Hancock Park Corporate Income 10-Q 2019 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 814-01185

Hancock Park Corporate Income, Inc.

(Exact name of registrant as specified in its charter)

Maryland		81-0850535
State or Other Jurisdiction of		I.R.S. Employer Identification No.
Incorporation or Organization
10 S. Wacker Drive, Suite 2500, Chicago, Illinois		60606
Address of Principal Executive Offices		Zip Code
	(847) 734-2000
Registrant’s Telephone Number, Including Area Code
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
None	None	None

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

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

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	¨
Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes ¨ No x

The number of shares of the issuer’s common stock, $0.001 par value, outstanding as of August 12, 2019 was 2,129,415.

HANCOCK PARK CORPORATE INCOME, INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		2
Item 1.	Financial Statements	2
	Consolidated Statements of Assets and Liabilities as of June 30, 2019 (unaudited), and December 31, 2018	2
	Statements of Operations for the Three and Six Months Ended June 30, 2019 (unaudited) and 2018 (unaudited)	3
	Statements of Changes in Net Assets for the Three and Six Months Ended June 30, 2019 (unaudited) and 2018 (unaudited)	4
	Statements of Cash Flows for the Six Months Ended June 30, 2019 (unaudited) and 2018 (unaudited)	6
	Schedules of Investments as of June 30, 2019 (unaudited) and December 31, 2018	7
	Notes to Financial Statements (unaudited)	18
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48
PART II. OTHER INFORMATION		49
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	50
Item 6.	Exhibits	51
SIGNATURES		52

Defined Terms

We have used "we," "us," "our," "our company," and "the Company" to refer to Hancock Park Corporate Income, Inc. in this report. We also have used several other terms in this report, which are explained or defined below:

Term	Explanation or Definition
1940 Act	Investment Company Act of 1940, as amended
Administration Agreement	Administration agreement between the Company and OFS Services, dated July 15, 2016
Advisers Act	The Investment Advisers Act of 1940, as amended
Annual Distribution Requirement	Distributions to our stockholders, for each taxable year, of at least 90% of our ICTI
ASC	Accounting Standards Codification, as issued by the FASB
ASC Topic 820	ASC Topic 820, "Fair Value Measurement"
ASC Topic 946	ASC Topic 946, "Financial Services—Investment Companies"
ASU	Accounting Standards Updates, as issued by the FASB
BDC	Business Development Company under the 1940 Act
BLA	Business Loan Agreement, with Pacific Western Bank, as lender, which provides the Company with a senior secured revolving credit facility
Board	The Company's board of directors
CLO	Collateralized Loan Obligation
Code	Internal Revenue Code of 1986, as amended
Contractual Issuer Expenses	Salaries and direct expenses of OFS Advisor’s employees, employees of their affiliates and others while engaged in offering and other contractually-defined activities
Dealer Manager	International Assets Advisory, LLC
Dealer Manager Agreement	Broker dealer management agreement dated August 1, 2016 between the Company, OFS Advisor and the Dealer Manager, as amended, supplemented or modified.
EBITDA	Earnings before interest, taxes, depreciation, and amortization
Exchange Act	Securities Exchange Act of 1934, as amended
Evolv	Evolv Capital Advisors LLC, a registered investment adviser under the Advisers Act, and former sub-adviser to the Company
Expense Support Agreement	Expense support and conditional reimbursement agreement dated July 15, 2016, between the Company and OFS Advisor
FASB	Financial Accounting Standards Board
Funding I	OFS Funding I, LLC, a wholly-owned subsidiary of OFSAM and an affiliate of OFS Advisor
GAAP	Accounting principles generally accepted in the United States
ICTI	Investment company taxable income, which is generally net ordinary income plus net short-term capital gains in excess of net long-term capital losses
Indicative Prices	Market quotations, prices from pricing services or bids from brokers or dealers
Investment Advisory Agreement	Investment advisory and management agreement between the Company and OFS Advisor, dated July 15, 2016
Investment Sub-Advisory Agreement	Investment sub-advisory agreement between the Company, OFS Advisor, and Evolv, dated July 15, 2016
IRS	Internal Revenue Service
LIBOR	London Interbank Offered Rate
Minimum Offering Requirement	The minimum capitalization requirement to commence the Offering. This was satisfied on August 30, 2016, when Funding I, a subsidiary of OFSAM, purchased 74,074 shares of our common stock in the Offering for gross proceeds of $1,000,000, or $13.50 per share
NBIB	Non-binding indicative bid
Net Loan Fees	The cumulative amount of fees, such as discounts, premiums and amendment fees that are deferred and recognized as income over the life of the loan.
OCCI	OFS Credit Company, Inc., a Delaware corporation and a non-diversified, closed-end management investment company for whom OFS Advisor serves as investment adviser

Term	Explanation or Definition
Offering	Continuous offering of up to $200,000,000 of shares of the Company's common stock
OFS Advisor	OFS Capital Management, LLC, a wholly-owned subsidiary of OFSAM and registered investment advisor under the Advisers Act
OFS Capital	OFS Capital Corporation, a Delaware corporation and publicly-traded BDC for whom OFS Advisor serves as investment advisor
OFS Services	OFS Capital Services, LLC, a wholly-owned subsidiary of OFSAM and affiliate of OFS Advisor
OFSAM	Orchard First Source Asset Management, LLC, a full-service provider of capital and leveraged finance solutions to U.S. corporations
PIK	Payment-in-kind. PIK interest and dividends are paid in the form of additional loan principal or preferred securities.
Prime Rate	United States Prime interest rate
PWB Credit Facility	Senior secured revolving credit facility between the Company and Pacific Western Bank, as lender
RIC	Regulated investment company under the Code
SBCAA	Small Business Credit Availability Act
SEC	U.S. Securities and Exchange Commission
Securities Act	Securities Act of 1933, as amended
Transaction Price	The cost of an arm's length transaction occurring in the same security

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "would," "should," "targets," "projects," and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

• our ability and experience operating a BDC or maintaining our qualification as a RIC under the Code;

• our dependence on key personnel;

• our ability to maintain or develop referral relationships;

• the ability of OFS Advisor, to identify, invest in and monitor companies that meet our investment criteria;

• actual and potential conflicts of interest with OFS Advisor and other affiliates of OFSAM;

• constraint on investments due to access to material nonpublic information;

• restrictions on our ability to enter into transactions with our affiliates;

• the use of borrowed money to finance a portion of our investments;

• our ability to incur additional leverage pursuant to the SBCAA, beginning on November 6, 2019;

• competition for investment opportunities;

• our ability to raise debt or equity capital as a BDC;

• the timing, form and amount of any distributions from our portfolio companies;

• the impact of a protracted decline in the liquidity of credit markets on our business;

• the general economy and its impact on the industries in which we invest;

• uncertain valuations of our portfolio investments; and

• the effect of new or modified laws or regulations governing our operations.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include, among others, those described or identified in "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2018. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.

We have based the forward-looking statements on information available to us on the date of this Quarterly Report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we may file with the SEC in the future, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The forward-looking statements and projections contained in this Quarterly Report on Form 10-Q are excluded from the safe harbor protection provided by Section 21E of the Exchange Act.

The following should be read in conjunction with our financial statements and the related notes thereto contained elsewhere in this Quarterly Report on Form 10-Q.

1

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Hancock Park Corporate Income, Inc.

Consolidated Statements of Assets and Liabilities

	June 30, 2019			December 31, 2018
	(unaudited)
Assets:
Non-control/non-affiliate investments at fair value (amortized cost of $31,498,471 and $28,663,635 respectively)	$	31,398,399		$	28,101,501
Cash	1,837,954			1,250,296
Interest receivable	179,518			192,295
Prepaid expenses and other assets	16,373			52,144
Total assets	$	33,432,244		$	29,596,236
Liabilities:
Revolving line of credit	$	4,775,000		$	4,400,000
Payable for investments purchased	—			721,286
Due to advisor and affiliates (see Note 3)	191,890			162,997
Accrued professional fees	170,754			191,011
Distribution payable	514,645			445,421
Other liabilities	73,420			37,635
Total liabilities	5,725,709			5,958,350
Commitments and contingencies (see Notes 3 and 6)
Net assets:
Common stock, par value of $0.001 per share; 20,000,000 shares authorized as of June 30, 2019, and December 31, 2018; 2,092,378 and 1,818,799 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	2,092			1,819
Paid-in capital in excess of par	27,841,302			24,200,918
Total distributable earnings (losses)	(136,859		)	(564,851		)
Total net assets	27,706,535			23,637,886
Total liabilities and net assets	$	33,432,244		$	29,596,236
Number of shares outstanding	2,092,378			1,818,799
Net asset value per share	$	13.24		$	13.00

See Notes to Consolidated Financial Statements.

2

Hancock Park Corporate Income, Inc.

Consolidated Statements of Operations (unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Investment income
Interest income	$	878,315		$	301,475		$	1,659,366		$	491,648
Payment-in-kind dividend income	—			128			—			2,630
Fee income	8,430			29,735			48,305			30,400
Total investment income	886,745			331,338			1,707,671			524,678
Operating expenses
Amortization of deferred offering costs	33,948			48,205			63,799			86,039
Contractual issuer expenses	3,084			5,520			6,196			9,271
Interest expense	103,670			—			199,019			—
Management fees	98,319			35,181			191,041			57,649
Incentive fees	29,296			—			78,066			—
Administrative fees	185,164			149,834			327,038			314,164
Professional fees	119,193			101,756			273,532			184,198
Insurance expense	18,529			26,867			34,896			45,065
Transfer agent fees	24,302			20,123			54,121			43,703
Other expenses	30,511			17,466			57,045			34,759
Total operating expenses	646,016			404,952			1,284,753			774,848
Less: Expense limitations under agreements with adviser (see Note 3)	(240,129		)	(307,627		)	(520,371		)	(687,500		)
Net operating expenses	405,887			97,325			764,382			87,348
Net investment income	480,858			234,013			943,289			437,330
Net realized and unrealized gain (loss) on investments
Net realized gain (loss) on investments	(1,964		)	1,414			52			1,414
Net unrealized appreciation (depreciation) on investments, net of taxes	(80,864		)	76,149			427,994			98,559
Net gain (loss) on investments	(82,828		)	77,563			428,046			99,973
Net increase in net assets resulting from operations	$	398,030		$	311,576		$	1,371,335		$	537,303
Net investment income per common share – basic and diluted	$	0.24		$	0.21		$	0.49		$	0.43
Net increase in net assets resulting from operations per common share – basic and diluted	$	0.20		$	0.27		$	0.72		$	0.53
Distributions declared per common share	$	0.26		$	0.26		$	0.52		$	0.52
Basic and diluted weighted average shares outstanding or subscribed	1,964,548			1,134,739			1,916,979			1,015,142

See Notes to Consolidated Financial Statements.

3

Hancock Park Corporate Income, Inc.

Consolidated Statements of Changes in Net Assets (unaudited)

	Common Stock
	Number of shares	Par value		Paid-in capital in excess of par			Total distributable earnings (losses)			Total net assets
Balances at January 1, 2018	845,700	$	846	$	11,251,552		$	17,634		$	11,270,032
Net investment income	—	—		—			437,330			437,330
Net realized gain on investment	—	—		—			1,414			1,414
Net unrealized appreciation on investments	—	—		—			98,559			98,559
Tax reclassifications of permanent differences	—	—		(99,235		)	99,235			—
Common stock issued or subscribed	466,012	466		6,294,089			—			6,294,555
Distributions to stockholders	—	—		—			(531,173		)	(531,173		)
Balances at June 30, 2018	1,311,712	$	1,312	$	17,446,406		$	122,999		$	17,570,717
Balances at March 31, 2018	994,175	$	994	$	13,221,754		$	41,689		$	13,264,437
Net investment income	—	—		—			234,013			234,013
Net realized gain on investment	—	—		—			1,414			1,414
Net unrealized appreciation on investments	—	—		—			76,149			76,149
Tax reclassifications of permanent differences	—	—		(66,833		)	66,833			—
Common stock issued or subscribed	317,537	318		4,291,485			—			4,291,803
Distributions to stockholders	—	—		—			(297,099		)	(297,099		)
Balances at June 30, 2018	1,311,712	$	1,312	$	17,446,406		$	122,999		$	17,570,717

4

Hancock Park Corporate Income, Inc.

Consolidated Statements of Changes in Net Assets (unaudited)

	Common Stock
	Number of shares		Par value			Paid-in capital in excess of par			Total distributable earnings (losses)			Total net assets
Balances at January 1, 2019	1,818,799		$	1,819		$	24,200,918		$	(564,851	)	$	23,637,886
Net investment income	—		—			—			943,289			943,289
Net realized gain on investment	—		—			—			52			52
Net unrealized appreciation on investments, net of taxes	—		—			—			427,994			427,994
Tax reclassifications of permanent differences	—		—			(61,018		)	61,018			—
Common stock issued	290,014		289			3,919,503			—			3,919,792
Repurchase of common stock	(16,435	)	(16		)	(218,101		)	—			(218,117		)
Distributions to stockholders	—		—			—			(1,004,361		)	(1,004,361		)
Balances at June 30, 2019	2,092,378		$	2,092		$	27,841,302		$	(136,859	)	$	27,706,535
Balances at March 31, 2019	1,939,743		$	1,940		$	25,808,089		$	(55,994	)	$	25,754,035
Net investment income	—		—			—			480,858			480,858
Net realized (loss) on investment	—		—			—			(1,964		)	(1,964		)
Net unrealized depreciation on investments, net of taxes	—		—			—			(80,864		)	(80,864		)
Tax reclassifications of permanent differences	—		—			(35,750		)	35,750			—
Common stock issued	169,070		168			2,287,064			—			2,287,232
Repurchase of common stock	(16,435	)	(16		)	(218,101		)	—			(218,117		)
Distributions to stockholders	—		—			—			(514,645		)	(514,645		)
Balances at June 30, 2019	2,092,378		$	2,092		$	27,841,302		$	(136,859	)	$	27,706,535

See Notes to Consolidated Financial Statements.

5

Hancock Park Corporate Income, Inc.

Consolidated Statements of Cash Flows (unaudited)

	Six Months Ended June 30,
	2019			2018
Cash flows from operating activities
Net increase in net assets resulting from operations	$	1,371,335		$	537,303
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Net unrealized appreciation on investments	(427,994		)	(98,559		)
Net realized gains on investments	(52		)	(1,414		)
Amortization of Net Loan Fees and discounts on investments	(30,425		)	(25,007		)
Amendment fees collected	1,437			—
Amortization of deferred debt issuance costs	31,289			—
Paid-in-kind interest and dividend income	(9,199		)	(10,303		)
Purchase of portfolio investments	(5,825,587		)	(9,773,823		)
Proceeds from principal payments on portfolio investments	1,488,187			1,661,538
Sale or redemption of portfolio investments	1,539,696			87,236
Changes in operating assets and liabilities:
Interest receivable	12,777			(37,713		)
Due to advisor and affiliates	28,893			81,945
Payable for investments purchased	(721,286		)	—
Other assets and liabilities	(12,950		)	69,925
Net cash used in operating activities	(2,553,879		)	(7,508,872		)
Cash flows from financing activities
Net proceeds from issuance of common stock	3,919,792			5,552,452
Distributions paid to stockholders	(935,137		)	(425,689		)
Borrowings under revolving line of credit	4,700,000			—
Repayments under revolving line of credit	(4,325,000		)	—
Repurchase of common stock	(218,118		)	—
Net cash provided by financing activities	3,141,537			5,126,763
Net increase (decrease) in cash	587,658			(2,382,109		)
Cash at beginning of period	1,250,296			6,259,541
Cash at end of period	$	1,837,954		$	3,877,432
Supplemental disclosure of cash flow information:
Amortization of deferred offering costs limited by investment advisor (see Note 3)	$	63,799		$	86,039
Cash paid for interest	168,945			—

See Notes to Consolidated Financial Statements.

6

Hancock Park Corporate Income, Inc.

