Document

                

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-23299 
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OFS Credit Company, Inc.
(Exact name of registrant as specified in charter)
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10 South Wacker Drive, Suite 2500
Chicago, IL 60606
(Address of principal executive offices)
Bilal Rashid
Chief Executive Officer
OFS Credit Company, Inc.
10 South Wacker Drive, Suite 2500
Chicago, IL 60606
(Name and address of agent for service)
––––––––––––––––––
Registrant’s telephone number, including area code: (847) 734-2000
Date of fiscal year end: October 31
Date of reporting period: October 31, 2021








Item 1. Report to Stockholders

The Company's Annual Report to stockholders for the year ended October 31, 2021 is filed herewith.
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OFS CREDIT COMPANY, INC.
 
TABLE OF CONTENTS - ANNUAL REPORT





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December 14, 2021

To Our Stockholders:

For the twelve-months ended October 31, 2021, shares of common stock of OFS Credit Company, Inc. ("OFS Credit" or the "Company") generated a total return based on market value of approximately 61%. The rebound in the market value of our common stock over the last year allowed us to raise net proceeds of approximately $48.7 million from the sale of common stock at or above net asset value. We believe that the increased scale allows us to further diversify the portfolio, reduce corporate overhead as a percentage of investment income, improve our common stock's trading liquidity and lower our cost of financing. On December 8, 2021, we closed an underwritten public offering of 1,220,000 shares of 5.25% Series E Term Preferred Stock at a public offering price of $25.00 per share, raising $30.5 million in gross proceeds. In addition, the Company has granted the underwriters a 30-day option to purchase up to an additional 180,000 shares of Series E Preferred Stock on the same terms and conditions to cover overallotments, if any. A portion of the proceeds were used to redeem our 6.875% Series A Preferred Stock and grow the portfolio.
On December 2, 2021, we announced a $0.55 per share quarterly distribution for common stockholders for the quarter ending January 31, 2022. The quarterly distribution equates to an approximately $2.20 annualized distribution rate of which $2.04, based on our prior year net investment income, represents return of capital.
The distribution will be paid in cash or shares of our common stock at the election of stockholders. The total amount of cash distributed to all stockholders will be limited to 20% of the total distribution to be paid, excluding any cash paid for fractional shares. The remainder of the distribution (approximately 80%) will be paid in the form of shares of our common stock. The exact distribution of cash and stock to any given stockholder will be dependent upon that stockholder's election as well as elections of other stockholders, subject to the pro-rata limitation.
We believe that this cash and stock distribution rate will allow OFS Credit to strengthen its balance sheet, improve scale and to be in position to capitalize on potential future investment opportunities.
Also, as of October 31, 2021, the total fair value of our investment portfolio was $149.7 million. The investment portfolio is comprised of 54 CLO equity tranche investments, three CLO mezzanine tranche investments and one loan accumulation facility. Our portfolio has 50 CLO equity tranches with reinvestment periods ending in 2022 or beyond. We have focused on investing in CLO equity securities with longer reinvestment periods in order to take advantage of market volatility and maximize our cash flows. We believe a longer reinvestment period provides collateral managers with more flexibility to maximize cash flows by reinvesting loan repayments into new loans, potentially at discounted levels with higher yields and to reposition the portfolio to adapt to changing market conditions (thus potentially increasing returns over the long run).
Our investment adviser, OFS Capital Management, LLC, is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and, as of September 30, 2021, had approximately $2.8 billion of committed assets under management. We believe our adviser is uniquely positioned to manage the Company given its expertise in both investing in structured credit (CLO equity and subordinated debt tranches) and managing CLOs, which entails underwriting corporate loans in the broadly syndicated loan market. We believe that our commitment to strong, long-term performance of OFS Credit is aligned with the interests of our investment adviser who, together with other insiders, owns approximately 7.8% of the Company’s common stock.
We want to assure you that we are working diligently to manage the portfolio with our primary goal of generating current income on behalf of our stakeholders during this time of volatility. We look forward to continuing this dialogue with you over the coming weeks and months, and appreciate your continued support.

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Chairman and Chief Executive Officer
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This letter is intended to assist stockholders in understanding our performance during the year ended October 31, 2021. The views and opinions in this letter were current as of October 31, 2021. Statements other than those of historical facts included herein may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties, including: the increase in the Company's scale and how that scale may facilitate further diversity in the Company's portfolio, reduce corporate overhead as a percentage of investment income, improve trading liquidity or lower the Company's cost of financing; the belief that the cash and stock distribution will allow the Company to strengthen its balance sheet and to be in position to capitalize on potential future investment opportunities, when there can be no assurance either will occur; the belief that longer reinvestment periods provide collateral managers with flexibility to maximize cash flows by reinvesting loan repayments and reposition their portfolios to adapt to changing market conditions; the expertise of the Company's adviser; and the Company's commitment to strong, long-term performance and the alignment of that performance to the ownership of the Company's common stock by affiliated parties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors. Nothing herein should be relied upon as a representation as to the future performance or portfolio holdings of the Company. We undertake no duty to update any forward-looking statement made herein.
[Not Part of the Annual Report]
2


Important Information
This report is transmitted to the stockholders of OFS Credit Company, Inc. (“we,” “us,” “our” or the “Company”) and is furnished pursuant to certain regulatory requirements. This report and the information and views herein do not constitute investment advice, or a recommendation or an offer to enter into any transaction with the Company or any of its affiliates. This report is provided for informational purposes only, does not constitute an offer to sell securities of the Company and is not a prospectus. From time to time, the Company may have a registration statement relating to one or more of its securities on file with the U.S. Securities and Exchange Commission (“SEC”).
An investment in the Company is not appropriate for all investors. The investment program of the Company is speculative, entails substantial risk and includes investment techniques not employed by traditional mutual funds. An investment in the Company is not intended to be a complete investment program. Shares of closed-end investment companies, such as the Company, frequently trade at a discount from their net asset value (“NAV”), which may increase investors’ risk of loss. Past performance is not indicative of, or a guarantee of, future performance. The performance and certain other portfolio information quoted herein represents information as of October 31, 2021. Nothing herein should be relied upon as a representation as to the future performance or portfolio holdings of the Company. Investment return and principal value of an investment will fluctuate, and shares, when sold, may be worth more or less than their original cost. The Company’s performance is subject to change since the end of the period noted in this report and may be lower or higher than the performance data shown herein.

About OFS Credit Company, Inc.
The Company is a non-diversified, externally managed closed-end management investment company that has registered as an investment company under the Investment Company Act of 1940, as amended, or the “1940 Act.” Our investment adviser is OFS Capital Management, LLC, which we refer to as “OFS Advisor” or the “Advisor.” Our primary investment objective is to generate current income, with a secondary objective to generate capital appreciation. Under normal market conditions, we will invest at least 80% of our assets, or net assets plus borrowings, in floating rate credit instruments and other structured credit investments, including: (i) collateralized loan obligation (“CLO”) debt and subordinated (i.e., residual or equity) securities; (ii) traditional corporate credit investments, including leveraged loans and high yield bonds; (iii) opportunistic credit investments, including stressed and distressed credit situations and long/short credit investments; and (iv) other credit-related instruments. The CLOs in which we intend to invest are collateralized by portfolios consisting primarily of below investment grade U.S. senior secured loans with a large number of distinct underlying borrowers across various industry sectors. As part of the 80%, we may also invest in other securities and instruments that are related to these investments or that OFS Advisor believes are consistent with our investment objectives, including senior debt tranches of CLOs, and loan accumulation facilities. Loan accumulation facilities are short- to medium-term facilities often provided by the bank that will serve as the placement agent or arranger on a CLO transaction. Loan accumulation facilities typically incur leverage between three and six times prior to a CLO’s pricing. Investments in loan accumulation facilities have risks similar to those applicable to investments in CLOs. The CLO securities in which we primarily seek to invest are unrated or rated below investment grade and are considered speculative with respect to timely payment of interest and repayment of principal. Unrated and below investment grade securities are also sometimes referred to as “junk” securities. In addition, the CLO equity and subordinated debt securities in which we will invest are highly leveraged (with CLO equity securities typically being leveraged 9 to 13 times), which magnifies our risk of loss on such investments.

Forward-Looking Statements
This report 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,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “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 future operating results;
our business prospects and the prospects of a CLO vehicle’s portfolio companies;
the impact of interest and inflation rates on our business prospects and the prospects of a CLO vehicle’s portfolio companies;
expectation that the Company will recognize a loss on extinguishment of debt related to the charge-off of deferred borrowing costs upon redemption of shares;
our operating policy, investment strategy and their impact on the CLO vehicles in which we invest;
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the dependence of our future success on financial institutions and the general economy and their impact on the industries in which we invest;
the expertise of our Advisor;
the ability of a CLO vehicle’s portfolio companies to achieve their objectives;
our expected financings and investments;
the impact of the global coronavirus (“COVID-19”) pandemic and related changes in base interest rates and significant market volatility on our business, our portfolio investments, our industry and the global economy;
the belief that the risk of loss related to the Company's cash deposits is minimal;
the ultimate realization of estimated effective yield and investment cost;
the redemption of the outstanding shares of 6.875% Series A Term Preferred Stock, 6.60% Series B Term Preferred Stock, 6.125% Series C Term Preferred Stock, 6.00% Series D Term Preferred Stock or 5.25% Series E Term Preferred Stock;
the potential significant difference in fair value of the investments from the values that would have been used had ready market or observable inputs existed for such investments or from the values that may ultimately be received or settled;
the realization of significantly less than the value at which a portfolio investment had previously been recorded if the Company were to required to liquidate such investment in a forced or liquidation sale;
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;
the belief that certain rating agencies provide broader rating coverage across underlying loan portfolios;
the impact of the transition away from LIBOR to any one the various alternative reference rates, including SOFR; and
the timing of cash flows, if any, from our investments.
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, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to make new investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in “Summary Risk Factors” in this report. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. 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 and Semi-Annual Reports on Form N-CSR and monthly portfolio investments reports filed on Form N-PORT for the third month of each of our fiscal quarters.
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OFS Credit Company, Inc.
Summary of Certain Portfolio Characteristics (unaudited)
As of October 31, 2021

The information below is presented on a look–through basis to the portfolios of the CLO investments held by the Company as of October 31, 2021, and reflects the aggregate underlying exposure of the combined portfolio of those investments. The data is estimated and unaudited and is derived from third party sources based on reported information available as of October 31, 2021.

