, and Recreation
Other Amusement and Recreation Industries20,967 4.5 13.3 19,973 4.5 12.6 
Construction
Electrical Contractors and Other Wiring Installation Contractors17,837 3.9 11.2 13,137 3.0 8.3 
Plumbing, Heating, and Air-Conditioning Contractors7,607 1.7 4.8 7,294 1.6 4.6 
Education Services
Colleges, Universities, and Professional Schools— — — 4,295 1.0 2.7 
Professional and Management Development Training1,595 0.3 1.0 1,306 0.3 0.8 
Finance and Insurance
Insurance Agencies and Brokerages9,544 2.1 6.0 9,302 2.1 5.9 
Health Care and Social Assistance
Child Day Care Services5,178 1.1 3.3 4,656 1.1 2.9 
Diagnostic Imaging Centers21,718 4.8 13.8 23,607 5.3 14.9 
Home Health Care Services4,199 0.9 2.6 4,250 1.0 2.7 
Medical Laboratories91 — 0.1 38 — — 
Offices of Physicians, Mental Health Specialists21,013 4.6 13.2 20,802 4.7 13.1 
Outpatient Mental Health and Substance Abuse Centers11,615 2.5 7.3 4,105 0.9 2.6 
Information
36

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Data Processing, Hosting, and Related Services$1,135 0.2 %0.7 %$1,749 0.4 %1.1 %
Software Publishers28,799 6.3 18.2 16,104 3.6 10.0 
Television Broadcasting1,977 0.4 1.2 1,758 0.4 1.1 
Manufacturing
Commercial Printing (except Screen and Books)4,789 1.0 3.0 4,812 1.1 3.0 
Custom Compounding of Purchased Resins15,444 3.3 9.7 17,164 3.9 10.8 
Other Aircraft Parts and Auxiliary Equipment Manufacturing5,431 1.2 3.4 4,275 1.0 2.7 
Other Commercial and Service Industry Machinery Manufacturing1,925 0.4 1.2 1,936 0.4 1.2 
Pharmaceutical Preparation Manufacturing2,205 0.5 1.4 38,213 8.7 24.1 
Pump and Pumping Equipment Manufacturing1,501 0.3 0.9 1,281 0.3 0.8 
Semiconductor and Related Device Manufacturing399 0.1 0.3 434 0.1 0.3 
Travel Trailer and Camper Manufacturing10,911 2.4 6.9 10,812 2.4 6.8 
Truck Trailer Manufacturing8,118 1.8 5.1 8,174 1.8 5.1 
Unlaminated Plastics Profile Shape Manufacturing8,922 1.9 5.6 8,818 2.0 5.5 
Other Services (except Public Administration)
Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance572 0.1 0.4 915 0.2 0.6 
Diet and Weight Reducing Centers477 0.1 0.3 479 0.1 0.3 
Professional, Scientific, and Technical Services
Administrative Management and General Management Consulting Services28,503 6.3 18.0 28,729 6.6 18.2 
All Other Professional, Scientific, and Technical Services1,921 0.4 1.2 1,905 0.4 1.2 
Marketing Consulting Services5,229 1.1 3.3 5,229 1.2 3.3 
Other Accounting Services21,621 4.7 13.7 22,238 5.0 14.0 
Other Computer Related Services16,247 3.5 10.2 16,000 3.6 10.1 
Public Administration
Other Justice, Public Order, and Safety Activities703 0.2 0.4 676 0.2 0.4 
Real Estate and Rental and Leasing
Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing496 0.1 0.3 499 0.1 0.3 
Office Machinery and Equipment Rental and Leasing5,953 1.3 3.7 2,736 0.6 1.7 
Retail Trade
Cosmetics, Beauty Supplies, and Perfume Stores6,738 1.5 4.2 6,701 1.5 4.2 
Shoe Store9,748 2.1 6.1 4,368 1.0 2.7 
37

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Percentage of TotalPercentage of Total
Amortized CostAmortized CostNet AssetsFair ValueFair ValueNet Assets
Sporting Goods Stores$2,907 0.6 %1.8 %$2,968 0.7 %1.9 %
All Other General Merchandise Stores5,252 1.1 3.3 5,060 1.1 3.2 
Transportation and Warehousing
Scheduled Passenger Air Transportation495 0.1 0.3 520 0.1 0.3 
Taxi Service1,976 0.4 1.2 1,997 0.5 1.3 
Wholesale Trade
Business to Business Electronic Markets2,891 0.6 1.8 2,875 0.6 1.8 
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers1,955 0.4 1.2 1,942 0.4 1.2 
Construction and Mining (except Oil Well) Machinery and Equipment Merchant Wholesalers16,392 3.6 10.3 16,777 3.8 10.6 
General Line Grocery Merchant Wholesalers275 0.1 0.2 284 0.1 0.2 
Industrial Machinery and Equipment Merchant Wholesalers9,696 2.1 6.1 9,179 2.1 5.8 
Industrial Supplies Merchant Wholesalers6,908 1.5 4.3 5,476 1.2 3.4 
Motor Vehicle Parts (Used) Merchant Wholesalers14,167 3.1 8.9 13,581 3.1 8.5 
Sporting and Recreational Goods and Supplies Merchant Wholesalers8,247 1.8 5.2 346 0.1 0.2 
Stationery and Office Supplies Merchant Wholesalers16,129 3.5 10.1 2,426 0.5 1.5 
Total debt and equity investments$405,163 87.9 %254.9 %$385,898 87.2 %242.8 %
Structured Finance Notes55,860 12.1 35.1 56,425 12.8 35.5 
Total investments$461,023 100.0 %290.0 %$442,323 100.0 %278.3 %
When there is reasonable doubt that principal, cash interest, or PIK interest will be collected, loan investments are placed on non-accrual status and the Company will generally cease recognizing cash interest, PIK interest, or Net Loan Fee amortization, as applicable. Interest accruals and Net Loan Fee amortization are resumed on non-accrual investments only when they are brought current with respect to principal, interest and when, in the judgment of management, the investments are estimated to be fully collectible as to all principal. The aggregate amortized cost and fair value of loans on non-accrual status with respect to all interest and Net Loan Fee amortization was $45,878 and $7,856, respectively, at March 31, 2021, and $48,102 and $12,135 respectively, at December 31, 2020.
On March 27, 2020, the Company's debt investment in Constellis Holdings, LLC was restructured, pursuant to which the Company converted its non-accrual debt investment into 20,628 shares of common equity. The cost and fair value of the common shares received were $703 and $703, respectively, as of March 31, 2020. The Company recognized a realized loss on the restructuring of $9,145 for the three months ended March 31, 2020, which was fully recognized as an unrealized loss as of December 31, 2019.

Note 5. Fair Value of Financial Instruments
The Company’s investments are carried at fair value as determined by the Board. These fair values are determined in accordance with a documented valuation policy and a consistently applied valuation process.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair values are determined with models or other valuation techniques, valuation inputs, and assumptions that market participants would use in pricing the subject asset or liability. Valuation inputs
38

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
are organized in a hierarchy that gives the highest priority to prices for identical assets or liabilities quoted in active markets (Level 1) and the lowest priority to fair values based on unobservable inputs (Level 3). The three levels of inputs in the fair value hierarchy are described below:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
Level 2: Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include: (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, (iii) inputs other than quoted prices that are observable for the asset or liability, and (iv) inputs that are derived principally from or corroborated by observable market data. 
Level 3: Unobservable inputs for the asset or liability, and situations where there is little, if any, market activity for the asset or liability at the measurement date.
The inputs into the determination of fair value are based upon the best information under the circumstances and may require significant judgment or estimation by management. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. The Company generally categorizes its investment portfolio into Level 2 and Level 3 of the hierarchy.
The Company assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the measurement date. Senior securities with a fair value of $899 were transferred from Level 3 to Level 2 during the three months ended March 31, 2021. Senior securities with a fair value of $12,683 were transferred from Level 2 to Level 3 during the three months ended March 31, 2020.
Due to the inherent uncertainty of determining the fair value of Level 3 investments, the fair value of the investments may differ significantly from the values that would have been used had a ready market or observable inputs existed for such investments and may differ materially from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions, or otherwise are less liquid than publicly traded instruments. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, the Company might realize significantly less than the value at which such investment had previously been recorded. The Company’s investments are subject to market risk, which is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments are traded.
The following tables present the Company's investment portfolio measured at fair value on a recurring basis as of March 31, 2021, and December 31, 2020.
SecurityLevel 1Level 2Level 3Fair Value at March 31, 2021
Debt investments$— $48,387 $289,505 $337,892 
Equity investments— — 66,577 66,577 
Structured Finance Notes— — 61,630 61,630 
$— $48,387 $417,712 $466,099 
SecurityLevel 1Level 2Level 3Fair Value at December 31, 2020
Debt investments$— $22,226 $299,145 $321,371 
Equity investments— — 64,527 64,527 
Structured Finance Notes— — 56,425 56,425 
$— $22,226 $420,097 $442,323 
39

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The following tables provide quantitative information about valuation techniques and the Company’s significant inputs to the Company’s Level 3 fair value measurements as of March 31, 2021 and December 31, 2020. In addition to the techniques and inputs noted in the tables below, according to the Company’s valuation policy, the Company may also use other valuation techniques and methodologies when determining the Company’s fair value measurements. The table below provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements.
Fair Value at March 31, 2021Valuation techniqueUnobservable inputsRange
(Weighted average)
Debt investments:
Senior secured$239,159 Discounted cash flowDiscount rates6.46% - 16.74% (9.87%)
Senior secured19,670 Market approachRevenue multiples0.51x - 0.74x (0.59x)
Senior secured
16,934 Market approachTransaction Price
Subordinated7,940 Discounted cash flowDiscount rates17.49% - 17.49% (17.49%)
Subordinated5,040 Market approachEBITDA multiples2.71x - 6.00x (5.94x)
Subordinated657 Market approachRevenue multiples0.25x - 0.25x (0.25x)
Subordinated105 Market approachTransaction Price
Structured Finance Notes
Subordinated notes (3)
58,833 Discounted cash flowDiscount rates10.00% - 18.50% (13.33%)
Constant Default Rate(1)
0.00% - 2.00% (1.67%)
Constant Default Rate(2)
2.00% - 2.00% (2.00%)
Recovery Rate60.00% - 60.00% (60.00%)
Mezzanine debt2,797 Discounted cash flowDiscount rates7.30% - 8.45% (7.79%)
Constant Default Rate(1)
0.00% - 3.00% (1.65%)
Constant Default Rate(2)
2.00% - 3.00% (2.36%)
Recovery Rate60.00% - 60.00% (60.00%)
Equity investments:
Preferred equity11,438 Market approachEBITDA multiples3.45x - 8.50x (7.26x)
Preferred equity873 Market approachRevenue multiples0.20x - 3.00x (0.95x)
Common equity, warrants and other54,256 Market approachEBITDA multiples3.45x - 12.00x (8.08x)
Common equity, warrants and other10 Market approachRevenue multiples0.20x - 3.00x (0.20x)
$417,712 
(1) Constant default rates for the next six months.
(2) Constant default rates following the next six months.
(3) The cash flows utilized in the discounted cash flow calculations assume liquidation of (a) certain distressed investments and (b) all investments currently in default held by the issuing CLO at their current market prices, and redeployment of proceeds at the issuing CLO's assumed reinvestment rate.
40

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Fair Value at December 31, 2020Valuation techniqueUnobservable inputsRange
(Weighted average)
Debt investments:
Senior secured$256,042 Discounted cash flowDiscount rates6.30% - 24.43% (10.18%)
Senior secured12,668 Market approachEBITDA multiples8.50x - 8.50x (8.50x)
Senior secured9,257 Market approachRevenue multiples0.86x - 0.86x (0.86x)
Senior secured6,111 Market approachTransaction Price
Subordinated7,822 Discounted cash flowDiscount rates17.83% - 17.83% (17.83%)
Subordinated6,794 Market approachEBITDA multiples7.05x - 9.10x (7.78x)
Subordinated451 Market approachRevenue multiples0.10x - 0.20x (0.18x)
Structured Finance Notes:
 Subordinated notes(1)
54,724 Discounted cash flowDiscount rates15.00% - 19.50% (17.79%)
Constant default rate0.00% - 2.00% (1.63%)
Constant default rate after 6 months2.00% - 2.00% (2.00%)
Recovery rate60.00% - 60.00% (60.00%)
Mezzanine debt1,701 Discounted cash flowDiscount Margin7.25% - 9.45% (8.58%)
Constant default rate0.00% - 2.00% (1.01%)
Constant default rate after 9 months2.00% - 3.00% (2.49%)
Recovery rate60.00% - 60.00% (60.00%)
Equity investments:
Preferred equity10,395 Market approachEBITDA multiples4.73x - 8.50x (7.37x)
Preferred equity1,148 Market approachRevenue multiples0.20x - 1.56x (0.96x)
Common equity and warrants52,969 Market approachEBITDA multiples3.75x - 11.50x (8.10x)
Common equity and warrants15 Market approachRevenue multiples0.20x - 1.56x (0.47x)
$420,097 
(1) The cash flows utilized in the discounted cash flow calculations assume liquidation at current market prices and redeployment of proceeds on all assets currently in default and all assets below specified fair value thresholds.
Averages in the preceding two tables were weighted by the fair value of the related instruments.
Changes in market credit spreads or events impacting the credit quality of the underlying portfolio company (both of which could impact the discount rate), as well as changes in EBITDA and/or EBITDA multiples, among other things, could have a significant impact on fair values, with the fair value of a particular debt investment susceptible to change in inverse relation to the changes in the discount rate. Changes in EBITDA and/or EBITDA multiples, as well as changes in the discount rate, could have a significant impact on fair values, with the fair value of an equity investment susceptible to change in tandem with the changes in EBITDA and/or EBITDA multiples, and in inverse relation to changes in the discount rate. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.
41