Consolidated Schedule of Investments (unaudited)

June 30, 2019

Portfolio Company (1)(8) Investment Type	Industry	Interest Rate (3)	Spread Above Index (3)	Initial Acquisition Date	Maturity	Principal Amount		Amortized Cost			Fair Value (4)		Percent of Net Assets
Non-control/Non-affiliate Investments
BayMark Health Services	Outpatient Mental Health and Substance Abuse Centers
Senior Secured Loan		10.77%	(L +8.25%)	3/22/2018	3/1/2025	$	1,000,000	$	991,838		$	1,000,000	3.6	%
Brookfield WEC Holdings Inc. (9)	Business to Business Electronic Markets
Senior Secured Loan		9.15%	(L +6.75%)	12/6/2018	8/3/2026	217,700		217,700			218,789		0.8
Carolina Lubes, Inc.	Automotive Oil Change and Lubrication Shops
Senior Secured Loan (6)		10.38%	(L +7.76%)	8/23/2017	8/23/2022	565,689		562,557			568,065		2.1
Senior Secured Loan (Revolver)		0.25% (5)	(L +7.25%)	8/23/2017	8/23/2022	—		(253		)	—		—
						565,689		562,304			568,065		2.1
Cenexel Clinical Research, Inc. (F/K/A JBR Clinical Research, Inc.)	Research and Development in the Social Sciences and Humanities
Senior Secured Loan (6)		9.73%	(L +7.95%)	8/2/2018	8/2/2023	1,668,778		1,657,774			1,638,740		5.8
Chemical Resources Holdings, Inc.	Custom Compounding of Purchased Resins
Senior Secured Loan (6)		10.64%	(L +8.00%)	1/25/2019	1/25/2024	1,256,850		1,241,366			1,245,538		4.5
Common Equity (168 units) (7)				1/25/2019				166,469			192,000		0.7
						1,256,850		1,407,835			1,437,538		5.2
Cirrus Medical Staffing, Inc.	Temporary Help Services
Senior Secured Loan		10.58%	(L +8.25%)	3/5/2018	10/19/2022	832,072		823,863			806,029		2.9
Senior Secured Loan (Revolver)		10.57%	(L +8.25%)	3/5/2018	10/19/2022	26,743		26,743			25,906		0.1
						858,815		850,606			831,935		3.0
Confie Seguros Holdings II Co. (9)	Insurance Agencies and Brokerages
Senior Secured Loan		11.02%	(L +8.50%)	6/6/2017	11/1/2025	447,640		439,496			430,182		1.6

7

Hancock Park Corporate Income, Inc.

Consolidated Schedule of Investments (unaudited)

June 30, 2019

Portfolio Company (1)(8) Investment Type	Industry	Interest Rate (3)	Spread Above Index (3)	Initial Acquisition Date	Maturity	Principal Amount		Amortized Cost		Fair Value (4)		Percent of Net Assets
Constellis Holdings, LLC	Other Justice, Public Order, and Safety Activities
Senior Secured Loan		7.58%	(L +5.00%)	4/27/2017	4/21/2024	$	24,500	$	24,331	$	18,694	0.1	%
Senior Secured Loan		11.58%	(L +9.00%)	4/26/2017	4/21/2025	550,000		553,746		382,250		1.4
						574,500		578,077		400,944		1.5
Convergint Technologies	Security Systems Services (except Locksmiths)
Senior Secured Loan		9.15%	(L +6.75%)	9/28/2018	2/2/2026	893,750		885,235		881,238		3.2
Davis Vision, Inc.	Direct Health and Medical Insurance Carriers
Senior Secured Loan		9.16%	(L +6.75%)	7/16/2018	12/1/2025	1,371,000		1,345,350		1,355,919		4.9
DRS Imaging Services, LLC	Data Processing, Hosting, and Related Services
Senior Secured Loan (6)		11.98%	(L +9.35%)	3/8/2018	11/20/2023	1,101,923		1,093,856		1,101,923		4.0
Common Equity (46 units) (7)				3/8/2018				115,385		201,000		0.7
						1,101,923		1,209,241		1,302,923		4.7
DuPage Medical Group	Offices of Physicians, Mental Health Specialists
Senior Secured Loan (9)		5.15%	(L +2.75%)	8/22/2017	8/15/2024	97,586		97,228		95,156		0.3
Senior Secured Loan		9.40%	(L +7.00%)	8/22/2017	8/15/2025	1,590,882		1,594,695		1,583,404		5.7
						1,688,468		1,691,923		1,678,560		6.0
Eblens Holdings, Inc.	Shoe Store
Subordinated Loan (2)		12.00% cash / 1.00% PIK	N/A	7/13/2017	1/13/2023	471,805		468,832		465,200		1.7
Common Equity (3,750 units) (7)				7/13/2017				37,500		44,000		0.2
						471,805		506,332		509,200		1.9
Excelin Home Health, LLC	Home Health Care Services
Senior Secured Loan		11.83%	(L +9.50%)	10/25/2018	4/25/2024	1,000,000		982,479		983,000		3.5

8

Hancock Park Corporate Income, Inc.

Consolidated Schedule of Investments (unaudited)

June 30, 2019

Portfolio Company (1)(8) Investment Type	Industry	Interest Rate (3)	Spread Above Index (3)	Initial Acquisition Date	Maturity	Principal Amount		Amortized Cost		Fair Value (4)		Percent of Net Assets
Hyland Software, Inc.	Software Publishers
Senior Secured Loan (9)		5.65%	(L +3.25%)	10/24/2018	7/1/2024	$	22,066	$	22,066	$	21,956	0.1	%
Senior Secured Loan		9.40%	(L +7.00%)	10/24/2018	7/7/2025	333,469		335,682		333,469		1.2
						355,535		357,749		355,425		1.3
Inergex Holdings	Other Computer Related Services
Senior Secured Loan		9.60%	(L +7.00%)	10/1/2018	10/1/2024	1,114,375		1,099,446		1,087,630		3.9
Senior Secured Loan (Revolver)		9.62%	(L +7.00%)	10/1/2018	10/1/2024	112,500		110,859		109,800		0.4
						1,226,875		1,210,305		1,197,430		4.3
Institutional Shareholder Services Inc.	Administrative Management and General Management Consulting Services
Senior Secured Loan		10.83%	(L +8.50%)	3/4/2019	3/5/2027	1,068,750		1,037,919		1,032,413		3.7
Online Tech Stores, LLC	Stationery and Office Supplies Merchant Wholesalers
Subordinated Loan		10.50% cash / 1.00% PIK	N/A	2/1/2018	8/1/2023	1,014,306		999,438		1,023,029		3.7
OnSite Care, PLLC	Home Health Care Services
Senior Secured Loan (6)		10.27%	(L +7.80%)	8/10/2018	8/10/2023	900,000		892,602		883,800		3.2
Parfums Holding Company, Inc.	Cosmetics, Beauty Supplies, and Perfume Stores
Senior Secured Loan		11.08%	(L +8.75%)	11/16/2017	6/30/2025	680,000		679,443		683,400		2.5
Pelican Products, Inc.	Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan		10.16%	(L +7.75%)	9/24/2018	5/1/2026	2,000,000		2,009,106		1,978,000		7.1
Performance Team LLC	General Warehousing and Storage
Senior Secured Loan		12.40%	(L +10.00%)	5/24/2018	11/24/2023	1,500,000		1,488,007		1,515,000		5.4

9

Hancock Park Corporate Income, Inc.

Consolidated Schedule of Investments (unaudited)

June 30, 2019

Portfolio Company (1)(8) Investment Type	Industry	Interest Rate (3)	Spread Above Index (3)	Initial Acquisition Date	Maturity	Principal Amount		Amortized Cost		Fair Value (4)		Percent of Net Assets
Professional Pipe Holdings, LLC	Plumbing, Heating, and Air-Conditioning Contractors
Senior Secured Loan		11.15%	(L +8.75%)	3/23/2018	3/23/2023	$	458,840	$	452,026	$	452,876	1.6	%
Common Equity (86 units) (7)				3/23/2018				85,714		151,000		0.5
						458,840		537,740		603,876		2.1
Resource Label Group, LLC	Commercial Printing (except Screen and Books)
Senior Secured Loan		7.09%	(L +4.50%)	6/7/2017	5/26/2023	69,747		69,291		68,631		0.2
Senior Secured Loan		11.09%	(L +8.50%)	6/7/2017	11/26/2023	178,571		176,747		171,964		0.6
						248,318		246,038		240,595		0.8
Rocket Software, Inc.	Software Publishers
Senior Secured Loan (9)		6.65%	(L +4.25%)	11/20/2018	11/28/2025	136,987		136,354		134,247		0.5
Senior Secured Loan		10.65%	(L +8.25%)	11/20/2018	11/28/2026	1,285,406		1,263,628		1,275,123		4.6
						1,422,393		1,399,982		1,409,370		5.1
RPLF Holdings, LLC	Software Publishers
Common Equity (45,890 units) (7)				1/17/2018				45,890		50,000		0.2
SSH Group Holdings, Inc.	Child Day Care Services
Senior Secured Loan		6.83%	(L +4.25%)	7/26/2018	7/30/2025	95,280		95,073		93,851		0.3
Senior Secured Loan		10.83%	(L +8.25%)	7/26/2018	7/30/2026	704,000		697,756		695,552		2.5
						799,280		792,829		789,403		2.8
STS Operating, Inc.	Industrial Machinery and Equipment Merchant Wholesalers
Senior Secured Loan (9)		6.65%	(L +4.25%)	5/15/2018	12/11/2024	105,442		105,224		104,472		0.4
Senior Secured Loan		10.40%	(L +8.00%)	5/15/2018	4/30/2026	1,593,220		1,593,185		1,580,315		5.7
						1,698,662		1,698,409		1,684,787		6.1
The Escape Game, LLC	All other amusement and recreation industries
Senior Secured Loan		11.15%	(L +8.75%)	12/22/2017	12/22/2022	500,000		497,392		493,600		1.8
Senior Secured Loan (Delayed Draw)		11.15%	(L +8.75%)	7/20/2018	12/22/2022	500,000		500,000		493,600		1.8
						1,000,000		997,392		987,200		3.6

10

Hancock Park Corporate Income, Inc.

Consolidated Schedule of Investments (unaudited)

June 30, 2019

Portfolio Company (1)(8) Investment Type	Industry	Interest Rate (3)	Spread Above Index (3)	Initial Acquisition Date	Maturity	Principal Amount		Amortized Cost		Fair Value (4)		Percent of Net Assets
Truck Hero, Inc.	Truck Trailer Manufacturing
Senior Secured Loan		6.15%	(L +3.75%)	5/30/2017	4/22/2024	$	16,072	$	15,960	$	15,188	0.1	%
Senior Secured Loan		10.65%	(L +8.25%)	5/30/2017	4/21/2025	878,456		885,306		840,682		3.0
						894,528		901,266		855,870		3.1
TTG Healthcare, LLC	Diagnostic Imaging Centers
Senior Secured Loan		11.44%	(L +9.00%)	3/1/2019	3/1/2024	1,233,209		1,214,478		1,204,968		4.3
Preferred Equity (191 units) (7)				3/1/2019				191,409		207,000		0.7
						1,233,209		1,405,887		1,411,968		5.0
Wastebuilt Environmental Solutions, LLC	Industrial Supplies Merchant Wholesalers
Senior Secured Loan		11.08%	(L +8.75%)	10/11/2018	10/11/2024	1,500,000		1,472,279		1,459,800		5.3
Total Investments						$	31,117,614	$	31,498,471	$	31,398,399	113.1	%

(1) Equity ownership may be held in shares or units of companies affiliated with the portfolio company. The Company's investments are generally classified as "restricted securities" as such term is defined under Rule 6-03(f) of Regulation S-X or Rule 144 of the Securities Act.

(2) The interest rate on these investments contains a PIK provision, whereby the issuer has the option to make interest payments in cash or with the issuance of additional securities as payment of the entire PIK provision. The interest rate in the schedule represents the current interest rate in effect for these investments. The following table provides additional details on these PIK investments, including the maximum annual PIK interest rate allowed as of June 30, 2019:

Portfolio Company	Investment Type	Range of PIK Option	Range of Cash Option	Maximum PIK Rate Allowed
Eblens Holdings, Inc.	Subordinated Loan	0% or 1.00%	13.00% or 12.00%	1.00%

(3) Substantially all of the debt investments bear interest at rates determined by reference to LIBOR (L), and which are reset monthly or quarterly. For all variable-rate investments the schedule presents the spread over LIBOR and the interest rate as of June 30, 2019. All investments with a stated PIK rate require interest payments with the issuance of additional securities as payment of the entire PIK provision.

(4) Unless otherwise noted with footnote 9, fair value was determined using significant unobservable inputs for all of the Company's investments and are considered Level 3 under GAAP. See Note 5 for further details.

(5) Commitment fee on undrawn funds.

11

Hancock Park Corporate Income, Inc.

Consolidated Schedule of Investments (unaudited)

June 30, 2019

(6) The Company has entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it has agreed to receive its payment after the repayment of certain co‑lenders pursuant to a payment waterfall. The table below provides additional details as of June 30, 2019:

Portfolio Company	Reported Interest Rate	Interest Rate per Credit Agreement	Additional Interest per Annum
Carolina Lubes, Inc.	10.11%	9.57%	0.54%
Cenexel Clinical Research, Inc. (F/K/A JBR Clinical Research, Inc.)	9.73%	8.85%	0.88%
Chemical Resources Holdings, Inc.	10.63%	8.58%	2.05%
DRS Imaging Services, LLC	11.98%	10.59%	1.39%
OnSite Care, PLLC	10.27%	8.69%	1.58%

(7) Non-income producing.

(8) Investments pledged as collateral under the PWB Credit Facility.

(9) Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP. See Note 5 for further details.

12

Hancock Park Corporate Income, Inc.

Consolidated Schedule of Investments

December 31, 2018

Portfolio Company (1) Investment Type (2)	Industry	Interest Rate (3)	Spread Above Index (3)	Initial Acquisition Date	Maturity	Principal Amount		Amortized Cost			Fair Value (4)		Percent of Net Assets
Non-control/Non-affiliate Investments
BayMark Health Services	Outpatient Mental Health and Substance Abuse Centers
Senior Secured Loan		10.60%	(L +8.25%)	3/22/2018	3/1/2025	$	1,000,000	$	991,124		$	983,152	4.2	%
Brookfield WEC Holdings Inc.	Business to Business Electronic Markets
Senior Secured Loan		9.27%	(L +6.75%)	12/6/2018	8/3/2026	217,700		217,700			212,701		0.9
Carolina Lubes, Inc.	Automotive Oil Change and Lubrication Shops
Senior Secured Loan (5)		10.24%	(L +7.25%)	8/23/2017	8/23/2022	573,555		569,878			573,302		2.4
Senior Secured Loan (Revolver) (7)		9.65%	(L +7.82%)	8/23/2017	8/23/2022	—		(293		)	—		—
						573,555		569,586			573,302		2.4
Cenexel Clinical Holding (F/K/A JBR Clinical Research, Inc.)	Research and Development in the Social Sciences and Humanities
Senior Secured Loan (5)		9.10%	(L +6.71%)	8/2/2018	8/2/2023	2,057,143		2,040,131			1,992,563		8.4
Cirrus Medical Staffing, Inc.	Temporary Help Services
Senior Secured Loan (5)		11.05%	(L +8.25%)	3/5/2018	10/19/2022	843,862		834,319			831,236		3.5
Senior Secured Loan (Revolver) (7)		11.05%	(L +8.25%)	3/5/2018	10/19/2022	83,570		83,570			82,320		0.3
						927,432		917,889			913,556		3.8
Confie Seguros Holdings II Co.	Insurance Agencies and Brokerages
Senior Secured Loan		11.24%	(L +8.50%)	6/6/2017	11/1/2025	447,640		438,860			429,675		1.8
Constellis Holdings, LLC	Other Justice, Public Order, and Safety Activities
Senior Secured Loan		7.52%	(L +5.00%)	4/27/2017	4/21/2024	24,625		24,438			23,162		0.1
Senior Secured Loan		11.52%	(L +9.00%)	4/26/2017	4/21/2025	550,000		554,066			521,663		2.2
						574,625		578,504			544,825		2.3
Convergint Technologies	Security Systems Services (except Locksmiths)
Senior Secured Loan		9.27%	(L +6.75%)	9/28/2018	2/2/2026	893,750		884,632			854,000		3.6
Davis Vision, Inc.	Direct Health and Medical Insurance Carriers
Senior Secured Loan		9.28%	(L +6.75%)	7/16/2018	12/1/2025	1,371,000		1,343,475			1,304,544		5.5

13

Hancock Park Corporate Income, Inc.