The top ten industries of the underlying obligors on a look-through basis to the Company’s CLO investments reported as of October 31, 2021, are provided below:The top ten underlying obligors on a look-through basis to the Company’s CLO investments reported as of October 31, 2021, are provided below:
Top 10 Industries of Underlying ObligorsTop 10 Underlying Obligors
Moody's Industry Name% of TotalObligor% of Total
Healthcare & Pharmaceuticals11.1%Asurion0.7%
High Tech Industries10.2%TransDigm0.6%
Services: Business9.0%Altice Sfrfp0.6%
Banking, Finance, Insurance & Real Estate8.3%CenturyLink0.6%
Media: Broadcasting & Subscription5.1%McAfee0.5%
Chemicals, Plastics & Rubber4.6%Cablevision Systems0.5%
Hotel, Gaming & Leisure4.4%American Airlines0.4%
Construction & Building4.1%Peraton0.4%
Telecommunications4.1%Virgin Media0.4%
Services: Consumers3.7%Univision Communications0.4%
Total64.6%Total5.1%
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OFS Credit Company, Inc.
Summary of Certain Portfolio Characteristics (unaudited)
As of October 31, 2021
The credit ratings distribution of the underlying obligors on a look-through basis to the portfolios of the Company’s CLO investments and other unrated investments reported as of October 31, 2021 is provided below:
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(1) CLO indentures commonly require rating of the underlying collateral by nationally recognized rating agencies. Credit ratings shown are based on those assigned by Standard & Poor’s Rating Group, or “S&P,” for comparison and informational purposes. This data represents underlying portfolio characteristics of the Company’s CLO equity portfolio. We have presented the S&P ratings of the underlying collateral of the CLO vehicles in which we are invested at October 31, 2021 because we believe S&P generally provides broader rating coverage across the underlying loan portfolios. Further information regarding S&P’s rating methodology and definitions may be found on its website (www.standardandpoors.com), which is not part of, or incorporated by reference in, this Annual Report.

The maturity distribution of the underlying obligors on a look-through basis to the portfolios of the Company’s CLO investments and other unrated investments reported as of October 31, 2021 is provided below:
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OFS Credit Company, Inc.
Statement of Assets and Liabilities
October 31, 2021


Assets: 
Investments at fair value (amortized cost of $156,783,483)$149,674,972 
Cash14,995,759 
Interest receivable289,205 
Other assets249,092 
Total assets165,209,028 
Liabilities: 
Preferred stock (net of deferred debt issuance costs of $1,291,160)49,025,340 
Payable to adviser and affiliates2,006,746 
Payable for investment purchased5,898,563 
Accrued professional fees133,065 
Other liabilities44,319 
Total liabilities57,108,033 
Commitments and contingencies (Note 5)
Net assets$108,100,995 
Net assets consists of:
Common stock, par value of $0.001 per share; 90,000,000 shares authorized and 7,719,307, shares issued and outstanding as of October 31, 2021$7,719 
Paid-in capital in excess of par96,350,022 
Total distributable earnings11,743,254 
Total net assets$108,100,995 
Net asset value per share$14.00 

See Notes to Financial Statements.

7


OFS Credit Company, Inc.
Statement of Operations
Year Ended October 31, 2021


Investment income:
Interest income$15,552,432 
Operating expenses:
Interest expense2,719,542 
Management fees2,218,509 
Incentive fees1,448,402 
Administration fees1,204,051 
Professional fees761,724 
Board of directors fees180,000 
Other expenses516,210 
Total operating expenses9,048,438 
Net investment income 6,503,994 

Net realized and unrealized gain on investments:
Net unrealized appreciation on investments13,804,716 
Net realized and unrealized gain on investments13,804,716 
Net increase in net assets resulting from operations$20,308,710 

See Notes to Financial Statements.

8


OFS Credit Company, Inc.
Statements of Changes in Net Assets
Years Ended October 31,
20212020
Changes in net assets resulting from operations:
Net investment income$6,503,994 $5,108,532 
Net unrealized appreciation (depreciation) on investments13,804,716 (8,785,474)
Net increase (decrease) in net assets resulting from operations20,308,710 (3,676,942)
Distributions paid to common stockholders:
Common stock distributions from net investment income(826,765)(3,846,141)
Common stock distributions from return of capital(10,345,650)(2,861,082)
Distributions paid to common stockholders(11,172,415)(6,707,223)
Capital share transactions:
Proceeds from sale of common stock, net of offering costs48,551,241 2,787,722 
Common stock issued in connection with dividend reinvestment plan— 100,616 
Common stock issued from reinvestment of stockholder distributions8,937,851 3,116,127 
Net increase in net assets resulting from capital transactions57,489,092 6,004,465 
Net increase (decrease) in net assets66,625,387 (4,379,700)
Net assets at the beginning of the year41,475,608 45,855,308 
Net assets at the end of the year$108,100,995 $41,475,608 
Capital share transactions:
Common stock shares outstanding at the beginning of the year3,580,663 3,061,858 
Sale of common stock shares3,499,258 173,498 
Common stock issued in connection with dividend reinvestment plan— 9,473 
Common stock issued from reinvestment of stockholder distributions639,386 335,834 
Common stock shares outstanding at the end of the year7,719,307 3,580,663 

See Notes to Financial Statements.

9


OFS Credit Company, Inc.
Statement of Cash Flows
Year Ended October 31, 2021

Cash flows from operating activities:
Net increase in net assets resulting from operations$20,308,710 
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Net unrealized appreciation on investments(13,804,716)
Amortization of debt issuance costs284,922 
Amortization of original issuance discount(3,082)
Accretion of interest income on Structured Finance Notes(14,107,203)
Purchase of portfolio investments(117,597,920)
Distributions from portfolio investments21,707,163 
Proceeds from the sale or repayment of portfolio investments31,016,378 
Changes in operating assets and liabilities:
Interest receivable(289,205)
     Other assets 51,336 
     Due to adviser and affiliates908,335 
     Accrued professional fees(58,310)
     Payable for investment purchased5,898,563 
     Other liabilities(33,062)
Net cash used in operating activities(65,718,091)
Cash flows from financing activities:
Proceeds from issuance of preferred stock, net of deferred offering costs28,019,803 
Proceeds from issuance of common stock, net of deferred offering costs48,663,657 
Payment of deferred offering costs(182,108)
Distributions paid to common stockholders(2,234,564)
Net cash provided by financing activities74,266,788 
Net increase in cash8,548,697 
Cash at the beginning of the year6,447,062 
Cash at the end of the year$14,995,759 
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest$2,438,691 
    Distributions of common stock8,937,851 

See Notes to Financial Statements.

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OFS Credit Company, Inc.
Schedule of Investments
October 31, 2021





Company and
Investment (1)(7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
Structured Finance Notes (2)
Allegro CLO VII, Ltd.
Subordinated Notes8.13%2/14/20196/13/2031$3,100,000 $2,113,533 $1,734,848 1.6 %
Allegro CLO 2021-2, Ltd.
Subordinated Notes15.29%8/23/202110/15/20345,000,000 4,107,674 4,311,180 4.0 
Anchorage Capital CLO 1-R Ltd.
Subordinated Notes15.95%10/5/20184/13/20312,100,000 1,526,545 1,566,470 1.4 
Apex Credit CLO 2020 Ltd.
Subordinated Notes10.20%11/16/202010/20/20316,170,000 5,090,256 5,096,960 4.6 
Apex Credit CLO 2021 Ltd.
Subordinated Notes14.53%5/28/20217/18/20347,140,000 6,305,486 6,115,412 5.7 
Atlas Senior Loan Fund IX Ltd.
Subordinated Notes (4) (6)0.00%10/5/20184/20/20281,200,000 502,370 279,409 0.3 
Atlas Senior Loan Fund X Ltd.
Subordinated Notes5.30%10/5/20181/15/20315,000,000 2,743,556 1,782,155 1.6 
Atlas Senior Loan Fund XVII, Ltd.
Subordinated Notes15.68%9/20/202110/20/20346,000,000 4,835,053 4,800,000 4.4 
Battalion CLO IX Ltd.
Income Notes17.53%10/10/20187/15/20311,079,022 689,467 642,209 0.6 
Subordinated Notes17.53%10/10/20187/15/20311,770,978 1,131,525 1,054,045 1.0 
2,850,000 1,820,992 1,696,254 1.6 
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OFS Credit Company, Inc.
Schedule of Investments
October 31, 2021




Company and
Investment (1)(7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
Battalion CLO XI Ltd.
Subordinated Notes21.20%3/20/201910/24/2029$5,000,000 $4,047,279 $4,470,647 4.1 %
Battalion CLO XIX Ltd.
Subordinated Notes22.33%3/16/20214/15/20345,000,000 3,023,627 3,650,782 3.4 
BlueMountain Fuji U.S. CLO III, Ltd.
Subordinated Notes18.69%9/18/20191/15/20303,701,700 2,565,744 2,544,779 2.4 
Crown Point CLO 4 Ltd.
Subordinated Notes11.42%3/22/20194/20/20315,000,000 3,649,362 2,838,197 2.6 
Dryden 30 Senior Loan Fund
Subordinated Notes26.17%10/5/201811/15/20281,000,000 361,516 376,565 0.3 
Dryden 38 Senior Loan Fund
Subordinated Notes12.33%10/5/20187/15/20302,600,000 1,553,102 1,464,741 1.4 
Dryden 41 Senior Loan Fund
Subordinated Notes13.58%10/5/20184/15/20312,600,000 1,326,921 1,241,187 1.1 
Dryden 53 CLO, Ltd.
Income Notes16.80%10/5/20181/15/20313,200,000 2,066,253 2,001,835 1.9 
Subordinated Notes20.50%10/1/20191/15/2031500,000 302,309 312,787 0.3 
3,700,000 2,368,562 2,314,622 2.2 
Dryden 60 CLO, Ltd.
Subordinated Notes15.11%4/23/20217/15/20315,950,000 4,743,432 4,793,133 4.4 
Dryden 76 CLO, Ltd.
Subordinated Notes15.73%9/27/201910/20/20322,250,000 1,689,851 1,838,155 1.7 
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OFS Credit Company, Inc.
Schedule of Investments
October 31, 2021




Company and
Investment (1)(7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
Dryden 87 CLO, Ltd.
Subordinated Notes15.86%6/2/20215/20/2034$5,000,000 $4,576,340 $4,594,606 4.3 %
Dryden 95 CLO, Ltd.
Subordinated Notes14.54%7/29/20218/20/20346,000,000 5,213,846 5,321,513 4.9 
Elevation CLO 2017-7, Ltd.
Subordinated Notes10.50%10/5/20187/15/20304,750,000 2,933,805 2,497,364 2.3 
Elevation CLO 2017-8, Ltd.
Subordinated Notes6.29%10/5/201810/25/20302,000,000 1,183,461 923,183 0.9 
Elevation CLO 2021-12, Ltd.
Subordinated Notes18.10%5/26/20214/20/20323,500,000 2,506,125 2,593,145 2.4 
Elevation CLO 2021-13
Subordinated Notes16.46%6/9/20217/15/20346,026,765 5,028,848 5,253,026 4.9 
Elevation CLO 2021-14, Ltd.
Subordinated Notes16.05%10/29/202110/20/20347,237,500 5,906,344 6,243,033 5.8 
Flatiron CLO 2017-1, Ltd.
Subordinated Notes25.46%3/22/20195/15/20303,000,000 1,959,926 2,181,119 2.0 
Flatiron CLO 18 Ltd.
Subordinated Notes15.00%10/5/20184/17/20314,500,000 3,405,850 3,359,987 3.1 
Greenwood Park CLO, Ltd.
Subordinated Notes11.15%10/5/20184/15/20314,000,000 2,924,222 2,791,676 2.6 
13