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The following tables present changes in investments measured at fair value using Level 3 inputs for the three months ended March 31, 2021 and March 31, 2020.
Three Months Ended March 31, 2021
Senior
Secured Debt
Investments
Subordinated
Debt
Investments
Preferred EquityCommon Equity, Warrants and OtherStructured Finance NotesTotal
Level 3 assets, January 1, 2021$284,078 $15,067 $11,543 $52,984 $56,425 $420,097 
Net unrealized appreciation (depreciation) on investments4,726 (1,443)721 1,282 (543)4,743 
Amortization of Net Loan Fees524 — — 28 558 
Accretion of interest income on structured-finance notes— — — — 2,278 2,278 
Capitalized PIK interest and dividends404 112 47 — — 563 
Amendment fees(97)— — — — (97)
Purchase and origination of portfolio investments32,569 — — — 6,163 38,732 
Proceeds from principal payments on portfolio investments(31,800)— — — — (31,800)
Proceeds from distributions received from portfolio investments— — — — (2,721)(2,721)
Transfers out of Level 3(899)— — — — (899)
Level 3 assets, March 31, 2021$289,505 $13,742 $12,311 $54,266 $61,630 $431,454 
42

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Three Months Ended March 31, 2020
Senior
Secured Debt
Investments
Subordinated
Debt
Investments
Preferred EquityCommon Equity, Warrants and OtherStructured Finance NotesTotal
Level 3 assets, January 1, 2020$334,059 $43,090 $17,729 $25,777 $21,610 $442,264 
Net realized loss on investments(9,091)— — — — (9,091)
Net unrealized depreciation on investments(4,970)(7,465)(1,653)(344)(8,206)(22,638)
Amortization of Net Loan Fees405 — — — 410 
Accretion of interest income on structured-finance notes— — — — 1,223 1,223 
Capitalized PIK interest and dividends319 129 179 — — 627 
Purchase and origination of portfolio investments48,802 — — 69 12,040 60,911 
Proceeds from principal payments on portfolio investments(30,674)— — — — (30,674)
Sale and redemption of portfolio investments(7,095)— (3,645)— — (10,740)
Proceeds from distributions received from portfolio investments— — — — (1,354)(1,354)
Conversion from debt investment to equity investment (Note 4)(703)— — 703 — — 
Transfers in to Level 312,683 — — — — 12,683 
Level 3 assets, March 31, 2020$343,735 $35,759 $12,610 $26,205 $25,313 $443,621 
The net unrealized appreciation (depreciation) reported in the Company’s consolidated statements of operations for the three months ended March 31, 2021 and 2020, attributable to the Company’s assets still held at those respective period ends was as follows:
Three Months Ended March 31,
20212020
Senior secured debt investments$4,078 $(19,003)
Subordinated debt investments(1,442)(7,465)
Preferred equity721 (1,650)
Common equity, warrants and other1,282 (344)
Structured Finance Notes(531)(8,206)
Net unrealized appreciation (depreciation) on investments held$4,108 $(36,668)
43

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Other Financial Assets and Liabilities
The Company provides disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying amounts of its other financial instruments such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments. The PWB Credit Facility and BNP Facility are variable rate instruments and fair value is approximately book value.
The following table sets forth carrying values and fair values of the Company’s debt as of March 31, 2021 and December 31, 2020:
As of March 31, 2021As of December 31, 2020
DescriptionCarrying ValueFair ValueCarrying ValueFair Value
PWB Credit Facility$— $— $600 $600 
BNP Facility19,550 19,550 31,450 31,450 
Unsecured Notes Due September 2023
24,188 25,490 24,106 25,100 
Unsecured Notes Due April 2025— — 48,891 48,800 
Unsecured Notes Due October 2025— — 47,339 47,069 
Unsecured Notes Due February 2026121,617 121,617 — — 
Unsecured Notes Due October 2026
52,690 55,270 52,617 51,066 
SBA-guaranteed debentures
94,583 99,380 104,182 116,172 
Total debt, at fair value$312,628 $321,307 $309,185 $320,257 
The following tables present the fair value measurements of the Company's debt and indicate the fair value hierarchy of the significant unobservable inputs utilized by the Company to determine such fair values as of March 31, 2021 and December 31, 2020:
March 31, 2021
DescriptionLevel 1Level 2
Level 3 (1)
Total
PWB Credit Facility$— $ $— $ 
BNP Facility— — 19,550 19,550 
Unsecured Notes Due September 2023
25,490 — — 25,490 
Unsecured Notes Due February 2026— — 121,617 121,617 
Unsecured Notes Due October 2026
55,270 — — 55,270 
SBA-guaranteed debentures
— — 99,380 99,380 
Total debt, at fair value$80,760 $— $240,547 $321,307 
December 31, 2020
DescriptionLevel 1Level 2
Level 3 (1)
Total
PWB Credit Facility$— $ $600 $600 
BNP Facility— — 31,450 31,450 
Unsecured Notes Due September 202325,100 — — 25,100 
Unsecured Notes Due April 202548,800 — — 48,800 
Unsecured Notes Due October 202547,069 — — 47,069 
Unsecured Notes Due October 2026
51,066 — — 51,066 
SBA-guaranteed debentures
— — 116,172 116,172 
Total debt, at fair value$172,035 $— $148,222 $320,257 
(1) For Level 3 measurements, fair value is estimated by discounting remaining payments at current market rates for similar instruments at the measurement date and considering such factors as the legal maturity date.
44

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)

Note 6. Commitments and Contingencies
The Company has the following unfunded commitments to portfolio companies as of March 31, 2021:
Name of Portfolio CompanyInvestment TypeCommitment
A&A Transfer, LLCSenior Secured Loan (Revolver)$2,136 
I&I Sales Group, LLCSenior Secured Loan (Revolver)156 
Inergex Holdings, LLCSenior Secured Loan (Revolver)2,813 
SSJA Bariatric Management LLCSenior Secured Loan (Revolver)667 
$5,772 
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, 2021.
Additionally, the Company is subject to periodic inspection by regulators to assess compliance with applicable BDC regulations and SBIC I LP is subject to periodic inspections by the SBA.
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide for general indemnification. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company believes the risk of any material obligation under these indemnifications to be low.
Note 7. Borrowings
SBA Debentures: The SBA debentures issued by SBIC I LP and other SBA regulations generally restrict assets held by SBIC I LP. On a stand-alone basis, SBIC I LP held $201,454 and $223,795 in assets at March 31, 2021, and December 31, 2020, respectively, which accounted for approximately 39% and 46% of the Company’s total consolidated assets, respectively. These assets cannot be pledged under any debt obligation of the Company. The average dollar amount of borrowings outstanding during the three months ended March 31, 2021 and 2020, were $95,953 and $144,392, respectively.
During the three months ended March 31, 2021, SBIC I LP prepaid $9,765 of SBA debentures that were contractually due September 1, 2022 and September 1, 2024. The Company recognized a loss on extinguishment of debt of $101 related to the charge-off of deferred borrowing costs on the prepaid debentures. As of March 31, 2021, SBIC I LP had outstanding SBA debentures of $95,505.
BNP Facility: OFSCC-FS has up to $150,000 of available credit, subject to borrowing base requirements, under the BNP Facility maturing on June 20, 2024, of which $19,550 was drawn as of March 31, 2021. The effective interest rate on the BNP Facility was 7.36% at March 31, 2021. The average dollar amount of borrowings outstanding during the three months ended March 31, 2021 and 2020, were $31,183 and $65,016, respectively. Borrowings under the BNP Facility are secured by substantially all of the assets held by OFSCC-FS, which were $100,901, or 20%, of the Company's total consolidated assets at March 31, 2021. The unused commitment under the BNP Facility was $130,450 as of March 31, 2021.
PWB Credit Facility: The Company has up to $25,000 of available credit, subject to borrowing base requirements, under its PWB Credit Facility maturing February 28, 2023, of which $-0- was drawn as of March 31, 2021. The average dollar amount of borrowings outstanding during the three months ended March 31, 2021 and 2020, were $2,249 and $7,836, respectively. The effective interest rate on the PWB Credit Facility was 5.02% at March 31, 2021. As of March 31, 2021 the unused commitment under the PWB Credit Facility was $25,000.
On February 17, 2021, the Company amended the BLA to among other things: (i) increase the maximum amount available from $20,000 to $25,000; (ii) decrease the interest rate floor from 5.25% per annum to 5.00% per annum; (iii) modify certain financial performance covenants; and (iv) extend the maturity date from February 28, 2021 to February 28, 2023.
Unsecured NotesAs of March 31, 2021, the Company had Unsecured Notes with an aggregate outstanding principal of $204,325. The average dollar amount of borrowings under the Unsecured Notes outstanding during the three months ended
45

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
March 31, 2021 and 2020, were $221,789 and $152,850, respectively. The weighted average effective interest rate on the Unsecured Notes was 5.89% at March 31, 2021.
On February 10, 2021, the Company closed the public offering of $100,000 aggregate principal amount of its 4.75% notes due 2026, and on March 18, 2021, the Company closed an additional public offering of $25,000 aggregate principal amount of its 4.75% notes due 2026 (together, the "Unsecured Notes Due February 2026"). The total net proceeds to the Company from the Unsecured Notes Due February 2026, after deducting underwriting fees of $3,209 and offering expenses of $231, was approximately $121,560. The Unsecured Notes Due February 2026 bear an effective interest rate, including amortization of deferred debt issuance costs, of 5.30%. The Unsecured Notes Due February 2026 will mature on February 10, 2026, and the Company may redeem the Unsecured Notes Due February 2026 in whole or in part at any time, or from time to time, at the Company’s option at par plus a "make-whole" premium, if applicable. The Unsecured Notes Due February 2026 bear interest at a rate of 4.75% per year payable semi-annually in arrears on February 10 and August 10 of each year, commencing on August 10, 2021.
On March 12, 2021, the Company used the proceeds from the Unsecured Notes Due February 2026 to redeem all $50,000 in aggregate principal amount of the Unsecured Notes Due April 2025 and all $48,525 in aggregate principal amount of the Unsecured Notes Due October 2025. The Unsecured Notes Due April 2025 and the Unsecured Notes Due October 2025 were redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid interest thereon from January 31, 2021, through, but excluding, March 12, 2021. The Company recognized a loss on extinguishment of debt of $2,198 related to the charge-off of deferred borrowing costs on the redeemed notes.
The Unsecured Notes are direct unsecured obligations and rank equal in right of payment with all current and future unsecured indebtedness of the Company. Because the Unsecured Notes are not secured by any of the Company's assets, they are effectively subordinated to all existing and future secured unsubordinated indebtedness (or any indebtedness that is initially unsecured as to which the Company subsequently grants a security interest), to the extent of the value of the assets securing such indebtedness, including, without limitation, borrowings under the PWB Credit Facility.
Interest expense for the three months ended March 31, 2021 and 2020 on the Company's outstanding borrowings is presented below:
Three Months Ended March 31,
20212020
SBA Debentures$833 $1,224 
PWB Credit Facility40 289 
Unsecured Notes3,502 2,615 
BNP Facility450 794 
Total interest expense$4,825 $4,922 
Average dollar borrowings$351,174 $370,094 
Weighted average interest rate5.57 %5.33 %
Interest expense includes the stated interest on the outstanding balance, commitment fees on undrawn amounts, and the amortization of deferred financing costs.
46

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The following table shows the scheduled maturities of the principal balances of the Company's outstanding borrowings as of March 31, 2021:
 Payments due by period
TotalLess than
year
1-3 years (1)4-5 years (1)After 5
years (1)
PWB Credit Facility$— $— $— $— $— 
Unsecured Notes204,325 — 25,000 125,000 54,325 
SBA Debentures95,505 — 7,000 88,505 — 
BNP Facility19,550 — — 19,550 — 
Total$319,380 $— $32,000 $233,055 $54,325 
(1)The SBA debentures are scheduled to mature between September 2022 and September 2025. The Unsecured Notes are scheduled to mature between October 2023 and October 2026.
47

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(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, 2021 and 2020:
Three Months Ended
March 31,
20212020
Per share operating performance:
Net asset value per share at beginning of period$11.85 $12.46 
Net investment income (4)
0.19 0.30 
Net realized gain (loss) on non-control/non-affiliate investments (4)
0.02 (0.67)
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes (4)
0.11 (1.69)
Net unrealized appreciation (depreciation) on affiliate investments (4)
0.14 (0.22)
Net unrealized appreciation (depreciation) on control investment (4)
0.03 (0.12)
Loss on extinguishment of debt (4)
(0.17)(0.01)
  Total from operations0.32 (2.41)
Distributions(0.20)(0.34)
Issuance of common stock (10)
(0.02)— 
Net asset value per share at end of period$11.95 $9.71 
Per share market value, end of period$8.78 $4.07 
Total return based on market value (1)(9)
25.6 %(60.8)%
Total return based on net asset value (2)(9)
3.2 %(15.6)%
Shares outstanding at end of period13,411,962 13,392,529 
Weighted average shares outstanding13,409,033 13,377,008 
Ratio/Supplemental Data (in thousands except ratios)
Average net asset value (3)
$159,713 $148,305 
Net asset value at end of period$160,470 $129,983 
Net investment income$2,550 $3,972 
Ratio of total expenses, net to average net assets (5)(7)
19.9 %24.0 %
Ratio of total expenses and losses extinguishment of debt to average net assets(5)
25.6 %24.4 %
Ratio of net investment income to average net assets (5)(8)
6.4 %10.7 %
Ratio of loss on extinguishment of debt to average net assets(9)
1.4 %0.1 %
Portfolio turnover (6)
11.4 %12.9 %
(1)Calculated as ending market value less beginning market value, adjusted for distributions reinvested at prices based on the Company’s dividend reinvestment plan for the respective distributions.
(2)Calculated as ending net asset value less beginning net asset value, adjusted for distributions reinvested at the Company’s dividend reinvestment plan for the respective distributions.
(3)Based on the average of the net asset value at the beginning and end of the indicated period and if applicable the preceding calendar quarters.
(4)Calculated on the average share method.
(5)Annualized.
(6)Portfolio turnover rate is calculated using the lesser of period-to-date sales, Structured Finance Note distributions and principal payments or period-to-date purchases over the average of the invested assets at fair value.
(7)Ratio of total expenses before incentive fee waiver to average net assets was 25.2% for the three months ended March 31, 2020.
(8)Ratio of net investment income before incentive fee waiver to average net assets was 9.5% for the three months ended March 31, 2020.
(9)Not annualized.
48

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
(10)Common stock issued through DRIP.
(11)Ratio of total expenses and losses on extinguishment of debt before incentive fee waiver to average net assets was 25.6% for the three months ended March 31, 2020.