Consolidated Schedule of Investments

December 31, 2018

Portfolio Company (1) Investment Type (2)	Industry	Interest Rate (3)	Spread Above Index (3)	Initial Acquisition Date	Maturity	Principal Amount		Amortized Cost			Fair Value (4)		Percent of Net Assets
DRS Imaging Services, LLC	Data Processing, Hosting, and Related Services
Senior Secured Loan (5)		12.23%	(L +9.42%)	3/8/2018	11/20/2023	$	1,104,807	$	1,095,807		$	1,079,723	4.6	%
Common Equity (115 units) (6)				3/8/2018				115,385			121,715		0.5
						1,104,807		1,211,192			1,201,438		5.1
DuPage Medical Group	Offices of Physicians, Mental Health Specialists
Senior Secured Loan		5.27%	(L +2.75%)	8/22/2017	8/15/2024	97,798		97,405			92,832		0.4
Senior Secured Loan		9.50%	(L +7.00%)	8/22/2017	8/15/2025	1,590,882		1,595,003			1,539,394		6.5
						1,688,681		1,692,408			1,632,226		6.9
Eblens Holdings, Inc.	Shoe Store
Subordinated Loan		12.00% cash / 1.00% PIK	N/A	7/13/2017	1/13/2023	469,442		466,053			464,278		2.0
Common Equity (3,750 units) (6)				7/13/2017				37,500			38,188		0.2
						469,442		503,553			502,466		2.2
Excelin Home Health, LLC	Home Health Care Services
Senior Secured Loan		12.31%	(L +9.50%)	10/25/2018	4/25/2024	1,000,000		980,677			980,000		4.1
GOBP Holdings, Inc.	Supermarkets and Other Grocery (except Convenience) Stores
Senior Secured Loan		10.05%	(L +7.25%)	10/17/2018	10/22/2026	200,000		198,042			192,664		0.8
Hyland Software, Inc.	Software Publishers
Senior Secured Loan		6.02%	(L +3.50%)	10/24/2018	7/1/2024	22,177		22,177			21,266		0.1
Senior Secured Loan		9.52%	(L +7.00%)	10/24/2018	7/7/2025	333,469		335,865			324,700		1.4
						355,646		358,042			345,966		1.5
Inergex Holdings	Other Computer Related Services
Senior Secured Loan		9.39%	(L +7.00%)	10/1/2018	10/1/2024	872,813		860,270			861,875		3.6
Senior Secured Loan (Revolver) (7)		0.50%	(L +7.00%)	10/1/2018	10/1/2024	—		(1,796		)	—		—
						872,813		858,473			861,875		3.6
Online Tech Stores, LLC	Stationery and Office Supplies Merchant Wholesalers
Subordinated Secured Loan		10.50% cash / 1.00% PIK	N/A	2/1/2018	8/1/2023	1,009,282		992,610			986,562		4.2
OnSite Care, PLLC	Home Health Care Services
Senior Secured Loan (5)		10.22%	(L +7.85%)	8/10/2018	8/10/2023	900,000		891,710			888,324		3.8

14

Hancock Park Corporate Income, Inc.

Consolidated Schedule of Investments

December 31, 2018

Portfolio Company (1) Investment Type (2)	Industry	Interest Rate (3)	Spread Above Index (3)	Initial Acquisition Date	Maturity	Principal Amount		Amortized Cost		Fair Value (4)		Percent of Net Assets
Parfums Holding Company, Inc.	Cosmetics, Beauty Supplies, and Perfume Stores
Senior Secured Loan		11.56%	(L +8.75%)	11/16/2017	6/30/2025	$	680,000	$	679,397	$	677,036	2.9	%
Pelican Products, Inc.	Unlaminated Plastics Profile Shape Manufacturing
Senior Secured Loan		10.13%	(L +7.75%)	9/24/2018	5/1/2026	2,000,000		2,009,767		1,949,254		8.2
Performance Team LLC	General Warehousing and Storage
Senior Secured Loan		12.52%	(L +10.00%)	5/24/2018	11/24/2023	1,500,000		1,486,656		1,525,633		6.5
Professional Pipe Holdings, LLC	Plumbing, Heating, and Air-Conditioning Contractors
Senior Secured Loan		12.77%	(L +10.25%)	3/23/2018	3/23/2023	471,429		463,467		452,467		1.9
Common Equity (86 Class A units) (6)				3/23/2018				85,714		46,581		0.2
						471,429		549,181		499,048		2.1
Rack Merger Sub Inc.	Packaging Machinery Manufacturing
Senior Secured Loan		9.71%	(L +7.25%)	5/22/2017	10/3/2022	178,889		175,604		178,636		0.8
Resource Label Group, LLC	Commercial Printing (except Screen and Books)
Senior Secured Loan		6.90%	(L +4.50%)	6/7/2017	5/26/2023	70,103		69,587		69,433		0.3
Senior Secured Loan		10.90%	(L +8.50%)	6/7/2017	11/26/2023	178,571		176,542		176,726		0.7
						248,674		246,129		246,159		1.0
Rocket Software, Inc.	Software Publishers
Senior Secured Loan		6.77%	(L +4.25%)	11/20/2018	11/19/2025	137,330		136,647		131,750		0.6
Senior Secured Loan		10.77%	(L +8.25%)	11/20/2018	11/19/2026	1,062,670		1,052,098		1,034,050		4.4
						1,200,000		1,188,746		1,165,800		5.0
RPLF Holdings, LLC	Software Publishers
Common Equity (45,890 Class A units) (6)				1/17/2018				45,890		52,500		0.2
SSH Group Holdings, Inc.	Child Day Care Services
Senior Secured Loan		6.77%	(L +4.25%)	7/26/2018	7/30/2025	95,760		95,535		89,725		0.4
Senior Secured Loan		10.77%	(L +8.25%)	7/26/2018	7/30/2026	704,000		697,318		667,264		2.8
						799,760		792,853		756,989		3.2

15

Hancock Park Corporate Income, Inc.

Consolidated Schedule of Investments

December 31, 2018

Portfolio Company (1) Investment Type (2)	Industry	Interest Rate (3)	Spread Above Index (3)	Initial Acquisition Date	Maturity	Principal Amount		Amortized Cost		Fair Value (4)		Percent of Net Assets
STS Operating, Inc.	Industrial Machinery and Equipment Merchant Wholesalers
Senior Secured Loan		6.77%	(L +4.25%)	5/15/2018	12/11/2024	$	105,977	$	105,738	$	99,986	0.4	%
Senior Secured Loan		10.52%	(L +8.00%)	5/15/2018	4/30/2026	1,593,220		1,593,182		1,489,777		6.3
						1,699,197		1,698,920		1,589,763		6.7
The Escape Game, LLC	All other amusement and recreation industries
Senior Secured Loan		11.27%	(L +8.75%)	12/22/2017	12/22/2022	500,000		497,020		489,649		2.1
Senior Secured Loan (Delayed Draw) (7)		11.22%	(L +8.75%)	7/20/2018	12/22/2022	266,667		266,667		261,146		1.1
						766,667		763,687		750,795		3.2
Truck Hero, Inc.	Truck Trailer Manufacturing
Senior Secured Loan		6.26%	(L +3.75%)	5/30/2017	4/22/2024	16,154		16,030		15,604		0.1
Senior Secured Loan		10.76%	(L +8.25%)	5/30/2017	4/21/2025	878,456		885,890		852,601		3.6
						894,610		901,920		868,205		3.7
Wand Intermediate I, LP	Automotive Body, Paint, and Interior Repair and Maintenance
Senior Secured Loan		9.84%	(L +7.25%)	5/14/2018	9/17/2022	977,784		986,602		971,844		4.1
Wastebuilt Environmental Solutions, LLC	Industrial Supplies Merchant Wholesalers
Senior Secured Loan		11.27%	(L +8.75%)	10/11/2018	10/11/2024	1,500,000		1,469,678		1,470,000		6.2
Total Investments						$	28,580,525	$	28,663,635	$	28,101,501	118.9	%

(1) Equity ownership may be held in shares or units of companies affiliated with the portfolio company. The Company's investments are generally classified as "restricted securities" as such term is defined under Rule 6-03(f) of Regulation S-X or Rule 144 of the Securities Act.

(2) All of the Company’s investments were qualifying assets under Section 55(a) of the 1940 Act as of the period end. Qualifying assets must represent at least 70% of the Company's assets, as defined under Section 55 of the 1940 Act, at the time of acquisition of any additional non-qualifying assets.

(3) Substantially all of the debt investments bear interest at rates determined by reference to LIBOR (L), all which are reset monthly or quarterly. For all variable-rate investments the schedule presents the spread over LIBOR and the interest rate as of December 31, 2018. All investments with a stated payment-in-kind ("PIK") rate require interest payments with the issuance of additional securities as payment of the entire PIK provision.

(4) Fair value was determined using significant unobservable inputs for all of the Company's investments. See Note 5 for further details.

16

Hancock Park Corporate Income, Inc.

Consolidated Schedule of Investments

December 31, 2018

(5) The Company has entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, it has agreed to receive its payment after the repayment of certain co‑lenders pursuant to a payment waterfall. The table below provides additional details as of December 31, 2018:

Portfolio Company	Reported Interest Rate	Interest Rate per Credit Agreement	Additional Interest per Annum
Carolina Lubes, Inc.	10.24%	9.65%	0.59%
Cenexel Clinical Holding (F/K/A JBR Clinical Research, Inc.)	9.10%	8.64%	0.46%
DRS Imaging Services, LLC	12.23%	10.80%	1.43%
OnSite Care, PLLC	10.22%	8.60%	1.62%

(6) Non-income producing.

(7) Subject to unfunded commitments. See Note 6 for further details.

See Notes to Consolidated Financial Statements.

17

Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

Note 1. Organization

The Company is a Maryland corporation formed on December 8, 2015, as an externally managed, non-diversified, closed-end investment company. The Company has elected to be regulated as a BDC and as a RIC under Subchapter M of the Code.

The Company’s objective is to provide stockholders with current income and capital appreciation primarily through debt investments and, to a lesser extent, equity investments primarily in middle-market companies located principally in the United States. OFS Advisor, an affiliate of the Company and a registered investment adviser, manages the day-to-day operations of, and provides investment advisory services to, the Company.

In addition, OFS Advisor serves as the investment adviser to OFS Capital, a publicly traded BDC with an investment strategy similar to the Company. OFS Advisor also serves as the investment adviser to OCCI, a non-diversified, externally managed, closed-end management investment company that is registered as an investment company under the 1940 Act and primarily invests in the equity tranche of CLOs.

The Company intends to raise up to $200,000,000 through offering shares of its common stock to investors in a continuous offering in reliance on exemptions from the registration requirements of the Securities Act. In addition, the Company and OFS Advisor have entered into a dealer manager agreement with the Dealer Manager. Placement activities are conducted by the Dealer Manager and participating broker dealers who solicit subscriptions to purchase shares of the Company’s common stock. As of July 1, 2019, fees and expenses paid pursuant to the Dealer Manager Agreement are paid by the Company.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of presentation: The accompanying interim financial statements of the Company and related financial information have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and pursuant to ASC Topic 946, Financial Services–Investment Companies, the requirements for reporting on Form 10-Q, and Articles 6, 10 and 12 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. However, in the opinion of management, the interim financial statements include all adjustments, consisting only of normal and recurring accruals and adjustments, necessary for fair presentation as of and for the periods presented. Certain amounts in the prior period financial statements have been reclassified to conform to the current year presentation. These financial statements and notes hereto should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10K for the year ended December 31, 2018. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.

Significant Accounting Policies:The following information supplements the description of significant accounting policies contained in Note 2 to the Company's financial statements included in the Company's Annual Report on Form 10K for the year ended December 31, 2018.

Use of estimates:The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

Concentration of credit risk: Aside from its debt instruments, financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits at financial institutions. At various times during the year, the Company may exceed the federally insured limits. To mitigate this risk, the Company places cash deposits only with high credit quality institutions; management believes this risk of loss is minimal. The amount of loss due to credit risk from debt investments if borrowers fail to perform according to the terms of the contracts, and the collateral or other security for those instruments proved to be of no value to the Company, is equal to the Company's recorded investment in debt instruments and the unfunded loan commitments as disclosed in Note 6.

New accounting standards:In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted this guidance effective September 30, 2018.

The Company did not adopt any other new accounting pronouncements during the six months ended June 30, 2019, that had, or is expected to have, a material impact on the Company's financial statements.

18

Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

Note 3. Related Party Transactions

Investment Advisory and Management Agreement: OFS Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company pursuant to an Investment Advisory Agreement, which became effective on August 30, 2016, when the Company satisfied the Minimum Offering Requirement. Under the terms of the Investment Advisory Agreement, which are in accordance with the 1940 Act and subject to the overall supervision of the Company’s Board, OFS Advisor is responsible for sourcing potential investments, conducting research and diligence on potential investments and equity sponsors, analyzing investment opportunities, structuring investments, and monitoring investments and portfolio companies on an ongoing basis. OFS Advisor is a subsidiary of OFSAM and a registered investment advisor under the Advisers Act.

OFS Advisor’s services under the Investment Advisory Agreement are not exclusive to us and OFS Advisor is free to furnish similar services to other entities, including other BDCs affiliated with OFS Advisor, so long as its services to us are not impaired. OFS Advisor also serves as the investment adviser to CLO funds and other companies, including OFS Capital and OCCI.

OFS Advisor receives fees for providing services, consisting of two components: a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 1.25% and based on the average value of the Company’s total assets (other than cash but including assets purchased with borrowed amounts and assets owned by any consolidated entity) at the end of the two most recently completed calendar quarters, adjusted for any share issuances or repurchases during the quarter.

The incentive fee has two parts. The first part ("Income Incentive Fee") is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination and sourcing, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest or dividend feature (such as OID, debt instruments with PIK interest, equity investments with accruing or PIK dividend and zero coupon securities), accrued income that the Company has not yet received in cash.

Pre-incentive fee net investment income is expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter. The incentive fee with respect to pre-incentive fee net income is 100.0% of the amount, if any, by which the pre-incentive fee net investment income for the immediately preceding calendar quarter exceeds a 1.75% (which is 7.0% annualized) “hurdle rate” but is less than 2.1875% (or 8.75% annually), referred to as the “catch-up” provision, and 20.0% of the amount of pre-incentive fee net investment income, if any, that exceeds 2.1875%. The “catch-up” is meant to provide OFS Advisor with 20.0% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this pre-incentive fee net investment income exceeds 2.1875% in any calendar quarter.

Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter in which the Company incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the quarterly minimum hurdle rate, the Company will pay the applicable incentive fee even if the Company has incurred a loss in that quarter due to realized and unrealized capital losses. The Company’s net investment income used to calculate this part of the incentive fee is also included in the amount of the Company’s gross assets used to calculate the base management fee. These calculations are appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during such quarter.

The second part of the incentive fee (the “Capital Gain Fee”) will be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and will equal 20.0% of the Company’s aggregate realized capital gains, if any, on a cumulative basis through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation through the end of such year, less all previous amounts paid in respect of the Capital Gain Fee.

The Company accrues the Capital Gain Fee if, on a cumulative basis, the sum of net realized capital gains and (losses) plus net unrealized appreciation and (depreciation) is positive. If, on a cumulative basis, the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation) decreases during a period, the Company will reverse any excess Capital Gain Fee previously accrued such that the amount of Capital Gains Fee accrued is no more than 20% of the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation).