OFS Credit Company, Inc.
Schedule of Investments
October 31, 2021




Company and
Investment (1)(7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
Halcyon Loan Advisors Funding 2018-1 Ltd.
Subordinated Notes14.18%3/20/20197/20/2031$3,000,000 $2,083,162 $1,738,592 1.6 %
HarbourView CLO VII-R, Ltd.
Subordinated Notes (4) (6)0.00%10/5/201811/18/20263,100,000 1,886,533 65,342 0.1 
Jamestown CLO XVI, Ltd.
Subordinated Notes16.50%7/29/20217/25/20343,500,000 2,576,161 2,689,719 2.5 
LCM 31 CLO
Mezzanine debt - Class E7.58%12/18/20201/20/2032250,000 247,669 250,409 0.2 
Subordinated Notes20.88%12/18/20201/20/20321,350,000 995,898 1,151,510 1.1 
1,600,000 1,243,567 1,401,919 1.3 
Madison Park Funding XXIII, Ltd.
Subordinated Notes17.52%10/5/20187/27/20474,000,000 2,751,146 2,817,715 2.6 
Madison Park Funding XXIX, Ltd.
Subordinated Notes15.88%12/22/202010/18/20471,000,000 707,531 730,049 0.7 
Marble Point CLO X Ltd.
Subordinated Notes5.86%10/5/201810/15/20307,000,000 4,174,109 2,939,418 2.7 
Marble Point CLO XI Ltd.
Income Notes0.87%10/5/201812/18/20471,500,000 957,839 567,692 0.5 
Marble Point CLO XX, Ltd.
Subordinated Notes14.49%4/9/20214/23/20515,125,000 4,122,159 4,362,899 4.0 
Marble Point CLO XXI, Ltd.
Subordinated Notes14.36%8/24/202110/17/20515,250,000 4,545,909 4,459,005 4.1 
14

OFS Credit Company, Inc.
Schedule of Investments
October 31, 2021




Company and
Investment (1)(7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
MidOcean Credit CLO VII Ltd.
Income Notes7.62%3/20/20197/15/2029$3,275,000 $1,544,724 $1,055,014 1.0 %
MidOcean Credit CLO VIII Ltd.
Income Notes20.85%1/14/20192/20/20313,225,000 2,227,484 2,183,281 2.0 
MidOcean Credit CLO IX Ltd.
Income Notes15.66%11/21/20187/20/20313,000,000 1,899,669 1,715,019 1.6 
Monroe Capital MML CLO X
Mezzanine debt - Class E9.62%3/10/20218/20/20311,000,000 985,669 1,004,393 0.9 
Niagara Park CLO, Ltd.
Subordinated Notes19.01%11/8/20197/17/20324,500,000 3,513,955 4,086,919 3.8 
Octagon Investment Partners 39, Ltd.
Subordinated Notes20.05%2/27/202010/20/20303,600,000 2,254,280 2,454,569 2.3 
Sound Point CLO IV-R, Ltd.
Subordinated Notes (4) (6)0.00%11/2/20184/18/20314,000,000 1,149,443 730,949 0.7 
THL Credit Wind River 2014-3 CLO Ltd.
Subordinated Notes5.52%10/10/201810/22/20312,778,000 1,666,995 1,300,925 1.2 
Trinitas CLO VIII
Subordinated Notes20.77%4/28/20217/20/21172,800,000 1,645,269 1,719,886 1.6 
Venture 33 CLO Limited
Subordinated Notes9.67%3/21/20197/15/20313,150,000 2,087,955 1,365,907 1.3 
15

OFS Credit Company, Inc.
Schedule of Investments
October 31, 2021




Company and
Investment (1)(7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
VCP CLO II
Mezzanine debt - Class E9.33%2/19/20214/15/2031$500,000 $485,983 $499,157 0.5 %
Vibrant CLO X Ltd.
Subordinated Notes13.45%5/23/201910/20/20318,000,000 4,744,280 4,229,058 3.9 
Vibrant CLO XIII, Ltd.
Subordinated Notes13.45%6/3/20217/15/20345,000,000 4,230,726 4,190,964 3.9 
Voya CLO 2017-4, Ltd.
Subordinated Notes10.85%10/5/201810/15/20301,000,000 700,685 561,506 0.5 
Wind River 2015-1 CLO
Subordinated Notes21.47%4/28/202110/20/20302,600,000 1,294,347 1,437,701 1.3 
Webster Park CLO
Subordinated Notes18.34%4/23/20211/20/20273,363,000 2,213,819 2,337,071 2.2 
Zais CLO 3, Limited
Income Notes6.57%10/10/20187/15/20311,038,255 614,791 326,063 0.3 
Subordinated Notes6.57%10/10/20187/15/20311,761,745 1,043,197 553,275 0.5 
2,800,000 1,657,988 879,338 0.8 
Total Structured Finance$211,041,965 $149,365,015 $142,198,155 131.6 %
Loan Accumulation Facilities (9)
Apex Credit CLO 2021-II Ltd.
Loan accumulation facility16.00%7/14/20217/14/2022$7,000,000 $7,000,000 $7,000,000 6.5 %
Total Loan Accumulation Facilities$7,000,000 $7,000,000 $7,000,000 6.5 %
16

OFS Credit Company, Inc.
Schedule of Investments
October 31, 2021




Company and
Investment (1)(7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
Other CLO equity related investments
CLO other (8)16.04%$418,468 $476,817 0.4 %
Total Investments$218,041,965 $156,783,483 $149,674,972 138.5 %

(1)    These investments are generally subject to certain limitations on resale, and may be deemed to be "restricted securities" under the Securities Act of 1933, as amended.
(2)    Structured Finance Notes classified as income notes and subordinated notes are considered CLO subordinated debt positions. CLO subordinated debt positions are entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying securities less contractual payments to debt holders and fund expenses. These securities are colloquially referred to as CLO equity.
(3)    The rate disclosed on Structured Finance Note investments 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 effective yield and investment cost may ultimately not be realized. 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. As of October 31, 2021, the Company's weighted-average effective yield on its total investments, based on current amortized cost, was 14.35%.
(4)    As of October 31, 2021, the effective accretable yield has been estimated to be 0%, as the aggregate amount of projected distributions, including projected distributions related to liquidation of the underlying portfolio upon the security's anticipated optional redemption, is less than current amortized cost. Projected distributions are periodically monitored and re-evaluated. All actual distributions will be recognized as reductions to amortized cost until such time, if and when occurring, a future aggregate amount of then-projected distributions exceeds the security's then-current amortized cost.
(5)    The fair value of all investments was determined in good faith by the board of directors of the Company using significant, unobservable inputs.
(6)    Non-income producing.
(7)    We do not "control" and are not an "affiliate" of any of our portfolio investments, each as defined in the 1940 Act. In general, under the 1940 Act, we would be presumed to "control" a portfolio investment if we owned 25% or more of its voting securities and would be an "affiliate" of a portfolio investment if we owned 5% or more of its voting securities.
(8)    Fair value represents discounted cash flows associated with fees earned from CLO equity related investments.
(9) Loan accumulation facilities are financing structures intended to aggregate loans that are expected to form part of the portfolio of a future CLO. Investments in loan accumulation facilities generally pay returns equal to the actual income earned on facility assets less costs and fees incurred on senior financing. Income and return of capital distributions from investments in loan accumulation facilities are generally received upon the earlier of the closing of the CLO securitization or the stated expiration of the instrument. Reported yields represent the estimated yield earned on the investment since inception. As of October 31, 2021, the fair value of loan accumulation facilities were determined by reference to Transaction Price (refer to Note 2 for description of Transaction Price).
17

OFS Credit Company, Inc.
Notes to Financial Statements

Note 1. Organization
OFS Credit Company, Inc., (the “Company”) is a Delaware corporation formed on September 1, 2017, that commenced operations on October 10, 2018. The Company is a non-diversified, externally managed, closed-end management investment company that has registered as an investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); and has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a regulated investment company ("RIC") under the Internal Revenue Code of 1986, as amended (the "Code"). The Company's investment adviser is OFS Capital Management, LLC, a wholly owned subsidiary of Orchard First Source Asset Management, LLC ("OFSAM"), which the Company refers to as “OFS Advisor”.
The Company's primary investment objective is to generate current income, with a secondary objective to generate capital appreciation. Under normal market conditions, the Company invests at least 80% of its assets in floating rate credit instruments and other structured credit investments, including: (i) collateralized loan obligation (“CLO”) debt and subordinated/residual tranche securities ("Structured Finance Notes"); (ii) traditional corporate credit investments, including leveraged loans and high yield bonds; (iii) opportunistic credit investments, including stressed and distressed credit situations and long/short credit investments; and (iv) other credit-related instruments. The CLOs in which the Company invests are collateralized by portfolios consisting primarily of below investment grade U.S. senior secured loans with a large number of distinct underlying borrowers across various industry sectors.
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of presentation: The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP"), including the provision ASC Topic 946, Financial Services — Investment Companies, and the reporting requirements of the 1940 Act and Article 6 of Regulation S-X. In the opinion of management, the financial statements include all adjustments, consisting only of normal and recurring accruals and adjustments, necessary for fair presentation in accordance with GAAP.
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. Accounting estimates significant to the financial statements include the recurring fair value and accretable yield estimates. Actual results could differ significantly from those estimates.
Cash: The Company’s cash is maintained with a member bank of the Federal Deposit Insurance Corporation ("FDIC") and, at times, such balances may be in excess of the FDIC insurance limits. As of October 31, 2021, all of the Company's cash was held at US Bank N.A.
Investments: The Company applies fair value accounting in accordance with ASC Topic 820, Fair Value Measurements, which defines fair value, establishes a framework to measure fair value, and requires disclosures regarding fair value measurements. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is determined through the use of models and other valuation techniques, valuation inputs, and assumptions market participants would use to value the investment. Highest priority is given to prices for identical assets quoted in active markets (Level 1) and the lowest priority is given to fair value estimates based on unobservable inputs (Level 3). The availability of observable inputs can vary significantly and is affected by many factors, including the type of product, whether the product is new to the market, whether the product is traded on an active exchange or in the secondary market, and the current market conditions. To the extent that the valuation is based on less observable or unobservable inputs, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3 (i.e., those instruments valued using non-observable inputs), which comprise the entirety of the Company’s investments.
In addition, the Company regularly assesses whether arm’s-length transactions have occurred in portfolio securities, including the Company's own transactions in such securities, the executed trade prices of which (“Transaction Prices”), may—depending on the size of the transactions, identifiable market participants, and other factors—be considered reasonable indications of fair value for up to six months after the transaction date.
Changes to the Company's valuation policy are reviewed and approved by management and the Company’s board of directors (the "Board"). As the Company’s investments change, markets change, new products develop, and valuation inputs become more or less observable, the Company will continue to refine its valuation methodologies.
The Company invests in Structured Finance Notes of CLO investment vehicles, CLO loan accumulation facilities and other credit-related investments. The Company considers underlying investment portfolio performance metrics, including prepayment
18