Note 9. Capital Transactions
Distributions: The Company intends to distribute to stockholders, on a quarterly basis, substantially all of its net investment income. In addition, although the Company intends to distribute at least annually net realized capital gains, net of taxes if any, out of assets legally available for such distribution, the Company may also retain such capital gains for investment through a deemed distribution.
The Company may be limited in its ability to make distributions due to the BDC asset coverage requirements of the 1940 Act. The Company’s ability to make distributions may be affected by SBIC I LP's distributions to the Company, which are governed by SBA regulations and currently require the prior approval of the SBA. In addition, distributions from OFSCC-FS to the Company are restricted by the terms and conditions of the BNP Facility. Net assets of SBIC I LP were $106,587, and consolidated cash at March 31, 2021 includes $4,536 held by SBIC I LP, of which $8,863 was available for distribution to the Company with the prior consent of the SBA. Net Assets of OFSCC-FS were $63,140, and consolidated cash at March 31, 2021 includes $4,448 held by OFSCC-FS, of which $-0- was available for distribution to the Company.
The following table summarizes distributions declared and paid for the three months ended March 31, 2021 and 2020:
Date DeclaredRecord DatePayment DateAmount
Per Share
Cash
Distribution
DRIP Shares
Issued
DRIP Shares
Value
Three Months Ended March 31, 2020
March 11, 2020March 24, 2020March 31, 2020$0.34 $4,484 15,693 $64 
$0.34 $4,484 $15,693 $64 
Three Months Ended March 31, 2021
March 2, 2021March 24, 2021March 31, 2021$0.20 $2,655 3,103 $27 
$0.20 $2,655 $3,103 $27 
Distributions in excess of the Company’s current and accumulated ICTI would be treated first as a return of capital to the extent of the stockholder’s adjusted tax basis, and any remaining distributions would be treated as a capital gain. The determination of the tax attributes of the Company’s distributions is made annually as of the end of its fiscal year based upon its ICTI for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of the Company’s distributions for a full year. Each year, a statement on Form 1099-DIV identifying the tax character of distributions is mailed to the Company’s stockholders.
Stock repurchase program:
The Company maintains a Stock Repurchase Program under which the Company may acquire up to $10.0 million of its outstanding common stock. On May 4, 2020, the Board extended the Stock Repurchase Program for an additional two-year period ending May 22, 2022, or until the approved dollar amount has been used to repurchase shares.
The following table summarizes shares of common stock repurchased under the Stock Repurchase Program during the three months ended March 31, 2021 and 2020, respectively.
Period
Total Number
of Shares Purchased
Cost of Shares PurchasedAverage Price Paid Per Share
Three Months Ended March 31, 2020
January 1, 2020 through March 31, 2020— $— $— 
Three Months Ended March 31, 2021
January 1, 2021 through March 31, 2021700 $$6.70 
49

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 10. Consolidated Schedule of Investments In and Advances To Affiliates
Period Ended March 31, 2021
Name of Portfolio CompanyInvestment Type (1)Net Realized Gain (Loss)Net change in unrealized appreciation/(depreciation)Interest & PIK InterestDividendsFeesTotal Income (2) December 31, 2020, Fair ValueGross
Additions (3)
Gross
Reductions (4)
March 31, 2021, Fair Value (5)
Control Investment
MTE Holding Corp.
Subordinated Loan$— $20 $367 $— $— $367 $7,822 $118 $— $7,940 
Common Equity— 368 — — — — 2,990 368 — 3,358 
— 388 367 — — 367 10,812 486 — 11,298 
Total Control Investment
— 388 367 — — 367 10,812 486 — 11,298 
Affiliate Investments
3rd Rock Gaming Holdings, LLCSenior Secured Loan— (21)— — — — 9,258 13 (2,271)7,000 
Common Equity (6)— — — — — — — — — — 
— (21)— — — — 9,258 13 (2,271)7,000 
Chemical Resources Holdings, Inc.Senior Secured Loan— 89 324 — — 324 13,744 89 13,842 
Common Equity (6)— (153)— — — — 3,420 — (153)3,267 
— (64)324 — — 324 17,164 89 (144)17,109 
Contract Datascan Holdings, Inc.Preferred Equity (7)— 38 — — — — 2,690 38 — 2,728 
Common Equity (6)— (5)— — — — 46 — (5)41 
— 33 — — — — 2,736 38 (5)2,769 
DRS Imaging Services, LLCCommon Equity (6)— 123 — — — — 1,749 123 — 1,872 
Master Cutlery, LLCSubordinated Loan (6)— 311 — — — — 346 311 — 657 
Preferred Equity (6)— — — — — — — — — — 
Common Equity (6)— — — — — — — — — — 
— 311 — — — — 346 311 — 657 
NeoSystems Corp.Preferred Equity (7)— 934 — 47 — 47 2,250 981 — 3,231 
Pfanstiehl Holdings, IncCommon Equity— 953 — 36,221 — 953 37,174 
50

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Period Ended March 31, 2021
Name of Portfolio CompanyInvestment Type (1)Net Realized Gain (Loss)Net change in unrealized appreciation/(depreciation)Interest & PIK InterestDividendsFeesTotal Income (2) December 31, 2020, Fair ValueGross
Additions (3)
Gross
Reductions (4)
March 31, 2021, Fair Value (5)
Professional Pipe Holdings, LLCSenior Secured Loan$— $(6)$188 $— $— $188 $6,086 $36 $(623)$5,499 
Common Equity (6)— (232)— — — — 1,208 — (232)976 
— (238)188 — — 188 7,294 36 (855)6,475 
TalentSmart Holdings, LLCCommon Equity (6)— (289)— — — — 1,306 — (289)1,017 
TRS Services, Inc.Preferred Equity (6)— (93)— — — — 915 — (93)822 
Common Equity (6)— — — — — — — — — — 
— (93)— — — — 915 — (93)822 
TTG Healthcare, LLCSenior Secured Loan— 139 416 — 37 453 19,530 142 (49)19,623 
Preferred Equity (6)— 138 — — — — 4,077 138 — 4,215 
— 277 416 — 37 453 23,607 280 (49)23,838 
Total Affiliate Investments— 1,926 928 47 37 1,012 102,846 1,871 (2,753)101,964 
Total Control and Affiliate Investments$— $2,314 $1,295 $47 $37 $1,379 $113,658 $2,357 $(2,753)$113,262 
(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, 2021, during which an investment was included in the Control Investment or Affiliate Investment categories.
(3)Gross additions include increases in cost basis of investments resulting from a new portfolio investment, PIK interest, fees and dividends; accretion of OID, and net increases in unrealized appreciation or decreases in net depreciation.
(4)Gross reductions include decreases in the cost basis of investments resulting from principal repayments and sales, if any, and net decreases in net unrealized appreciation or net increases in net depreciation.
(5)Fair value was determined using significant unobservable inputs. See Note 5 for further details.
(6)Non-income producing.
(7)Dividends credited to income include dividends contractually earned but not declared.
51

OFS Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 11. Subsequent Events Not Disclosed Elsewhere
On May 7, 2021, the Board declared a distribution of $0.22 per share for the second quarter of 2021, payable on June 30, 2021 to stockholders of record as of June 23, 2021.
COVID-19
The Company evaluated events subsequent to March 31, 2021 through May 7, 2021. The Company is continuing to closely monitor the impact of the outbreak of COVID-19 on all aspects of our business, including how it impacts its portfolio companies, employees, due diligence and underwriting processes, and financial markets. The U.S. capital markets experienced extreme volatility and disruption following the COVID-19 pandemic, which appear to have subsided and returned to pre-COVID-19 levels. Nonetheless, certain economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a prolonged period of world-wide economic downturn.
On March 27, 2020, the U.S. government enacted the CARES Act, which contains provisions intended to mitigate the adverse economic effects of the coronavirus pandemic. On December 27, 2020, the U.S. government enacted the December 2020 COVID Relief Package. Additionally, on March 11, 2021, the U.S. government enacted the American Rescue Plan, which included additional funding to mitigate the adverse economic effects of the COVID-19 pandemic. It is uncertain whether, or to what extent, our portfolio companies will be able to benefit from the CARES Act, the December 2020 COVID Relief Package, the American Rescue Plan, or any other subsequent legislation intended to provide financial relief or assistance. As a result of this disruption and the pressures on their liquidity, certain of its portfolio companies have been, or may continue to be, incentivized to draw on most, if not all, of the unfunded portion of any revolving or delayed draw term loans made by the Company, subject to availability under the terms of such loans.
The extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, will depend to a large extent on future developments regarding the duration and severity of the coronavirus, effectiveness of vaccination deployment and the actions taken by governments (including stimulus measures or the lack thereof) and their citizens to contain the coronavirus or treat its impact, all of which are beyond our control. An extended period of global supply chain and economic disruption could materially affect its business, results of operations, access to sources of liquidity and financial condition. Given the fluidity of the situation, the Company cannot estimate the long-term impact of COVID-19 on its business, future results of operations, financial position, or cash flows at this time.
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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, 2020.
Overview
Key performance metrics are presented below:
March 31, 2021December 31, 2020
Net asset value per common share$11.96 $11.85 
Three Months Ended March 31,
20212020
Net investment income per common share$0.19 $0.30 
Net increase (decrease) in net assets resulting from operations per common share
0.31 (2.41)
Distributions paid per common share0.20 0.34 
Net investment income per share declined $0.11 from the corresponding quarter in the prior year primarily due to an approximate $0.15 decline in net interest margin—total interest income less interest expense—per share. Weighted average yield on debt and Structured Finance Notes for the three months ended March 31, 2021, declined to 9.01% from 9.51% in the quarter ended March 31, 2020, due to the decrease in LIBOR and our plans to focus on lower-yielding, first lien senior secured loans to larger borrowers, which we believe will improve our overall risk profile. The decline in net interest margin was partially offset by declines in management and incentive fees of $0.08 per share. For the three months ended March 31, 2021, our weighted-average interest costs increased to 5.57% from 5.33% in the quarter ended March 31, 2020, principally due to borrowings under our Unsecured Notes Due September 2023, offset by repayments of our SBA debentures. As of March 31, 2021, approximately 94% of our debt is fixed rate.
Our portfolio experienced net gains of $3.9 million, or $0.29 per share, during the three months ended March 31, 2021, principally due to a $4.4 million, or 1.6%, improvement in the fair values of our directly originated debt and equity investments. The net appreciation in our directly originated investments was led by a $1.6 million improvement on our debt investment in Wastebuilt Environmental Solutions LLC, which experienced an improvement in fair value as the company continues to proceed with an anticipated acquisition. Our investment in the common equity of Pfanstiehl Holdings, Inc., and NeoSystems Corp., also improved by $1.0 million and $0.9 million, respectively, in both instances driven by improved operating results of the companies. Additionally, we observed spread tightening in middle market loans ranging from zero to 25 basis points, which translated into fair value increases across our portfolio from zero to 1%. These investment valuation increases were partially offset by a decrease of $2.3 million in the fair value of our subordinated debt investment in Online Tech Stores LLC, due to further degradation of performance at that company. We also experienced net depreciation of $0.5 million in our Structured Finance Note investments, due to the decline in value of Apex Credit CLO 2020 Ltd. The fair value of our investments in broadly syndicated loans were relatively unchanged, consistent with major syndicated loan indices.
Since OFS Advisor implemented its business continuity plan in mid-March 2020, OFS Advisor's entire team has effectively transitioned to remote work and we are currently capable of maintaining our normal functionality to complete our operational requirements.
OFS Advisor has actively monitored our portfolio companies throughout this period of economic uncertainty, which has included assessments of our portfolio companies' operational and liquidity outlook. During the three months ended March 31, 2021, we converted cash interest to PIK interest on one subordinated debt investment, rescheduled the due date of one portfolio company's first quarter 2021 interest payment until the second quarter of 2021, and amended two debt investments that resulted in increased all-in interest rates. As of March 31, 2021, we have unfunded commitments of $5.8 million. During the three months ended March 31, 2021, we purchased Structured Finance Notes for an aggregate cost of $6.2 million and $62.3 million in Portfolio Company Investments.
53