19

Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

The Investment Advisory Agreement was originally approved for a period of two years from August 30, 2016 to August 30, 2018 and, unless terminated earlier as described below, will remain in effect from year-to-year thereafter upon annual approval by the Company’s Board or by the affirmative vote of the holders of a majority of the Company’s outstanding voting securities, and, in either case, if also approved by a majority of the Company’s directors who are not “interested persons” as defined in the 1940 Act. On April 4, 2019, the Board approved the continuation of the Investment Advisory Agreement for a twelve month period from August 30, 2019 to August 30, 2020. The Investment Advisory Agreement will automatically terminate in the event of its assignment, as defined in the 1940 Act, and may be terminated by the Company or OFS Advisor without penalty upon not less than 60 days written notice to the other. The holders of a majority of our outstanding voting securities may also terminate the Investment Advisory Agreement without penalty upon not less than 60 days written notice.

Investment Sub-Advisory Agreement: Evolv served as the Company's sub-adviser pursuant to the Investment Sub-Advisory Agreement, which became effective on August 30, 2016, when the Minimum Offering Requirement was satisfied. Evolv assisted OFS Advisor with the management of the Company's activities and operations. Effective March 26, 2019, Evolv resigned as the Company's sub-advisor, thereby terminating Evolv’s services under the Investment Sub-Advisory Agreement.

Administration Agreement: OFS Services furnishes the Company with office facilities and equipment, necessary software licenses and subscriptions, and clerical, bookkeeping and record keeping services at such facilities pursuant to the Administration Agreement. Under the Administration Agreement, OFS Services performs, or oversees the performance of, the Company’s required administrative services, which include being responsible for the financial records that the Company is required to maintain and preparing reports to its stockholders and all other reports and materials required to be filed with the SEC or any other regulatory authority. In addition, OFS Services assists the Company in determining and publishing its net asset value, oversees the preparation and filing of its tax returns and the printing and dissemination of reports to its stockholders, and generally oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. Under the Administration Agreement, OFS Services also provides managerial assistance on the Company’s behalf to those portfolio companies that have accepted the Company’s offer to provide such assistance. Payment under the Administration Agreement is equal to an amount based upon the Company’s allocable portion of OFS Services’ overhead in performing its obligations under the Administration Agreement, including, but not limited to, rent, information technology services and the Company’s allocable portion of the cost of its officers, including its chief executive officer, chief financial officer, chief compliance officer, chief accounting officer, and their respective staffs. To the extent that OFS Services outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to OFS Services. Amounts charged under the Administration Agreement exclude Contractual Issuer Expenses.

Expenses recognized for the three and six months ended June 30, 2019 and 2018, under agreements with OFS Advisor and OFS Services are presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Base management fees	$	98,319	$	35,181	$	191,041	$	57,649
Incentive fees	29,296		—		78,066		—
Administration fees	185,164		149,834		327,038		314,164

Expense Limitation Agreements: OFS Advisor limits the Company's incurred expenses under two agreements: the Investment Advisory Agreement, which contains provisions limiting organization and offering costs and Contractual Issuer Expenses; and an Expense Support Agreement, which limits all other operating expenses. Expense limitations provided under the Investment Advisory Agreement and Expense Support Agreement for the three and six months ended June 30, 2019 and 2018, are presented below:

	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018
Net organization and offering costs, and Contractual Issuer Expenses limitations under Investment Advisory Agreement	$	1,282	$	(13,105	)	$	8,977	$	(2,502	)
Operating expense limitations under Expense Support Agreement	238,847		320,732			511,394		690,002
Net expense limitations under agreements with OFS Advisor	$	240,129	$	307,627		$	520,371	$	687,500

20

Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

The Company is conditionally obligated to reimburse OFS Advisor for aggregate expense support provided of $4,006,897 and $3,783,377 at June 30, 2019 and December 31, 2018, respectively, as presented below:

	June 30, 2019		December 31, 2018
Unreimbursed costs under Investment Advisory Agreement:
Organization costs	$	49,017	$	255,097
Offering costs:
Unamortized as of period end	122,737		50,872
Amortized as of period end	392,763		457,165
Contractual Issuer Expenses	148,860		238,118
Total unreimbursed costs under Investment Advisory Agreement	713,377		1,001,252
Unreimbursed operating expense support under Expense Support Agreement	3,293,520		2,782,125
Total conditional reimbursement obligation under expense limitation agreements with OFS Advisor	$	4,006,897	$	3,783,377

Organization and Offering Costs, and Contractual Issuer Expense Limitations:The Company is conditionally liable for organizational and offering costs, and Contractual Issuer Expenses that OFS Advisor and its affiliates have incurred on its behalf under the terms of the Investment Advisory Agreement. The Investment Advisory Agreement entitles OFS Advisor to receive up to 1.5% of the gross proceeds raised in the Offering until all reimbursable organization and offering costs paid by OFS Advisor and its affiliates have been recovered. Organization and offering expenses incurred by OFS Advisor or its affiliates will be eligible for reimbursement for three years from the date incurred. Unreimbursed organization and offering costs, and Contractual Issuer Expenses subject to conditional reimbursement as of June 30, 2019, are summarized below:

Period incurred	Unreimbursed Total
Three months ended September 30, 2016	$	177,768
Three months ended December 31, 2016	35,649
Three months ended March 31, 2017	50,512
Three months ended June 30, 2017	35,369
Three months ended September 30, 2017	43,760
Three months ended December 31, 2017	79,120
Three months ended March 31, 2018	49,363
Three months ended June 30, 2018	50,109
Three months ended September 30, 2018	26,413
Three months ended December 31, 2018	23,452
Three months ended March 31, 2019	4,113
Three months ended June 30, 2019	137,749
Total unreimbursed organization and offering costs, and Contractual Issuer Expenses	$	713,377

Expense Support Agreement: The Expense Support Agreement is designed to ensure no portion of the Company’s distribution to stockholders will be paid from its Offering proceeds, and provides for expense-reduction payments from OFS Advisor to the Company in any quarterly period in which the Company’s cumulative distributions to stockholders exceeds its cumulative distributable ordinary income and net realized gains ("Cumulative Taxable Income"). Cumulative distributions to stockholders may exceed Cumulative Taxable Income to the extent of cumulative tax-basis return-of-capital distributions received by the Company from its investments without resulting in an expense limitation payment from OFS Advisor. The Expense Support Agreement provides for reimbursement of these payments by the Company to OFS Advisor, however, such liability shall only accrue (i) to the extent they do not cause the then-current annualized year-to-date and quarterly "Other Operating Expense Ratio" (defined below) to exceed such ratios for the annual and quarterly periods, respectively, for which the Company will reimburse OFS Advisor as presented in the table below, and (ii) if the then-current annualized rate of distribution per share equals or exceeds the annualized rate of distribution per share of the supported period for which the Company will reimburse OFS Advisor. The Other Operating Expense Ratio is defined as total operating expenses reported in the statement of operations excluding interest expense, management fees, incentive fees, organization cost, amortization of deferred offering costs, and

21

Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

Contractual Issuer Expenses as a percentage of net assets. Payments under the Expense Support Agreement will be eligible for reimbursement for three years from the date accrued.

Unreimbursed support for operating expenses provided under the Expense Support Agreement and subject to conditional reimbursement as of June 30, 2019, is summarized below:

			Other Operating Expense Ratio
Supported period	Amount of expense limitation		Annualized for the quarter limitation was provided		Annual for year limitation was provided		Annualized rate of distribution per share (1)
Three months ended September 30, 2016	$	237,837	75.2	%	102.7	%	7.0%(2)
Three months ended December 31, 2016	169,115		64.3	%	102.7	%	7.0%(2)
Three months ended March 31, 2017	306,395		82.0	%	18.1	%	7.0%
Three months ended June 30, 2017	283,883		19.0	%	18.1	%	7.0%
Three months ended September 30, 2017	314,988		10.7	%	18.1	%	7.0%
Three months ended December 31, 2017	316,379		8.1	%	18.1	%	7.0%
Three months ended March 31, 2018	369,270		10.1	%	7.2	%	7.0%
Three months ended June 30, 2018	320,732		8.2	%	7.2	%	7.0%
Three months ended September 30, 2018	275,339		6.9	%	7.2	%	7.0%
Three months ended December 31, 2018	188,188		5.3	%	7.2	%	7.0%
Three months ended March 31, 2019	272,547		6.1	%	n/m (3)		7.0%
Three months ended June 30, 2019	238,847		5.9	%	n/m (3)		7.0%
Total unreimbursed operating expense limitations provided under Expense Support Agreement	$	3,293,520

(1) The annualized rate of distributions per share is expressed as a percentage equal to the annualized distribution amount as of the end of the applicable period (which is calculated by annualizing the regular quarterly cash distribution per share as of such date without compounding), divided by our public offering price per share as of such date.

(2) Agreed-upon annualized distribution rate per share for the purposes of determining reimbursement eligibility. No distribution was actually declared or paid from inception through December 31, 2016.

(3) Not meaningful. Annual Other Operating Expense Ratio upon which reimbursement is conditioned is based on the full-year results, and will not be determined until after December 31, 2019.

Note 4. Investments

As of June 30, 2019, the Company had loans to 31 portfolio companies, of which 95% were senior secured loans and 5% were subordinated loans, at fair value, as well as common and preferred equity investments in six of these portfolio companies, while holding only equity in one portfolio company. At June 30, 2019, investments consisted of the following:

			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Senior secured debt investments (1)	$	29,387,834	93.3	%	106.1	%	$	29,065,170	92.6	%	104.8	%
Subordinated debt investments	1,468,270		4.7	%	5.3		1,488,229		4.7	%	5.4
Preferred equity	191,409		0.6	%	0.7		207,000		0.7	%	0.7
Common equity	450,958		1.4	%	1.6		638,000		2.0	%	2.3
Total	$	31,498,471	100.0	%	113.7	%	$	31,398,399	100.0	%	113.2	%

(1) Includes debt investments, typically referred to as unitranche, in which we have entered into contractual arrangements with co-lenders whereby, subject to certain conditions, we have agreed to receive our principal payments after the repayment of certain co‑lenders pursuant to a payment waterfall. Amortized cost and fair value of these investments were $5,448,155 and $5,438,066, respectively.

22

Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

At June 30, 2019, all of the Company’s investments were domiciled in the United States. Geographic composition is determined by the location of the corporate headquarters of the portfolio company. The industry compositions of the Company’s portfolio were as follows:

			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Administrative and Support and Waste Management and Remediation Services
Security Systems Services (except Locksmiths)	$	885,235	2.8	%	3.2	%	$	881,238	2.8	%	3.2	%
Temporary Help Services	850,606		2.7		3.1		831,935		2.6		3.0
Arts, Entertainment, and Recreation
All Other Amusement and Recreation Industries	997,392		3.2		3.6		987,200		3.1		3.6
Construction
Plumbing, Heating, and Air-Conditioning Contractors	537,740		1.7		1.9		603,876		1.9		2.2
Finance and Insurance
Direct Health and Medical Insurance Carriers	1,345,350		4.3		4.9		1,355,919		4.3		4.9
Insurance Agencies and Brokerages	439,496		1.4		1.6		430,182		1.4		1.6
Health Care and Social Assistance
Child Day Care Services	792,829		2.5		2.9		789,403		2.5		2.8
Diagnostic Imaging Centers	1,405,887		4.5		5.1		1,411,968		4.5		5.1
Home Health Care Services	1,875,081		5.9		6.7		1,866,800		6.0		6.6
Offices of Physicians, Mental Health Specialists	1,691,923		5.4		6.1		1,678,560		5.3		6.1
Outpatient Mental Health and Substance Abuse Centers	991,838		3.1		3.6		1,000,000		3.2		3.6
Information
Data Processing, Hosting, and Related Services	1,209,241		3.8		4.4		1,302,923		4.1		4.7
Software Publishers	1,803,620		5.7		6.4		1,814,795		5.8		6.5
Manufacturing
Commercial Printing (except Screen and Books)	246,038		0.8		0.9		240,595		0.8		0.9
Custom Compounding of Purchased Resins	1,407,835		4.5		5.1		1,437,538		4.6		5.2
Truck Trailer Manufacturing	901,266		2.9		3.3		855,870		2.7		3.1
Unlaminated Plastics Profile Shape Manufacturing	2,009,107		6.3		7.2		1,978,000		6.4		6.9
Other Services (except Public Administration)
Automotive Oil Change and Lubrication Shops	562,304		1.8		2.0		568,065		1.8		2.1
Professional, Scientific, and Technical Services
Administrative Management and General Management Consulting Services	1,037,919		3.3		3.7		1,032,413		3.3		3.7
Other Computer Related Services	1,210,305		3.8		4.4		1,197,430		3.8		4.3
Research and Development in the Social Sciences and Humanities	1,657,774		5.3		6.0		1,638,740		5.2		5.9
Public Administration
Other Justice, Public Order, and Safety Activities	578,077		1.8		2.1		400,944		1.3		1.4
Retail Trade
Cosmetics, Beauty Supplies, and Perfume Stores	679,443		2.2		2.5		683,400		2.2		2.5
Shoe Store	506,332		1.6		1.8		509,200		1.6		1.8

23

Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Transportation and Warehousing
General Warehousing and Storage	1,488,007		4.7		5.4		1,515,000		4.8		5.5
Wholesale Trade
Business to Business Electronic Markets	217,700		0.7		0.8		218,789		0.7		0.8
Industrial Machinery and Equipment Merchant Wholesalers	1,698,409		5.4		6.1		1,684,787		5.4		6.1
Industrial Supplies Merchant Wholesalers	1,472,279		4.7		5.3		1,459,800		4.6		5.3
Stationery and Office Supplies Merchant Wholesalers	999,438		3.2		3.6		1,023,029		3.3		3.7
	$	31,498,471	100.0	%	113.7	%	$	31,398,399	100.0	%	113.1	%

As of December 31, 2018, the Company had loans to 31 portfolio companies, of which 95% were senior secured loans and 5% were subordinated loans, at fair value, as well as equity investments in three of these portfolio companies. The Company also held an equity investment in a portfolio company in which it did not hold a debt investment. At December 31, 2018, investments consisted of the following:

			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Senior secured debt investments (1)	$	26,920,483	93.9	%	113.9	%	$	26,391,677	93.9	%	111.7	%
Subordinated debt investments	1,458,663		5.1		6.2		1,450,840		5.2		6.1
Common equity	284,489		1.0		1.2		258,984		0.9		1.1
Total	$	28,663,635	100.0	%	121.3	%	$	28,101,501	100.0	%	118.9	%

(1) Includes debt investments in which we have entered into contractual arrangements with co-lenders whereby, subject to certain conditions, we have agreed to receive our principal payments after the repayment of certain co-lenders pursuant to a payment waterfall. Amortized cost and fair value of these investments were $4,597,526 and $4,533,912, respectively.