OFS Credit Company, Inc.
Notes to Financial Statements
rates, default rates, loss-on-default and recovery rates, other metrics, and estimated market yields as a primary source for discounted cash flow fair value estimates, supplemented by actual trades executed in the market at or around period-end, as well as indicative prices provided by broker-dealers in its estimate of the fair value of such investments. The Company also considers operating metrics, typically included in the governing documents of CLO vehicles, including collateralization tests, concentration limits, defaults, restructuring activity and prepayment rates on the underlying loans, if applicable. The Company engages a third-party valuation firm to provide assistance to the Board in determining the fair value of its investments.
See Note 4 for additional disclosures of the Company’s fair value measurements of its financial instruments.
Investment Income
Interest income: Interest income from investments in Structured Finance Notes is recognized on the basis of the estimated effective yield to expected redemption utilizing assumed cash flows in accordance with ASC Sub-topic 325-40, Beneficial Interests in Securitized Financial Assets. The Company monitors the expected cash flows from its Structured Finance Notes, and the accretable yields are determined and updated periodically. Expected cash flows inherent in the Company's estimates of accretable yields are based on expectations of defaults and loss-on-default severity, as well as other loan-performance assumptions, impacting the loans in the underlying CLO portfolios. These estimated cash flows are subject to a reasonable possibility of near-term change as economic and credit market conditions—including the transition away from LIBOR to any one the various alternative reference rates, including SOFR— become known, and the effect of these changes could be material.
Interest income from investments in loan accumulation facilities is recognized on an accrual basis as earned in accordance with the settlement terms of the instrument. Interest income is generally received upon the earlier of the closing of the CLO securitization or the stated expiration of the instrument.
Net realized and unrealized gain or loss on investments: Investment transactions are reported on a trade-date basis. Unsettled trades as of the balance sheet date are reported as payable for investments purchased or receivable for investments sold. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of the investment on a specific-identification basis. Investments are reported at fair value as determined in good faith by the Board. The Company reports changes in the fair value of investments as net unrealized appreciation on investments in the statement of operations.
Deferred debt issuance costs: Deferred debt issuance costs represent fees and other direct incremental costs incurred in connection with the Company’s mandatorily redeemable preferred stock. Deferred debt issuance costs are presented as a direct reduction of the related debt liability on the statement of assets and liabilities. Deferred debt issuance costs are amortized to interest expense over the term of the related debt.
Deferred offering costs:  Offering costs include legal, accounting and other expenses pertaining to registration of securities. Offering costs are deferred and as the registration statement is utilized and securities sold, a portion of the costs are charged as a reduction to capital when a common stock offering occurs or as common stock is issued under an equity distribution agreement, or allocated to deferred debt issuance costs when a preferred stock or debt offering occurs. Deferred costs are periodically reviewed and charged to expense if the related registration statement is withdrawn or if an offering is unsuccessful.
Interest expense: Interest expense is recognized on an accrual basis as incurred.
Income taxes: The Company has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code. To qualify for tax treatment as a RIC, the Company must, among other things, meet certain source of income and asset diversification requirements, and timely distribute at least 90% of its investment company taxable income ("ICTI"), to its stockholders. The Company has made, and intends to continue to make, the requisite distributions to its stockholders, which generally relieves the Company from U.S. federal income taxes.
The Company may choose to retain a portion of ICTI in an amount less than that which would trigger U.S. federal income tax liability under Subchapter M of the Code; however, the Company may be liable for 4% excise tax on a portion of such income unless it timely distributes at least 98% of its ICTI, or 98.2% of net capital gains, to its stockholders. Excise taxes are recognized when the Company determines it is probable distributions of estimated taxable income will not meet the distribution thresholds for avoidance of such tax.
The Company evaluates tax positions taken in the course of preparing its tax returns to determine whether they are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold could result in greater and undistributed ICTI, income and excise tax expense, and, if involving multiple years, a re-assessment of the Company’s RIC status. GAAP requires recognition of accrued interest and penalties related to uncertain tax benefits as income tax expense. There were no uncertain income tax positions at October 31, 2021.
Distributions: Distributions to stockholders are recorded on the applicable record date. The amount, timing and form of distributions is determined by the Board each quarter. Net realized capital gains, if any, are distributed at least annually,
19

OFS Credit Company, Inc.
Notes to Financial Statements
although the Company may decide to retain such capital gains for investment. Distributions paid in excess of taxable net investment income and net realized gains are generally considered returns of capital to stockholders.
Net investment income determined in accordance with tax regulations may differ from net investment income for financial reporting purposes. Differences may be permanent or temporary. Permanent differences result in a reclassification between capital accounts. Additionally, certain short-term capital gains may be reported as ordinary income. Distributions paid by the Company in accordance with RIC requirements are subject to re-characterization for tax purposes.
The tax character of distributions paid to stockholders, as set forth in the Statement of Changes in Net Assets and in Financial Highlights, reflect estimates made by the Company for U.S. federal income tax purposes. Actual results may vary as the tax character of distributions is determined annually as of the end of each calendar year and, if required, reported to stockholders on Form 1099-DIV.
Concentration of credit risk: Aside from its instruments in Structured Finance Notes and CLO loan accumulation facilities, 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's cash deposits may exceed the federally insured limits. To mitigate this risk, the Company places cash deposits only with high credit quality institutions. Management believes the risk of loss related to the Company's cash deposits is minimal. The amount of loss due to credit risk from investments in Structured Finance Notes, if underlying funds and managers fail to perform according to the terms of the indentures and collateral management agreements and the collateral or other security for those instruments proved to be of no value to the Company, is equal to the Company's recorded investment in Structured Finance Notes and CLO loan accumulation facilities.
New Accounting Standards
The following table discusses recently issued ASUs by the FASB:
StandardDescriptionPeriod of AdoptionEffect of Adoption on the Financial Statements
Standards that were adopted
ASU 2020-04, Reference Rate Reform (Topic 840): Facilitation of the Effects of Reference Rate Reform on Financial ReportingProvides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates (e.g., LIBOR) that are expected to be discontinued. ASU 2020-04 allows, among other things, certain contract modifications, such as those within the scope of Topic 310 on receivables, to be accounted as a continuation of the existing contract.First Quarter 2021, prospectivelyThrough October 31, 2021, no contracts have transitioned away from discontinued reference rates.
Note 3. Related Party Transactions
Investment Advisory and Management Agreement: OFS Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company pursuant to an investment advisory and management agreement (the "Investment Advisory Agreement"). On June 3, 2021, the Board unanimously voted to approve the continuation of the Investment Advisory Agreement for one year. Under the terms of the Investment Advisory Agreement, OFS Advisor is responsible for: (i) determining the composition of the portfolio, the nature and timing of the changes to the portfolio and the manner of implementing such changes; (ii) identifying, evaluating and negotiating the structure of the investments made (including performing due diligence on prospective investments); (iii) closing and monitoring the investments made; and (iv) providing other investment advisory, research and related services as required. OFS Advisor is a subsidiary of OFSAM and a registered investment advisor under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). OFS Advisor’s services under the Investment Advisory Agreement are not exclusive, and it and its members, officers and employees are free to furnish similar services to other persons and entities so long as its services to the Company are not impaired. OFS Advisor also serves as the investment adviser to CLO funds and other assets, including OFS Capital Corporation and Hancock Park Corporate Income, Inc.
OFS Advisor receives fees for providing services, consisting of two components: a base management fee ("Base Management Fee") and an incentive fee ("Incentive Fee"). The Base Management Fee is calculated and payable quarterly in arrears and equals an annual rate of 1.75% of the Company’s “Total Equity Base”, defined as the net asset value (“NAV”) of the
20

OFS Credit Company, Inc.
Notes to Financial Statements
Company’s shares of common stock and the paid-in capital of the Company’s preferred stock. Base Management Fees are paid by the holders of our shares of common stock and are not paid by holders of preferred stock, or the holders of any other types of securities that the Company may issue. Base Management Fees for any partial calendar quarter are prorated based on the number of days in such quarter. The Base Management Fee does not increase when the Company borrows funds, but will increase if the Company issues preferred stock.
The Incentive Fee is calculated and payable quarterly in arrears and equals 20% of the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter, subject to a preferred return, or “hurdle,” and a “catch up” feature. No incentive fees are payable to OFS Advisor in respect of any capital gains. 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, structuring, diligence and consulting fees or other fees that the Company receives from an investment) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the Base Management Fee, expenses payable under the administrative services agreement to OFS Capital Services, LLC, ("OFS Services") and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee). Pre-Incentive Fee Net Investment Income includes accrued income that the Company has not yet received in cash, as well as any such amounts received (or accrued) in kind. Pre-Incentive Fee Net Investment Income does not include any capital gains or losses, and no incentive fees are payable in respect of any capital gains and no incentive fees are reduced in respect of any capital losses.
In calculating the Incentive Fee for any given calendar quarter, Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, is compared to a hurdle of 2.00% of the Company’s NAV per quarter (8.00% annualized) (the "Hurdle Rate"). For such purposes, the Company’s quarterly rate of return is determined by dividing its Pre-Incentive Fee Net Investment Income by its reported net assets as of the prior period end. The Company’s net investment income used to calculate this part of the incentive fee is also included in the calculation of the Total Equity Base which is used to calculate the Base Management Fee. The Incentive Fee with respect to the Company’s Pre-Incentive Fee Net Investment Income in each calendar quarter as follows: 
(A)    no Incentive Fee in any calendar quarter in which Pre-Incentive Fee Net Investment Income does not exceed the hurdle of 2.00% of NAV; 
(B)    100% of 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 but is less than 2.50% of NAV in any calendar quarter (10.00% annualized). The Company refers to this portion of the Pre-Incentive Fee Net Investment Income (which exceeds the hurdle but is less than 2.50% of our NAV) as the “catch-up.” The “catch-up” is meant to provide OFS Advisor with 20% of Pre-Incentive Fee Net Investment Income as if a hurdle did not apply if this net investment income meets or exceeds 2.50% of NAV in any calendar quarter; and
(C)    20.0% of that portion of the Company’s pre-Incentive Fee net investment income, if any, with respect to which the rate of return exceeds 2.50% in such quarter (10.0% annualized) is payable to OFS Advisor (that is, once the hurdle is reached and the catch-up is achieved, 20% of all Pre-Incentive Fee Net Investment Income thereafter is paid to OFS Advisor).
There will be no accumulation of amounts on the Hurdle Rate from quarter to quarter, no claw back of amounts previously paid if the rate of return in any subsequent quarter is below the Hurdle Rate and no delay of payment if the rate of return in any prior quarters was below the Hurdle Rate. Incentive Fees will be adjusted for any share issuances or repurchases during the calendar quarter, and any partial quarter Incentive Fee will be prorated based on the number of days in such quarter.
Administration Agreement: OFS Services, an affiliate of OFS Advisor, provides the administrative services necessary for the Company to operate. OFS Services furnishes the Company with office facilities and equipment, necessary software licenses and subscriptions, and clerical, bookkeeping and record keeping services at such facilities pursuant to an administrative services agreement (the "Administration Agreement"). On June 3, 2021, the Board unanimously voted to approve the continuation of 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 Securities and Exchange Commission or any other regulatory authority. In addition, OFS Services assists the Company in determining and publishing its NAV, 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. Payment under the Administration Agreement is equal to an amount based upon the Company’s allocable portion (subject to the review and approval of the Board) of OFS Services’ 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
21

