Document

Filed pursuant to Rule 424(b)(3)
File No. 333-255877
PROSPECTUS SUPPLEMENT
(To Prospectus dated June 7, 2021)
 June 10, 2022

OFS Credit Company, Inc.
$70,000,000
Common Stock
This prospectus supplement supplements the prospectus dated June 7, 2021, as amended and supplemented to date (the “Prospectus”), which relate to the sale of shares of common stock of OFS Credit Company, Inc. in an “at the market offering” pursuant to an equity distribution agreement, dated January 24, 2020, as amended by Amendment No. 1 thereto, dated March 16, 2021, Amendment No. 2 thereto, dated April 22, 2021, Amendment No. 3 thereto, dated June 8, 2021, and Amendment No. 4 thereto, dated December 7, 2021, with Ladenburg Thalmann & Co. Inc. (the “Equity Distribution Agreement”). The disclosure in this prospectus supplement supersedes disclosure elsewhere in the Prospectus to the extent such disclosure is inconsistent with the disclosure herein.
You should carefully read the entire Prospectus before investing in our common stock. You should also review the information set forth under the “Risk Factors” section beginning on page 22 of the Base Prospectus.
The terms “OFS Credit,” the “Company,” “we,” “us” and “our” generally refer to OFS Credit Company, Inc.
PRIOR SALES PURSUANT TO THE “AT THE MARKET” OFFERING
From January 24, 2020 to June 9, 2022, we sold a total of 2,534,267 shares of common stock at a weighted average price of $14.22 per share under the Equity Distribution Agreement (the “At-the-Market Offering”). The net proceeds as a result of these sales of common stock were approximately $35.6 million after deducting commissions and fees. Pursuant to Amendment No. 2 to the Equity Distribution Agreement, the aggregate offering price of the At-the-Market Offering was increased to up to $50.0 million. Pursuant to Amendment No. 4 to the Equity Distribution Agreement, the aggregate offering price of the At-the-Market offering was increased to up to $70.0 million (which amount includes all of the shares previously sold pursuant to the Equity Distribution Agreement to date).




RECENT DEVELOPMENTS
 
May 2022 Financial Update
On June 10, 2022, we announced that management’s unaudited estimate of the range of our net asset value (“NAV”) per share of our common stock as of May 31, 2022 is between $11.13 and $11.23. This estimate is not a comprehensive statement of our financial condition or results for the month ended May 31, 2022. This estimate did not undergo the Company’s typical quarter-end financial closing procedures and was not approved by our board of directors. We advise you that current estimates of our NAV per share may differ materially from future NAV estimates or determinations, including the determination for the period ending July 31, 2022, which will be reported in our monthly report on Form N-PORT.
Our financial condition, including the fair value of our portfolio investments, and results of operations may be materially impacted after May 31, 2022 by circumstances and events that are not yet known. To the extent our portfolio investments are adversely impacted by the COVID-19 pandemic, changes in base interest and inflation rates, the conflict between Russia and Ukraine, or by other factors, we may experience a material adverse impact on our future net investment income, the underlying value of our investments, our financial condition and the financial condition of our portfolio investments.
The preliminary financial data included in this May 2022 Financial Update has been prepared by, and is the responsibility of, OFS Credit’s management. KPMG LLP has not audited, reviewed, compiled, or applied agreed-upon procedures with respect to the preliminary financial data. Accordingly, KPMG LLP does not express an opinion or any other form of assurance with respect thereto.




Second Quarter 2022 Highlights and Financial Results
Highlights
Net investment income (“NII”) of $3.1 million, or $0.38 per common share, for the fiscal quarter ended April 30, 2022. This compares to NII of $0.33 per common share for the fiscal quarter ended January 31, 2022.
Core net investment income (“Core NII”)1 of $7.8 million, or $0.97 per common share, for the fiscal quarter ended April 30, 2022. This compares to Core NII of $6.0 million, or $0.78 per common share, for the fiscal quarter ended January 31, 2022.
On June 1, 2022, OFS Credit’s board of directors declared a quarterly distribution of $0.55 per share of common stock for the fiscal quarter ending July 31, 2022. The distribution is payable on July 29, 2022 in cash or shares of our common stock to stockholders of record as of June 13, 2022. The total amount of cash distributed to all stockholders will be limited to 20% of the total distribution, excluding any cash paid for fractional shares.
As of April 30, 2022, the weighted average effective yield of our investment portfolio at amortized cost was 15.15%.
SELECTED FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
April 30, 2022January 31, 2022
Investment portfolio, at fair value$158,666 $167,654 
Net asset value per share$12.44 $13.72 
For the Fiscal Quarter Ended
April 30, 2022January 31, 2022
Net Investment Income Per Share$0.38 $0.33 
Net Realized/Unrealized Gain (Loss) Per Share
Loss on redemption of preferred stock per share$— $(0.05)
Net change in unrealized depreciation on investments per share(2)
(1.10)— 
Net realized/unrealized loss per share$(1.10)$(0.05)
Earnings (Loss) Per Share$(0.72)$0.28 
Core NII Per Share
Net investment income per share$0.38 $0.33 
CLO equity adjustments per share0.59 0.45 
Core NII per share$0.97 $0.78 
1 On a supplemental basis, we disclose Core NII, which is a financial measure calculated and presented on a basis of methodology other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Core NII represents NII adjusted for additional applicable cash distributions received on our CLO equity investments. See additional information under “Supplemental Information Regarding Core Net Investment Income” below.
2 Amount rounds to less than a $0.01 per share for the fiscal quarter ended January 31, 2022.




DISTRIBUTIONS
On June 1, 2022, our board of directors declared the following distribution on shares of our common stock.
Record DatePayable Date
Distribution Per Common Share (3)
June 13, 2022July 29, 2022$0.55
3 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 each stockholder's election as well as the elections of other stockholders, subject to the pro-rata limitation.
On June 1, 2022, our board of directors declared the following distributions on shares of our preferred stock.
The following schedule applies to the 6.60% Series B Term Preferred Stock distributions for preferred stockholders of record on the close of business of each specific record date:
Record Date
Payable Date
Distribution Per Share
August 24, 2022
August 31, 2022
$0.1375
September 23, 2022
September 30, 2022
$0.1375
October 24, 2022
October 31, 2022
$0.1375
November 23, 2022
November 30, 2022
$0.1375
December 23, 2022
December 30, 2022
$0.1375
January 24, 2023
January 31, 2023
$0.1375

The following schedule applies to the 6.125% Series C Term Preferred Stock distributions for preferred stockholders of record on the close of business of each specific record date:

Record Date
Payable Date
Distribution Per Share
August 24, 2022
August 31, 2022
$0.1276042
September 23, 2022
September 30, 2022
$0.1276042
October 24, 2022
October 31, 2022
$0.1276042
November 23, 2022
November 30, 2022
$0.1276042
December 23, 2022
December 30, 2022
$0.1276042
January 24, 2023
January 31, 2023
$0.1276042

The following schedule applies to the 6.00% Series D Term Preferred Stock distributions for preferred stockholders of record on the close of business of each specific record date:

Record Date
Payable Date
Distribution Per Share
August 24, 2022
August 31, 2022
$0.125
September 23, 2022
September 30, 2022
$0.125
October 24, 2022
October 31, 2022
$0.125
November 23, 2022
November 30, 2022
$0.125
December 23, 2022
December 30, 2022
$0.125
January 24, 2023
January 31, 2023
$0.125









The following schedule applies to the 5.25% Series E Term Preferred Stock distributions for preferred stockholders of record on the close of business of each specific record date:

Record Date
Payable Date
Distribution Per Share
August 24, 2022
August 31, 2022
$0.109375
September 23, 2022
September 30, 2022
$0.109375
October 24, 2022
October 31, 2022
$0.109375
November 23, 2022
November 30, 2022
$0.109375
December 23, 2022
December 30, 2022
$0.109375
January 24, 2023
January 31, 2023
$0.109375

PORTFOLIO AND INVESTMENT ACTIVITIES
The total fair value of our investment portfolio was approximately $158.7 million as of April 30, 2022, which was equal to approximately 91% of amortized cost. During the quarter ended April 31, 2022, we made additional investments of approximately $19.0 million and received approximately $15.5 million from sales and repayments of our CLO investments.
Portfolio Overview
($ in millions, except number of portfolio companies)As of April 30, 2022As of January 31, 2022
Investment portfolio, at fair value
$158.7 $167.7 
Total number of portfolio companies6361
Weighted-average effective yield
15.15 %14.12 %
For the Fiscal Quarter Ended
Portfolio ActivityApril 30, 2022January 31, 2022
Investments in subordinated notes$15.6 $8.0 
Investments in loan accumulation facilities3.4 16.0 
RESULTS OF OPERATIONS
Interest Income
For the fiscal quarter ended April 30, 2022, interest income increased to $6.0 million compared to $5.8 million in the prior quarter. The increase in interest income was due to the deployment of new capital into subordinated notes and CLO loan accumulation facilities and an increase in the portfolio’s weighted effective yield to 15.15% as of April 30, 2022 from 14.12% at January 31, 2022.
Expenses
For the fiscal quarter ended April 30, 2022, total expenses of $3.0 million decreased $0.3 million compared to the prior quarter, primarily due to a decrease in incentive and administration fees.
Net realized and unrealized gain (loss)
For the fiscal quarter ended April 30, 2022, net unrealized losses of $8.8 million were primarily due to widening of liquid credit market spreads.



OFS Credit Company, Inc.
Statement of Assets and Liabilities

April 30, 2022
(unaudited)
Assets: 
Investments at fair value (amortized cost of $174,603,308)$158,665,746 
Cash8,307,589 
Interest receivable346,748 
Other assets181,717 
Total assets167,501,800 
Liabilities: 
Preferred stock (net of deferred issuance costs of $1,924,254)62,075,746 
Payable to adviser and affiliates1,740,645 
Accrued professional fees361,817 
Other liabilities47,100 
Total liabilities64,225,308 
Net assets$103,276,492 
Net assets consists of:
Common stock, par value of $0.001 per share; 90,000,000 shares authorized and 8,300,744 shares issued and outstanding as of April 30, 2022$8,301 
Paid-in capital in excess of par103,792,215 
Total accumulated losses(524,024)
Total net assets$103,276,492 
Net asset value per share$12.44 




OFS Credit Company, Inc.
Statement of Operations
Three Months EndedSix Months Ended
April 30, 2022April 30, 2022
(unaudited)(unaudited)
Investment income:
Interest income$6,035,687 $11,868,178 
Operating expenses:
Interest expense1,023,689 2,006,034 
Management fees737,356 1,503,600 
Incentive fees524,557 1,157,187 
Administration fees256,075 806,205 
Professional fees260,347 459,709 
Board of directors fees45,000 90,000 
Other expenses127,580 253,839 
Total operating expenses2,974,603 6,276,574 
Net investment income 3,061,084 5,591,604 

Net realized and unrealized gain (loss)
Loss on redemption of preferred stock— (384,729)
Net change in unrealized depreciation on investments(8,839,723)(8,829,050)
Net realized and unrealized loss(8,839,723)(9,213,779)
Net decrease in net assets resulting from operations$(5,778,639)$(3,622,175)




Supplemental Information Regarding Core Net Investment Income

We provide information relating to Core NII (a non-GAAP measure) on a supplemental basis. This measure is not provided as a substitute for GAAP NII, but in addition to it. Our non-GAAP measures may differ from similar measures by other companies, even in the event of similar terms being utilized to identify such measures. Core NII represents GAAP NII adjusted for additional applicable cash distributions received on our CLO equity investments. OFS Capital Management, LLC, our investment adviser, uses this information in its internal analysis of results and believes that this information may be informative in gauging the quality of Company’s financial performance, identifying trends in its results and providing meaningful period-to-period comparisons.
Income from investments in the “equity” class securities of CLO vehicles, for GAAP purposes, is recorded using the effective interest method. This is based on an effective yield to the expected redemption utilizing estimated cash flows, at current cost, including those CLO equity investments that have not made their inaugural distribution for the relevant period end. The result is an effective yield for the investment in which the respective investment’s cost basis is adjusted quarterly based on the difference between the actual cash received, or distributions entitled to be received, and the effective yield calculation. Accordingly, investment income recognized on CLO equity securities in the GAAP statement of operations differs from the cash distributions actually received by the Company during the period (referred to below as “CLO equity adjustments”).
Furthermore, in order for the Company to continue to qualify for tax treatment as a regulated investment company, we are required, among other things, to distribute at least 90% of our investment company taxable income annually. Therefore, Core NII may provide a better indication of our estimated taxable income for a reporting period than GAAP NII. We can offer no assurance that will be the case, however, as the ultimate tax character of our earnings cannot be determined until after tax returns are prepared at the close of a fiscal year. We note that this non-GAAP measure may not serve as a useful indicator of taxable earnings, particularly during periods of market disruption and volatility, and, as such, our taxable income may differ materially from our Core NII.
The following table provides a reconciliation of GAAP NII to Core NII for the fiscal quarters ended April 30, 2022 and January 31, 2022:
For the Fiscal Quarter Ended April 30, 2022For the Fiscal Quarter Ended January 31, 2022
AmountPer Common Share AmountAmountPer Common Share Amount
Net investment income$3,061,084 $0.38 $2,530,521 $0.33 
CLO equity adjustments4,706,825 0.59 3,517,514 0.45 
Core NII$7,767,909 $0.97 $6,048,035 $0.78 






SEMI-ANNUAL REPORT TO STOCKHOLDERS

On June 7, 2022, the Company filed its Semi-Annual Report to stockholders for the fiscal period ended April 30, 2022. The text of the Semi-Annual Report is attached hereto and is incorporated herein by reference.