At March 31, 2021, our asset coverage ratio of 171% was within minimum asset coverage requirements under the 1940 Act, and we remained in compliance with all applicable financial thresholds under our outstanding debt. On February 17, 2021, we executed an amendment to our BLA with Pacific Western Bank in order to, among other things, increase the total commitment under the PWB Credit Facility from $20.0 million to $25.0 million. As of March 31, 2021, we had an unused commitment of $25.0 million under our PWB Credit Facility, as well as an unused commitment of $130.5 million under our BNP Facility, both subject to a borrowing base and other covenants. Based our portfolio's fair value and our equity capital at March 31, 2021, we could access these available lines of credit for $97.0 million and remain in compliance with our asset coverage requirements. We continue to believe that we have sufficient levels of liquidity to support our existing portfolio companies and will continue to selectively deploy capital in new investment opportunities in this challenging environment.
On May 7, 2021, the Board declared a distribution of $0.22 per share for the second quarter of 2021, payable on June 30, 2021 to stockholders of record as of June 23, 2021.
We cannot predict the full impact of the COVID-19 pandemic, including its duration in the United States and worldwide, and the magnitude of the economic impact of the outbreak, including the impact of travel restrictions, business closures and other quarantine measures imposed on service providers and other individuals by various local, state, and federal governmental authorities, as well as non-U.S. governmental authorities. As such, we are unable to predict the duration of any business and supply-chain disruptions, the extent to which the COVID-19 pandemic will negatively affect our portfolio companies’ operating results, or the impact that such disruptions may have on our results of operations and financial condition. Depending on the duration and extent of the disruption to the operations of our portfolio companies, we expect that certain portfolio companies will experience financial distress and possibly default on their financial obligations to us and their other capital providers. We also expect that some of our portfolio companies may significantly curtail business operations, furlough or lay-off employees and terminate service providers, and defer capital expenditures if subjected to prolonged and severe financial distress, which would likely impair their business on a permanent basis. These developments would likely result in a decrease in the value of our investment in any such portfolio company.
We are also subject to financial risks, including changes in market interest rates. As of March 31, 2021, approximately $330 million (principal amount) of our debt investments bore interest at variable rates, which are generally LIBOR-based, and many of which are subject to reference-rate floors. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased, primarily in the second quarter of 2020. A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on our portfolio investments, a decrease in our operating expenses, including with respect to our income incentive fee, or a decrease in the interest rate of our floating interest rate liabilities indexed to LIBOR. As of March 31, 2021, the majority of our variable rate debt investments are subject to the base rate floor, partially mitigating the impact of the recent decrease in LIBOR on our gross investment income.
We will continue to monitor the rapidly evolving situation relating to the COVID-19 pandemic and guidance from U.S. and international authorities, including federal, state and local public health authorities, and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our plan of operation. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of the COVID-19 pandemic on our financial condition, results of operations or cash flows in the future. However, to the extent our portfolio companies continue to be adversely impacted by the COVID-19 pandemic, our future net investment income, financial condition, results of operations and the fair value of our portfolio investments may be materially adversely impacted.
Critical Accounting Policies and Significant Estimates
Our critical accounting policies and estimates are those relating to revenue recognition and fair value estimates. Management has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board. For descriptions of our revenue recognition and fair value policies, see "Item 8. Financial Statements - Notes to Financial Statements - Note 2" and "Management's Discussion and Analysis - Critical Accounting Policies and Significant Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2020.
Fair value estimates. Our approach to fair value estimates was significantly adjusted in response to the economic uncertainty associated with the spread of the COVID-19 pandemic, principally through adjustments to the weights given the various methodologies we utilize to estimate discount rates, greater use of pandemic-adjusted forward-looking information, and shortening the evaluation periods used to assess the market depth and liquidity associated with Indicative Prices. These adjustments resulted from observed decreases in the historic correlation between observable inputs utilized on our valuation models. However, as of December 31, 2020, we had reverted all of our methodologies to their pre-pandemic weightings as financial markets stabilized and the correlations between observable market factors returned.
54


The following table illustrates the impact of our fair value measures if we selected the low or high end of the range of values for all investments at March 31, 2021 (dollar amounts in thousands):
Investment Type
Fair Value at March 31, 2021Range of Fair Value
Low-endHigh-end
Debt investments:   
Senior secured
$307,216 $303,443 $311,156 
Senior secured (valued at Transaction Prices)
16,934 16,934 16,934 
Subordinated
13,742 12,599 14,885 
Structured Finance Notes:
Subordinated notes
58,833 $57,076 60,588 
Mezzanine debt
2,797 2,748 2,845 
Equity investments:
Preferred equity
12,311 10,829 13,775 
Common equity, warrants and other
54,266 50,155 58,146 
$466,099 $453,784 $478,329 
The SEC issued a final rule in 2020 modifying Rule 2a-5 under the 1940 Act to establish requirements for determining fair value in good faith for purposes of the 1940 Act. We are evaluating the impact of adopting Rule 2a-5 on the consolidated financial statements and intend to comply with the new rule’s requirements on or before the compliance date in September 2022.
Related Party Transactions
We have entered into a number of business relationships with affiliated or related parties, including the following:
The Investment Advisory Agreement with OFS Advisor to manage our operating and investment activities. Under the Investment Advisory Agreement we have agreed to pay OFS Advisor an annual base management fee based on the average value of our total assets (other than cash but including assets purchased with borrowed amounts and including assets owned by any consolidated entity) as well as an incentive fee based on our investment performance. See “Item 1–Financial Statements–Note 3”.
The Administration Agreement with OFS Services, an affiliate of OFS Advisor, to provide us with the office facilities and administrative services necessary to conduct our operations. See “Item 1–Financial Statements–Note 3.
A license agreement with OFSAM, the parent company of OFS Advisor, under which OFSAM has agreed to grant us a non-exclusive, royalty-free license to use the name “OFS.” Under this agreement, we have a right to use the “OFS” name for so long as OFS Advisor or one of its affiliates remains our investment adviser. Other than with respect to this limited license, we have no legal right to the “OFS” name. This license agreement will remain in effect for so long as the Investment Advisory Agreement with OFS Advisor is in effect.
OFS Advisor’s services under the Investment Advisory Agreement are not exclusive to us and OFS Advisor is free to furnish similar services to other entities, including other funds affiliated with OFS Advisor, so long as its services to us are not impaired. OFS Advisor also serves as the investment adviser to CLO funds and other assets, including HPCI and OCCI. Additionally, OFS Advisor provides sub-advisory services to CMFT Securities Investments, LLC, a wholly owned subsidiary of CIM Real Estate Finance Trust, Inc., a corporation that qualifies as a real estate investment trust. Additionally, OFS Advisor serves as sub-adviser to CIM Real Assets & Credit Fund, an externally managed registered investment company that operates as an interval fund that invests primarily in a combination of real estate, credit and related investments. 
    Effective January 1, 2020, OFS Advisor agreed to reduce a portion of its base management fee by reducing the portion of such fee from 0.4375% per quarter (1.75% annualized) to 0.25% per quarter (1.00% annualized) of the average value of the portion of the OFSCC-FS Assets at the end of the two most recently completed calendar quarters. The base management fee reduction by OFS Advisor is renewable on an annual basis and the amount of the base management fee reduced with respect to the OFSCC-FS Assets shall not be subject to recoupment by OFS Advisor; On February 16, 2021, OFS Advisor renewed the waiver through December 31, 2021.
The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with certain affiliates absent an order from the SEC permitting the BDC to do so. On August 4, 2020, we received the Order, which superseded a previous
55


order we received on October 12, 2016 and provides us with greater flexibility to enter into co-investment transactions with Affiliated Funds. We are generally permitted to co-invest with Affiliated Funds if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.
    In addition, pursuant to an exemptive order issued by the SEC on April 8, 2020 and applicable to all BDCs, through December 31, 2020, we were permitted, subject to the satisfaction of certain conditions, to co-invest in our existing portfolio companies with certain affiliates, even if such other funds had not previously invested in such existing portfolio company. Without this order, affiliated funds would not be able to participate in such co-investments with us unless the affiliated funds had previously acquired securities of the portfolio company in a co-investment transaction with us. Although the conditional exemptive order expired on December 31, 2020, the SEC’s Division of Investment Management has indicated that until March 31, 2022, it will not recommend enforcement action, to the extent that any BDC with an existing co-investment order continues to engage in certain transactions described in the conditional exemptive order, pursuant to the same terms and conditions described therein.
    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 1A. Business — 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" and "Item 1A. Risk Factors — Regulations — Conflicts of Interest - Conflicts Related to Portfolio Investments" in our Annual Report on Form 10-K for the year ended December 31, 2020.
Portfolio Composition and Investment Activity
Portfolio Composition
As of March 31, 2021, the fair value of our debt investment portfolio totaled $337.9 million in 59 portfolio companies, of which 96% and 4% were senior secured loans and subordinated loans, respectively. As of March 31, 2021, we had equity investments in 23 portfolio companies with a fair value of approximately $66.6 million. We also have fifteen investments in Structured Finance Notes with a fair value of $61.6 million. We had unfunded commitments of $5.8 million to four portfolio companies at March 31, 2021. Set forth in the tables and charts below is selected information with respect to our portfolio as of March 31, 2021 and December 31, 2020.
The following table presents our investment portfolio by each wholly owned legal entity within the consolidated group as of March 31, 2021, and December 31, 2020 (dollar amounts in thousands):
March 31, 2021December 31, 2020
Amortized CostFair ValueAmortized CostFair Value
OFS Capital Corporation (Parent)$181,644 $164,001 $190,627 $172,249 
SBIC I LP192,881 196,466 191,192 190,573 
OFSCC-FS95,168 94,629 67,781 68,037 
OFSCC-MB11,209 11,003 11,423 11,464 
Total investments
$480,902 $466,099 $461,023 $442,323 
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    Portfolio Yields
The weighted average yield on total investments(1) was 8.41% and 8.56% at March 31, 2021 and December 31, 2020, respectively. The following table displays the composition of our performing debt investment and Structured Finance Note portfolio by yield range and its weighted average yields as of March 31, 2021, and December 31, 2020:
March 31, 2021December 31, 2020
Yield Range
Senior
Secured
SubordinatedStructured FinanceSenior
Secured
SubordinatedStructured Finance
DebtDebtNotesTotalDebtDebtNotesTotal
Less than 8%35.0 %— %2.7 %28.6 %29.5 %— %1.4 %24.0 %
8% - 10%49.0 — 1.5 39.6 52.0 — 1.4 42.2 
10% - 12%11.5 — — 9.2 13.5 — — 10.9 
12% - 14%3.0 53.2 12.9 6.7 3.4 53.6 12.5 7.0 
Greater than 14%1.5 46.8 82.9 15.9 1.6 46.4 84.7 15.9 
Total100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %
Weighted average yield - performing debt and Structured Finance Note investments (2)
8.52 %14.05 %16.88 %10.04 %8.92 %14.88 %16.56 %10.27 %
Weighted average yield - total debt and Structured Finance Note investments (3)
8.09 %5.24 %16.88 %9.01 %8.38 %5.53 %16.56 %9.15 %
(1) Weighted average yield on total investments is computed as (a) the sum of (i) the annual stated accruing interest on our debt investments at the balance sheet date plus the annualized accretion of Net Loan Fees, (ii) the effective yield on our performing preferred equity investments, and (iii) the annual effective yield on Structured Finance Notes, divided by (b) amortized cost of our total investment portfolio, including assets in non-accrual status as of the balance sheet date.
(2) The weighted average yield on our performing debt and Structured Finance Note investments is computed as (a) the sum of (i) the annual stated accruing interest on debt investments plus the annualized accretion of Net Loan Fees; and (ii) the annual effective yield on Structured Finance Notes divided by (b) amortized cost of our debt and Structured Finance Note investments, excluding debt investments in non-accrual status as of the balance sheet date.
(3) The weighted average yield on our total debt and Structured Finance Note investments is computed as (a) the sum of (i) the annual stated accruing interest plus the annualized accretion of Net Loan Fees and (ii) plus the annual effective yield on Structured Finance Notes divided by (b) amortized cost of our debt and Structured Finance Note investments, including debt investments in non-accrual status as of the balance sheet date.
The weighted average yield on performing portfolio company debt securities, including Structured Finance Notes, decreased to 10.04% at March 31, 2021 from 10.27% at December 31, 2020, primarily due to the 7.4% weighted average yield on new debt investments and Structured Finance Notes. We purchased approximately $40.9 million in debt securities, primarily in lower-yielding, first lien senior secured loans to larger borrowers, with a weighted average yield of 6.5%. The weighted average yield on total debt, including Structured Finance Notes, decreased to 9.01% at March 31, 2021 from 9.15% at December 31, 2020.
As of March 31, 2021, and December 31, 2020, floating rate loans at fair value were 93% and 96% of our debt portfolio, excluding Structured Finance Notes, respectively, and fixed rate loans at fair value were 7% and 4% of this portfolio, respectively.
The weighted average yield of our investments is not the same as a return on investment for our stockholders, but rather the gross investment income from our investment portfolio before the payment of all of our fees and expenses. There can be no assurance that the weighted average yield will remain at its current level.
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Portfolio Company Investments
The following table summarizes the composition of our Portfolio Company Investments as of March 31, 2021 and December 31, 2020 (dollar amounts in thousands):
March 31, 2021December 31, 2020
Amortized CostFair ValueAmortized CostFair Value
Senior secured debt investments (1)
$339,615 $324,150 $325,647 $306,304 
Subordinated debt investments45,526 13,742 45,409 15,067 
Preferred equity18,695 12,311 18,648 11,543 
Common equity, warrants and other15,459 54,266 15,459 52,984 
  Total Portfolio Company Investments
$419,295 $404,469 $405,163 $385,898 
Total number of portfolio companies72 72 62 62 
(1)    Includes debt investments in which we have entered into contractual arrangements with co‑lenders whereby, subject to certain conditions, we have agreed to receive our principal payments after the repayment of certain co‑lenders pursuant to a payment waterfall. The aggregate amortized cost and fair value of these investments was $55,767 and $57,029, respectively, at March 31, 2021, and $55,776 and $56,217, respectively, at December 31, 2020.
    At March 31, 2021, 96% and 70% of our loan portfolio and total portfolio, respectively, consisted of senior secured loans, based on fair value. Approximately 80% of our Portfolio Company Investments at fair value are senior securities of the borrower, rather than in the subordinated securities, preferred equity or common equity. We believe the seniority of our debt investments in the borrowers' capital structures may provide greater downside protection against adverse economic changes, including those caused by the COVID-19 pandemic.
As of March 31, 2021, the three largest industries of our Portfolio Company Investments by fair value, were (1) Manufacturing (23.1%), (2) Professional, Scientific, and Technical Services (17.3%), and (3) Wholesale Trade (14.2%), totaling approximately 54.5% of the investment portfolio. We have limited exposure to the Retail Trade industry (4.3%), which has been significantly impacted by the COVID-19 pandemic. For a full summary of our investment portfolio by industry, see “Item 1–Financial Statements–Note 4.”
The following table presents our debt investment portfolio by investment size as of March 31, 2021 and December 31, 2020 (dollar amounts in thousands):
Amortized CostFair Value
March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Up to $4,000$52,017 13.5 %$30,427 8.2 %$52,405 15.5 %$33,149 10.3 %
$4,001 to $7,00055,388 14.4 72,030 19.4 61,476 18.2 68,939 21.5 
$7,001 to $10,00059,965 15.6 51,874 14.0 43,023 12.7 43,735 13.6 
$10,001 to $13,00023,297 6.0 21,013 5.7 35,956 10.6 33,470 10.4 
Greater than $13,000194,474 50.5 195,711 52.7 145,032 43.0 142,078 44.2 
Total$385,141 100.0 %$371,055 100.0 %$337,892 100.0 %$321,371 100.0 %
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Investment Activity
The following is a summary of our Portfolio Company Investment activity for the three months ended March 31, 2021 (dollar amounts in millions):
 Three Months Ended March 31, 2021
 Debt
Investments
Equity
Investments
Investments in new portfolio companies$36.2 $— 
Investments in existing portfolio companies
Follow-on investments
26.1 — 
Restructured investments
— — 
Delayed draw and revolver funding
— — 
Total investments in existing portfolio companies
26.1 — 
Total investments in new and existing portfolio
companies
$62.3 $— 
Number of new portfolio company investments18 — 
Number of existing portfolio company
investments
16 — 
Proceeds/redemptions from principal payments/
equity investments
48.6 — 
Proceeds from investments sold or redeemed0.6 — 
Total proceeds from principal payments, equity
distributions and investments sold
$49.2 $— 
Notable investments in new portfolio companies during the three months ended March 31, 2021, include Allen Media, LLC ($2.9 million senior secured loan), Confie Seguros Holding II Co. ($2.9 million senior secured loan), Innovacare, Inc. ($3.0 million senior secured loan), Ivanti Software, Inc. ($3.0 million senior secured loan) and JP Intermediate B, LLC ($3.8 million senior secured loan).
The weighted-average yield of new debt in Portfolio Company Investment companies during the three months ended March 31, 2021 was 6.5%.
We also invested $6.2 million in Structured Finance Notes with a weighted average annual effective yield of 14.9% during the three months ended March 31, 2021.