OFS Credit Company, Inc.
Notes to Financial Statements
officer, chief financial officer, chief compliance officer, chief accounting officer, corporate secretary 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. After the first two years of effectiveness, the Administration Agreement may be renewed annually with the approval of the Board, including a majority of our directors who are not “interested persons.” The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.
Equity Ownership: As of October 31, 2021, the Advisor and its affiliates held 601,541 shares of common stock, which is approximately 7.8% of the Company's outstanding shares of common stock.
Distributions paid to affiliates and expenses recognized under agreements with OFS Advisor and OFS Services for the year ended October 31, 2021 are presented below:
Expenses paid to affiliates:
   Management fees$2,218,509 
   Incentive fees1,448,402 
   Administration fees1,204,051 
Common stock distributions paid to affiliates1,203,576 
22

OFS Credit Company, Inc.
Notes to Financial Statements
Note 4. Fair Value of Financial Instruments
The following table provides quantitative information about the Company’s Level 3 fair value measurements as of October 31, 2021. In addition to the valuation techniques and inputs noted in the table below, other valuation techniques and methodologies may be utilized 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.
Investment TypeFair ValueValuation TechniquesUnobservable Input
Range
 (Weighted average) (1)
Subordinated debt(4)
$135,644,197 Discounted Cash Flows
Constant Default Rate(2)
0.00% - 2.00% (1.43%)
Constant Default Rate(3)
2.00% - 2.00% (2.00%)
Constant Prepayment Rate25.00% - 25.00% (25.00%)
Reinvestment Spread over LIBOR3.10% - 3.90% (3.48%)
Reinvestment Price 99.50% - 99.50% (99.50%)
LIBOR floor on Reinvested Assets1.00% - 1.00% (1.00%)
Recovery Rate60.00% - 60.00% (60.00%)
Discount Rate8.00% - 33.50% (14.17%)
Subordinated debt4,800,000Market ApproachTransaction Price
Loan accumulation facilities7,000,000Market ApproachTransaction Price
Mezzanine debt1,753,958 Discounted Cash Flows
Constant Default Rate(2)
2.00% - 3.00% (2.57%)
Constant Default Rate(3)
2.00% - 3.00% (2.57%)
Constant Prepayment Rate25.00% - 25.00% (25.00%)
Reinvestment Spread over LIBOR3.45% - 5.00% (4.54%)
Reinvestment Price 99.50% - 99.50% (99.50%)
LIBOR floor on Reinvested Assets1.00% - 1.00% (1.00%)
Recovery Rate60.00% - 60.00% (60.00%)
Discount Margin7.05% - 8.75% (8.42%)
CLO other476,817Discounted Cash Flows
Constant Default Rate (2)
0.00% - 0.00% (0.00%)
Constant Default Rate (3)
2.00% - 2.00% (2.00%)
Constant Prepayment Rate25.00% - 25.00% (25.00%)
Reinvestment Spread over LIBOR3.55% - 3.65% (3.61%)
Reinvestment Price 99.50% - 99.50% (99.50%)
LIBOR floor on Reinvested Assets1.00% - 1.00% (1.00%)
Recovery Rate60.00% - 60.00% (60.00%)
Discount Margin8.95% - 9.16% (9.03%)
$149,674,972 
(1)    Weighted average is calculated based on fair value of investments.
(2)    Constant default rates for the next six months.
(3)    Constant default rates following the next six months.
23

OFS Credit Company, Inc.
Notes to Financial Statements
(4)    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.
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 changes in the investment measured at fair value using Level 3 inputs for the year ended October 31, 2021.
Subordinated notesMezzanine debtLoan accumulation facilitiesCLO otherTotal
Level 3 assets, October 31, 2020$56,885,592 $— $— $— $56,885,592 
Net unrealized appreciation on portfolio investments (1)
13,711,729 34,638 — 58,349 13,804,716 
Accretion of interest income on Structured Finance Notes14,087,319 — — 19,884 14,107,203 
Amortization of original issuance discount3,082 — — 3,082 
Purchase of portfolio investments77,483,097 1,716,239 38,000,000 398,584 117,597,920 
Proceeds from the sale or repayment of portfolio investments(16,378)— (31,000,000)— (31,016,378)
Distributions from portfolio investments(21,707,163)— — — (21,707,163)
Level 3 assets, October 31, 2021$140,444,196 $1,753,959 $7,000,000 $476,817 $149,674,972 
(1) The net unrealized appreciation in the Company's statement of operations for the year ended October 31, 2021 attributable to the Company's level 3 assets still held at the end of the year was $13,804,716.
Other Financial Assets and Liabilities
GAAP requires 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 and that such financial instruments are held with high credit quality institutions to mitigate the risk of loss due to credit risk.
The following table sets forth carrying values and fair values of the Company's debt as of October 31, 2021:
DescriptionCarrying ValueFair Value
6.875% Series A Term Preferred Stock$20,913,395 $21,521,138 
6.60% Series B Term Preferred Stock2,929,580 2,999,676 
6.125% Series C Term Preferred Stock22,258,550 23,322,000 
6.00% Series D Term Preferred Stock2,923,815 2,989,444 
Total preferred stock$49,025,340 $50,832,258 
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 October 31, 2021:
24

OFS Credit Company, Inc.
Notes to Financial Statements
DescriptionLevel 1Level 2
Level 3(1)
Total
6.875% Series A Term Preferred Stock$21,521,138 $— $— $21,521,138 
6.60% Series B Term Preferred Stock— — 2,999,676 2,999,676 
6.125% Series C Term Preferred Stock23,322,000 — — 23,322,000 
6.00% Series D Term Preferred Stock— — 2,989,444 2,989,444 
Total preferred stock, at fair value$44,843,138 $— $5,989,120 $50,832,258 
(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.
Note 5. Commitments and Contingencies
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not occurred. The Company believes the risk of any material obligation under these indemnifications to be low.
Under the Company’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Company.
25

OFS Credit Company, Inc.
Notes to Financial Statements
Note 6. Mandatorily Redeemable Preferred Stock
The Company has authorized 10,000,000 shares of preferred stock, at a par value of $0.001 per share, and at October 31, 2021 had 2,012,660 shares of preferred stock outstanding.
6.875% Series A Term Preferred Stock
As of October 31, 2021, the Company had 852,660 shares of its 6.875% Series A Term Preferred Stock due 2024 ( the "Series A Term Preferred Stock") issued and outstanding. The shares of Series A Term Preferred Stock are mandatorily redeemable on March 31, 2024. At any time on or after March 31, 2021, the Company may, at its sole option, redeem the outstanding shares of Series A Term Preferred Stock in whole or, from time to time, in part, out of funds legally available for such redemption, at the liquidation preference plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the date fixed for such redemption.
On June 11, 2020, the Board authorized a program under which the Company may repurchase up to $10.0 million of its outstanding shares of Series A Term Preferred Stock. No shares of Series A Term Preferred Stock were repurchased under the program during the year ended October 31, 2021.
On November 10, 2021, the Company caused notices to be issued to the holders of the Series A Term Preferred Stock regarding the exercise of its option to redeem, if certain conditions were to occur, all of the issued and outstanding Series A Term Preferred Stock. On December 10, 2021, all outstanding shares of the Series A Term Preferred Stock were redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid dividends through December 9, 2021. The total amount of the redemption, plus accrued dividends, was $21,353,138. The Company expects to recognize a loss on extinguishment of debt of approximately $385,000 related to the charge-off of deferred borrowing costs upon redemption of the shares.
During the year ended October 31, 2021, the Company paid the following distributions on shares of Series A Term Preferred Stock.
Record DatePayable Date
Distribution Per Preferred Share(1)
November 23, 2020November 30, 2020$0.1432292
December 24, 2020December 31, 20200.1432292
January 22, 2021January 29, 20210.1432292
February 19, 2021February 26, 20210.1432292
March 24, 2021March 31, 20210.1432292
April 23, 2021April 30, 20210.1432292
May 24, 2021May 31, 20210.1432292
June 23, 2021June 30, 20210.1432292
July 23, 2021July 30, 20210.1432292
August 24, 2021August 31, 20210.1432292
September 23, 2021September 30, 20210.1432292
October 22, 2021October 29, 20210.1432292
(1) The Company paid distributions of approximately $1.72 per share of Series A Term Preferred Stock during the year ended October 31, 2021.
6.60% Series B Term Preferred Stock
On November 19, 2020, the Company issued through a private placement 120,000 shares of its 6.60% Series B Term Preferred Stock due 2023 (the "Series B Term Preferred Stock") at a price per share of $24.40625, resulting in gross proceeds of $2,928,750. The shares of Series B Term Preferred Stock have a liquidation preference of $25 per share and are subject to mandatory redemption on November 19, 2023. At any time on or after March 31, 2021, the Company may, at its sole option, redeem the outstanding shares of Series B Term Preferred Stock in whole or, from time to time, in part, out of funds legally available for such redemption, at the liquidation preference plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the date fixed for such redemption.
26

OFS Credit Company, Inc.
Notes to Financial Statements
The offering was consummated pursuant to the terms of a purchase agreement (the “Series B Purchase Agreement”) dated November 19, 2020 by and between the Company and the purchaser named therein (the “Series B Purchaser”). The Series B Purchase Agreement provided for the Series B Term Preferred Stock to be issued to the Series B Purchaser in a private placement in reliance on an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(a)(2) thereof and Regulation D thereunder. The Company relied upon this exemption from registration based in part on representations made by the Series B Purchaser. The Series B Term Preferred Stock has not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration.
During the year ended October 31, 2021, the Company paid the following distributions on shares of Series B Term Preferred Stock.
Record DatePayable Date
Distribution Per Preferred Share(1)
November 23, 2020November 30, 2020$0.055
December 24, 2020December 31, 20200.1375
January 22, 2021January 29, 20210.1375
February 19, 2021February 26, 20210.1375
March 24, 2021March 31, 20210.1375
April 23, 2021April 30, 20210.1375
May 24, 2021May 31, 20210.1375
June 23, 2021June 30, 20210.1375
July 23, 2021July 30, 20210.1375
August 24, 2021August 31, 20210.1375
September 23, 2021September 30, 20210.1375
October 22, 2021October 29, 20210.1375
(1) The Company paid distributions of approximately $1.57 per share of Series B Term Preferred Stock during the year ended October 31, 2021.
6.125% Series C Term Preferred Stock
In April 2021, the Company issued 920,000 shares of its 6.125% Series C Term Preferred Stock due 2026 (the "Series C Term Preferred Stock"). The shares of Series C Term Preferred Stock have a liquidation preference of $25 per share and are mandatorily redeemable on April 30, 2026. At any time on or after April 30, 2023, the Company may, at its sole option, redeem the outstanding shares of Series C Term Preferred Stock in whole or, from time to time, in part, out of funds legally available for such redemption, at the liquidation preference plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the date fixed for such redemption.
During the year ended October 31, 2021, the Company paid the following distributions on shares of Series C Term Preferred Stock.
Record DatePayable Date
Distribution Per Preferred Share(1)
April 28, 2021April 30, 2021$0.0127604
May 24, 2021May 31, 20210.1276042
June 23, 2021June 30, 20210.1276042
July 23, 2021July 30, 20210.1276042
August 24, 2021August 31, 20210.1276042
September 23, 2021September 30, 20210.1276042
October 22, 2021October 29, 20210.1276042
(1) The Company paid distributions of approximately $0.78 per share of Series C Term Preferred Stock during the year ended October 31, 2021.
27