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OFS CREDIT COMPANY, INC.
 
TABLE OF CONTENTS - SEMI-ANNUAL REPORT





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June 7, 2022

To Our Stockholders:

OFS Credit Company, Inc. (“OFS Credit” or the “Company”) has a primary goal of generating current income on behalf of our stakeholders. We want to assure you we are working diligently to manage the portfolio during this time of market volatility caused by impacts from the COVID-19 pandemic, the ongoing conflict between Russia and the Ukraine, and rising interest and inflation rates.
We believe CLOs can be an attractive investment during periods of market dislocation because CLOs reinvest in loans trading at a discount during their reinvestment period. In addition, CLOs are floating rate vehicles so we believe that income may rise as interest rates increase.
On June 1, 2022, we announced a $0.55 per share quarterly distribution for common stockholders for the quarter ending July 31, 2022. The quarterly distribution equates to an approximate 19.1% annualized distribution rate based on our April 30, 2022 market price of $11.51.
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.
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 March 31, 2022, had approximately $3.1 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 7.7% of the Company’s common stock.
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 six months ended April 30, 2022. The views and opinions in this letter were current as of April 30, 2022. 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 management's beliefs regarding the nature of CLO investments in a dislocated market, including whether CLO income will rise as interest rates increase; management’s belief that the cash and stock distribution will allow the Company to strengthen its balance sheet, improve its scale, and enable the Company to capitalize on potential future investment opportunities, when there can be no assurance any of these outcomes will occur; 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 Semi-Annual Report]
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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 April 30, 2022. 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 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. Investments in Loan Accumulation Facilities have risks similar to those applicable to investments in CLOs. The CLO securities in which we primarily 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 unamortized deferred issuance costs upon redemption of shares;
our operating policy, investment strategy and their impact on the CLO vehicles in which we invest;
the dependence of our future success on financial institutions and the general economy and their impact on the industries in which we invest;
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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 impact of the ongoing conflict between Russia and Ukraine;
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 6.60% 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 or the repurchase by the Company of any shares of its Series C Term Preferred Stock or Series E Preferred Stock under its repurchase program;
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;
expectation that interest income on investments in CLO debt will be received in cash;
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 on favorable terms. 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 April 30, 2022

The information below is presented on a look–through basis to the portfolios of the CLO investments held by the Company as of April 30, 2022, 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 April 30, 2022.

The top ten industries of the underlying obligors on a look-through basis to the Company’s CLO investments reported as of April 30, 2022, are provided below:The top ten underlying obligors on a look-through basis to the Company’s CLO investments reported as of April 30, 2022, are provided below:
Top 10 Industries of Underlying ObligorsTop 10 Underlying Obligors
Moody's Industry Name% of TotalObligor% of Total
Healthcare & Pharmaceuticals10.6%Asurion0.7%
High Tech Industries10.0%Altice Sfrfp0.7%
Services: Business9.2%Centurylink0.6%
Banking, Finance, Insurance & Real Estate8.4%Transdigm0.6%
Media: Broadcasting & Subscription5.1%McAfee0.6%
Chemicals, Plastics & Rubber4.7%Cablevision Systems0.5%
Hotel, Gaming & Leisure4.4%Peraton0.5%
Construction & Building4.1%American Airlines0.4%
Telecommunications3.9%Calpine0.4%
Services: Consumers3.9%Global Medical Response0.4%
Total64.3%Total5.4%
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OFS Credit Company, Inc.
Summary of Certain Portfolio Characteristics (unaudited)
As of April 30, 2022
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 April 30, 2022 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 April 30, 2022 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 Semi-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 April 30, 2022 is provided below:
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OFS Credit Company, Inc.
Statement of Assets and Liabilities

April 30, 2022
(unaudited)
Assets: 
Investments at fair value (amortized cost of $174,603,308)$158,665,746 
Cash8,307,589 
Interest receivable346,748 
Other assets181,717 
Total assets167,501,800 
Liabilities: 
Preferred stock (net of deferred issuance costs of $1,924,254)62,075,746 
Payable to adviser and affiliates1,740,645 
Accrued professional fees361,817 
Other liabilities47,100 
Total liabilities64,225,308 
Commitments and contingencies (Note 5)
Net assets$103,276,492 
Net assets consists of:
Common stock, par value of $0.001 per share; 90,000,000 shares authorized and 8,300,744 shares issued and outstanding as of April 30, 2022$8,301 
Paid-in capital in excess of par103,792,215 
Total accumulated losses(524,024)
Total net assets$103,276,492 
Net asset value per share$12.44 

See Notes to Unaudited Financial Statements.

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OFS Credit Company, Inc.
Statement of Operations

Six Months Ended
 April 30, 2022
(unaudited)
Investment income:
Interest income$11,868,178 
Operating expenses:
Interest expense2,006,034 
Management fees1,503,600 
Incentive fees1,157,187 
Administration fees806,205 
Professional fees459,709 
Board of directors fees90,000 
Other expenses253,839 
Total operating expenses6,276,574 
Net investment income 5,591,604 

Net realized and unrealized gain (loss)
Loss on redemption of preferred stock(384,729)
Net change in unrealized depreciation on investments(8,829,050)
Net realized and unrealized loss(9,213,779)
Net decrease in net assets resulting from operations$(3,622,175)

See Notes to Unaudited Financial Statements.

8


OFS Credit Company, Inc.
Statements of Changes in Net Assets
Six Months Ended April 30, 2022 (unaudited)Year Ended October 31, 2021
Changes in net assets resulting from operations:
Net investment income$5,591,604 $6,503,994 
Loss on redemption of preferred stock(384,729)— 
Net change in unrealized appreciation (depreciation) on investments(8,829,050)13,804,716 
Net increase (decrease) in net assets resulting from operations(3,622,175)20,308,710 
Distributions paid to common stockholders:
Common stock distributions from net investment income(8,645,104)(826,765)
Common stock distributions from return of capital— (10,345,650)
Distributions paid to common stockholders(8,645,104)(11,172,415)
Capital share transactions:
Proceeds from sale of common stock, net of offering costs526,731 48,551,241 
Common stock issued from reinvestment of stockholder distributions6,916,045 8,937,851 
Net increase in net assets resulting from capital transactions7,442,776 57,489,092 
Net increase (decrease) in net assets(4,824,503)66,625,387 
Net assets at the beginning of the period108,100,995 41,475,608 
Net assets at the end of the period$103,276,492 $108,100,995 
Capital share transactions:
Common stock shares outstanding at the beginning of the period7,719,307 3,580,663 
Sale of common stock shares40,261 3,499,258 
Common stock issued from reinvestment of stockholder distributions541,176 639,386 
Common stock shares outstanding at the end of the period8,300,744 7,719,307 

See Notes to Unaudited Financial Statements.