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The following is a summary of our Portfolio Company Investment activity for the three months ended March 31, 2020 (dollar amounts in millions):
 Three Months Ended
March 31, 2020
 Debt
Investments
Equity
Investments
Investments in new portfolio companies$39.8 $— 
Investments in existing portfolio companies
Follow-on investments
9.6 0.1 
Restructured investments
— 0.7 
Delayed draw and revolver funding
1.4 — 
Total investments in existing portfolio companies
11.0 0.8 
Total investments in new and existing portfolio
companies
$5.8 $0.8 
Number of new portfolio company investments— 
Number of existing portfolio company
investments
11 
Proceeds/distributions from principal payments/
equity investments
37.2 — 
Proceeds from investments sold or redeemed38.5 3.6 
Total proceeds from principal payments, equity
distributions and investments sold
$75.7 $3.6 
Notable investments in new portfolio companies during the three months ended March 31, 2020, include A&A Transfer, LLC ($23.7 million senior secured loan and $1.6 million revolver) and SourceHOV Tax, Inc. ($12.8 million senior secured loan).
The weighted-average yield of direct debt investments in new portfolio companies during the three months ended March 31, 2020 was 8.8%.
We also invested $12.0 million in Structure Finance Notes with a weighted average annual effective yield of 17.3% during the three months ended March 31, 2020.
Non-cash investment activity
On March 27, 2020, our debt investment in Constellis Holdings, LLC was restructured. We converted our non-accrual debt investment into 20,628 shares of common equity. The cost and fair value of the 20,628 shares of common equity received was $0.7 million and $0.7 million, respectively, which we recognized as the investment's cost.
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Risk Monitoring
We categorize direct investments in the debt securities of portfolio companies into seven risk categories based on relevant information about the ability of borrowers to service their debt. For additional information regarding our risk categories, see “Item 1. Business–Portfolio Review/Risk Monitoring” in our Annual Report on Form 10-K for the year ended December 31, 2020. The following table shows the classification of our debt securities of portfolio companies, excluding Structured Finance Notes, by credit risk rating as of March 31, 2021, and December 31, 2020 (dollar amounts in thousands):
Debt Investments, at Fair Value
Risk CategoryMarch 31, 2021December 31, 2020
1 (Low Risk)$— — %$— — %
2 (Below Average Risk)
— — — — 
3 (Average)282,739 83.7 263,934 82.2 
4 (Special Mention)47,297 14.0 45,302 14.1 
5 (Substandard)7,094 2.1 11,684 3.6 
6 (Doubtful)762 0.2 451 0.1 
7 (Loss)— — — — 
$337,892 100.0 %$321,371 100.0 %
Changes in the distribution of our debt investments across risk categories were a result of new debt investments, the receipt of amortization payments on existing debt investments, repayment of certain debt investments in full, changes in the fair value of our existing debt investments, realized gains on the sale of investments, as well as changes in risk categories. A debt investment with a cost and fair value of $4,712 and $4,731, respectively, had a risk rating upgrade from risk category 4 to risk category 3 during the three months ended March 31, 2021.
Non-Accrual Loans
When there is reasonable doubt that principal, cash interest, or PIK interest will be collected, loan investments are placed on non-accrual status and the Company will generally cease recognizing cash interest, PIK interest, or Net Loan Fee amortization, as applicable. Interest accruals and Net Loan Fee amortization are resumed on non-accrual investments only when they are brought current with respect to principal, interest and when, in the judgment of management, the investments are estimated to be fully collectible as to all principal. No new loans were placed on non-accrual status during the three months ended March 31, 2021. The aggregate amortized cost and fair value of loans on non-accrual status with respect to all interest and Net Loan Fee amortization was $45,878 and $7,856, respectively, at March 31, 2021, and $48,102 and $12,135, respectively, at December 31, 2020.
Structured Finance Notes
The following table summarizes the composition of our Structured Finance Notes as of March 31, 2021, and December 31, 2020 (in thousands):
March 31, 2021December 31, 2020
Amortized CostFair ValueAmortized CostFair Value
Subordinated notes$58,992 $58,833 $54,280 $54,724 
Mezzanine bonds2,616 2,797 1,580 1,701 
Total Structured Finance Notes$61,608 $61,630 $55,860 $56,425 
The weighted average yield on Structured Finance Notes increased to 16.88% at March 31, 2021, from 16.56% at December 31, 2020, primarily due to an increase in the effective yields of our subordinated notes.
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, 2020. 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
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extent, equity investments, including warrants and other minority equity securities and Structured Finance Notes, which differs to some degree from our historical investment concentration, in that we now also focus on the debt of larger U.S. companies and Structured Finance Notes. Moreover, as a BDC and a RIC, we will also be subject to certain constraints on our operations, including, but not limited to, limitations imposed by the 1940 Act and the Code. In addition, SBIC I LP is subject to regulation and oversight by SBA. For the reasons described above, the results of operations described below may not necessarily be indicative of the results we expect to report in future periods.
Net increase (decrease) in net assets resulting from operations can vary substantially from period to period for various reasons, including the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, annual comparisons of net increase (decrease) in net assets resulting from operations may not be meaningful.
The following analysis compares our quarterly results of operations to the preceding quarter, as well as our year-to-date results of operations to the corresponding period in the prior year. We believe a comparison of our current quarterly results to the preceding quarter is more meaningful and transparent than a comparison to the corresponding prior-year quarter as our results of operations are not influenced by seasonal factors the latter comparison is designed to elicit and highlight.
Comparison of the three months ended March 31, 2021 and December 31, 2020
Consolidated operating results for the three months ended March 31, 2021 and December 31, 2020 are as follows (in thousands):
Three Months Ended
March 31, 2021December 31, 2020
Investment income
Interest income:
Cash interest income$6,837 $7,423 
Net Loan Fee amortization
573 625 
Accretion of interest income on Structured Finance Notes2,278 1,735 
Other interest income
12 15 
Total interest income9,700 9,798 
PIK income:
PIK interest income
440 306 
Preferred equity PIK dividends
47 116 
Total PIK income487 422 
Dividend income:
Common and preferred equity cash dividends
— 350 
Total dividend income— 350 
Fee income:
Syndication fees217 278 
Prepayment and other fees
86 289 
Total fee income304 567 
Total investment income10,491 11,137 
Total expenses7,941 8,133 
Net investment income2,550 3,004 
Net gain on investments3,923 8,915 
Loss on extinguishment of debt(2,299)(484)
Net increase in net assets resulting from operations$4,174 $3,694 
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Interest and PIK income by debt investment type for the three months ended March 31, 2021 and December 31, 2020, is summarized below (in thousands):
Three Months Ended
March 31,December 31,
20212020
Interest income and PIK interest income:
Senior secured debt investments
$7,202 $7,464 
Subordinated debt investments
660 863 
Structured Finance Notes
2,278 1,777 
Total interest income and PIK interest income
10,140 10,104 
Plus purchased premiums (less Net Loan Fees) accelerations
(342)(333)
Recurring interest income and PIK interest income
$9,798 $9,771 
Investment Income
We consider our interest income on direct debt investments to portfolio companies—other than acceleration of Net Loan Fees recognized upon the repayment of a loan—PIK interest income, and the accretable yield on Structured Finance Notes to be recurring in nature. Such recurring interest income and PIK interest income was essentially unchanged during the three months ended March 31, 2021 compared to the three months ended December 31, 2020.
Total PIK income on debt securities was $0.4 million and $0.3 million for the three months ended March 31, 2021 and December 31, 2020, respectively. During the three months ended March 31, 2021, we amended two loans to increase the PIK rate and amended a non-accrual loan to convert first quarter cash interest due to PIK interest; however, such income remained unrecognized in accordance with our non-accrual policy.
Syndication fees, prepayment fees and the acceleration of Net Loan Fees generally result from periodic transactions rather than from holding portfolio investments and are considered non-recurring. Syndication fees, which are recognized when OFS Advisor sources, structures, and arranges the lending group, and for which we are additionally compensated, declined to $0.2 million for the three months ended March 31, 2021 compared to $0.3 million for the three months ended December 31, 2020. Total fee income for the three months ended March 31, 2021 compared to December 31, 2020, decreased from $0.6 million to $0.3 million due to decreases in syndication fees and prepayment fees.
Expenses
Operating expenses for the three months ended March 31, 2021 and December 31, 2020, are presented below (in thousands):
Three Months Ended
March 31,December 31,
20212020
Interest expense$4,825 $4,507 
Management fee1,834 1,846 
Incentive fee— 693 
Professional fees387 464 
Administration fee568 399 
General and administrative expenses327 224 
Total expenses$7,941 $8,133 
Interest expense for the three months ended March 31, 2021, increased $0.3 million compared to the three months ended December 31, 2020, primarily due to us paying interest on both the Unsecured Notes Due February 2026, issued in March of 2021, and the Unsecured Notes Due April 2025 and the Unsecured Notes Due October 2025. After the 30-day notice period expired, we used the proceeds from the Unsecured Notes Due February 2026 to redeem both the Unsecured Notes Due April 2025 and the Unsecured Notes Due October 2025.
Management fee expense for the three months ended March 31, 2021 remained stable compared to the prior quarter.
Incentive fee expense for the three months ended March 31, 2021 decreased $0.7 million compared to the prior quarter due to a decline in net interest margin and lower fee income.
Professional fees for the three months ended March 31, 2021 decreased $0.1 million compared to the prior quarter due to reduced valuation and accounting costs.
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Administration fee expense for the three months ended March 31, 2021 increased $0.2 million over the prior quarter due to allocations related to year-end administrative services, including audit support.
General and administrative expenses for the three months ended March 31, 2021 increased $0.1 million over the prior quarter primarily due to the realization of tax benefits in the fourth quarter of 2020.
Net realized and unrealized gain (loss) on investments
Net gain (loss) by investment type for the three months ended March 31, 2021 and December 31, 2020, were as follows (in thousands):
Three Months Ended
March 31,December 31,
20212020
Senior secured debt$3,880 $148 
Subordinated debt(1,442)(4,803)
Preferred equity, net of taxes655 (71)
Common equity, warrants and other1,373 9,347 
Structured Finance Notes(543)4,294 
Total net gain on investments$3,923 $8,915 
Net gain on investments for the three months ended March 31, 2021 and March 31, 2020
Our portfolio experienced net gains of $3.9 million in the first quarter of 2021, primarily as a result of performance improvements in our directly originated debt and equity investments, resulting in net unrealized appreciation. During the first quarter of 2020, the fair value of the portfolio declined $27.4 million primarily as a result of the adverse economic effects of the COVID-19 pandemic on market conditions and the overall economy and the related declines in quoted loan prices, increases in underlying market credit spreads and company-specific negative impacts on past and expected future operating performance. Additionally, we incurred realized losses of $9.1 million primarily due to the restructuring of our debt investment in Constellis Holdings, LLC, which was fully recognized as an unrealized loss as of December 31, 2019.
The net appreciation on our senior secured debt investments in the first quarter of 2021 was primarily attributable to a $1.5 million improvement on our debt investment in Wastebuilt Environmental Solutions LLC, which experienced an improvement in fair value as the company continues to proceed with an anticipated acquisition. We also experienced general appreciation in our senior secured investments as a result of credit spread tightening observed in the market, leading to a 31 basis point reduction in the weighted averge discount rates utilized in our discounted cash flow fair value models. We recognized net losses of $18.7 million on senior secured debt during the three months ended March 31, 2020, primarily as a result of the net unrealized depreciation of $19.0 million on our senior secured debt. We also recognized a net realized loss of $9.1 million, primarily due to a $9.1 million realized loss from the restructuring of our debt investment in Constellis Holdings, LLC, which had unrealized depreciation of $9.3 million as of December 31, 2019, and therefore positively impacted the first quarter of 2020 net loss by $0.2 million.
First quarter 2021 net losses in our subordinated debt investments was principally due to a decrease of $2.3 million in the fair value of our subordinated debt investment in Online Tech Stores LLC, due to further degradation of performance at that company. We recognized net losses of $7.5 million on subordinated debt during the three months ended March 31, 2020, primarily as a result of unrealized depreciation of $7.2 million on Online Tech Stores, LLC, which was the only loan placed on non-accrual during the quarter. We also recognized net unrealized depreciation of $0.3 million on our remaining subordinated debt securities, primarily due to net negative impact of portfolio company-specific performance factors.
Net gain on investments for the three months ended December 31, 2020
Our portfolio experienced net gains of $8.9 million in the fourth quarter of 2020 primarily as a result of performance improvements in our equity investments. During the three months ended December 31, 2020, we recognized net gains of $9.3 million on our equity investments, primarily due to unrealized appreciation of $4.3 million on our investment in Pfanstiehl Holdings, Inc., as well as unrealized appreciation of $2.5 million on our investment in MTE Holding Corp. We recognized net losses of $4.8 million on our subordinated debt investments, primarily due to unrealized depreciation of $4.7 million on our investment in Online Tech Stores, LLC.
Loss on Extinguishment of Debt
During the three months ended March 31, 2021, we prepaid $9.8 million of SBA debentures and redeemed $98.5 million of unsecured notes, and, as a result, we recognized losses on extinguishment of debt of $2.3 million related to the charge-off of deferred borrowing costs on these instruments.
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During the three months ended December 31, 2020, we prepaid $23.5 million of SBA debentures and the BLA was amended to reduce the total commitment from $50.0 million to $20.0 million, and, as a result, recognized losses on extinguishment of debt of $0.5 million related to the charge-off of deferred borrowing costs on these instruments.