OFS Credit Company, Inc.
Notes to Financial Statements
6.00% Series D Term Preferred Stock
On June 10, 2021, the Company issued through a private placement 120,000 shares of its 6.00% Series D Term Preferred Stock due 2026 (the "Series D Term Preferred Stock") at a price per share of $24.50, resulting in gross proceeds of $2,940,000. The shares of Series D Term Preferred Stock have a liquidation preference of $25 per share and are subject to mandatory redemption on June 10, 2026. At any time on or after June 30, 2022, the Company may, at its sole option, redeem the outstanding shares of Series D Term Preferred Stock in whole or, from time to time, in part, out of funds legally available for such redemption, at the liquidation preference plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the date fixed for such redemption.
The offering was consummated pursuant to the terms of a purchase agreement (the “Series D Purchase Agreement”) dated June 10, 2021 by and between the Company and the purchaser named therein (the “Series D Purchaser”). The Series D Purchase Agreement provided for the Series D Term Preferred Stock to be issued to the Series D Purchaser in a private placement in reliance on an exemption from registration under the Securities Act, provided by Section 4(a)(2) thereof and Regulation D thereunder. The Company relied upon this exemption from registration based in part on representations made by the Series D Purchaser. The Series D Term Preferred Stock has not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration.
During the year ended October 31, 2021, the Company paid the following distributions on shares of Series D Term Preferred Stock.
Record DatePayable Date
Distribution Per Preferred Share(1)
June 10, 2021June 30, 2021$0.0875
July 23, 2021July 30, 20210.125
August 24, 2021August 31, 20210.125
September 23, 2021September 30, 20210.125
October 22, 2021October 29, 20210.125
(1) The Company paid distributions of approximately $0.59 per share of Series D Term Preferred Stock during the year ended October 31, 2021.
As of and for the year ended October 31, 2021, the Company's preferred stock had the following terms and balances:
DescriptionPrincipalUnamortized Debt Issuance CostsStated Interest Rate
Effective Interest Rate(1)
Interest Expense(2)
Series A Term Preferred Stock$21,316,500 $403,105 6.875 %7.66 %$1,632,204 
Series B Term Preferred Stock3,000,000 70,420 6.60 7.74 221,235 
Series C Term Preferred Stock23,000,000 741,450 6.125 6.84 789,611 
Series D Term Preferred Stock3,000,000 76,185 6.00 6.54 76,492 
Total$50,316,500 $1,291,160 $2,719,542 
(1) The effective interest rate includes deferred debt issuance cost amortization.
(2) Interest expense includes deferred debt issuance cost amortization of $284,922.
During the year ended October 31, 2021, the average dollar borrowings and average interest rate for the Company’s preferred stock was $37,502,801 and 7.25%, respectively.
The following table shows the scheduled maturities of the principal balances of the Company's outstanding borrowings as of October 31, 2021:
28

OFS Credit Company, Inc.
Notes to Financial Statements
 Payments due by period
DescriptionTotalLess than
1 year
1-3 years4-5 yearsAfter 5 years
Series A Term Preferred Stock(1)
$21,316,500 $— $21,316,500 $— $— 
Series B Term Preferred Stock3,000,000 — 3,000,000 — — 
Series C Term Preferred Stock23,000,000 — — 23,000,000 — 
Series D Term Preferred Stock3,000,000 — — 3,000,000 — 
Total(2)
$50,316,500 $— $24,316,500 $26,000,000 $— 
(1)On November 10, 2021, the Company caused notices to be issued to the holders of the Series A Term Preferred Stock regarding the exercise of its option to redeem, if certain conditions were to occur, all of the issued and outstanding Series A Term Preferred Stock. On December 10, 2021, all outstanding shares of the Series A Term Preferred Stock were redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid dividends through December 9, 2021. The total amount of the redemption, plus accrued dividends, was $21,353,138.
(2)On December 8, 2021, the Company closed an underwritten public offering of 1,220,000 shares of 5.25% Series E Term Preferred Stock due 2026 (the “Series E Term Preferred Stock”) at a public offering price of $25.00 per share, raising $30.5 million in gross proceeds. In addition, the Company has granted the underwriters a 30-day option to purchase up to an additional 180,000 shares of Series E Term Preferred Stock on the same terms and conditions to cover overallotments, if any.
On August 5, 2021 and December 8, 2021, the Board declared the following fiscal year 2022 distributions.
29

OFS Credit Company, Inc.
Notes to Financial Statements
DescriptionRecord DatePayable DateDistribution Per Preferred Share
Series A Term Preferred StockNovember 23, 2021November 30, 2021$0.1432292
December 24, 2021December 31, 20210.1432292
January 24, 2022January 31, 20220.1432292
Series B Term Preferred StockNovember 23, 2021November 30, 2021$0.1375
December 24, 2021December 31, 20210.1375
January 24, 2022January 31, 20220.1375
February 21, 2022February 28, 20220.1375
March 24, 2022March 31, 20220.1375
April 22, 2022April 29, 20220.1375
May 24, 2022May 31, 20220.1375
June 23, 2022June 30, 20220.1375
July 22, 2022July 29, 20220.1375
Series C Term Preferred StockNovember 23, 2021November 30, 2021$0.1276042
December 24, 2021December 31, 20210.1276042
January 24, 2022January 31, 20220.1276042
February 21, 2022February 28, 20220.1276042
March 24, 2022March 31, 20220.1276042
April 22, 2022April 29, 20220.1276042
May 24, 2022May 31, 20220.1276042
June 23, 2022June 30, 20220.1276042
July 22, 2022July 29, 20220.1276042
Series D Term Preferred StockNovember 23, 2021November 30, 2021$0.125
December 24, 2021December 31, 20210.125
January 24, 2022January 31, 20220.125
February 21, 2022February 28, 20220.125
March 24, 2022March 31, 20220.125
April 22, 2022April 29, 20220.125
May 24, 2022May 31, 20220.125
June 23, 2022June 30, 20220.125
July 22, 2022July 29, 20220.125
Series E Term Preferred StockDecember 24, 2021December 31, 2021$0.08385416
January 24, 2022January 31, 20220.109375
February 21, 2022February 28, 20220.109375
March 24, 2022March 31, 20220.109375
April 22, 2022April 29, 20220.109375
May 24, 2022May 31, 20220.109375
June 23, 2022June 30, 20220.109375
July 22, 2022July 29, 20220.109375
30

OFS Credit Company, Inc.
Notes to Financial Statements
The tax character of each distribution paid is reported, if required, to stockholders on Form 1099-DIV in January following the close of the fiscal year. Distributions declared prior to December 31st and paid on or prior to January 31st of the following year, are generally included in such tax reporting to the recipient in the year declared.
Note 7. Federal Income Taxes
The Company has elected, and intends to qualify annually hereafter, to be taxed as a RIC under Subchapter M of the Code. To maintain its status as a RIC, the Company is required to distribute annually to its stockholders at least 90% of its ICTI. Additionally, to avoid a 4% U.S. federal excise tax on undistributed earnings the Company is required to distribute each calendar year the sum of (i) 98% of its ordinary income for such calendar year (ii) 98.2% of its net capital gains for the period ending October 31 of that calendar year, and (iii) any income recognized, but not distributed, in preceding years and on which the Company paid no U.S. federal income tax. Maintenance of the Company's RIC status also requires adherence to certain source of income and asset diversification requirements provided under the Code. The Company has met the source of income and asset diversification requirements as of October 31, 2021, and intends to continue to meet these requirements.
The Company’s ICTI differs from the net increase in net assets resulting from operations primarily due to differences in income recognition for Structured Finance Notes and the treatment of distributions on preferred stock. GAAP requires recognition of an estimated constant yield for Structured Finance Notes. U.S. federal income tax rules, however, require recognition of net investment income reported to the Company by the underlying CLO fund in the tax period reported, as well as differences in recognition of unrealized appreciation/depreciation of investments; these differences can be permanent or temporary in nature. Distributions on mandatorily redeemable preferred stock are reported as interest expense under GAAP but are treated as either dividends or return-of-capital distributions for federal income tax purposes. The Company recorded a reclassification to its capital accounts of $4,094,045 for the year ended October 31, 2021 for permanent differences related to return-of-capital distributions to preferred shareholders and other permanent differences. The Company had no undistributed ICTI and a non-expiring capital loss carry-forward of $3,407,891 as of October 31, 2021.
The tax-basis cost of investments and associated tax-basis gross unrealized appreciation (depreciation) inherent in the fair value of investments based on known and estimated GAAP-tax basis differences as of October 31, 2021, were as follows:
Tax-basis amortized cost of investments$134,523,827 
Tax-basis gross unrealized appreciation on investments17,973,896 
Tax-basis gross unrealized depreciation on investments(2,822,751)
Tax-basis net unrealized appreciation on investments15,151,145 
Fair value of investments$149,674,972 
The Company has distributed $13,607,035 for the year ended October 31, 2021, consisting of common stock distributions and the cash portion of mandatorily redeemable preferred stock interest, which is considered a distribution for federal income tax purposes. The final tax character of distributions will not be determined until the end of the year and the tax character of all distributions will be reported to stockholders on Form 1099-DIV, if required, after the end of each calendar year.