9


OFS Credit Company, Inc.
Statement of Cash Flows

Six Months Ended
April 30, 2022
(unaudited)
Cash flows from operating activities:
Net decrease in net assets resulting from operations$(3,622,175)
Adjustments to reconcile net decrease in net assets resulting from operations to net cash used in operating activities:
Net change in unrealized depreciation on investments8,829,050 
Loss on redemption of preferred stock384,729 
Amortization of preferred stock issuance costs224,000 
Amortization of original issuance discount(4,545)
Accretion of interest income on investments(10,738,723)
Purchase of portfolio investments(42,939,643)
Distributions from portfolio investments18,963,063 
Proceeds from the repayment of portfolio investments16,970,084 
Changes in operating assets and liabilities:
Interest receivable(57,543)
     Other assets (2,685)
     Due to adviser and affiliates(266,101)
     Accrued professional fees228,752 
     Payable for investment purchased(5,898,563)
     Other liabilities2,434 
Net cash used in operating activities(17,927,866)
Cash flows from financing activities:
Proceeds from issuance of preferred stock, net of deferred issuance costs33,758,177 
Redemption of preferred stock(21,316,500)
Proceeds from issuance of common stock, net of deferred offering costs527,078 
Distributions paid to common stockholders(1,729,059)
Net cash provided by financing activities11,239,696 
Net decrease in cash(6,688,170)
Cash at the beginning of the period14,995,759 
Cash at the end of the period$8,307,589 
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest$1,782,034 
Supplemental Disclosure of Non-Cash Activities:
    Common stock issued from reinvestment of stockholder distributions$6,916,045 

See Notes to Unaudited Financial Statements.

10

OFS Credit Company, Inc.
Schedule of Investments
April 30, 2022
(unaudited)




Company and
Investment (1) (7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
CLO Debt Securities
LCM 31 CLO
Mezzanine Debt - Class E9.10%12/18/20201/20/2032$250,000 $248,067 $243,031 0.2 %
Monroe Capital MML CLO X
Mezzanine Debt - Class E9.93%3/10/20218/20/20311,000,000 988,357 1,000,056 1.0 
VCP CLO II
Mezzanine Debt - Class E10.25%2/19/20214/15/2031500,000 487,441 485,368 0.5 
Total CLO Debt Securities$1,750,000 $1,723,865 $1,728,455 1.7 %
CLO Equity Securities(2)
Allegro CLO VII, Ltd.
Subordinated Notes8.14%2/14/20196/13/2031$3,100,000 $1,928,807 $1,373,205 1.2 %
Allegro CLO 2021-2, Ltd.
Subordinated Notes17.42%8/23/202110/15/20345,000,000 3,918,085 3,868,968 3.7 
Anchorage Capital CLO 1-R Ltd.
Subordinated Notes15.48%10/5/20184/13/20312,100,000 1,426,518 1,388,346 1.3 
Apex Credit CLO 2020 Ltd.
Subordinated Notes15.27%11/16/202010/20/20316,170,000 5,170,113 5,162,376 5.0 
Apex Credit CLO 2021 Ltd.
Subordinated Notes14.87%5/28/20217/18/20347,140,000 5,693,809 5,276,148 5.1 
Apex Credit CLO 2022-1A
Subordinated Notes13.36%4/28/20224/22/20338,833,176 7,003,557 7,003,557 6.8 
Atlas Senior Loan Fund IX Ltd.
Subordinated Notes (4) (6)0.00%10/5/20184/20/20281,200,000 469,948 197,545 0.2 
Atlas Senior Loan Fund X Ltd.
Subordinated Notes5.96%10/5/20181/15/20315,000,000 2,414,577 1,436,338 1.4 
11

OFS Credit Company, Inc.
Schedule of Investments
April 30, 2022
(unaudited)




Company and
Investment (1) (7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
Atlas Senior Loan Fund XVII, Ltd.
Subordinated Notes19.46%9/20/202110/20/2034$6,000,000 $4,632,633 $4,841,613 4.7 %
Battalion CLO IX Ltd.
Subordinated Notes - Income17.67%10/10/20187/15/20311,079,022 669,144 549,451 0.5 
Subordinated Notes17.68%10/10/20187/15/20311,770,978 1,098,168 901,804 0.9 
2,850,000 1,767,312 1,451,255 1.4 
Battalion CLO XI Ltd.
Subordinated Notes21.05%3/20/201910/24/20295,000,000 3,967,867 4,165,197 4.0 
Battalion CLO XIX Ltd.
Subordinated Notes22.82%3/16/20214/15/20345,000,000 2,940,427 3,441,386 3.3 
BlueMountain Fuji U.S. CLO III, Ltd.
Subordinated Notes18.63%9/18/20191/15/20303,701,700 2,464,890 2,227,198 2.2 
Crown Point CLO 4 Ltd.
Subordinated Notes8.01%3/22/20194/20/20315,000,000 3,418,925 2,385,935 2.3 
Dryden 30 Senior Loan Fund
Subordinated Notes23.93%10/5/201811/15/20281,000,000 334,885 306,508 0.3 
Dryden 38 Senior Loan Fund
Subordinated Notes12.63%10/5/20187/15/20302,600,000 1,457,199 1,191,795 1.2 
Dryden 41 Senior Loan Fund
Subordinated Notes12.53%10/5/20184/15/20312,600,000 1,162,011 915,165 0.9 
Dryden 53 CLO, Ltd.
Subordinated Notes - Income15.25%10/5/20181/15/20313,200,000 1,912,584 1,523,335 1.5 
Subordinated Notes18.75%10/1/20191/15/2031500,000 281,999 238,021 0.2 
3,700,000 2,194,583 1,761,356 1.7 
Dryden 60 CLO, Ltd.
Subordinated Notes15.93%4/23/20217/15/20315,950,000 4,570,137 4,189,986 4.1 
Dryden 76 CLO, Ltd.
Subordinated Notes19.10%9/27/201910/20/20322,250,000 1,679,649 1,710,423 1.7 
Dryden 87 CLO, Ltd.
Subordinated Notes17.16%6/2/20215/20/20345,000,000 4,392,450 4,282,270 4.1 
12

OFS Credit Company, Inc.
Schedule of Investments
April 30, 2022
(unaudited)