At December 31, 2018, all of the Company’s investments were domiciled in the United States. Geographic composition is determined by the location of the corporate headquarters of the portfolio company. The industry compositions of the Company’s portfolio were as follows:

			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Administrative and Support and Waste Management and Remediation Services
Security Systems Services (except Locksmiths)	$	884,632	3.1	%	3.7	%	$	854,000	3.0	%	3.6	%
Temporary Help Services	917,889		3.2		3.9		913,556		3.3		3.9
Arts, Entertainment, and Recreation
All other amusement and recreation industries	763,687		2.7		3.2		750,795		2.7		3.2
Construction
Plumbing, Heating, and Air-Conditioning Contractors	549,181		1.9		2.3		499,048		1.8		2.1
Health Care and Social Assistance
Child Day Care Services	792,853		2.8		3.4		756,989		2.7		3.2
Home Health Care Services	1,872,387		6.5		7.9		1,868,324		6.6		7.9
Offices of Physicians, Mental Health Specialists	1,692,408		5.9		7.2		1,632,226		5.8		6.9
Outpatient Mental Health and Substance Abuse Centers	991,124		3.5		4.2		983,152		3.5		4.2

24

Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

			Percentage of Total						Percentage of Total
	Amortized Cost		Amortized Cost		Net Assets		Fair Value		Fair Value		Net Assets
Information
Data Processing, Hosting, and Related Services	1,211,192		4.2		5.1		1,201,438		4.3		5.1
Software Publishers	1,592,678		5.6		6.7		1,564,266		5.6		6.6
Finance and Insurance
Direct Health and Medical Insurance Carriers	1,343,475		4.7		5.7		1,304,544		4.6		5.4
Insurance Agencies and Brokerages	438,860		1.5		1.9		429,675		1.5		1.8
Manufacturing
Commercial Printing (except Screen and Books)	246,129		0.9		1.0		246,159		0.9		1.0
Packaging Machinery Manufacturing	175,604		0.6		0.7		178,636		0.6		0.8
Truck Trailer Manufacturing	901,920		3.1		3.8		868,205		3.1		3.7
Unlaminated Plastics Profile Shape Manufacturing	2,009,767		6.9		8.5		1,949,254		6.9		8.3
Other Services (except Public Administration)
Automotive Body, Paint, and Interior Repair and Maintenance	986,602		3.4		4.2		971,844		3.5		4.1
Automotive Oil Change and Lubrication Shops	569,586		2.0		2.4		573,302		2.0		2.4
Professional, Scientific, and Technical Services
Other Computer Related Services	858,473		3.0		3.6		861,875		3.1		3.6
Scientific Research and Development Services	2,040,131		7.1		8.8		1,992,563		7.1		8.5
Public Administration
Other Justice, Public Order, and Safety Activities	578,504		2.0		2.4		544,825		1.9		2.3
Retail Trade
Cosmetics, Beauty Supplies, and Perfume Stores	679,397		2.4		2.9		677,036		2.4		2.9
Shoe Store	503,553		1.8		2.1		502,466		1.8		2.1
Supermarkets and Other Grocery (except Convenience) Stores	198,042		0.7		0.8		192,664		0.7		0.8
Transportation and Warehousing
General Warehousing and Storage	1,486,656		5.2		6.3		1,525,633		5.4		6.5
Wholesale Trade
Business to Business Electronic Markets	217,700		0.8		0.9		212,701		0.8		0.9
Industrial Machinery and Equipment Merchant Wholesalers	1,698,920		5.9		7.3		1,589,763		5.7		6.7
Industrial Supplies Merchant Wholesalers	1,469,678		5.1		6.2		1,470,000		5.2		6.2
Stationery and Office Supplies Merchant Wholesalers	992,610		3.5		4.2		986,562		3.5		4.2
	$	28,663,635	100.0	%	121.3	%	$	28,101,501	100.0	%	118.9	%

Note 5. Fair Value of Financial Instruments

The Company’s investments are valued at fair value as determined in good faith by management under the supervision, and review and approval of the Board.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair values are determined with models or other valuation techniques, valuation inputs, and assumptions market participants would use in pricing an asset or liability. Valuation inputs are organized

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Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

in a hierarchy that gives the highest priority to prices for identical assets or liabilities quoted in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of inputs in the fair value hierarchy are described below:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

Level 2: Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include: (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, (iii) inputs other than quoted prices that are observable for the asset or liability, and (iv) inputs that are derived principally from or corroborated by observable market data. 

Level 3: Unobservable inputs for the asset or liability, and situations where there is little, if any, market activity for the asset or liability at the measurement date.

The inputs into the determination of fair value are based upon the best information under the circumstances and may require significant judgment or estimation by management. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

Senior securities with a fair value of $1,004,802 were transfered from Level 3 to Level 2 during the three and six months ended June 30, 2019. There were no transfers among Level 1, 2 and 3 during the three and six months ended June 30, 2018.

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. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments are traded.

The following tables provide quantitative information about valuation techniques and the Company’s significant inputs to the Company’s Level 3 fair value measurements as of June 30, 2019 and December 31, 2018. In addition to the techniques and inputs noted in the tables below, according to the Company’s valuation policy, the Company may also use other valuation techniques and methodologies when determining the Company’s fair value measurements. The tables below are not intended to be exhaustive, but rather provide information on the significant Level 3 inputs as they relate to the Company’s fair value measurements.

	Fair Value at June 30, 2019		Valuation techniques	Unobservable input	Range (Weighted average)
Debt investments:
Senior secured	$	28,060,368	Discounted cash flow	Discount rates	6.24% - 23.56% (10.85%)
Subordinated	1,488,229		Discounted cash flow	Discount rates	10.99% - 15.40% (12.30%)
Equity investments:
Preferred equity	207,000		Market approach	EBITDA multiples	5.50x - 6.50x (6.00x)
Common equity	638,000		Market approach	EBITDA multiples	4.00x - 11.25x (7.94x)
	$	30,393,597

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Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

	Fair Value at December 31, 2018		Valuation techniques	Unobservable input	Range (Weighted average)
Debt investments:
Senior secured	$	23,079,802	Discounted cash flow	Discount rates	6.34% - 16.82% (11.71%)
	3,311,875		Transaction Price
Subordinated	1,450,840		Discounted cash flow	Discount rates	12.09% - 15.40% (13.24%)
Equity investments:
Common equity	258,984		Market approach	EBITDA multiples	4.00x - 10.50x (7.81x)
	$	28,101,501

Averages in the preceding two tables were weighted by the fair value of the related instruments.

Changes in market credit spreads or events impacting the credit quality of the underlying portfolio company (both of which could impact the discount rate), among other things, could have a significant impact on debt fair value. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.

The following tables presents the Company's investment portfolio measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018.

Security	Level 1		Level 2		Level 3		Fair Value at June 30, 2019
Debt investments	$	—	$	1,004,802	$	29,548,597	$	30,553,399
Equity investments	—		—		845,000		845,000
	$	—	$	1,004,802	$	30,393,597	$	31,398,399

Security	Level 1		Level 2		Level 3		Fair Value at December 31, 2018
Debt investments	$	—	$	—	$	27,842,517	$	27,842,517
Equity investments	—		—		258,984		258,984
	$	—	$	—	$	28,101,501	$	28,101,501

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Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

The following tables present changes in the investment measured at fair value using Level 3 inputs for the six months ended June 30, 2019 and 2018:

	Senior Secured Debt Investments			Subordinated Debt Investments		Preferred Equity		Common Equity		Total
Level 3 assets, January 1, 2019	$	26,391,677		$	1,450,840	$	—	$	258,984	$	28,101,501
Net unrealized appreciation on investments	206,139			27,781		15,591		212,547		462,058
Net realized gain on investments	52			—		—		—		52
Amortization of Net Loan Fees	25,779			2,220		—		—		27,999
Paid-in-kind interest income	1,697			7,388		—		—		9,085
Proceeds from principal payments on portfolio investments	(1,488,187		)	—		—		—		(1,488,187		)
Sale of portfolio investments	(1,539,696		)	—		—		—		(1,539,696		)
Purchase of portfolio investments	5,467,709			—		191,409		166,469		5,825,587
Transfers out of Level 3	(1,004,802		)	—		—		—		(1,004,802		)
Level 3 assets, June 30, 2019	$	28,060,368		$	1,488,229	$	207,000	$	638,000	$	30,393,597

	Senior Secured Debt Investments			Subordinated Debt Investments			Preferred Equity			Common Equity		Total
Level 3 assets, January 1, 2018	$	4,556,911		$	459,278		$	81,889		$	40,581	$	5,138,659
Net unrealized appreciation (depreciation) on investments	51,694			(6,849		)	1,303			52,411		98,559
Net realized gain on investments	—			—			1,414			—		1,414
Amortization of Net Loan Fees	22,680			2,327			—			—		25,007
Paid-in-kind interest and dividend income	1,611			6,062			2,630			—		10,303
Proceeds from principal payments on portfolio investments	(1,661,538		)	—			—			—		(1,661,538		)
Sale or redemption of portfolio investments	—			—			(87,236		)	—		(87,236		)
Purchase of portfolio investments	8,616,065			980,000			—			177,758		9,773,823
Level 3 assets, June 30, 2018	$	11,587,423		$	1,440,818		$	—		$	270,750	$	13,298,991

The net unrealized appreciation (depreciation) reported in the Company’s consolidated statements of operations for the six months ended June 30, 2019 and 2018, attributable to the Company’s Level 3 assets still held at those respective period ends was as follows:

	Period ended June 30,
	2019		2018
Senior secured debt investments	$	189,039	$	57,033
Subordinated debt investments	27,781		(3,013		)
Preferred equity	15,591		—
Common equity	212,547		52,411
Net unrealized appreciation (depreciation) on investments held	$	444,958	$	106,431

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

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Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

approximate the fair value of such items due to the short maturity of such instruments. The PWB Facility is a variable rate instrument and fair value approximates book value as of June 30, 2019 and December 31, 2018.

The information presented should not be interpreted as an estimate of the fair value of the entire Company since fair value measurements are only required for a portion of the Company’s assets and liabilities. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.

Note 6. Commitments and Contingencies

The Company has the following unfunded commitments to portfolio companies as of June 30, 2019:

Name of Portfolio Company	Investment Type	Commitment
Carolina Lubes, Inc.	Senior Secured Loan (Revolver)	$	80,357
Cirrus Medical Staffing, Inc.	Senior Secured Loan (Revolver)	65,185
Inergex Holdings, LLC	Senior Secured Loan (Revolver)	12,500
		$	158,042

From time to time, the Company is involved in legal proceedings in the normal course of its business. Although the outcome of such litigation cannot be predicted with any certainty, management is of the opinion, based on the advice of legal counsel, that final disposition of any litigation should not have a material adverse effect on the financial position of the Company as of June 30, 2019.

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.

Note 7. Borrowings

PWB Credit Facility: The Company has up to $10.0 million available credit under its PWB Credit Facility, maturing September 12, 2019, of which $4.8 million was drawn as of June 30, 2019, Maximum availability under the PWB Credit Facility as of June 30, 2019, was $5.2 million based on the stated advance rate of 35% of the borrowing base. All investments are pledged as collateral under the PWB Credit Facility.

The Company's average outstanding borrowing, effective interest rate and interest expense on the PWB Credit Facility are presented below:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Average dollar borrowings	$	5,221,429		$	—		$	4,930,663		$	—
Interest expense (1)	103,670			—			199,019			—
Effective interest rate (1)	7.96		%	—		%	8.14		%	—		%

(1) The PWB Credit Facility's effective interest rate and interest expense are inclusive of interest on the outstanding balance, commitment fees on undrawn amounts, and the amortization of deferred financing costs.

Note 8. Federal Income Tax

The Company has elected to be taxed as a RIC under Subchapter M of the Code. The determination of the tax attributes of the Company's distributions is made annually as of the end of its fiscal year based on its ICTI and distributions for the full year.

The tax-basis of portfolio investments and net unrealized appreciation (depreciation) on investments did not differ from their GAAP basis as of June 30, 2019 and December 31, 2018, respectively.

For further information, see the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

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Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

Note 9. Financial Highlights

The following is a schedule of financial highlights for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Per share operating performance:
Net asset value per share at beginning of period	$	13.28		$	13.34		$	13.00		$	13.33
Net investment income (6)	0.24			0.21			0.49			0.43
Net realized gain (loss) on non-control/non-affiliate investments (6)	—			—			—			—
Net unrealized depreciation on non-control/non-affiliate investments (6)	(0.04		)	0.06			0.24			0.10
Total from investment operations	0.20			0.27			0.73			0.53
Distributions (1)	(0.26		)	(0.26		)	(0.52		)	(0.52		)
Issuance of common stock (2) (6)	0.02			0.05			0.03			0.06
Net asset value per share at end of period	$	13.24		$	13.40		$	13.24		$	13.40
Total return based on net asset value (3)	1.7		%	2.4		%	5.9		%	4.5		%
Shares outstanding or subscribed at end of period	2,092,378			1,311,712			2,092,378			1,311,712
Weighted average shares outstanding or subscribed	1,964,548			1,134,739			1,916,979			1,015,142
Ratio/Supplemental Data
Average net asset value (4)	$	26,730,286		$	15,417,577		$	25,699,486		$	14,035,062
Net asset value at end of period	$	27,706,535		$	17,570,717		$	27,706,535		$	17,570,717
Net investment income	$	480,858		$	234,013		$	943,289		$	437,330
Ratio of total net operating expenses to average net assets (5)	6.1		%	2.5		%	5.9		%	1.2		%
Ratio of net investment income to average net assets (5)	7.2		%	6.1		%	7.3		%	6.2		%
Portfolio turnover (7)	2.6		%	6.3		%	10.0		%	18.2		%

(1) The per share data for distributions is the actual amount of distributions declared per share during the period.

(2) 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 in the Company’s continuous public offering and the dilutive or anti-dilutive impact from significant changes in weighted-average shares outstanding during the period.

(3) Calculated as ending net asset value less beginning net asset value, adjusting for distributions reinvested at the Company’s most recent quarter-end net asset value prior to the respective payment date of the distributions.

(4) Based on net asset values as the end of the indicated and preceding calendar quarter.

(5) Annualized.

(6) Calculated on the average share method.

(7) Portfolio turnover rate is calculated using the lesser of period-to-date sales and principal payments or period-to-date purchases over the average of the invested assets at fair value.

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Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

Note 10. Capital Transactions

Common stock transactions

Below is a summary of transactions with respect to shares of the Company’s common stock issued or subscribed in the Offering during the six months ended June 30, 2019 and 2018:

	Six Months Ended June 30,
	2019				2018
	Shares	Amount			Shares	Amount
Gross proceeds from the Offering	290,014	$	4,069,625		466,012	$	6,524,330
Commissions and dealer manager fees	—	(271,869		)	—	(425,400		)
Dealer manager fees paid by OFS Advisor	—	122,036			—	195,625
Net proceeds to the Company	290,014	$	3,919,792		466,012	$	6,294,555

From May 19, 2017 through June 30, 2019, OFS Advisor paid the dealer manager fee on sales of shares of our common stock in the Offering. Payments of dealer manager fees by OFS Advisor were not subject to reimbursement by the Company. The Company has agreed to pay the dealer manager fees on sales of shares of our common stock in the Offering subsequent to June 30, 2019.

Distributions

The following table reflects the cash distributions per share that the Company declared on its common stock during the six months ended June 30, 2019 and 2018. Stockholders of record as of each respective record date were entitled to receive the distribution.

Date Declared	Record Dates	Payment Date	Monthly Per Share Amount		Cash Distribution
Six Months Ended June 30, 2019
January 29, 2019	January 29, 2019, February 26, 2019 and March 27, 2019	April 15, 2019	$	0.0875	$	489,716
April 26, 2019	April 26, 2019, May 29, 2019 and June 26, 2019	July 15, 2019	0.0875		514,645
Six Months Ended June 30, 2018
January 29, 2018	January 29, 2018, February 26, 2018 and March 28, 2018	April 16, 2018	$	0.0875	$	234,074
April 26, 2018	April 26, 2018, May 29, 2018 and June 27, 2018	July 16, 2018	0.0875		297,097

(1) The quarterly per share distribution amount was $0.2625 for the three and six months ended June 30, 2019 and 2018, respectively.

The above distributions were funded, in part, through the reimbursement of certain operating expenses by OFS Advisor under the Expense Support Agreement. The Expense Support Agreement is designed to ensure no portion of the Company's distribution to stockholders will be paid from Offering proceeds, and will provide for expense reduction payments to the Company in any quarterly period in which the Company's cumulative distributions to stockholders exceeds the Company's cumulative ICTI and net realized gains. The Expense Support Agreement may be terminated by OFS Advisor, without payment of any penalty, with or without notice to the Company.

Repurchases of Shares

The SBCAA permits a BDC to reduce its asset coverage ratio from 200% to 150% so long as such BDC complies with certain requirements contained within the SBCAA. For BDCs, like the Company, that do not have shares of common stock listed on a national securities exchange, in order to take advantage of the modified asset coverage ratio, they must, among other things, extend to each of the BDC’s stockholders as of the date of approval from the BDC’s board of directors, the opportunity to sell the securities held by that stockholder as of that date.