31

OFS Credit Company, Inc.
Notes to Financial Statements
Note 8. Financial Highlights
The following is a schedule of financial highlights for the years ended October 31, 2021, 2020, 2019, and the period ended October 31, 2018:
Year Ended October 31, 2021Year Ended October 31, 2020Year Ended October 31, 2019Period from October 10 (commencement) through October 31, 2018
Per share data:
Net asset value per share at beginning of period
$11.58 $14.98 $20.11 $20.00 
Total distributions(9)
(2.14)(2.07)(2.12)— 
  Net investment income(7)
1.22 1.58 1.66 0.08 
  Net realized and unrealized gains (losses) on investments (7)
2.59 (2.71)(4.69)0.03 
Net increase (decrease) from operations3.81 (1.13)(3.03)0.11 
Issuance of common stock(8)
0.75 (0.20)0.02 — 
Net asset value per share at end of period$14.00 $11.58 $14.98 $20.11 
Per share market value, end of period
$13.60 $9.83 $16.91 $18.78 
Total return based on market value (1)
60.70 %(29.07)%1.84 %(6.10)%
Total return based on net asset value (2)
40.43 %(5.68)%(15.75)%0.55 %
Shares outstanding at end of period
7,719,307 3,580,663 3,061,858 2,505,000 
Weighted average shares outstanding
5,329,914 3,237,905 2,601,037 2,505,000 
Ratio/Supplemental Data
Average net asset value
$74,788,302 $43,665,458 $48,120,908 $50,243,254 
Net asset value at end of period
$108,100,995 $41,475,608 $45,855,308 $50,386,507 
Ratio of total operating expenses to average net assets (4)(6)
12.10 %13.65 %9.41 %4.42 %
Ratio of net investment income to average net assets (5)(6)
8.70 %11.70 %9.00 %7.17 %
Portfolio turnover (3)
51.00 %8.60 %28.80 %5.10 %
Asset coverage of preferred stock314.8 %294.6 %315.1 %— %
(1)Total return based on market value is calculated assuming shares of common stock were purchased at the market price at the beginning of the period, distributions were reinvested at a price obtained in the Company's dividend reinvestment plan, and shares were sold at the closing market price on the last day of the period. Total return is not annualized for a period of less than one year.
(2)Total return based on net asset value is calculated assuming shares of common stock were purchased at the net asset value at the beginning of the period, distributions were reinvested at a price obtained in the Company's dividend reinvestment plan, and shares were sold at the ending net asset value on the last day of the period. Total return is not annualized for a period of less than one year.
(3)Portfolio turnover rate is calculated using the lesser of period-to-date sales and distributions from portfolio investments or period-to-date purchases over the average of the invested assets at fair value.
(4)Ratio of total expenses before management fee waiver to average net assets was 12.10%, 13.65%, 9.87% and 6.17% for the year ended October 31, 2021, October 31, 2020, October 31, 2019 and period ended October 31, 2018, respectively.
(5)Ratio of net investment income before management fee waiver to average net assets was 8.70%, 11.70%, 8.54% and 5.42% for the year ended October 31, 2021, October 31, 2020, October 31, 2019 and period ended October 31, 2018, respectively.
(6)Annualized for periods less than one year.
(7)Calculated on the average share method.
(8)The issuance of common stock on a per share basis reflects the incremental net asset value change as a result of the issuance of shares of common stock under the Equity Distribution Agreement (as defined below), the issuance of shares of common stock in the Company's August 2019 rights offering, the issuance of shares of common stock in the Company's March 2021 public offering, the issuance of shares of common stock as common stock distributions, and the anti-dilutive (dilutive) impact from changes in weighted-average shares outstanding during the period.
(9)Distributions for the fiscal years ended October 31, 2020 and 2019 included returns of capital of $0.88 and $2.12, respectively, and the distribution of fiscal year ended October 31, 2020 included distributions from investment company
32

OFS Credit Company, Inc.
Notes to Financial Statements
taxable income of $1.19. The final tax character of the Company’s earnings cannot be determined until the end of the calendar year and may vary from the estimates disclosed in Note 9. Each common stockholder, if required, will receive a Form 1099-DIV following the end of each calendar year, which will reflect the actual amounts of taxable ordinary income, capital gain and return of capital paid by the Company.
The following table presents the aggregate outstanding borrowings and asset coverage per unit as of October 31, 2021, 2020, 2019 and 2018:
Class and Year(7)
Total Amount Outstanding(1)
Asset Coverage Per $1,000(2)
Asset Coverage Per Unit(3)
Involuntary Liquidation Preference Per Unit(4)
Average Market Value Per Unit(5)
6.875% Series A Term Preferred Stock(6)
October 31, 2021$21,316,500 3,148 78.71 $25.00 $25.15 
October 31, 202021,316,500 2,946 73.64 25.00 23.72 
October 31, 2019
21,316,500 3,151 78.78 25.00 25.46 
6.60% Series B Term Preferred Stock
October 31, 20213,000,000 3,148 78.71 25.00 N/A
6.125% Series C Term Preferred Stock
October 31, 202123,000,000 3,148 78.71 25.00 25.22 
6.00% Series D Term Preferred Stock
October 31, 20213,000,000 3,148 78.71 25.00 N/A
(1) Total amount of each class of senior securities outstanding at the end of the period presented.
(2) The asset coverage ratio for a class of senior securities representing indebtedness is calculated as the total assets, less all liabilities and indebtedness not represented by senior securities, divided by the aggregate amount of outstanding senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the “Asset Coverage Per $1,000.”
(3) The Asset Coverage Per Unit is expressed in terms of a ratio per share of the aggregate amount of outstanding senior securities. When expressing in terms of dollar amounts per share, the asset coverage ratio is multiplied by the involuntary liquidation preference per unit of $25.
(4) The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it.
(5) Average market value per unit for the Series A Term Preferred Stock and Series C Term Preferred Stock represent the average of the daily closing prices as reported on the Nasdaq Capital Market during the period presented. Not applicable to Series B Term Preferred Stock and Series D Term Preferred Stock because these senior securities are not registered for public trading.
(6) On November 10, 2021, the Company caused notices to be issued to the holders of the Series A Term Preferred Stock regarding the exercise of its option to redeem, if certain conditions were to occur, all of the issued and outstanding Series A Term Preferred Stock. On December 10, 2021, all outstanding shares of the Series A Term Preferred Stock were redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid dividends through December 9, 2021. The total amount of the redemption, plus accrued dividends, was $21,353,138.
(7) On December 8, 2021, the Company closed an underwritten public offering of 1,220,000 shares of Series E Term Preferred Stock at a public offering price of $25.00 per share, raising $30.5 million in gross proceeds. In addition, the Company has granted the underwriters a 30-day option to purchase up to an additional 180,000 shares of Series E Term Preferred Stock on the same terms and conditions to cover overallotments, if any.
33

OFS Credit Company, Inc.
Notes to Financial Statements
Note 9. Capital Transactions
At-the-Market Program
On January 24, 2020, the Company entered into an equity distribution agreement by and among us, OFS Advisor, and OFS Capital Services, LLC, a Delaware limited liability company, on the one hand, and Ladenburg Thalmann & Co. Inc., as Placement Agent, on the other hand, as amended (the “Equity Distribution Agreement”), relating to the sale of shares of its common stock. The original equity distribution agreement provided that the Company may offer and sell shares of its common stock having an aggregate offering price of up to $25,000,000.
On April 22, 2021, the Equity Distribution Agreement was amended to increase the amount of common stock that the Company may offer and sell pursuant to such agreement up to an aggregate offering price of $50,000,000.
For the year ended October 31, 2021, the Company sold 2,320,508 shares of its common stock under the At-the-Market offering for net proceeds of $32,276,249 after deducting commissions and fees. Since June 15, 2021, the Company sold 1,342,378 shares of its common stock under the At-the-Market offering for net proceeds of $18,851,984 after deducting commissions and fees.
As of October 31, 2021, the Company may issue additional shares in the At-the-Market offering of approximately $14.5 million.
On December 7, 2021, the Company entered into amendment No. 4 to the Equity Distribution Agreement to increase the aggregate offering price of the shares available to be sold under the Equity Distribution Agreement from $50,000,000 to $70,000,000 (which amount shall include all of the shares sold under the Equity Distribution Agreement to date).
Common stock offering
On March 30, 2021 and April 1, 2021, the Company sold an aggregate of 1,178,750 shares of common stock in an underwritten public offering of shares of its common stock at a price to the public of $14.67 per share. Net proceeds from the offering were approximately $16,387,845, after deducting underwriting costs and offering expenses of $904,417.
The following table summarizes distributions paid on common shares for the year ended October 31, 2021.
Record DatePayable Date
Distribution Per Common Share (1)
Cash DistributionValue of Common Shares IssuedTotal Distribution
December 18, 2020January 29, 2021$0.52$372,425 $1,489,555 $1,861,980 
March 23, 2021April 30, 20210.53401,771 1,607,000 2,008,771 
June 14, 2021July 30, 20210.54643,261 2,572,942 3,216,203 
September 13, 2021October 29, 20210.55817,107 3,268,354 4,085,461 
(1) The total amount of cash distributed to stockholders was limited to 20% of the total distribution paid, excluding any cash paid for fractional shares. The remainder of the distribution (approximately 80%) was paid in shares of the Company's common stock.
The Company distributed $11,172,415 or $2.14 per common share during the year ended October 31, 2021. The tax attributes of distributions are determined annually as of the end of each calendar year based, in part, on the taxable income for the fiscal year, estimated taxable income subsequent to the fiscal year end, and distributions paid. The tax character of each distribution paid is reported to stockholders, if required, on Form 1099-DIV in January following the close of the calendar year. The tax character of distributions paid for the fiscal year ended October 31, 2021, represent $826,765 from ordinary income and $10,345,650 from tax return of capital. These amounts and sources of distributions reported are not being provided for U.S. tax reporting purposes as the fiscal period does not correspond to the required tax reporting period. The ultimate tax character of the Company's earnings cannot be determined until tax returns are prepared after the end of the fiscal year. The information provided is based on available estimates.
The Company adopted a plan that provides for reinvestment of its common stock distributions on behalf of the common stockholders (the “DRIP”), unless a common stockholder elects to receive cash. The DRIP was suspended in connection with the Board's declaration of distributions payable in cash and common stock payable each of the quarters ending January 31, 2021, April 30, 2021, July 31, 2021 and October 31, 2021. During the year ended October 31, 2021, no shares were issued under the DRIP.
On December 1, 2021, the Board declared the following distribution on common shares.
Record DatePayable DateDistribution Per Common Share
December 13, 2021January 31, 2022$0.55
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OFS Credit Company, Inc.
Notes to Financial Statements
(1)    The total amount of cash distributed to stockholders will be limited to 20% of the total distribution paid, excluding any cash paid for fractional shares. The remainder of the distribution (approximately 80%) will be paid in the form of shares of the Company's common stock.

35

OFS Credit Company, Inc.
Notes to Financial Statements
Note 10. Subsequent Events
On November 10, 2021, the Company caused notices to be issued to the holders of the Series A Term Preferred Stock regarding the exercise of its option to redeem, if certain conditions were to occur, all of the issued and outstanding Series A Term Preferred Stock. On December 10, 2021, all outstanding shares of the Series A Term Preferred Stock were redeemed at 100% of their principal amount ($25 per Note), plus the accrued and unpaid dividends through December 9, 2021. The total amount of the redemption, plus accrued dividends, was $21,353,138. The Company expects to recognize a loss on extinguishment of debt of approximately $385,000 related to the charge-off of deferred borrowing costs upon redemption of the shares.
On December 8, 2021, the Company closed an underwritten public offering of 1,220,000 shares of 5.25% Series E Term Preferred Stock at a public offering price of $25.00 per share, raising $30.5 million in gross proceeds. In addition, the Company has granted the underwriters a 30-day option to purchase up to an additional 180,000 shares of Series E Term Preferred Stock on the same terms and conditions to cover overallotments, if any. The shares of Series E Term Preferred Stock have a liquidation preference of $25 per share and are mandatorily redeemable on December 31, 2026. At any time on or after December 31, 2023, the Company may, at its sole option, redeem the outstanding shares of Series E Term Preferred Stock in whole or, from time to time, in part, out of funds legally available for such redemption, at the liquidation preference plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the date fixed for such redemption.
On December 7, 2021, the Board authorized a program under which the Company may repurchase up to $10.0 million of its outstanding shares of the Company's Series C Term Preferred Stock and Series E Term Preferred Stock. Under this program, the Company may, but is not obligated to, repurchase its outstanding Series C Term Preferred Stock and Series E Term Preferred Stock in the open market from time to time through December 7, 2023. The timing and the amount of Series C Term Preferred Stock and Series E Term Preferred Stock to be repurchased will depend on a number of factors, including then-existing market conditions, liquidity, prospects for future access to capital, contractual restrictions, alternative investment opportunities and other factors. In addition, any repurchases will also be conducted in accordance with the 1940 Act. There are no assurances that the Company will engage in any repurchases.
On December 7, 2021, the Board terminated the program under which the Company could repurchase up to $10.0 million of its outstanding shares of Series A Term Preferred Stock.
On December 7, 2021, the Company entered into amendment No. 4 to the Equity Distribution Agreement to increase the aggregate offering price of the shares available to be sold under the Equity Distribution Agreement from $50,000,000 to $70,000,000 (which amount shall include all of the shares sold under the Equity Distribution Agreement to date).
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OFS Credit Company, Inc.
Notes to Financial Statements
On December 8, 2021, the Board declared the following fiscal year 2022 distributions.
DescriptionRecord DatePayable DateDistribution Per Preferred Share
Series B Term Preferred StockFebruary 21, 2022February 28, 2022$0.1375
March 24, 2022March 31, 20220.1375
April 22, 2022April 29, 20220.1375
May 24, 2022May 31, 20220.1375
June 23, 2022June 30, 20220.1375
July 22, 2022July 29, 20220.1375
Series C Term Preferred StockFebruary 21, 2022February 28, 2022$0.1276042
March 24, 2022March 31, 20220.1276042
April 22, 2022April 29, 20220.1276042
May 24, 2022May 31, 20220.1276042
June 23, 2022June 30, 20220.1276042
July 22, 2022July 29, 20220.1276042
Series D Term Preferred StockFebruary 21, 2022February 28, 2022$0.125
March 24, 2022March 31, 20220.125
April 22, 2022April 29, 20220.125
May 24, 2022May 31, 20220.125
June 23, 2022June 30, 20220.125
July 22, 2022July 29, 20220.125
Series E Term Preferred StockDecember 24, 2021December 31, 2021$0.08385416
January 24, 2022January 31, 20220.109375
February 21, 2022February 28, 20220.109375
March 24, 2022March 31, 20220.109375
April 22, 2022April 29, 20220.109375
May 24, 2022May 31, 20220.109375
June 23, 2022June 30, 20220.109375
July 22, 2022July 29, 20220.109375
37