Company and
Investment (1) (7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
Dryden 95 CLO, Ltd.
Subordinated Notes16.40%7/29/20218/20/2034$6,000,000 $4,993,283 $5,017,835 4.9 %
Dryden 98 CLO, Ltd.
Subordinated Notes14.00%3/17/20224/20/20355,500,000 5,062,210 5,062,210 4.9 
Elevation CLO 2017-7, Ltd.
Subordinated Notes (4) (6)0.00%10/5/20187/15/20303,247,245 1,331,144 691,480 0.7 
Elevation CLO 2017-8, Ltd.
Subordinated Notes7.25%10/5/201810/25/20302,000,000 1,073,608 683,671 0.7 
Elevation CLO 2021-12, Ltd.
Subordinated Notes18.67%5/26/20214/20/20323,500,000 2,462,395 2,288,875 2.2 
Elevation CLO 2021-13, Ltd.
Subordinated Notes18.63%6/9/20217/15/20346,026,765 4,511,026 4,648,842 4.5 
Elevation CLO 2021-14, Ltd.
Subordinated Notes18.10%10/29/202110/20/20347,237,500 5,749,641 5,766,475 5.6 
Elevation CLO 2021-15, Ltd.
Subordinated Notes18.47%12/6/20211/5/20359,000,000 6,196,104 6,364,742 6.2 
Flatiron CLO 2017-1, Ltd.
Subordinated Notes22.55%3/22/20195/15/20303,000,000 1,913,487 1,931,313 1.9 
Flatiron CLO 18 Ltd.
Subordinated Notes15.09%10/5/20184/17/20314,500,000 3,278,424 3,018,468 2.9 
Greenwood Park CLO, Ltd.
Subordinated Notes11.84%10/5/20184/15/20314,000,000 2,715,357 2,494,786 2.4 
Halcyon Loan Advisors Funding 2018-1 Ltd.
Subordinated Notes16.32%3/20/20197/20/20313,000,000 1,964,992 1,485,567 1.4 
HarbourView CLO VII-R, Ltd.
Subordinated Notes (4) (6)0.00%10/5/201811/18/20263,100,000 1,886,533 104,231 0.1 
13

OFS Credit Company, Inc.
Schedule of Investments
April 30, 2022
(unaudited)




Company and
Investment (1) (7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
Jamestown CLO XVI, Ltd.
Subordinated Notes19.92%7/29/20217/25/2034$3,500,000 $2,338,374 $2,532,115 2.5 %
LCM 31 CLO
Subordinated Notes22.27%12/18/20201/20/20321,350,000 974,522 1,042,176 1.0 
Madison Park Funding XXIII, Ltd.
Subordinated Notes16.71%10/5/20187/27/20474,000,000 2,601,639 2,603,716 2.5 
Madison Park Funding XXIX, Ltd.
Subordinated Notes14.50%12/22/202010/18/20471,000,000 671,345 649,827 0.6 
Marble Point CLO X Ltd.
Subordinated Notes5.69%10/5/201810/15/20307,000,000 3,764,923 2,437,501 2.4 
Marble Point CLO XI Ltd.
Subordinated Notes - Income1.75%10/5/201812/18/20471,500,000 847,320 402,173 0.4 
Marble Point CLO XX, Ltd.
Subordinated Notes15.30%4/9/20214/23/20515,125,000 3,936,233 3,554,209 3.4 
Marble Point CLO XXI, Ltd.
Subordinated Notes15.22%8/24/202110/17/20515,250,000 4,176,555 3,743,593 3.6 
Marble Point CLO XXIII Ltd.
Subordinated Notes16.00%12/3/20211/22/20521,750,000 1,445,969 1,366,627 1.3 
MidOcean Credit CLO VII Ltd.
Subordinated Notes - Income3.48%3/20/20197/15/20293,275,000 1,321,979 612,958 0.6 
MidOcean Credit CLO VIII Ltd.
Subordinated Notes - Income17.88%1/14/20192/20/20313,225,000 2,121,850 1,855,304 1.8 
MidOcean Credit CLO IX Ltd.
Subordinated Notes - Income15.49%11/21/20187/20/20313,000,000 1,831,285 1,502,202 1.5 
14

OFS Credit Company, Inc.
Schedule of Investments
April 30, 2022
(unaudited)




Company and
Investment (1) (7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
Niagara Park CLO, Ltd.
Subordinated Notes19.68%11/8/20197/17/2032$4,500,000 $3,434,144 $3,714,904 3.6 %
Octagon Investment Partners 39, Ltd.
Subordinated Notes20.40%2/27/202010/20/20303,600,000 2,143,122 2,020,714 2.0 
Sound Point CLO IV-R, Ltd.
Subordinated Notes (4) (6)0.00%11/2/20184/18/20314,000,000 962,786 428,873 0.4 
Steele Creek CLO 2022-1, Ltd.
Subordinated Notes17.51%3/1/20224/15/20355,000,000 3,649,181 3,649,180 3.5 
THL Credit Wind River 2014-3 CLO Ltd.
Subordinated Notes10.42%10/10/201810/22/20312,778,000 1,499,351 1,097,288 1.1 
Trinitas CLO VIII
Subordinated Notes21.27%4/28/20217/20/21172,800,000 1,586,735 1,534,541 1.5 
Venture 33 CLO Limited
Subordinated Notes17.53%3/21/20197/15/20313,150,000 1,893,129 1,199,716 1.2 
Vibrant CLO X Ltd.
Subordinated Notes12.50%5/23/201910/20/20318,000,000 4,512,165 3,415,638 3.3 
Vibrant CLO XIII, Ltd.
Subordinated Notes14.03%6/3/20217/15/20345,000,000 4,109,671 3,599,697 3.5 
Voya CLO 2017-4, Ltd.
Subordinated Notes10.30%10/5/201810/15/20301,000,000 651,363 442,766 0.4 
Wind River 2015-1 CLO
Subordinated Notes21.44%4/28/202110/20/20302,600,000 1,225,415 1,179,839 1.1 
Webster Park CLO
Subordinated Notes18.44%4/23/20211/20/20273,363,000 2,099,417 2,052,565 2.0 
Zais CLO 3, Limited
Subordinated Notes - Income6.49%10/10/20187/15/20311,038,255 562,022 247,137 0.2 
Subordinated Notes6.49%10/10/20187/15/20311,761,745 953,657 419,350 0.4 
2,800,000 1,515,679 666,487 0.6 
15

OFS Credit Company, Inc.
Schedule of Investments
April 30, 2022
(unaudited)