On November 6, 2018, the Company’s Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved a proposal to permit the Company to reduce the minimum asset coverage ratio applicable to it from 200% to 150%, as permitted by and pursuant to the SBCAA. Pursuant to the SBCAA, the asset coverage ratio test applicable to the Company will be decreased from 200% to 150%, effective November 6, 2019, provided that the Company extends to each of its stockholders as of November 6, 2018, an offer to repurchase the equity securities held by such

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Hancock Park Corporate Income, Inc.

Notes to Consolidated Financial Statements

stockholder as of November 6, 2018, with 25% of such equity securities to be repurchased in each of the four quarters following November 6, 2018.

The following table summarizes the common stock repurchases by the Company, pursuant to the preceding sentence, as of June 30, 2019:

	Number of Shares	Amount
November 6, 2018 through December 31, 2018	18,425	$	243,030
January 1, 2019 through March 31, 2019 (1)	—	—
April 1, 2019 through June 30, 2019	16,435	218,117

(1)  The Company's February 11, 2019 tender offer that was originally scheduled to end on March 27, 2019, was amended to extend the offer period to April 5, 2019. On April 5, 2019, the Company validly repurchased 7,407 shares in the second of four tender offers.

Note 11. Subsequent Events Not Disclosed Elsewhere

Subsequent to June 30, 2019, the Company sold an additional 37,037 common shares for additional net proceeds of $485,000.

On July 29, 2019, the Board declared a distribution of $0.0875 per common share, payable on October 15, 2019, to stockholders of record on each of July 29, 2019, August 28, 2019, and September 26, 2019.

32

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto contained elsewhere in this Quarterly Report on Form 10-Q.

Overview

We are an externally managed, closed-end, non-diversified management investment company and have elected to be treated as a BDC under the 1940 Act. We were formed on December 8, 2015 as a corporation under the laws of Maryland. Our investment objective is to provide our stockholders with both current income and capital appreciation primarily through debt investments and, to a lesser extent, equity investments. Our investment strategy focuses primarily on investments in middle-market companies in the United States. We use the term “middle-market” to refer to companies that may exhibit one or more of the following characteristics: number of employees between 150 and 2,000; revenues between $15 million and $300 million; annual EBITDA, between $3 million and $50 million; generally, private companies owned by private equity firms or owners/operators; and enterprise value between $10 million and $500 million. For additional information about how we define the middle-market, see "Item 1. Business—Investment Criteria/Guidelines" in our Annual Report on Form 10-K for the year ended December 31, 2018.

While our investment strategy focuses primarily on middle-market companies in the United States, including senior secured loans, which includes first-lien, second-lien and unitranche loans as well as subordinated loans and, to a lesser extent, warrants and other equity securities, we also may invest up to 30% of our portfolio in opportunistic investments of non-eligible portfolio companies. Specifically, as part of this 30% basket, we may consider investments in investment funds that are operating pursuant to certain exceptions to the 1940 Act and in advisers to similar investment funds, as well as in debt of middle-market companies located outside of the United States and debt and equity of public companies that do not meet the definition of eligible portfolio companies because their market capitalization of publicly traded equity securities exceeds the levels provided for in the 1940 Act.

We intend to raise up to $200,000,000 through the Offering, in reliance on exemptions from the registration requirements of the Securities Act. Placement activities are conducted by our officers and OFS Advisor. In addition, we have entered, and may enter, into additional agreements with placement agents or broker-dealers to solicit investor capital commitments (“Capital Commitments”). In particular, we and OFS Advisor have entered into the Dealer Manager Agreement with the Dealer Manager and certain participating broker-dealers to solicit Capital Commitments. From May 19, 2017 through June 30, 2019, OFS Advisor paid the dealer manager fee on sales of shares of our common stock in the Offering. We will pay the dealer manager fee on sales of shares of our common stock in the Offering subsequent to June 30, 2019, resulting in less proceeds to us in comparison to when OFS Advisor paid the dealer manager fees. Previous payments of dealer manager fees by OFS Advisor are not subject to reimbursement by us. On August 30, 2016, we satisfied the Minimum Offering Requirement when Funding I, a subsidiary of OFSAM, purchased 74,074 shares of our common stock in the Offering for gross proceeds of $1,000,000, or $13.50 per share. No selling commissions or dealer manager fees were paid by us in connection with this purchase. Since commencing operations on August 30, 2016, and as of August 5, 2019, we have sold a total of 2,164,275 shares of common stock for total gross proceeds of $30,045,751.

Our investment activities are managed by OFS Advisor and supervised by our Board, a majority of whom are independent of us, OFS Advisor and its affiliates. Under the Investment Advisory Agreement we have agreed to pay OFS Advisor an annual base management fee, and an incentive fee based on our investment performance. The base management fee was calculated at an annual rate of 2.0% and based on the average value of our total assets (other than cash but including assets purchased with borrowed amounts and including assets owned by any entity) at the end of the two most recently completed calendar quarters, adjusted for any share issuances or repurchases during the quarter. On May 19, 2017, OFS Advisor agreed to permanently reduce the base management fee from 2.0% per annum to 1.25% per annum. OFS Advisor also serves as the investment adviser to CLO funds and other assets, including OFS Capital, a publicly traded BDC with an investment strategy similar to the Company's, and OCCI, a publicly tradedregistered investment company under the 1940 Act that primarily invests in the equity tranche of CLOs. Evolv, a registered investment advisor, served as our sub-advisor pursuant to the Investment Sub-Advisory Agreement, until March 26, 2019, when Evolv resigned from its role as sub-advisor under the Investment Sub-Advisory Agreement.

We have also entered into an Administration Agreement with OFS Services. Under our Administration Agreement, we have agreed to reimburse OFS Services for our allocable portion (subject to the review and approval of our independent directors) of overhead and other expenses incurred by OFS Services in performing its obligations under the Administration Agreement.

As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our assets, as defined by the 1940 Act, are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Under the relevant SEC rules, the term

33

“eligible portfolio company” includes all private companies, companies whose securities are not listed on a national securities exchange, and certain public companies that have listed their securities on a national securities exchange and have a market capitalization of less than $250 million, in each case organized in the United States.

We are permitted to borrow money from time to time within the levels permitted by the 1940 Act which generally prohibits us from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets). On March 23, 2018, the Consolidated Appropriations Act of 2018, which includes the SBCAA, was signed into law. The SBCAA amends the 1940 Act to permit a BDC to reduce the required minimum asset coverage ratio applicable to it from 200% to 150%, subject to certain requirements described therein.

On November 6, 2018, the Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the SBCAA. As a result, provided we extend to each of our stockholders as of November 6, 2018, an offer to repurchase the equity securities held by such stockholder as of November 6, 2018, with 25% of such equity securities to be repurchased in each of the four quarters following November 6, 2018, the asset coverage ratio test applicable to us will be decreased from 200% to 150%, effective November 6, 2019.

We may borrow money when the terms and conditions available are favorable to do so and are aligned with our investment strategy and portfolio composition. The use of borrowed funds or the proceeds of preferred stock to make investments would have its own specific benefits and risks, and all of the costs of borrowing funds or issuing preferred stock would be borne by holders of our common stock.

We have elected to be treated for federal income tax purposes, and intend to qualify annually, as a RIC under the Code. To qualify as a RIC, we must, among other things, meet certain source-of-income and assets diversification requirements. Pursuant to these elections, we generally will not have to pay corporate-level taxes on any income we distribute to our stockholders.

Related Party Transactions

We have entered into a number of business relationships with affiliated or related parties, including the following:

• The Investment Advisory Agreement with OFS Advisor to manage our operating and investment activities. Under the Investment Advisory Agreement we have agreed to pay OFS Advisor an annual base management fee based on the average value of our total assets (other than cash but including assets purchased with borrowed amounts and including assets owned by any consolidated entity) as well as an incentive fee based on our investment performance. See "Item 1. Financial Statements –– Notes to Financial Statements – Note 3."

• The Administration Agreement with OFS Services, an affiliate of OFS Advisor, to provide us with the office facilities and administrative services necessary to conduct our operations. See "Item 1. Financial Statements – Notes to Financial Statements – Note 3."

• Expense Limitation Agreements: OFS Advisor limits the Company's incurred expenses under two agreements: (1) the Investment Advisory Agreement, which contains provisions limiting organization and offering costs, and Contractual Issuer Expenses; and (2) an Expense Support Agreement, which limits all other operating expenses. Both agreement contain conditions under which we may become obligated to reimburse OFS Advisor for expense limitations provided thereunder. See "Item 1. Financial Statements – Notes to Financial Statements – Note 3."

OFS Advisor’s services under the Investment Advisory Agreement are not exclusive to us and OFS Advisor is free to furnish similar services to other entities, including other BDCs affiliated with OFS Advisor, so long as its services to us are not impaired. OFS Advisor also serves as the investment adviser to CLO funds and other assets, including OFS Capital and OCCI. Additionally, OFS Advisor expects to provide sub-advisory services to CIM Real Assets & Credit Fund, a newly organized externally managed registered investment company that intends to operate as an interval fund and expects to invest primarily in a combination of real estate, credit and related investments. 

The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with certain affiliates absent an order from the SEC permitting the BDC to do so. On October 12, 2016, we received the Order from the SEC to permit us to co-invest in portfolio companies with certain BDCs, registered investment companies and private funds managed by OFS Advisor, or any adviser that controls, is controlled by, or is under common control with, OFS Adviser and is registered as an investment adviser under the Advisers Act, in a manner consistent with our investment strategy as well as applicable law, including the terms and conditions of the Order. Pursuant to the Order, we are generally permitted to participate in a co-investment transaction if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors makes certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transaction, including the

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consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies. We have applied for a new exemptive order, which, if granted, would supersede the Order and would permit us greater flexibility to enter into co-investment transactions. There can be no assurance that we will obtain such new exemptive relief from the SEC.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are those relating to revenue recognition, expense limitation agreements and fair value estimates. Management has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board. For descriptions of our revenue recognition and fair value policies, see "Item 8. Financial Statements – Notes to Financial Statements – Note 2" and "Management's Discussion and Analysis – Critical Accounting Policies and Significant Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2018.

Fair value estimates. As of June 30, 2019, approximately 94% of our total assets were carried at fair value, which are generally measured using either the discounted cash flow or market-approach valuation techniques, or on the basis of NBIB provided by pricing services. Our discounted cash flow valuations involve a determination of discount rate commensurate with the risk inherent in the investment. Management uses two methods to estimate discount rates: the weighted-average cost of capital method, which is a method based upon a hypothetical recapitalization of the entity given its current operating performance and current market conditions; and a hypothetical debt rating method, which assigns a surrogate debt rating to the entity based on known industry standards for assigning such ratings and estimates the discount rate based on observed market conditions for actual rated debt. Management may also use a relative value method to estimate yields, which involves measuring the discount rate of non-traded subject debt investments based on an expected or assumed relationship between NBIB or observed prices on traded debt and the subject debt for a portfolio company. All methods for estimating the discount rate generally involve calibration of the internal rate of return on the subject investment at close or purchase date to the observable inputs utilized in each method as of or near that date. These methods generally produce a range of discount rates, and management, under the supervision of the Board, generally selects the midpoint of the range for fair value measures. Such midpoint values may be further limited based on the portfolio company's ability to prepay the investment without penalty.

Our market approach valuations, generally applied to equity investments and investments in non-performing debt, involve a determination of an enterprise value multiple to a financial performance metric of the portfolio company, generally EBITDA. These determinations are based on identification of a comparable set of publicly traded companies and determination of a public-to-private liquidity adjustment factor, generally through calibration to transaction prices in the subject investment instrument. This method generally produces a range of multiplier values and management, under the supervision of the Board, generally select the midpoint of the range for fair value measures.

The following table illustrates the impact of our fair value measures if we selected the low or high end of the range of values for all investments at June 30, 2019:

	Fair Value at June 30, 2019		Range of Fair Value
Investment Type			Low-end		High-end
Debt investments:
Senior secured	$	29,065,170	$	28,620,387	$	29,508,823
Subordinated	1,488,229		1,467,332		1,509,229
Equity investments:
Preferred equity	207,000		166,000		248,000
Common equity	638,000		542,000		734,000
	$	31,398,399	$	30,795,719	$	32,000,052

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Portfolio Composition and Investment Activity

Portfolio Composition

The following table summarizes the composition of our investment portfolio as of June 30, 2019 and December 31, 2018:

	June 30, 2019				December 31, 2018
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Senior secured debt investments (1)	$	29,387,834	$	29,065,170	$	26,920,483	$	26,391,677
Subordinated debt investments	1,468,270		1,488,229		1,458,663		1,450,840
Preferred equity investments	191,409		207,000		—		—
Common equity investments	450,958		638,000		284,489		258,984
	$	31,498,471	$	31,398,399	$	28,663,635	$	28,101,501
Total number of portfolio companies	32		32		31		31

(1) Includes debt investments, typically referred to as unitranche, in which we have entered into a contractual arrangement with co‑lenders whereby, subject to certain conditions, we have agreed to receive our principal payments after the repayment of certain co‑lenders pursuant to a payment waterfall. At June 30, 2019, the aggregate amortized cost and fair value of these investments was $5,448,155 and $5,438,066, respectively.

As of June 30, 2019, all of our senior secured debt investments were floating rate loans and our subordinated debt investments were fixed rate loans.

As of June 30, 2019, our investment portfolio’s three largest industries by fair value, were (1) Health Care and Social Assistance of 21.5%, (2) Manufacturing of 14.5%, and (3) Wholesale Trade of 14.0%, totaling approximately 50.2% of the investment portfolio. For a full summary of our investment portfolio by industry, see "Item 1–Financial Statements–Note 4."

The following table presents our debt investment portfolio by investment size as of June 30, 2019, and December 31, 2018:

	Amortized Cost								Fair Value
	June 30, 2019				December 31, 2018				June 30, 2019				December 31, 2018
Up to $500,000	$	2,181,840	7.1	%	$	2,563,895	9.0	%	$	2,564,011	8.4	%	$	2,522,546	9.1	%
$500,000 to $1,000,000	10,113,509		32.7		11,789,664		41.6		8,463,911		27.7		11,610,465		41.7
$1,000,000 to $1,500,000	11,503,543		37.3		6,584,362		23.2		11,030,390		36.1		5,020,067		18.0
Greater than $1,500,000	7,057,212		22.9		7,441,225		26.2		8,495,087		27.8		8,689,439		31.2
Total	$	30,856,104	100.0	%	$	28,379,146	100.0	%	$	30,553,399	100.0	%	$	27,842,517	100.0	%

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The following table displays the composition of our debt investment portfolio by weighted average yield as of June 30, 2019 and December 31, 2018:

	June 30, 2019						December 31, 2018
	Senior Secured		Subordinated		Total		Senior Secured		Subordinated		Total
Weighted Average Yield (1)	Debt		Debt		Debt		Debt		Debt		Debt
Less than 8%	1.9	%	—	%	1.8	%	2.1	%	—	%	2.0	%
8% - 10%	20.5		—		19.6		30.7		—		29.1
10% - 12%	61.3		—		58.4		46.8		—		44.4
12% - 14%	16.3		100.0		20.2		20.4		100.0		24.5
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Weighted average yield	10.91	%	12.59	%	10.99	%	10.82	%	12.62	%	10.92	%

(1) The weighted average yield on our debt investments is computed as (a) the annual stated accruing interest on our debt investments at the balance sheet date, plus the annualized accretion of Net Loan Fees divided by (b) amortized cost of our debt investments as of the balance sheet date.

The weighted average yield on senior secured debt investments increased approximately 9 basis point during the six months ended June 30, 2019, as a result of net investments in new and existing portfolio companies.

The weighted average yield on total investments was 10.76% and 10.81% at June 30, 2019 and December 31, 2018, respectively. Weighted average yield on total investments is computed as (a) the annual stated accruing interest on our debt investments at the balance sheet date, plus the annualized accretion of Net Loan Fees, plus the effective yield on our performing preferred equity investments, divided by (b) amortized cost of our total investment portfolio, including assets in non-accrual status as of the balance sheet date. The weighted average yield of our investments is not the same as a return on investment for our stockholders but rather the gross investment income from our investment portfolio before the payment of all of our fees and expenses. There can be no assurance that the weighted average yield will remain at its current level.