Report of Independent Registered Public Accounting Firm


To the Shareholders and Board of Directors
OFS Credit Company, Inc.:

Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of OFS Credit Company, Inc. (the Company), including the schedule of investments, as of October 31, 2021, the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the years in the two‑year period then ended, and the related notes (collectively, the financial statements) and the financial highlights for each of the years in the three-year period then ended and the period from October 10, 2018 (commencement of operations) through October 31, 2018. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Company as of October 31, 2021, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the years in the two‑year period then ended, and the financial highlights for each of the years in the three-year period then ended and the period from October 10, 2018 through October 31, 2018, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion
These financial statements and financial highlights are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures also included confirmation of securities owned as of October 31, 2021, by correspondence with custodians and brokers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. We believe that our audits provide a reasonable basis for our opinion.


https://cdn.kscope.io/d9dc25a0b9710ff30947705af758ea00-kpmglogoa.jpg

We have served as the auditor of the Company since 2018.

Chicago, Illinois
December 14, 2021

38


SUMMARY RISK FACTORS

The risk factors described below are a summary of the principal risk factors associated with an investment in the Company. These are not the only risks we face. You should carefully consider these risk factors, together with the risk factors set forth in our prospectus, as supplemented from time to time, and the other reports and documents filed by us with the SEC. Specifically, see “Risk Factors” in our prospectus filed with the SEC on June 4, 2021.

We are subject to risks related to our business and structure.

Our investment portfolio is recorded at fair value, with our Board having final responsibility for overseeing, reviewing and determining, in accordance with the 1940 Act, the fair value of our investments. As a result, there will be uncertainty as to the value of our portfolio investments.
Our financial condition and results of operations depend on OFS Advisor’s ability to effectively manage and deploy capital, and we are dependent upon the OFS senior professionals for our future success and upon their access to the investment professionals and partners of OFSAM and its affiliates.
We may face increasing competition for investment opportunities.
OFS Advisor and OFS Services each has the right to resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.
Our success will depend on the ability of OFS Advisor to attract and retain qualified personnel in a competitive environment.
We will incur significant costs as a result of being a publicly traded company.
There are significant potential conflicts of interest which could impact our investment returns.
Our incentive fee structure may incentivize OFS Advisor to pursue speculative investments, use leverage when it may be unwise to do so, refrain from de-levering when it would otherwise be appropriate to do so, or include optimistic assumptions in the determination of net investment income.
A general increase in interest rates may have the effect of making it easier for OFS Advisor to receive incentive fees, without necessarily resulting in an increase in our net earnings.
We may be obligated to pay OFS Advisor incentive compensation even if we incur a loss or on income we do not receive in cash.
OFS Advisor’s liability is limited under the Investment Advisory Agreement, and we have agreed to indemnify OFS Advisor against certain liabilities, which may lead OFS Advisor to act in a riskier manner on our behalf than it would when acting for its own account.
The Investment Advisory Agreement and the Administration Agreement were not negotiated on an arm's length basis and may not be as favorable to us as if they had been negotiated with an unaffiliated third party.
We may experience fluctuation in our quarterly operating results and not replicate the historical results achieved by OFSAM or other entities managed or sponsored by OFSAM and its other affiliates.
Our Board may change our operating policies and strategies without stockholder approval, the effects of which may be adverse.
We will be subject to corporate-level U.S. federal income tax if we are unable to maintain our tax treatment as a RIC.
There is a risk that holders of our equity securities may not receive distributions or that our distributions may not grow or may be reduced over time, and a portion of our distributions to holders of our equity securities may be a return of capital.
We may choose to pay distributions in our own common stock, in which case, our stockholders may be required to pay U.S. federal income taxes in excess of the cash distributions they receive.
We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income.
Our cash distributions to common stockholders may change and a portion of our distributions to common stockholders may be a return of capital.
Because we expect to distribute substantially all of our ordinary income and net realized capital gains to our stockholders, we may need additional capital to finance the acquisition of new investments and such capital may not be available on favorable terms, or at all.
Events outside of our control, including ongoing public health crises and supply chain disruptions, have negatively affected and could continue to negatively affect our CLO investments and our results of operations.
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Global economic, political and market conditions may adversely affect our business, ability to secure debt financing, results of operations and financial condition, including our revenue growth and profitability.
The United Kingdom referendum decision to leave the European Union may create significant risks and uncertainty for global markets and our investments.
Adverse developments in the credit markets may impair our ability to secure debt financing.
We are a non-diversified management investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.
Significant stockholders may control the outcome of matters submitted to our stockholders or adversely impact the market price of our securities.
Our ability to enter into transactions with our affiliates is restricted, which may limit the scope of investments available to us.
We may leverage our portfolio, which would magnify the potential for gain or loss on amounts invested and will increase the risk of investing in us.
Regulations governing our operation as a registered closed-end management investment company affect our ability to raise additional capital and the way in which we do so. The raising of debt capital may expose us to risks, including the typical risks associated with leverage.
Provisions of the General Corporation Law of the State of Delaware and our Amended and Restated Certificate of Incorporation and Bylaws could deter takeover attempts and have an adverse effect on the price of our securities.
Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy.
The SEC staff could modify its position on certain non-traditional investments, including investments in CLO securities.
Terrorist attacks, acts of war or natural disasters may impact the businesses in which we invest and harm our business, operating results and financial condition.
A cyberattack or cybersecurity-systems failures, as well as the occurrence of other events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively.
Historical data regarding our business, results of operations, financial condition and liquidity does not reflect the impact of the COVID-19 pandemic and related containment measures and therefore does not purport to be representative of our future performance.
There is uncertainty surrounding potential legal, regulatory and policy changes, including tax reform, by the new presidential administration in the United States that may directly affect financial institutions and the global economy.
We are subject to risks related to corporate social responsibility.

We are subject to risks related to our investments.

Investing in senior secured loans indirectly through CLO securities involves particular risks.
Our investments in CLO securities, the primary CLO market and other structured finance securities involve certain risks.
Our investments in subordinated or equity CLO securities are more likely to suffer a loss of all or a portion of their value in the event of a default.
Our portfolio of investments may lack diversification among CLO securities or underlying obligors, which may subject us to a risk of significant loss if one or more of these CLO securities experience a high level of defaults on collateral.
We may be subject to risks associated with our investments in certain industries including the technology, healthcare and pharmaceuticals industries.
The CLO securities in which we invest may hold loans that are concentrated in a limited number of industries.
Failure by a CLO in which we are invested to satisfy certain tests will harm our operating results.
Negative loan ratings migration may also place pressure on the performance of certain of our investments.
Our investments in CLOs and other investment vehicles will result in additional expenses to us, and may be less transparent to us and our stockholders than direct investments in the collateral.
CLO investments involve complex documentation and accounting considerations, and as a result the risk of dispute over interpretation or enforceability of the documentation may be higher relative to other types of investments.
40


The application of the risk retention rules under Section 941 of the Dodd-Frank Act and other similar European Union law to CLOs may have broader effects on the CLO and loan markets in general, potentially resulting in fewer or less desirable investment opportunities for us.
We are dependent on the collateral managers of the CLOs in which we invest and those CLOs are generally not registered under the 1940 Act.
Our investments in CLO securities may be subject to special anti-deferral provisions that could result in us incurring tax or recognizing income prior to receiving cash distributions related to such income.
If a CLO in which we invest fails to comply with certain U.S. tax disclosure requirements, such CLO may be subject to withholding requirements that could materially and adversely affect our operating results and cash flows.
Increased competition in the market or a decrease in new CLO issuances may result in increased price volatility or a shortage of investment opportunities.
The interest rates of our investments, payment obligations and financing terms that extend beyond 2021 might be subject to change based on recent regulatory changes, including the decommissioning of LIBOR.
We and our investments are subject to interest rate risk, credit risk and prepayment risk.
We are subject to risks associated with loan assignments, participations and counterparties.
The lack of liquidity in our investments may adversely affect our business.
We are subject to risks associated with defaults on an underlying asset held by a CLO, loan accumulation facilities, and the bankruptcy or insolvency of an issuer or borrower of a loan that we hold or of an underlying asset held by a CLO in which we invest.
We may be exposed to risks if we invest in the securities of new issuers.
We may expose ourselves to risks if we engage in hedging transactions, and we and our investments may be subject to currency risk and risks associated with non-U.S. investing.
Any unrealized depreciation we experience on our portfolio may be an indication of future realized losses, which could reduce our income available for distribution or to make payments on our other obligations.
A portion of our income and fees may not be qualifying income for purposes of the income source requirement.
Downgrades by rating agencies of broadly syndicated loans could adversely impact the financial performance of the CLO vehicles in which we have invested and their ability to pay equity distributions to the Company in the future.

We are subject to risks relating to our securities.

Due to the recent COVID-19 pandemic, our shares of common stock have traded at a discount from NAV and our 6.875% Series A Term Preferred Stock due 2024, 6.125% Series C Term Preferred Stock due 2026 and our 5.25% Series E Term Preferred Stock due 2026 may not trade at a favorable price.
Our common stock price may be volatile and may decrease substantially.
SEC regulations may limit the number of shares we may sell pursuant to our shelf registration statement.
Our common stockholders’ economic and voting interest in us, as well as their propo