Comparison of the three months ended March 31, 2021 and 2020
Consolidated operating results for the three months ended March 31, 2021 and 2020 are as follows (in thousands):
Three Months Ended March 31,
20212020
Investment income
Interest income:
Cash interest income$6,837 $9,988 
Net Loan Fee amortization
573 414 
Accretion of interest income on Structured Finance Notes2,278 1,223 
Other interest income
12 37 
Total interest income9,700 11,662 
PIK income:
PIK interest income
440 436 
Preferred equity PIK dividends
47 179 
Total PIK income487 615 
Dividend income:
Common and preferred equity cash dividends
— 100 
Total dividend income— 100 
Fee income:
Management and syndication
217 378 
Prepayment and other fees
86 115 
Total fee income304 493 
Total investment income10,491 12,870 
Total expenses, net incentive fee waiver7,941 8,898 
Net investment income2,550 3,972 
Net gain (loss) on investments3,923 (35,983)
Loss on extinguishment of debt(2,299)(149)
Net increase (decrease) in net assets resulting from operations$4,174 $(32,160)
Interest and PIK income by debt investment type for the three months ended March 31, 2021 and 2020, is summarized below (in thousands):
Three Months Ended March 31,
20212020
Interest income and PIK interest income:
Senior secured debt investments
$7,202 $9,918 
Subordinated debt investments
660 958 
Structured Finance Notes
2,278 1,223 
Total interest income and PIK interest income
10,140 12,099 
Plus purchased premiums (less Net Loan Fees) accelerations
(342)(103)
Recurring interest income and PIK interest income
$9,798 $11,996 
Investment Income
We consider our interest income on direct debt investments to portfolio companies—other than acceleration of Net Loan Fees recognized upon the repayment of a loan—PIK interest income, and the accretable yield on Structured Finance Notes to be recurring in nature. Such recurring interest income and PIK interest income decreased by $2.2 million for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, primarily due to $2.0 million from a $85 million decrease in the average outstanding performing loan balance, and a $0.2 million decrease resulting from a 6 basis point reduction in the recurring earned yield on our portfolio primarily due to lower yielding senior secured investments.
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Expenses
Operating expenses for the three months ended March 31, 2021 and 2020, are presented below (in thousands):
Three Months Ended March 31,
20212020
Interest expense$4,825 $4,922 
Management fee1,834 2,019 
Incentive fee— 883 
Professional fees387 648 
Administration fee568 520 
Other expenses327 347 
Total expenses before incentive fee waiver
$7,941 $9,339 
Incentive fee waiver— (441)
Total expenses, net of incentive fee waiver
$7,941 $8,898 
Interest expense for the three months ended March 31, 2021 decreased $0.1 million over the corresponding prior year period primarily due to a decrease in the average dollar borrowings.
Management fee expense for the three months ended March 31, 2021 decreased $0.2 million over the corresponding prior year period due to a decrease in the size of our portfolio.
The $0.9 million decrease in incentive fee expense during the three months ended March 31, 2021 was attributable to a decrease in net investment income resulting from a decline in net interest margin. On May 4, 2020, OFS Advisor agreed to irrevocably waive the receipt of $0.4 million in Income Incentive Fees (based on net investment income) related to net investment income, that it would otherwise be entitled to receive under the Investment Advisory Agreement for the three months ended March 31, 2020. As a result of the voluntary fee waiver, we incurred Income Incentive Fee expense of $0.4 million for the three months ended March 31, 2020, which is equal to half the Income Incentive Fee expense we would have incurred for such period.
The $0.3 million decrease in professional fees for the three months ended March 31, 2021, compared to the corresponding prior year period was attributable to reduced valuation and accounting costs.
Administration fee expense for the three months ended March 31, 2021, remained stable compared to the corresponding prior year period.
Other expenses for the three months ended March 31, 2021 remained stable compared to the corresponding prior year period.
Net realized and unrealized gain (loss) on investments
Net gain (loss) by investment type for the three months ended March 31, 2021 and 2020, were as follows (in thousands):
Three Months Ended March 31,
20212020
Senior secured debt$3,880 $(18,731)
Subordinated debt(1,442)(7,465)
Preferred equity, net of taxes655 (1,237)
Common equity, warrants and other1,373 (344)
Structured Finance Notes(543)(8,206)
Total net gain (loss) on investments$3,923 $(35,983)
Net gains on investments for the three months ended March 31, 2020.
We recognized net losses of $1.2 million on preferred equity investments for the three months ended March 31, 2020, primarily as a result of unrealized depreciation of $2.0 million on Contract Datascan Series A units, offset by unrealized appreciation of $0.8 million on TTG Healthcare, LLC Class B preferred shares.
Net appreciation in our common equity, warrants and other during the three months ended March 31, 2021, was led by net gains on our investments in the common equity of Pfanstiehl Holdings, Inc., and NeoSystems Corp., which improved by $1.0 million and $0.9 million, respectively, in both instances driven by improved operating results of the companies. We
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recognized net losses of $0.3 million on common equity and warrant investments for the three months ended March 31, 2020, primarily as a result of negative portfolio company-specific performance factors.
We recognized unrealized depreciation of $8.2 million on Structured Finance Notes for the three months ended March 31, 2020, primarily as a result of the negative impact of assumptions that reflect more stress on the underlying portfolios due to widening credit spreads.
Liquidity and Capital Resources
At March 31, 2021, we held cash of $41.6 million, which includes $4.5 million held by SBIC I LP, our wholly owned SBIC, and $4.4 million held by OFSCC-FS. Our use of cash held by SBIC I LP may be restricted by SBA regulation, including limitations on the amount of cash SBIC I LP can distribute to the Parent. Any such distributions to the Parent from SBIC I LP are generally restricted under SBA regulations to a statutory measure of undistributed accumulated earnings or regulatory capital of SBIC I LP, and require the prior approval of the SBA. During the three months ended March 31, 2021, the Parent received a return of capital distribution of $19.1 million from SBIC I LP. 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, 2021, the Parent received $0.7 million in cash distributions from OFSCC-FS. As of March 31, 2021, cash available to be distributed from SBIC I LP and OFSCC-FS were $8.9 million and $-0-, respectively.
At March 31, 2021, we had an unused commitment of $25.0 million under our PWB Credit Facility, as well as an unused commitment of $130.5 million under our BNP Facility, both subject to a borrowing base requirements and other covenants. The Parent may make unsecured loans to SBIC I LP, the aggregate which cannot exceed $35 million at any given time, and no interest may be charged on the unpaid principal balance. There were no intercompany loans between the Parent and SBIC I LP as of March 31, 2021.
Based on fair values and equity capital at March 31, 2021, we could access available lines of credit for $97 million and remain in compliance with our asset coverage requirements. As of May 7, 2021, we had cash on hand of approximately $28.5 million. We continue to believe that we have sufficient levels of liquidity to support our existing portfolio companies and selectively deploy capital in new investment opportunities in this challenging environment.
Sources and Uses of Cash
We generate operating cash flows from net investment income and the net liquidation of portfolio investments, and use cash in our operations in the net purchase of portfolio investments and payment of expenses. Significant variations may exist between net investment income and cash from net investment income, primarily due to the recognition of non-cash investment income, including certain Net Loan Fee amortization, PIK interest, and PIK dividends, which generally will not be fully realized in cash until we exit the investment. As discussed in "Item 1.–Financial Statements–Note 3," we pay OFS Advisor a quarterly incentive fee with respect to our pre-incentive fee net investment income, which may include investment income that we have not received in cash. In addition, we must distribute substantially all of our taxable income, which approximates, but will not always equal, the cash we generate from net investment income to maintain our RIC tax treatment. Historically, our distributions have been in excess of taxable income, and we have limited history of net taxable gains. We also obtain cash to
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fund investments or general corporate activities from the issuance of securities and our revolving line of credit. These principal sources and uses of cash and liquidity are presented below (in thousands):
 Three Months Ended March 31,
 20212020
Cash from net investment income$(1,517)$886 
Net (purchases and originations)/repayments and sales of portfolio investments
7,340 6,831 
Net cash provided by operating activities5,823 7,717 
Distributions paid to stockholders(1)
(2,655)(4,484)
Net (borrowings) repayments under lines of credit(12,500)1,600 
Repayment of SBA debentures(9,765)(16,110)
Proceeds from unsecured notes offering, net of discounts121,791 — 
Redemption of unsecured notes(98,525)— 
Other financing activities(236)— 
Net cash used in financing activities(1,890)(18,994)
Increase (decrease) in cash$3,933 $(11,277)
(1)    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. See "Item 1–Financial Statements–Note 9. "
Cash from net investment income
Cash from net investment income decreased $2.4 million for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, principally due to an decrease in collected net interest, dividend, and fee income of $3.1 million and an increase in operating expenses paid of $0.5 million, offset by an decrease in fees paid to OFS Advisor and affiliates of $1.4 million.
Net (purchases and originations)/repayments and sales of portfolio investments
During the three months ended March 31, 2021, net purchases and originations of portfolio investments of $7.3 million were primarily due to $44.0 million of cash we used to purchase portfolio investments, offset by $51.3 million of cash we received from amortized cost repayments and sales on our portfolio investments. During the three months ended March 31, 2020, net purchases and originations of portfolio investments consisted of $71.9 million of cash we used to purchase portfolio investments, offset by $78.7 million of cash we received from amortized cost repayments and sales on our portfolio investments. See "—Portfolio Composition and Investment Activity–Investment Activity."
Borrowings
SBA Debentures
SBIC I LP has a SBIC license that allowed it to obtain leverage by issuing SBA-guaranteed debentures, subject to issuance of a capital commitment by the SBA and customary procedures. These debentures are non-recourse to us, and bear interest payable semi-annually, and each debenture has a maturity date that is ten years following issuance. The interest rate was fixed at the first pooling date after issuance, which was March and September of each year, at a market-driven spread over U.S. Treasury Notes with ten-year maturities. As of March 31, 2021 and 2020, SBIC I LP had outstanding debentures of $95.5 million and $133.8 million, respectively.
On a stand-alone basis, SBIC I LP held $201.5 million, and $223.8 million in total assets at March 31, 2021 and December 31, 2020, respectively, which accounted for approximately 39% and 46% of the Company’s total consolidated assets, respectively.
    As part of our plans to focus on lower-yielding, first lien senior secured loans to larger borrowers, which we believe will improve our overall risk profile, SBIC I LP is repaying over time its outstanding SBA debentures prior to the scheduled maturity dates of its debentures. Under a plan approved by the SBA, we will only make follow-on investments in current portfolio companies held by SBIC I LP. We believe that investing in more senior loans to larger borrowers is consistent with our view of the private loan market and will reduce our overall leverage on a consolidated basis. During the three months ended March 31, 2021, SBIC I LP prepaid $9.8 million of SBA debentures that were contractually due September 1, 2022 and September 1, 2024. We recognized a loss on extinguishment of debt of $0.1 million related to the charge-off of deferred borrowing costs on the prepaid debentures.
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SBIC I LP is periodically examined and audited by the SBA’s staff to determine its compliance with SBA regulations. If SBIC I LP fails to comply with applicable SBA regulations, the SBA could, depending on the severity of the violation, limit or prohibit SBIC I LP’s use of debentures, declare outstanding debentures immediately due and payable, and/or limit SBIC I LP from making distributions.
    We have received exemptive relief from the SEC effective November 26, 2013, which permits us to exclude SBA guaranteed debentures from the definition of senior securities in the statutory 150% asset coverage ratio under the 1940 Act.
PWB Credit Facility
We are party to a BLA with Pacific Western Bank, as lender, to provide us with a senior secured revolving credit facility, or the PWB Credit Facility, which is available for general corporate purposes including investment funding. The maximum availability of the PWB Credit Facility is equal to 50% of the aggregate outstanding principal amount of eligible loans included in the borrowing base, which excludes subordinated loan investments (as defined in the BLA) and as otherwise specified in the BLA. The PWB Credit Facility is guaranteed by OFSCC-MB, Inc. and secured by all of our current and future assets, excluding assets held by SBIC I LP, OFSCC-FS and the Company’s partnership interests in SBIC I LP and OFS SBIC I, GP.
    On February 17, 2021, we amended the BLA to among other things: (i) increase the maximum amount available from $20.0 million to $25.0 million; (ii) decrease the interest rate floor from 5.25% per annum to 5.00% per annum; (iii) modify certain financial performance covenants; and (iv) extend the maturity date from February 28, 2021 to February 28, 2023.
    As of March 31, 2021, we had no outstanding balance and an unused commitment of $25.0 million under the PWB Credit Facility, subject to a borrowing base and other covenants.
The BLA contains customary terms and conditions, including, without limitation, affirmative and negative covenants, such as information reporting requirements, a minimum tangible net asset value, a minimum quarterly net investment income after incentive fees, a debt/worth ratio and a net loss restriction. The BLA also contains customary events of default, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-default to other indebtedness, bankruptcy, change in investment advisor, and the occurrence of a material adverse change in our financial condition. As of March 31, 2021, we were in compliance with the applicable covenants under the PWB Credit Facility.