Company and
Investment (1) (7)
Effective Yield (3)
Initial Acquisition DateMaturityPrincipal
Amount
Amortized Cost
Fair Value (5)
Percent of
Net Assets
Total CLO Equity Securities$237,872,386 $161,460,738 $145,439,674 140.8 %
Loan Accumulation Facilities (9)
Brightwood Capital MM CLO 2022-1, Ltd.
Loan Accumulation Facility14.50%1/5/202212/31/2032$7,500,000 $7,500,000 $7,500,000 7.3 %
Marble Point CLO XXV Ltd.
Loan Accumulation Facility14.50%4/4/20223/2/20233,350,000 3,350,000 3,350,000 3.2 
Total Loan Accumulation Facilities$10,850,000 $10,850,000 $10,850,000 10.5 %
Other CLO equity-related investments
CLO other (8)18.83%$568,705 $647,617 0.6 %
Total Investments$250,472,386 $174,603,308 $158,665,746 153.6 %

(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)    Subordinated notes and income notes are considered CLO equity securities. CLO equity securities are entitled to recurring distributions, which are generally equal to the remaining cash flow payments made by underlying securities less contractual payments to debt holders and fund expenses.
(3)    The rate disclosed on CLO equity securities 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 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. The rates disclosed on CLO debt securities reflects the yield to maturity. The rate disclosed on Loan Accumulation Facilities represents the estimated yield to be earned on the investment. As of April 30, 2022, the Company's weighted-average effective yield on its total investments, based on current amortized cost, was 15.15%.
(4)    As of April 30, 2022, 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.
16

OFS Credit Company, Inc.
Schedule of Investments
April 30, 2022
(unaudited)




(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 earn returns equal to the actual income earned on facility assets less costs and fees incurred on senior financing and manager costs. 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 liquidation of the underlying portfolio.



17

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

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 (“OFS Advisor”), a wholly owned subsidiary of Orchard First Source Asset Management, LLC (“OFSAM”).
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 (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 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. The Company may also invest in financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle, often provided by the bank that will serve as the placement agent or arranger on a CLO transaction (each, a “Loan Accumulation Facility”). Loan Accumulation Facilities have risks similar to those applicable to investments in CLO equity investments.
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 Accounting Standards Codification (“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 April 30, 2022, 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.
18

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

The Company primarily invests in equity and junior debt tranches of CLO investment vehicles, Loan Accumulation Facilities and other credit-related investments. The Company considers underlying investment portfolio performance metrics, including prepayment 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 CLO equity securities is recognized on the basis of the estimated effective yield to expected redemption utilizing assumed cash flows in accordance with ASC Subtopic 325-40, Beneficial Interests in Securitized Financial Assets. The Company monitors the expected cash flows from its CLO equity investments, 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 on-going 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.
Further, the Company may receive other CLO equity-related securities in connection with the Company’s acquisition of, subsequent amendment to, or restructuring of, CLO equity investments. The Company determines the cost basis of the security based on its fair value and the fair value of the CLO equity investment and other securities or consideration received.
Interest income from investments in Loan Accumulation Facilities is recognized on an accrual basis based on an estimated yield. Income notes associated with Loan Accumulation Facilities generally pay returns equal to the actual income earned on facility assets less costs of senior financing and manager costs. Interest income is generally received upon the earlier of the closing of the CLO securitization or liquidation of the underlying portfolio.
Interest income from investments in CLO debt is recorded using the accrual basis of accounting to the extent such amounts are expected to be collected. Interest income on investments in CLO debt is generally expected to be received in cash. Amortization of premiums or accretion of discounts on CLO debt investments are recognized over the expected life.
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. Primary market trades are recorded on the closing and issuance of the security. Realized gains and 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. An optional redemption feature of a CLO allows a majority of the holders of the CLO equity securities issued by the CLO issuer, after the end of a specified non-call period, to cause the redemption of the CLO equity securities issued by the CLO with proceeds paid either through the liquidation of the CLO’s assets or through a refinancing with new debt. The optional redemption is effectively a voluntary prepayment of the CLO equity securities issued by the CLO prior to the stated maturity of such debt. Distributions received on CLO equity securities where the optional redemption feature has been exercised are first applied to the remaining cost basis until it is reduced to zero, after which distributions are recorded as realized gains.
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 change in net unrealized appreciation (depreciation) on investments in the statement of operations.
Deferred issuance costs: Deferred issuance costs represent fees and other direct incremental costs incurred in connection with the Company’s mandatorily redeemable preferred stock. Deferred issuance costs are presented as a direct reduction of the related liability on the statement of assets and liabilities. Deferred issuance costs are amortized to interest expense over the term of the related mandatorily redeemable preferred stock.
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.
19

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

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 annual 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 be liable for 4% excise tax on a portion of income unless it timely distributes at least 98% of its ICTI, or 98.2% of net capital gains, to its stockholders. However, 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. 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 April 30, 2022.
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, 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 Statements of Changes in Net Assets and in the 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 unknown until it is determined annually as of the end of each calendar year and, if required, reported to stockholders on Form 1099-DIV. Accordingly, the final tax character of distributions may differ materially from the estimates presented herein.
Concentration of credit risk: Aside from the Company’s investments, financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits at financial institutions. At various times during the year, the Company'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 the Company’s investments, 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 and the unfunded commitments disclosed in Note 5.
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 2, 2022, 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
20

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

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 NAV of the 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 NAV 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 NAV 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 due 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. The incentive fee for the six months ended April 30, 2022 has been reduced by approximately $193,000 to reflect an adjustment for shares issued by the Company during the fiscal year ended October 31, 2021.
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 2, 2022, 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
21

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

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’s overhead in performing its obligations under the Administration Agreement, including, but not limited to, rent, information technology services and the Company’s allocable portion of the cost of its officers, including its chief executive officer, chief financial officer, chief compliance officer, chief accounting officer, 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. 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 April 30, 2022, the Advisor and its affiliates held 638,463 shares of common stock, which is approximately 7.7% 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 six months ended April 30, 2022 are presented below:
Expenses incurred to affiliates:
   Management fees$1,503,600 
   Incentive fees1,157,187 
   Administration fees806,205 
Common stock distributions to affiliates671,241 
22