Investment Activity

The following is a summary of our investment activity for the three and six months ended June 30, 2019:

	Three Months Ended June 30, 2019				Six Months Ended June 30, 2019
	Debt Investments		Equity Investments		Debt Investments		Equity Investments
Investments in new portfolio companies	$	—	$	—	$	3,260,046	$	357,878
Investments in existing portfolio companies:
Follow-on investments	781,286		—		1,598,711		—
Delayed draw / revolver funding	407,910		—		608,952		—
Total investments in existing portfolio companies	1,189,196		—		2,207,663		—
Total investments in new and existing portfolio companies	$	1,189,196	$	—	$	5,467,709	$	357,878
Number of new portfolio company investments	—		—		3		2
Number of existing portfolio company investments	6		—		10		—
Proceeds from principal payments	$	403,546	$	—	$	1,488,187	$	—
Proceeds from investments sold or redeemed	417,910		—		1,539,696		—
Total proceeds from principal payments, equity distributions and investments sold	$	821,456	$	—	$	3,027,883	$	—

Notable investments in new portfolio companies during the six months ended June 30, 2019, include Chemical Resources Holdings, Inc. ($1.2 million senior secured loan and $0.2 million common equity), TTG Healthcare, LLC ($1.0 million senior secured loan and $0.2 million preferred stock) and Institutional Shareholder Services, Inc. ($1.0 million senior secured loan).

The weighted-average yield of debt investments in new portfolio companies of $3,260,046 during the six months ended June 30, 2019 was 11.7%.

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The following is a summary of our investment activity for the three and six months ended June 30, 2018:

	Three Months Ended June 30, 2018				Six Months Ended June 30, 2018
	Debt Investments		Equity Investments		Debt Investments		Equity Investments
Investments in new portfolio companies	$	3,552,225	$	—	$	8,020,553	$	177,758
Investments in existing portfolio companies:
Follow-on investments	1,410,256		—		1,506,256		—
Refinanced investments	—		—		—		—
Delayed draw / revolver funding	—		—		69,257		—
Total investments in existing portfolio companies	1,410,256		—		1,575,513		—
Total investments in new and existing portfolio companies	$	4,962,481	$	—	$	9,596,066	$	177,758
Number of new portfolio company investments	3		—		9		—
Number of existing portfolio company investments	2		—		4		—
Proceeds from principal payments	$	700,941	$	—	$	1,662,121	$	—
Proceeds from investments sold or redeemed	—		72,743		—		87,236
Total proceeds from principal payments, equity distributions and investments sold	$	700,941	$	72,743	$	1,662,121	$	87,236

Notable investments in new portfolio companies during the six months ended June 30, 2018, include Online Tech Stores, LLC ($0.98 million subordinated loan) and Performance Team, LLC ($1.49 million senior secured loan).

The weighted-average yield of debt investments in new portfolio companies during the six months ended June 30, 2018, was 11.8%.

Our level of investment activity may vary substantially from period to period depending on various factors, including, but not limited to, the amount of debt and equity capital available to middle market companies, the level of merger and acquisition activity, the general economic environment and the competitive environment for the types of investments we make.

We categorize debt investments into seven risk categories based on relevant information about the ability of borrowers to service their debt. For additional information regarding our risk categories, see “Item 1. Business–Portfolio Review/Risk Monitoring” in our Annual Report on Form 10-K for the year ended December 31, 2018. The following table shows the classification of our debt securities of portfolio companies, by credit risk rating as of June 30, 2019 and December 31, 2018.

	Debt Investments, at Fair Value
Risk Category	June 30, 2019				December 31, 2018
1 (Low Risk)	$	—	—	%	$	—	—	%
2 (Below Average Risk)	—		—		—		—
3 (Average)	30,152,455		98.7		27,842,517		100.0
4 (Special Mention)	400,944		1.3		—		—
5 (Substandard)	—		—		—		—
6 (Doubtful)	—		—		—		—
7 (Loss)	—		—		—		—
	$	30,553,399	100.0	%	$	27,842,517	100.0	%

Results of Operations

Key Financial Measures

The following is a discussion of the key financial measures that management employs in reviewing the performance of our operations.

Total Investment Income. We generate revenue in the form of interest income on debt investments and dividend income from our equity investments. Our debt investments typically have a term of three to eight years and bear interest at fixed and floating rates. In some cases, our investments provide for deferred interest or dividend payments, PIK interest, or PIK dividends (meaning interest or dividends paid in the form of additional principal amount of the loan or equity security instead

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of in cash). We also generate revenue in the form of management, valuation, and other contractual fees, which is recognized as the related services are rendered. In the general course of business, we receive certain fees from portfolio companies which are non-recurring in nature. Such non-recurring fees include prepayment fees on certain loans repaid prior to their scheduled due date, which are recognized as earned when received, and fees for capital structuring services from certain co-lenders, which are recognized as earned upon closing of the investment. Net Loan Fees are capitalized, and accreted or amortized over the life of the loan as interest income. When we receive principal payments on a loan in an amount that exceeds its amortized cost, we will also recognize the excess principal payment as income in the period it is received.

Expenses. Our primary operating expenses include professional fees, the payment of fees to OFS Advisor under the Investment Advisory Agreement, our allocable portion of overhead expenses under the Administration Agreement and other operating costs described below. Additionally, we will pay interest expense on any outstanding debt under any new credit facility or other debt instrument we may enter into. We will bear all other out-of-pocket costs and expenses of our operations and transactions, whether incurred by us directly or on our behalf by a third party, including:

• the cost of calculating our net asset value, including the cost of any third-party valuation services;

• the cost of effecting sales and repurchases of shares of our common stock and other securities;

• fees payable to third parties relating to making investments, including out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments;

• transfer agent and custodial fees;

• out-of-pocket fees and expenses associated with marketing efforts;

• federal and state registration fees and any stock exchange listing fees;

• U.S. federal, state and local taxes;

• independent directors’ fees and expenses;

• brokerage commissions;

• fidelity bond, directors’ and officers�� liability insurance and other insurance premiums;

• direct costs, such as printing, mailing and long-distance telephone;

• fees and expenses associated with independent audits and outside legal costs;

• costs associated with our reporting and compliance obligations under the 1940 Act and other applicable U.S. federal and state securities laws; and

• other expenses incurred by either OFS Services or us in connection with administering our business.

Net Gain (Loss) on Investments. Net gain (loss) on investments consists of the sum of: (a) realized gains and losses from the sale of debt or equity securities, or the redemption of equity securities; and (b) net unrealized appreciation or depreciation on debt and equity investments. In the period in which a realized gain or loss is recognized, such gain or loss will generally be offset by the reversal of previously recognized unrealized appreciation or depreciation, and the net gain recognized in that period, if any, will generally be smaller. The accumulated net unrealized appreciation or depreciation on debt securities is also reversed when those investments are redeemed or paid off prior to maturity. In such instances, the reversal of accumulated unrealized appreciation or depreciation will be reported as a net loss or gain, respectively, and may be partially offset by the acceleration of any premium or discount on the debt security, which is reported in interest income, and any prepayment fees on the debt security, which is reported in fee income.

We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the debt securities we acquire, the default rate on such securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, distributions from our portfolio companies, the degree to which we encounter competition in our markets and general economic conditions. In light of these factors, results for any period should not be relied upon as being indicative of performance in future periods. Moreover, as a BDC and a RIC, we will also be subject to certain constraints on our operations, including, but not limited to, limitations imposed by the 1940 Act and the Code.

Net increase in net assets resulting from operations can vary substantially from period to period for various reasons, including the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, annual comparisons of net increase in net assets resulting from operations may not be meaningful.

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Comparison of the Three and Six Months Ended June 30, 2019, and 2018

Operating results for the three and six months ended June 30, 2019 and 2018, are as follows:

Investment Income

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Interest income	$	878,315	$	301,475	$	1,659,366	$	491,648
Payment-in-kind dividend income	—		128		—		2,630
Fee income	8,430		29,735		48,305		30,400
Total investment income	$	886,745	$	331,338	$	1,707,671	$	524,678

Investment income for the three and six months ended June 30, 2019 consisted primarily of interest income on our debt investments and syndication fee income. The increase in interest income is primarily due to the growth in our portfolio from the deployment of Offering proceeds. Syndication fee income for the three and six months ended June 30, 2019, resulted from approximately $14.0 million and $74.5 million, respectively, in loan originations in which OFS Advisor sourced, structured, and arranged the lending group, and for which we were additionally compensated.

Gross Expenses. Our gross expenses are limited under the Investment Management Agreement and the Expense Support Agreement; see "—Expense Limitations." Investment expenses shown with respect to each governing expense limitation agreement for the three and six months ended June 30, 2019 and 2018, are presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Expenses subject to limitation under Investment Advisory Agreement:
Amortization of deferred offering costs	$	33,948	$	48,205	$	63,799	$	86,039
Contractual issuer expenses	3,084		5,520		6,196		9,271
Total expenses subject to limitation under Investment Advisory Agreement	37,032		53,725		69,995		95,310
Expenses subject to limitation under Expense Support Agreement:
Interest expense	103,670		—		199,019		—
Management fees	98,319		35,181		191,041		57,649
Incentive fees	29,296		—		78,066		—
Administration fee	185,164		149,834		327,038		314,164
Professional fees	119,193		101,756		273,532		184,198
Insurance expense	18,529		26,867		34,896		45,065
Transfer agent fees	24,302		20,123		54,121		43,703
Other expenses	30,511		17,466		57,045		34,759
Total expenses subject to limitation under Expense Support Agreement	608,984		351,227		1,214,758		679,538
Total expenses	$	646,016	$	404,952	$	1,284,753	$	774,848

Expenses Limited under the Investment Management Agreement

Offering Expenses. OFS Advisor incurred, on our behalf, offering costs of $134,665 and $44,588 during the three months ended June 30, 2019 and 2018, respectively, which are deferred and amortized over the twelve months following incurrence. Offering costs for the three and six months ended June 30, 2019 and 2018, relate to ordinary due diligence and development of distribution platforms for our common stock.

Amortization of offering costs were $33,948 and $63,799 for the three and six months ended June 30, 2019, respectively, compared to $48,205 and $86,039 for the three and six months ended June 30, 2018, respectively. Higher amortization expense in the three and six months ended June 30, 2018 relate to the initial costs of developing distribution platforms after the commencement of the Offering.

Contractual Issuer Expenses. Contractual Issuer Expenses declined in the three and six months ended June 30, 2019, compared to the corresponding periods in the prior year as the fund has grown and the marketing of the fund has required less direct involvement of OFS Advisor’s employees, employees of their affiliates.

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Expenses Limited under the Expense Support Agreement

Interest expense increased due to the average dollar amount of borrowings outstanding of $5,221,429 and $4,930,663 during the three and six months ended June 30, 2019, respectively, compared to no borrowings outstanding during the three and six months ended June 30, 2018.

Management and incentive fees increased for the three and six months ended June 30, 2019, compared to the corresponding periods in the prior year as a result of growth in our portfolio from the deployment of Offering proceeds. Administrative fees are primarily related to accounting and record-keeping services, and preparation and filing of required periodic reports with the SEC. Administrative fees for the three and six months ended June 30, 2019, compared to the corresponding periods in the prior year slightly increased due to more labor allocated to the fund for administrative services.

Professional fees include fees for our attorneys, independent accountants and consultants. Professional fees increased due to an increase in legal fees, as well as the retention of additional third-party valuation services, which were not utilized during the three and six months ended June 30, 2018.

General and administrative expenses, such as insurance, transfer agent and other expenses, were $73,342 and $146,062 for the three and six months ended June 30, 2019, respectively, compared to $64,456 and $123,527 for the three and six months ended June 30, 2018, respectively. The increase in expenses relate to the growth in size of the Company.

Expense Limitations

Expense Limitations under Investment Advisory Agreement. We reimbursed OFS Advisor $35,750 and $61,018 for organization and offering expenses, and Contractual Issuer Expenses for the three and six months ended June 30, 2019, respectively. This amount consisted of organization costs, Contractual Issuer Expenses and offering expenses incurred in prior periods by OFS Advisor on our behalf.

We are conditionally obligated to pay OFS Advisor up to 1.5% of the gross proceeds raised in the Offering until all reimbursable organization and offering costs, and Contractual Issuer Expenses paid by OFS Advisor and its affiliates have been recovered. Reimbursable organization and offering costs, and Contractual Issuer Expenses were $713,377 as of June 30, 2019.

The determination of expense limitations under the Investment Advisory Agreement is presented below.

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Total expenses limited under Investment Advisory Agreement	$	37,032		$	53,725		$	69,995		$	95,310
Organization costs, amortization of deferred offering costs, and Contractual Issuer Expenses reimbursed and incurred	(35,750		)	(66,830		)	(61,018		)	(97,812		)
Net organization and offering costs, and Contractual Issuer Expenses limitations (reimbursements) under Investment Advisory Agreement	$	1,282		$	(13,105	)	$	8,977		$	(2,502	)

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Expense Limitations under Expense Support Agreement. Gross operating expenses (operating expenses exclusive of organization and offering expenses, and Contractual Issuer Expenses, and before limitations) are subject to limitation under the Expense Support Agreement. OFS Advisor's obligation to provide such expense support is a function of declared distributions on our common stock, and the amount of support provided is determined by reference to unsupported investment company taxable income (expense), net realized gains (losses), and the amount of declared distributions; the Expense Support Agreement provides expense support such that distributions are not paid from Offering proceeds. The determination of expense limitation under the Expense Support Agreement for the three and six months ended June 30, 2019 and 2018, is presented below.

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019		2018
Total investment income	$	886,745		$	331,338		$	1,707,671	$	524,678
Expenses limited under the Expense Support Agreement (1):
Interest expense, base management fees, and incentive fees	231,285			35,181			468,126		57,649
Other operating expenses as defined in the Expense Support Agreement (2)	377,699			315,013			746,630		621,889
Total expenses limited under the Expense Support Agreement	608,984			350,194			1,214,756		679,538
Net investment income (loss) prior to limitation	277,761			(18,856		)	492,915		(154,860		)
Net realized gain (loss)	(1,964		)	—			52		—
Temporary differences in recognition of ICTI and GAAP net investment income (1)	—			(4,779		)	—		(3,969		)
Investment company taxable income (loss) and realized gains prior to limitation	275,797			(23,635		)	492,967		(158,829		)
Declared distributions	514,644			297,097			1,004,361		531,173
Expense limitation under Expense Support Agreement	$	238,847		$	320,732		$	511,394	$	690,002

(1) Expense limitation under Expense Support Agreement is generally based on ICTI, which excludes organization costs, amortization of deferred offering costs, Contractual Issuer Expenses, and the related expense support under the Investment Advisory Agreement as such items are permanent differences between GAAP and taxable income. PIK dividends are excluded from the determination of ICTI until collected. See “Item 8. Financial Statements–Notes to Financial Statements–Note 8” in our Annual Report on Form 10-K.

(2) Generally defined in the Expense Support Agreement as our operating expenses determined in accordance with GAAP excluding organization and offering expenses, Contractual Issuer Expenses, interested expenses, and base management fees, and incentive fees. The annualized ratio of other operating expenses to net assets at the time of support and annual ratio for the year in which support is provided constitute conditions for reimbursement to OFS Advisor. See "Item 1. Financial Statements–Notes to Financial Statements–Note 3."

Expense support provided by OFS Advisor or its affiliates is reimbursable for three years from the date incurred. Expense limitation under both the Investment Advisory Agreement and the Expense Support Agreement is cancelable at any time.

Net unrealized appreciation on non-control/non-affiliate investments

We recognized net unrealized appreciation (depreciation) of $(189,034) and $206,139 on senior secured investments for the three and six months ended June 30, 2019, respectively, primarily as a result of negative company-specific performance factors in Constellis Holding, LLC during the three months ended June 30, 2019, offset by a market recovery observed in the broadly syndicated loan market during the six months ended June 30, 2019. We recognized net unrealized appreciation of $102,531 and $212,547 on common stock for the three and six months ended June 30, 2019, respectively, primarily as a result of positive impact of portfolio company-specific performance factors in DRS Imaging Services, LLC. and Professional Pipe Holdings, LLC.