Unsecured Notes
On February 10, 2021, we closed the public offering of $100.0 million aggregate principal amount of our 4.75% notes due 2026, and on March 18, 2021, we closed an additional public offering of $25.0 million aggregate principal amount of our 4.75% notes due 2026 (the "Unsecured Notes Due February 2026"). The total net proceeds to us from the Unsecured Notes Due February 2026, after deducting underwriting fees of $3.2 million and estimated offering expenses of $0.3 million, was approximately $121.5 million. The Unsecured Notes Due February 2026 bear an effective interest rate, including amortization of deferred debt issuance costs, of 5.30%. The Unsecured Notes Due February 2026 will mature on February 10, 2026, and we may redeem the Unsecured Notes Due February 2026 in whole or in part at any time, or from time to time, at our option at par plus a "make-whole" premium, if applicable. The Unsecured Notes Due February 2026 bear interest at a rate of 4.75% per year payable semi-annually in arrears on February 10 and August 10 of each year, commencing on August 10, 2021.
In connection with, and using the proceeds from, the issuance of the Unsecured Notes Due February 2026, on March 12, 2021, we redeemed all $50.0 million in aggregate principal amount of the Unsecured Notes Due April 2025 and all $48.5 million in aggregate principal amount of the Unsecured Notes Due October 2025. The Unsecured Notes Due April 2025 and the Unsecured Notes Due October 2025 were redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid interest thereon from January 31, 2021, through, but excluding, March 12, 2021. We recognized a loss on extinguishment of debt of $2.2 million related to the charge-off of deferred borrowing costs on the redemption of the notes.
    The Unsecured Notes are direct unsecured obligations and rank equal in right of payment with all of our current and future unsecured indebtedness. Because the Unsecured Notes are not secured by any of our assets, they are effectively subordinated to all existing and future secured unsubordinated indebtedness (or any indebtedness that is initially unsecured as to which we subsequently grant a security interest), to the extent of the value of the assets securing such indebtedness, including, without limitation, borrowings under the PWB Credit Facility.
    In order to, among other things, reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may, from time to time, purchase the Unsecured Notes for cash in open market purchases and/or privately negotiated transactions. We will evaluate any such transactions in light of then-existing market conditions, taking into account our current liquidity, prospects for future access to capital, contractual restrictions and other factors. The amounts involved in any such transactions, individually or in the aggregate, may be material.
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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 $19.6 million was drawn as of March 31, 2021. Borrowings under the BNP Facility bear interest based on LIBOR for the relevant interest period, plus an applicable spread. The effective interest rate on the BNP Facility was 7.36% at March 31, 2021. The BNP Facility will mature on the earlier of June 20, 2024 or upon certain other events defined in the credit agreement which result in accelerated maturity. Borrowings under the BNP Facility are secured by substantially all of the assets held by OFSCC-FS. The unused commitment under the BNP Facility was $130.5 million as of March 31, 2021. As of March 31, 2021, we were in compliance with the applicable covenants.
    On a stand-alone basis, OFSCC-FS held approximately $100.9 million and $72.4 million in total assets at March 31, 2021 and December 31, 2020, respectively, which accounted for approximately 19.7% and 15% of our total consolidated assets, respectively.
Other Liquidity Matters 
We expect to fund the growth of our investment portfolio utilizing our current borrowings, follow-on equity offerings, and issuances of senior securities or future borrowings to the extent permitted by the 1940 Act. We cannot assure stockholders that our plans to raise capital will be successful. In addition, we intend to distribute to our stockholders substantially all of our taxable income in order to satisfy the requirements applicable to RICs under Subchapter M of the Code. Consequently, we may not have the funds or the ability to fund new investments or make additional investments in our portfolio companies. The illiquidity of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded value.
As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our assets, as defined by the 1940 Act, are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Under the relevant SEC rules, the term “eligible portfolio company” includes all private companies, companies whose securities are not listed on a national securities exchange, and certain public companies that have listed their securities on a national securities exchange and have a market capitalization of less than $250 million, in each case organized in the United States. Conversely, we may invest up to 30% of our portfolio in opportunistic investments not otherwise eligible under BDC regulations. Specifically, as part of this 30% basket, we may consider investments in investment funds that are operating pursuant to certain exceptions to the 1940 Act and in advisers to similar investment funds, as well as in debt or equity of middle-market portfolio companies located outside of the United States and debt and equity of public companies that do not meet the definition of eligible portfolio companies because their market capitalization of publicly traded equity securities exceeds the levels provided for in the 1940 Act. As of March 31, 2021, approximately 86% of our investments were qualifying assets.
BDCs generally are required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities to total senior securities, which include all of our borrowings and any outstanding preferred stock, of at least 200% (150% if certain requirements are met). We received an exemptive order from the SEC to permit us to exclude the debt of SBIC I LP guaranteed by the SBA from the definition of Senior Securities in the statutory asset coverage ratio under the 1940 Act. This requirement limits the amount that we may borrow. To fund growth in our investment portfolio in the future, we anticipate the need to raise additional capital from various sources, including the equity markets and the securitization or other debt-related markets, which may or may not be available on favorable terms, if at all.
On May 3, 2018, our Board, including a required majority (as such term is defined in Section 57(o) of the 1940 Act) thereof, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, our minimum required asset coverage ratio decreased from 200% to 150%, effective May 3, 2019.
    On May 22, 2018, the Board authorized the Stock Repurchase Program under which we could acquire up to $10.0 million of our outstanding common stock through the two-year period ending May 22, 2020. On May 4, 2020, the Board extended the Stock Repurchase Program for an additional two-year period. Under the extended Stock Repurchase Program, we are authorized to repurchase shares in open-market transactions, including through block purchases, depending on prevailing market conditions and other factors. We expect the Stock Repurchase Program to be in place through May 22, 2022, or until the approved dollar amount has been used to repurchase shares. The Stock Repurchase Program does not obligate us to acquire any specific number of shares, and all repurchases will be made in accordance with SEC Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of stock repurchases. The Stock Repurchase Program may be extended, modified or discontinued at any time for any reason. We have provided our stockholders with notice of our intention to repurchase shares of our common stock in accordance with 1940 Act requirements. We retire all shares of common stock that we purchased in connection with the Stock Repurchase Program.
The following table summarizes shares of common stock repurchased under the Stock Repurchase Program during the three months ended March 31, 2021.
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Period
Total Number
of Shares Purchased
Cost of Shares PurchasedAverage Price Paid Per Share
January 1, 2021 through March 31, 2021700 $4,690 $6.70 
    As of March 31, 2021, the aggregate amount outstanding of the senior securities issued by us was $223.9 million, for which our asset coverage was 171%. The Small Business Administration Debentures are not subject to the asset coverage requirements of the 1940 Act as a result of exemptive relief granted to us by the SEC effective November 26, 2013. The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness.
    As a BDC, we are generally not permitted to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if the Board determines that such sale is in the best interests of us and our stockholders, and if our stockholders approve such sale. On June 23, 2020, our stockholders approved a proposal to authorize us, with approval of our Board, to sell or otherwise issue shares of our common stock (during a twelve-month period) at a price below our then-current net asset value per share in one or more offerings, subject to certain limitations (including that the cumulative number of shares sold pursuant to such authority does not exceed 25% of our then outstanding common stock immediately prior to each such sale).
Contractual Obligations and Off-Balance Sheet Arrangements
The following table shows our contractual obligations as of March 31, 2021 (in thousands):
 Payments due by period
Contractual Obligation (1)
TotalLess than
year
1-3 years (2)4-5 years (2)After 5
years (2)
PWB Credit Facility$— $— $— $— $— 
Unsecured Notes204,325 — 25,000 125,000 54,325 
SBA Debentures95,505 — 7,000 88,505 — 
BNP Facility19,550 — — 19,550 — 
Total(3)
$319,380 $— $32,000 $233,055 $54,325 
(1)Excludes commitments to extend credit to our portfolio companies.
(2)The PWB Credit Facility is scheduled to mature on February 28, 2023. The SBA debentures are scheduled to mature between September 2022 and September 2025. SBIC I LP is repaying over time its outstanding SBA debentures prior to the scheduled maturity dates of its debentures. The Unsecured Notes are scheduled to mature between October 2023 and October 2026. The BNP Facility is scheduled to mature on June 20, 2024.
(3)64% of the outstanding debt is unsecured.
    We continue to believe our long-dated financing, with approximately 90% of our total debt contractually maturing in 2024 and beyond, affords us operational flexibility.
We have entered into contracts with third parties under which we have material future commitments—the Investment Advisory Agreement, pursuant to which OFS Advisor has agreed to serve as our investment adviser, and the Administration Agreement, pursuant to which OFS Services has agreed to furnish us with the facilities and administrative services necessary to conduct our day-to-day operations.
We may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. At March 31, 2021, we had $5.8 million in unfunded commitments to four portfolio companies. We continue to believe that we have sufficient levels of liquidity to support our existing portfolio companies and will meet these unfunded commitments by using our cash on hand or utilizing our available borrowings under the PWB Credit Facility.
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
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deduct dividends it pays to its stockholders from its income to determine “taxable income.” Taxable income includes our taxable interest, dividend and fee income, and taxable net capital gains. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as gains or losses are not included in taxable income until they are realized. In addition, gains realized for financial reporting purposes may differ from gains included in taxable income as a result of our election to recognize gains using installment sale treatment, which generally results in the deferment of gains for tax purposes until notes or other amounts, including amounts held in escrow, received as consideration from the sale of investments are collected in cash. Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, which includes contractual PIK interest, and the amortization of discounts and fees. Cash collections of income resulting from contractual PIK interest and dividends or the amortization of discounts and fees generally occur upon the repayment of the loans or debt securities that include such items. Non-cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation, and amortization expense.
Our Board maintains a variable dividend policy with the objective of distributing four quarterly distributions in an amount not less than 90-100% of our taxable quarterly income or potential annual income for a particular year. In addition, at the end of the year, we may also pay an additional special dividend, or fifth dividend, such that we may distribute approximately all of our annual taxable income in the year it was earned, while maintaining the option to spill over our excess taxable income to a following year. Each year, a statement on Form 1099-DIV identifying the source of the distribution is mailed to the Company’s stockholders. Generally, a RIC is entitled to deduct dividends it pays to its stockholders from its income to determine “taxable income.” Taxable income includes our taxable interest, dividend and fee income, and taxable net capital gains. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as gains or losses are not included in taxable income until they are realized. In addition, gains realized for financial reporting purposes may differ from gains included in taxable income as a result of our election to recognize gains using installment sale treatment, which generally results in the deferment of gains for tax purposes until notes or other amounts, including amounts held in escrow, received as consideration from the sale of investments are collected in cash. Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, which includes contractual PIK interest, and the amortization of discounts and fees. Cash collections of income resulting from contractual PIK interest and dividends or the amortization of discounts and fees generally occur upon the repayment of the loans or debt securities that include such items. Non-cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation, and amortization expense.
Recent Developments
    On May 7, 2021, our Board declared a distribution of $0.22 per share for the second quarter of 2021, payable on June 30, 2021 to stockholders of record as of June, 23, 2021.
    We evaluated events subsequent to March 31, 2021 through May 10, 2021. We are continuing to closely monitor the impact of the outbreak of COVID-19 on all aspects of our business, including how it impacts our portfolio companies, employees, due diligence and underwriting processes, and financial markets. The U.S. capital markets experienced extreme volatility and disruption following the COVID-19 pandemic, which appear to have subsided and returned to pre-COVID-19 levels. Nonetheless, certain economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a prolonged period of world-wide economic downturn.