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

Note 4. Fair Value of Financial Instruments
The following table provides quantitative information about the Company’s Level 3 fair value measurements as of April 30, 2022. 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)
CLO Equity(4)
$129,033,246 Discounted Cash FlowsConstant Default Rate2.00% - 2.00% (2.00%)
Constant Prepayment Rate25.00% - 25.00% (25.00%)
Reinvestment Spread - LIBOR3.05% - 3.95% (3.51%)
Reinvestment Spread - SOFR3.20% - 4.10% (3.66%)
Reinvestment Price 99.50% - 99.50% (99.50%)
Reinvestment Floor0.50% - 0.50% (0.50%)
Recovery Rate65.00% - 65.00% (65.00%)
Discount Rate12.00% - 40.00% (17.99%)
CLO Equity(4)
15,714,948Market ApproachTransaction Price
CLO Equity(4)
691,480Market Approach
NAV liquidation(5)
Loan Accumulation Facilities10,850,000Market ApproachTransaction Price
CLO Debt1,728,455Discounted Cash FlowsConstant Default Rate2.00% - 3.00% (2.58%)
Constant Prepayment Rate25.00% - 25.00% (25.00%)
Reinvestment Spread - LIBOR3.50% - 5.00% (4.56%)
Reinvestment Spread - SOFR3.65% - 5.15% (4.71%)
Reinvestment Price 99.50% - 99.50% (99.50%)
Reinvestment Floor0.50% - 0.50% (0.50%)
Recovery Rate65.00% - 65.00% (65.00%)
Discount Margin7.70% - 9.15% (8.77%)
Other CLO Related Investments647,617Discounted Cash Flows
Constant Default Rate(2)
0.00% - 2.00% (1.86%)
Constant Default Rate(3)
2.00% - 2.00% (2.00%)
Constant Prepayment Rate25.00% - 25.00% (25.00%)
Reinvestment Spread - LIBOR3.55% - 3.65% (3.63%)
Reinvestment Spread - SOFR3.70% - 3.80% (3.78%)
Reinvestment Price 99.50% - 99.50% (99.50%)
Reinvestment Floor0.50% - 0.50% (0.50%)
Recovery Rate65.00% - 65.00% (65.00%)
Discount Margin8.95% - 9.96% (9.30%)
Total$158,665,746 
(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
(unaudited)

(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.
(5) NAV liquidation represents the fair value, or estimated expected residual value, of the CLO equity security that has been optionally redeemed.
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 as a result of economic and political developments, including impacts from the COVID-19 pandemic, the ongoing conflict between Russia and the Ukraine, and rising interest and inflation rates. Market risk can affect the fair value of our investments.
The following tables present changes in the investment measured at fair value using Level 3 inputs for the six months ended April 30, 2022.
CLO EquityCLO DebtLoan Accumulation FacilitiesOther CLO Related InvestmentsTotal
Level 3 assets, October 31, 2021$140,444,196 $1,753,959 $7,000,000 $476,817 $149,674,972 
Net unrealized depreciation on portfolio investments (1)
(8,819,564)(30,049)— 20,563 (8,829,050)
Accretion of interest income10,481,405 — — 257,318 10,738,723 
Amortization of original issuance discount— 4,545 — — 4,545 
Purchase of portfolio investments23,595,258 — 19,300,000 44,385 42,939,643 
Proceeds from the repayment of portfolio investments(1,450,024)— (15,450,000)— (16,900,024)
Distributions from portfolio investments(18,811,597)— — (151,466)(18,963,063)
Level 3 assets, April 30, 2022$145,439,674 $1,728,455 $10,850,000 $647,617 $158,665,746 
(1) The net unrealized depreciation in the Company's statement of operations for the six months ended April 30, 2022 attributable to the Company’s Level 3 assets still held at the end of the year was $8,829,050.
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 April 30, 2022:
DescriptionCarrying ValueFair Value
6.60% Series B Term Preferred Stock$2,946,739 $2,906,602 
6.125% Series C Term Preferred Stock22,340,955 23,138,092 
6.00% Series D Term Preferred Stock2,932,077 2,800,038 
5.25% Series E Term Preferred Stock 33,855,975 34,300,000 
Total preferred stock$62,075,746 $63,144,732 
24

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

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 April 30, 2022:
DescriptionLevel 1Level 2
Level 3(1)
Total
6.60% Series B Term Preferred Stock$— $— $2,906,602 $2,906,602 
6.125% Series C Term Preferred Stock23,138,092 — — 23,138,092 
6.00% Series D Term Preferred Stock— — 2,800,038 2,800,038 
5.25% Series E Term Preferred Stock34,300,000 — — 34,300,000 
Total preferred stock, at fair value$57,438,092 $— $5,706,640 $63,144,732 
(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
As of April 30, 2022, the Company has unfunded commitments totaling approximately $4,645,500.
Indemnifications: In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not 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.
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 April 30, 2022 had 2,560,000 shares of preferred stock outstanding. During the six months ended April 30, 2022, the average dollar borrowings and average interest rate for the Company’s preferred stock was $61,320,591 and 6.54%, respectively. Dividends on mandatorily redeemable preferred stock are recorded as interest expense on the Statement of Operations. The Company may recognize a loss related to the charge-off of unamortized deferred issuance costs upon early redemption of any outstanding shares of preferred stock.
6.875% Series A Term Preferred Stock
On December 10, 2021, all outstanding shares of the 6.875% 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 recognized a loss on redemption of preferred stock of $384,729 related to the charge-off of unamortized deferred issuance costs upon redemption of the shares.
For the six months ended April 30, 2022, the components of interest expense, cash paid for interest, effective interest rate and average outstanding balances for the 6.875% Series A Term Preferred Stock was as follows:
Stated interest expense$158,764 
Amortization of debt issuance costs18,381 
   Total interest and debt financing costs$177,145 
Cash paid for interest expense$158,764 
Effective interest rate7.92 %
Average outstanding balance$4,475,287 
25

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

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.
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.
For the six months ended April 30, 2022, the components of interest expense, cash paid for interest, effective interest rate and average outstanding balances for the Series B Term Preferred Stock was as follows:
Stated interest expense$99,000 
Amortization of debt issuance costs17,158 
   Total interest and debt financing costs$116,158 
Cash paid for interest expense$99,000 
Effective interest rate7.74 %
Average outstanding balance$3,000,000 
During the six months ended April 30, 2022, the Company paid distributions of approximately $0.83 per share of Series B Term Preferred Stock. On December 8, 2021 the Board declared monthly distributions through July 2022, and on June 1, 2022, the Board declared additional monthly distributions through January 2023 of $0.1375 per share of Series B Term Preferred Stock.
26

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

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.
For the six months ended April 30, 2022, the components of interest expense, cash paid for interest, effective interest rate and average outstanding balances for the Series C Term Preferred Stock was as follows:
Stated interest expense$704,374 
Amortization of debt issuance costs82,405 
   Total interest and debt financing costs$786,779 
Cash paid for interest expense$704,374 
Effective interest rate6.84 %
Average outstanding balance$23,000,000 
During the six months ended April 30, 2022, the Company paid distributions of approximately $0.77 per share of Series C Term Preferred Stock. On December 8, 2021 the Board declared monthly distributions through July 2022, and on June 1, 2022, the Board declared additional monthly distributions through January 2023 of $0.1276042 per share of Series C Term Preferred Stock.
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.
For the six months ended April 30, 2022, the components of interest expense, cash paid for interest, effective interest rate and average outstanding balance for the Series D Term Preferred Stock was as follows:
Stated interest expense$90,000 
Amortization of debt issuance costs8,256 
   Total interest and debt financing costs$98,256 
Cash paid for interest expense$90,000 
Effective interest rate6.55 %
Average outstanding balance$3,000,000 
27