Liquidity and Capital Resources

Sources and Uses of Cash

We expect to generate cash primarily from (i) the net proceeds of the Offering, (ii) cash flows from our operations, including net amounts received from OFS Advisor, (iii) the PWB Credit Facility and any other financing arrangements we may enter into in the future and (iv) any future offerings of our equity or debt securities. We may fund a portion of our investments through borrowings from banks, including the PWB Credit Facility, and issuances of senior securities. Our primary use of cash will be for (i) investments in portfolio companies and other investments to comply with certain portfolio diversification

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requirements, (ii) the cost of operations (including paying OFS Advisor), (iii) debt service of any borrowings and (iv) cash distributions to the holders of our stock. These principal sources and uses of cash and liquidity are presented below:

	Six Months Ended June 30,
	2019			2018
Total investment income collected	$	1,680,824		$	486,965
Investment expenses paid	(668,884		)	(707,817		)
Net cash provided by (to) OFS Advisor (1)	(46,881		)	737,029
Cash from gains	52			—
Net purchases and amortized cost re-payments of portfolio investments	(3,518,990		)	(8,025,049		)
Net cash used in operating activities	(2,553,879		)	(7,508,872		)
Proceed from issuances of common stock	3,919,792			5,552,452
Repurchase of common stock	(218,118		)	—
Net borrowings under revolving line of credit	375,000			—
Common stock distributions paid	(935,137		)	(425,689		)
Net change in cash	$	587,658		$	(2,382,109	)

(1) Cash provided by (to) OFS Advisor is comprised of the difference between amounts received under the Expense Support Agreement, offset by amounts payable for management fees, incentive fees, administrative services and amounts due under the Investment Advisory Agreement.

We used $2,553,879 and $7,508,872 in cash from operating activities for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, the principal source of operating liquidity is investment income collected. The increase in total investment income collected is due to the growth in our portfolio from the deployment of Offering proceeds.

Investment expenses paid for the six months ended June 30, 2019 remained stable compared to the corresponding period in 2018.

Net purchases and origination of portfolio investments relates to the deployment of Offering proceeds. See "—Portfolio Composition and Investment Activity."

We collected $3,919,792 and $5,552,452 from the sale of our common stock during the six months ended June 30, 2019 and 2018, respectively. Offering proceeds are net of aggregate commissions and dealer manager fees of $271,869 and $425,432 for the six months ended June 30, 2019 and 2018, respectively, of which $122,036 and $195,625, respectively, were paid by OFS Advisor. On July 2, 2018, we collected $742,101 related to subscriptions receivable as of June 30, 2018.

During the six months ended June 30, 2019, we paid $935,137 in dividends to common stockholders and, subsequent to June 30, 2019, we paid $514,645 in dividends to our common stockholders.

Borrowings

We are party to the BLA with Pacific Western Bank, as lender, to provide us with a $10.0 million senior secured revolving credit facility, or PWB Credit Facility. The PWB Credit Facility is available for general corporate purposes including investment funding and is scheduled to mature on September 12, 2019. The maximum availability of the PWB Credit Facility is equal to 35% of the aggregate outstanding principal amount of eligible loans included in the borrowing base, which excludes subordinated loan investments and as otherwise specified in the BLA. The PWB Credit Facility bears interest at a variable rate of the Prime Rate plus a 0.75% margin, with a 5.75% floor, and includes an unused commitment fee for any unused portion in excess of $3.0 million, payable monthly in arrears, equal to 0.50% per annum on any unused portion. As of June 30, 2019, the stated interest rate on the PWB Credit Facility was 6.25%. The PWB Credit Facility bore an effective interest rate, inclusive of interest on the outstanding balance, commitment fees on undrawn amounts, and the amortization of deferred financing costs, of 8.14% for the six months ended June 30, 2019.

We have up to $10.0 million of available credit under its PWB Credit Facility, of which $4.8 million was drawn as of June 30, 2019. Maximum availability under the PWB Credit Facility as of June 30, 2019, was $5.2 million based on the stated advance rate of 35% of the borrowing base.

Other Liquidity Matters

We expect to fund the growth of our investment portfolio through the private placement of our common shares and issuances of senior securities or future borrowings to the extent permitted by the 1940 Act. We cannot assure stockholders that our plans to raise capital will be successful. In addition, we intend to distribute to our stockholders substantially all of our

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taxable income in order to satisfy the requirements applicable to RICs under Subchapter M of the Code. Consequently, we may not have the ability to fund new investments or make additional investments in our portfolio companies. The illiquidity of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded value.

In addition, as a BDC, we generally will be required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which include all of any borrowings or outstanding preferred stock (of which we had none at June 30, 2019 and December 31, 2018) of at least 200% (or 150% if certain requirements are met). This requirement limits the amount that we may borrow. To fund growth in our investment portfolio in the future, we anticipate needing to raise additional capital from various sources, including the equity markets and the securitization or other debt-related markets, which may or may not be available on favorable terms, if at all.

On March 23, 2018, the Consolidated Appropriations Act of 2018, which includes the SBCAA, was signed into law. The SBCAA amends the 1940 Act to permit a BDC to reduce the required minimum asset coverage ratio applicable to it from 200% to 150%, subject to certain requirements described therein.

On November 6, 2018, the Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the SBCAA. As a result, provided we extend to each of our stockholders as of November 6, 2018, an offer to repurchase the equity securities held by such stockholder as of November 6, 2018, with 25% of such equity securities to be repurchased in each of the four quarters following November 6, 2018, the minimum asset coverage ratio test applicable to us will be decreased from 200% to 150%, effective November 6, 2019.

As of June 30, 2019, the aggregate amount outstanding of the senior securities issued by the Company was $4.8 million, for which the Company’s asset coverage was 680%. The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness.

Contractual Obligations

We, with approval by our Board, entered into the Investment Advisory Agreement, the Expense Support Agreement, the Investment Sub-Advisory Agreement, and the Administration Agreement. See "Item 1. Financial Statements – Notes to Financial Statements – Note 3."

The following table shows our contractual obligations as of June 30, 2019 (in thousands):

	Payments due by period
Contractual Obligation	Total		Less than year		1-3 years		3-5 years		After 5 years
PWB Credit Facility (1)	$	4,775,000	$	4,775,000	$	—	$	—	$	—

(1) The PWB Credit Facility is scheduled to mature on September 12, 2019.

Off-Balance Sheet Arrangements

Amounts Conditionally Reimbursable to OFS Advisor.

OFS Advisor and its affiliates have incurred organizational and offering costs, and Contractual Issuer Expenses related to the Company of which $713,377 and $1,001,252 were unreimbursed as of June 30, 2019 and December 31, 2018, respectively. We remain conditionally liable for organization and offering costs incurred by OFS Advisor and its affiliates on our behalf. See "Item 1. Financial Statements – Notes to FInancial Statements – Note 3."

OFS Advisor has provided aggregate operating expense support of $3,293,520 and $2,782,125 as of June 30, 2019 and December 31, 2018, respectively. We remain conditionally liable for operating expense support provided by OFS Advisor. See "Item 1. Financial Statements – Notes to Financial Statements – Note 3."

Unfunded Commitments.

We may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. We had $158,042 of total unfunded commitments to three portfolio companies at June 30, 2019. See "Item 1. Financial Statements – Notes to Financial Statements – Note 6."

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Distributions

We have elected to be taxed as a RIC under Subchapter M of the Code. In order to maintain our status as a RIC, we are required to distribute annually to our stockholders at least 90% of our ICTI, as defined by the Code. Additionally, to avoid a 4% excise tax on undistributed earnings we are required to distribute each calendar year the sum of (i) 98% of our ordinary income for such calendar year (ii) 98.2% of our net capital gains for the one-year period ending October 31 of that calendar year, and (iii) any income recognized, but not distributed, in preceding years and on which we paid no federal income tax. Maintenance of our RIC status also requires adherence to certain source of income and asset diversification requirements. Generally, a RIC is entitled to deduct dividends it pays to its stockholders from its income to determine “taxable income.” Taxable income includes our taxable interest, dividend and fee income, and taxable net capital gains. Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation, as gains or losses are not included in taxable income until they are realized. In addition, gains realized for financial reporting purposes may differ from gains included in taxable income as a result of our election to recognize gains using installment sale treatment, which generally results in the deferment of gains for tax purposes until notes or other amounts, including amounts held in escrow, received as consideration from the sale of investments are collected in cash. Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, which includes contractual PIK interest, and the amortization of discounts and fees. Cash collections of income resulting from contractual PIK interest and dividends or the amortization of discounts and fees generally occur upon the repayment of the loans or debt securities that include such items. Non-cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation, and amortization expense.

We do not currently qualify as a “publicly offered regulated investment company,” as defined in the Code. Accordingly, stockholders will be taxed as though they received a distribution of some of the our expenses. A “publicly offered regulated investment company” is a RIC whose shares are either (i) continuously offered pursuant to a public offering, (ii) regularly traded on an established securities market, or (iii) held by at least 500 persons at all times during the taxable year. We anticipate that we will not qualify as a publicly offered RIC for the 2019 tax year, and we cannot determine when we will qualify as a publicly offered RIC. Since we are not a publicly offered RIC, a non-corporate stockholder’s allocable portion of our affected expenses, including a portion of our management fees, will be treated as an additional distribution to the stockholder. A non-corporate stockholder’s allocable portion of these expenses are treated as miscellaneous itemized deductions that are not currently deductible by such stockholders.

Our Board maintains a variable dividend policy with the objective of distributing four quarterly distributions in an amount not less than 90-100% of our taxable quarterly income or potential annual income for a particular year. In addition, at the end of the year, we may also pay an additional special dividend, or fifth dividend, such that we may distribute approximately all of our annual taxable income in the year it was earned, while maintaining the option to spill over our excess taxable income to a following year. Each year, a statement on Form 1099-DIV identifying the source of the distribution is mailed to the Company’s stockholders.

Our distributions to date were, and our distributions may in the future, be funded through expense limitation payments by OFS Advisor under the Expense Support Agreement. The Expense Support Agreement is designed to ensure no portion of our distribution to stockholders will be paid from Offering proceeds, and provides for expense limitation payments to us in any quarterly period our cumulative distributions to stockholders exceeds the Company's cumulative ICTI and net realized gains. Any such distributions funded through expense limitation payments are not based on our investment performance, and can only be sustained if we achieve positive investment performance in future periods and/or OFS Advisor continues to make such payments. The Expense Support Agreement may be terminated by us or OFS Advisor, without payment of any penalty, upon written notice to us.

Share Repurchases

On November 6, 2018, our Board, including a "required majority" (as such terms is defined in Section 57(o) of the 1940 Act) of our board, approved a proposal to permit us to reduce the minimum asset coverage ratio applicable to us from 200% to 150%, as permitted by and pursuant to the SBCAA. Pursuant to the SBCAA, the asset coverage ratio test applicable to us will be decreased from 200% to 150%, effective November 6, 2019, provided the we extend to each of our stockholders as of November 6, 2018, an offer to repurchase the equity securities held by such stockholders as of November 6, 2018, with 25% of such equity securities to be repurchased in each of the four quarters following November 6, 2018.

On November 6, 2018, the Board approved an offer to repurchase the equity securities held by each of our stockholders as of November 6, 2018, with 25% of such equity securities to be repurchased in each of the four quarters following November 6, 2018. The repurchase offer allows our stockholders to sell their shares back to us at a price equal to the most recently disclosed net asset value per share of our common stock immediately prior to the date of repurchase. See "Item 1. Financial Statements – Notes to Financial Statements – Note 10" for details on share repurchases.

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Recent Developments

On July 29, 2019, our Board declared a distribution of $0.0875 per common share, payable on October 15, 2019, to stockholders of record on each of July 29, 2019, August 28, 2019, and September 26, 2019.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our market risks reported in our Annual Report on Form 10-K for the year ended December 31, 2018.

Our PWB Credit Facility has a floating interest rate provision based on the Prime Rate with a 5.75% interest rate floor, which resulted in an effective interest rate of 6.25% as of June 30, 2019. Assuming that the interim, unaudited Statement of Assets and Liabilities as of June 30, 2019, were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates:

Basis point increase	Interest income		Interest expense			Net increase in net investment income
50	$	127,002	$	(24,207	)	$	102,795
100	277,218		(48,413		)	228,805
150	427,433		(72,620		)	354,813
200	577,648		(96,826		)	480,822
250	727,863		(121,033		)	606,830

Basis point decrease	Interest income			Interest expense		Net decrease in net investment income
50	$	(171,603	)	$	24,207	$	(147,396	)
100	(312,934		)	—		(312,934		)
150	(423,039		)	—		(423,039		)
200	(465,264		)	—		(465,264		)
250	(493,306		)	—		(493,306		)

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Item 4.  Controls and Procedures

Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2019. The term “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of the Company’s disclosure controls and procedures as of June 30, 2019, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended June 30, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1.  Legal Proceedings

We, OFS Advisor and OFS Services, are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business, including the enforcement of our rights under contracts with our future portfolio companies. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our future portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors

Investing in our common stock may be speculative and involves a high degree of risk. In addition to the other information contained in this Quarterly Report on Form 10-Q, including our financial statements, and the related notes, schedules and exhibits, you should carefully consider the risk factors described in "Part I – Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

There have been no material changes from the risk factors previously disclosed in "Part I – Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2018, which should be read together with the other information disclosed elsewhere in this Quarterly Report on Form 10-Q and our other reports filed with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three month period ended June 30, 2019, we sold 169,070 shares of our common stock for gross proceeds of $2,385,125, or a weighted average price of $14.11 per share, to investors who participated in the Offering and each of whom met the criteria of an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act.

The offer and sale of the Company’s common stock in the Offering was exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of, and Rule 506 of Regulation D under, the Securities Act. We paid $97,893 in commissions in connection with the sale of the shares. OFS Advisor paid commissions of $71,501. On May 19, 2017, OFS Advisor agreed to pay the dealer manager fee on subsequent sales of shares of our common stock in the Offering. Effective July 1, 2019, we will pay the dealer manager fee on subsequent sales of shares of our common stock in the Offering. Previous payments of dealer manager fees by OFS Advisor are not subject to reimbursement by us.

Because shares of our common stock have been acquired by investors in one or more transactions "not involving a public offering," they are "restricted securities" and may be required to be held indefinitely. Our common stock may not be sold, transferred, assigned, pledged or otherwise disposed of unless: (i) the transferor provides OFS Advisor with at least 10 days written notice of the transfer; (ii) the transfer is made in accordance with applicable securities laws; and (iii) the transferee agrees in writing to be bound by these restrictions and the other restrictions imposed on the common stock and to execute such other instruments or certifications as are reasonably required by us. Accordingly, an investor must be willing to bear the economic risk of investment in the common stock until we are liquidated. No sale, transfer, assignment, pledge or other disposition, whether voluntary or involuntary, of the common shares may be made except by registration of the transfer on our books.

Item 3.  Defaults Upon Senior Securities

Not applicable.

Item 4.  Mine Safety Disclosures

Not applicable.

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Item 5.  Other Information

Not applicable.

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Item 6.  Exhibits

Listed below are the exhibits that are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):

		Incorporated by Reference
Exhibit Number	Description	Form and SEC File No.	Filing Date with SEC	Filed with this 10-Q
11.1	Computation of Per Share Earnings			+
14.1	Joint Code of Ethics of Hancock Park Corporate Income, Inc. and OFS Advisor			*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended			*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended			*
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002			†
32.2	Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002			†

+	Included in the statements of operations contained in this report
*	Filed herewith.
†	Furnished herewith.

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SIGNATURES

 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: August 13, 2019	HANCOCK PARK CORPORATE INCOME, INC.
	By:	/s/ Bilal Rashid
	Name:	Bilal Rashid
	Title:	Chief Executive Officer
	By:	/s/ Jeffrey A. Cerny
	Name:	Jeffrey A. Cerny
	Title:	Chief Financial Officer

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