On March 27, 2020, the U.S. government enacted the CARES Act, which contains provisions intended to mitigate the adverse economic effects of the coronavirus pandemic. On December 27, 2020, the U.S. government enacted the December 2020 COVID Relief Package. Additionally, on March 11, 2021, the U.S. government enacted the American Rescue Plan, which included additional funding to mitigate the adverse economic effects of the COVID-19 pandemic. It is uncertain whether, or to what extent, our portfolio companies will be able to benefit from the CARES Act, the December 2020 COVID Relief Package, the American Rescue Plan, or any other subsequent legislation intended to provide financial relief or assistance. As a result of this disruption and the pressures on their liquidity, certain of our portfolio companies have been, or may continue to be, incentivized to draw on most, if not all, of the unfunded portion of any revolving or delayed draw term loans made by us, subject to availability under the terms of such loans.
The extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, will depend to a large extent on future developments regarding the duration and severity of the coronavirus, effectiveness of vaccination deployment and the actions taken by governments (including stimulus measures or the lack thereof) and their citizens to contain the coronavirus or treat its impact, all of which are beyond our control. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity and financial condition. Given the fluidity of the situation, we cannot estimate the long-term impact of COVID-19 on our business, future results of operations, financial position, or cash flows at this time.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
The economic effects of the COVID-19 outbreak has introduced significant volatility in the financial markets. The U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased. In addition, in a prolonged low interest rate environment, including a reduction of LIBOR to zero, our net interest margin will be compressed and adversely affect our operating results. For additional information concerning the COVID-19 outbreak and its potential impact on our business and our operating results, see "Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
As of March 31, 2021, 93% of our debt investments bore interest at floating interest rates, at fair value. The interest rates on our debt investments bearing floating interest rates are usually based on a floating LIBOR, and the debt investments typically contain interest rate re-set provisions that adjust applicable interest rates to current market rates on a periodic basis. A significant portion of our loans that are subject to the floating LIBOR rates are also subject to a minimum base rate, or floor, that we charge on our loans if the current market rates are below the respective floors. As of March 31, 2021, a majority of our floating rate loans were based on a floating LIBOR, subject to its floor.
Our outstanding SBA debentures and Unsecured Notes bear interest at fixed rates. Our PWB Credit Facility and BNP Facility have floating interest rate provisions based on the Prime Rate and LIBOR, respectively, with effective interest rates of 5.02% and 7.36%, respectively, as of March 31, 2021.
Assuming that the interim and unaudited consolidated balance sheet as of March 31, 2021 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$70 $(49)$21 
50162 (99)63 
75267 (148)119 
100637 (198)439 
1251,222 (247)975 
Basis point decreaseInterest incomeInterest expenseNet change
25$(71)$37 $(34)
50
_ (1)
_ (1)
_ (1)
75
_ (1)
_ (1)
_ (1)
100
_ (1)
_ (1)
_ (1)
125
_ (1)
_ (1)
_ (1)
(1) Any additional decrease in LIBOR would not result in a change to interest income or interest expense due to current LIBOR rates and a minimum base rate, or floor, that our debt investments and the PWB Credit Facility contain.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures 
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2021. 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, 2021, 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.
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Changes in Internal Control over Financial Reporting 
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended March 31, 2021, that has materially affected, or is 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, 2021. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our business, financial condition, results of operations or cash flows.
Item 1A. Risk Factors
Investing in our common stock may be speculative and involves a high degree of risk. In addition to the other information contained in this Quarterly Report on Form 10-Q, including our financial statements, and the related notes, schedules and exhibits, you should carefully consider the risk factors described in "Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, 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.
Other than the risk described below, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020. The risks previously disclosed in our 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.
The interest rates of our loans to our portfolio companies that extend beyond 2021 might be subject to change based on recent regulatory changes, including the decommissioning of LIBOR.
LIBOR is the basic rate of interest used in lending transactions between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate in loans we extend to portfolio companies such that the interest due to us pursuant to a loan extended to a portfolio company is calculated using LIBOR. The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR.
On March 5, 2021, the United Kingdom's Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that it will not compel panel banks to contribute to the overnight 1, 3, 6 and 12 months U.S. LIBOR tenors after June 30, 2023 and all other tenors after December 31, 2021. It is unclear if at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. Central banks and regulators in a number of major jurisdictions (for example, United States, United Kingdom, European Union, Switzerland and Japan) have convened working groups to find, and implement the transition to, suitable replacements for interbank offered rates (“IBORs”). To identify a successor rate for U.S. dollar LIBOR, the Alternative Reference Rates Committee (“ARRC”), a U.S.-based group convened by the U.S. Federal Reserve Board and the Federal Reserve Bank of New York, was formed. The ARRC has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. Although SOFR appears to be the preferred replacement rate for U.S. dollar LIBOR, at this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or other reforms to LIBOR that may be enacted in the United States, United Kingdom or elsewhere or, whether the COVID-19 outbreak will have further effect on LIBOR transition plans.
The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market value of and/or transferability of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations.
Recently, the CLOs we have invested in have included, or have been amended to include, language permitting the CLO investment manager to implement a market replacement rate (like those proposed by the ARRC of the Federal Reserve Board and the Federal Reserve Bank of New York) upon the occurrence of certain material disruption events. However, we cannot ensure that all CLOs in which we are invested will have such provisions, nor can we ensure the CLO investment managers will undertake the suggested amendments when able. We believe that because CLO managers and other CLO market participants have been preparing for an eventual transition away from LIBOR, we do not anticipate such a transition to have a material impact on the liquidity or value of any of our LIBOR-referenced CLO investments. However, because the future of LIBOR at this time is uncertain and the specific effects of a transition away from LIBOR cannot be determined with certainty as of the date of this filing, a transition away from LIBOR could:
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•    adversely impact the pricing, liquidity, value of, return on and trading for a broad array of financial products, including any LIBOR-linked CLO investments;
•    require extensive changes to documentation that governs or references LIBOR or LIBOR-based products, including, for example, pursuant to time-consuming renegotiations of existing documentation to modify the terms of outstanding investments;
•    result in inquiries or other actions from regulators in respect of our preparation and readiness for the replacement of LIBOR with one or more alternative reference rates;
•    result in disputes, litigation or other actions with CLO investment managers, regarding the interpretation and enforceability of provisions in our LIBOR-based CLO investments, such as fallback language or other related provisions, including, in the case of fallbacks to the alternative reference rates, any economic, legal, operational or other impact resulting from the fundamental differences between LIBOR and the various alternative reference rates;
•    require the transition and/or development of appropriate systems and analytics to effectively transition our risk management processes from LIBOR-based products to those based on one or more alternative reference rates, which may prove challenging given the limited history of the proposed alternative reference rates; and
•    cause us to incur additional costs in relation to any of the above factors.
In addition, the effect of a phase out of LIBOR on U.S. senior secured loans, the underlying assets of the CLOs in which we invest, is currently unclear. To the extent that any replacement rate utilized for senior secured loans differs from that utilized for a CLO that holds those loans, the CLO would experience an interest rate mismatch between its assets and liabilities which could have an adverse impact on our net investment income and portfolio returns.
Many underlying corporate borrowers can elect to pay interest based on 1-month LIBOR, 3-month LIBOR and/or other rates in respect of the loans held by CLOs in which we are invested, in each case plus an applicable spread, whereas CLOs generally pay interest to holders of the CLO’s debt tranches based on 3-month LIBOR plus a spread. The 3-month LIBOR currently exceeds the 1-month LIBOR by a historically high amount, which may result in many underlying corporate borrowers electing to pay interest based on 1-month LIBOR. This mismatch in the rate at which CLOs earn interest and the rate at which they pay interest on their debt tranches negatively impacts the cash flows on a CLO’s equity tranche, which may in turn adversely affect our cash flows and results of operations. Unless spreads are adjusted to account for such increases, these negative impacts may worsen as the amount by which the 3-month LIBOR exceeds the 1-month LIBOR increases.
The senior secured loans underlying the CLOs in which we invest typically have floating interest rates. A rising interest rate environment may increase loan defaults, resulting in losses for the CLOs in which we invest. In addition, increasing interest rates may lead to higher prepayment rates, as corporate borrowers look to avoid escalating interest payments or refinance floating rate loans. Further, a general rise in interest rates will increase the financing costs of the CLOs. However, since many of the senior secured loans within CLOs have LIBOR floors, if LIBOR is below the average LIBOR floor, there may not be corresponding increases in investment income resulting in smaller distributions to equity investors in these CLOs.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three month period ended March 31, 2021, we issued 3,103 shares of common stock to stockholders in connection with our DRIP. These issuances were not subject to the registration requirements of the Securities Act. The aggregate value of the shares of our common stock issued under our distribution reinvestment plan was approximately $27,242.
Issuer Purchases of Equity Securities
On May 22, 2018, the Board authorized the Company to initiate the Stock Repurchase Program under which the Company could acquire up to $10.0 million of its outstanding common stock through the two-year period ending May 22, 2020.
On May 4, 2020, the Board extended the Stock Repurchase Program for an additional two-year period. Under the extended Stock Repurchase Program, the Company is authorized to repurchase shares in open-market transactions, including through block purchases, depending on prevailing market conditions and other factors. The Company expects the Stock Repurchase Program to be in place through May 22, 2022, 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.
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During the three months ended March 31, 2021, we repurchased 700 shares of common stock on the open market for under the Stock Repurchase Program. The following table provides information regarding the Stock Repurchase Program (amount in thousands except shares):
Period
Total Number
of Shares Purchased (1)
Cost of Shares PurchasedAverage Price Paid Per ShareMaximum Number (or Appropriate Dollar Value) of Shares that May Yet Be Purchased Under the Stock Repurchase Program
May 22, 2018 through June 30, 2018— $— $— $10,000 
July 1, 2018 through September 30, 2018— $— $— $10,000 
October 1, 2018 through December 31, 2018300 $$10.29 $9,997 
January 1, 2019 through March 31, 2019— $— $— $9,997 
April 1, 2019 through June 30, 2019— $— $— $9,997 
July 1, 2019 through September 30, 2019— $— $— $9,997 
October 1, 2019 through December 31, 2019— $— $— $9,997 
January 1, 2020 through March 31, 2020— $— $— $9,997 
April 1, 2020 through June 30, 2020— $— $— $9,997 
July 1, 2020 through September 30, 2020— $— $— $9,997 
October 1, 2020 through December 31, 2020— $— $— $9,997 
January 1, 2021 through March 31, 2021700 $$6.70 $9,992 
(1)    Excludes shares purchased on the open market and reissued in order to satisfy the DRIP obligation.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Not applicable.
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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
4.1Form 8-K (333-00813)February 10, 2021
4.2Form 8-K (333-00813)February 10, 2021
10.1Form 8-K (333-00813)February 19, 2021
10.2Form 8-K (333-00813)February 19, 2021
31.1 *
31.2 *
32.1 
32.2 
*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 11, 2021OFS 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

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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;
 
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 provided 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 11th day of May, 2021.
 
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;
 
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 provided 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 11th day of May, 2021.
 
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, 2021 (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 11, 2021


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, 2021 (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 11, 2021