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)


During the six months ended April 30, 2022, the Company paid distributions of approximately $0.75 per share of Series D Term Preferred Stock. On December 8, 2021 the Board declared monthly distributions through July 2022, and on June 1, 2022, the Board declared additional monthly distributions through January 2023 of $0.125 per share of Series D Term Preferred Stock.
5.25% Series E Term Preferred Stock
In December 2021, the Company issued 1,400,000 shares of its 5.25% Series E Term Preferred Stock (the “Series E Term Preferred Stock”). 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.
For the six months ended April 30, 2022, the components of interest expense, cash paid for interest, effective interest rate and average outstanding balance for the Series E Term Preferred Stock was as follows:
Stated interest expense$729,896 
Amortization of debt issuance costs97,800 
   Total interest and debt financing costs$827,696 
Cash paid for interest expense$729,896 
Effective interest rate5.94 %
Average outstanding balance$27,845,304 
During the six months ended April 30, 2022. the Company paid distributions of approximately $0.52 per share of Series E Term Preferred Stock. On December 8, 2021 the Board declared monthly distributions through July 2022, and on June 1, 2022, the Board declared additional monthly distributions through January 2023 of $0.109375 per share of Series E Term Preferred Stock.
The following table shows the scheduled maturities of the principal balances of the Company's outstanding borrowings as of April 30, 2022:
 Payments due by period
DescriptionTotalLess than
1 year
1-3 years4-5 yearsAfter 5 years
Series B Term Preferred Stock$3,000,000 $— $3,000,000 $— $— 
Series C Term Preferred Stock23,000,000 — — 23,000,000 — 
Series D Term Preferred Stock3,000,000 — — 3,000,000 — 
Series E Term Preferred Stock35,000,000 — — 35,000,000 — 
Total$64,000,000 $— $3,000,000 $61,000,000 $— 
Preferred Stock Repurchase Program
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. During the six months ended April 30, 2022, no shares of preferred stock were repurchased.
28

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

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 April 30, 2022, 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 CLO equity investments, the treatment of distributions on preferred stock and recognition of unrealized appreciation/depreciation on investments. These differences can be permanent or temporary in nature. GAAP requires recognition of an estimated constant yield for CLO equity investments. 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. 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 estimated 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 April 30, 2022, were as follows:
Tax-basis amortized cost of investments$165,451,417 
Tax-basis gross unrealized appreciation on investments5,559,911 
Tax-basis gross unrealized depreciation on investments(12,345,582)
Tax-basis net unrealized depreciation on investments(6,785,671)
Fair value of investments$158,665,746 
The Company has distributed $10,427,138 for the six months ended April 30, 2022, 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 calendar 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. 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.
29

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

Note 8. Financial Highlights
The following is a schedule of financial highlights for the periods indicated:
Six Months Ended April 30, 2022Year 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
$14.00 $11.58 $14.98 $20.11 $20.00 
Net investment income(7)
0.71 1.22 1.58 1.66 0.08 
Loss on redemption of preferred stock(7)
(0.05)— — — — 
Net realized and unrealized gains (losses) on investments (7)
(1.12)2.59 (2.71)(4.69)0.03 
Net increase (decrease) from operations(0.46)3.81 (1.13)(3.03)0.11 
Total distributions(9)
(1.10)(2.14)(2.07)(2.12)— 
Issuance of common stock(8)
— 0.75 (0.20)0.02 — 
Net asset value per share at end of period$12.44 $14.00 $11.58 $14.98 $20.11 
Per share market value, end of period
$11.51 $13.60 $9.83 $16.91 $18.78 
Total return based on market value (1)
(7.93)%60.70 %(29.07)%1.84 %(6.10)%
Total return based on net asset value (2)
(4.10)%40.43 %(5.68)%(15.75)%0.55 %
Shares outstanding at end of period
8,300,744 7,719,307 3,580,663 3,061,858 2,505,000 
Weighted average shares outstanding
7,866,918 5,329,914 3,237,905 2,601,037 2,505,000 
Ratio/Supplemental Data
Average net asset value
$105,688,743 $74,788,302 $43,665,458 $48,120,908 $50,243,254 
Net asset value at end of period
$103,276,492 $108,100,995 $41,475,608 $45,855,308 $50,386,507 
Ratio of total operating expenses to average net assets (4)(6)
11.88 %12.10 %13.65 %9.41 %4.42 %
Ratio of net investment income to average net assets (5)(6)
10.58 %8.70 %11.70 %9.00 %7.17 %
Portfolio turnover rate (3)
23.30 %51.00 %8.60 %28.80 %5.10 %
Asset coverage of preferred stock261.4 %314.8294.6 %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, repayments 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 11.88%, 12.10%, 13.65%, 9.87% and 6.17% for the six month period ended April 30, 2022, 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 10.58%, 8.70%, 11.70%, 8.54% and 5.42% for the six month period ended April 30, 2022, 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.
30

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)

(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, 2021, 2020 and 2019 included returns of capital of $1.62, $0.88 and $2.12, respectively, and the distributions for the fiscal years ended October 31, 2021 and 2020 included distributions from investment company taxable income of $0.55 and $1.19, respectively. The tax character of distributions for the six months ended April 30, 2022 is an estimate and is unknown until after the end of the calendar year. 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.

SENIOR SECURITIES
Information about our senior securities is shown in the following table as of April 30, 2022 and the years ended October 31, 2021, 2020, 2019 and 2018, respectively.
Class and Year
Total Amount Outstanding(1)
Asset Coverage Per $1,000(2)
Asset Coverage Per Unit(3)
Involuntary Liquidation Preference Per Unit(4)
Average Market Value Per Unit(5)
6.875% Series A Term Preferred Stock(6)
April 30, 2022 (unaudited)$— — — $— N/A
October 31, 202121,316,500 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
April 30, 2022 (unaudited)3,000,000 2,614 65.34 25.00 N/A
October 31, 20213,000,000 3,148 78.71 25.00 N/A
6.125% Series C Term Preferred Stock
April 30, 2022 (unaudited)23,000,000 2,614 65.34 25.00 25.36 
October 31, 202123,000,000 3,148 78.71 25.00 25.22 
6.00% Series D Term Preferred Stock
April 30, 2022 (unaudited)3,000,000 2,614 65.34 25.00 N/A
October 31, 20213,000,000 3,148 78.71 25.00 N/A
5.25% Series E Term Preferred Stock
April 30, 2022 (unaudited)35,000,000 2,614 65.34 25.00 24.93 
(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 C Term Preferred Stock and Series E 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
31

OFS Credit Company, Inc.
Notes to Financial Statements
(unaudited)