What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-03 compared with 2025-03-04 · 227 added, 201 removed, 532 unchanged (45% of the section changed)

18 unchanged sentences

• competition for investment opportunities;

• the belief that the seniority of our debt investments in a borrower’s capital structure may provide greater downside protection against adverse economic changes, including those caused by the impacts of interest rate and inflation rate changes, the ongoing war between Russia and Ukraine, instability in the U.S.

and international banking systems, the agenda of the new U.S.

presidential administration, including the potential impact of tariff enactment and tax reductions, the risk of recession or a shutdown of U.S.

and international banking systems, the agenda of the U.S.

presidential administration, including the impact of tariff enactment and tax reductions, trade disputes with other countries, the risk of recession or the impact of the prolonged shutdown of U.S.

government services, and related market volatility on our business, our portfolio companies, our industry and the global economy;

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

• the impact of current political, economic and industry conditions, including changes in the interest rate environment, inflation, significant market volatility, supply chain and labor market disruptions, including those as a result of strikes, work stoppages or accidents, resource shortages and other conditions affecting the financial and capital markets, which, in turn, impacts our business prospects and the prospects of our portfolio companies;

• the impact of the ongoing war between Russia and Ukraine, and general uncertainty surrounding the financial and political stability of the United States, the United Kingdom, the European Union and China;

a result of strikes, work stoppages or accidents, resource shortages and other conditions affecting the financial and capital markets, which, in turn, impacts our business prospects and the prospects of our portfolio companies;

• the general uncertainty surrounding the financial and political stability of the United States, the United Kingdom, the Middle East, the European Union, South America and China;

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

• the belief that we have sufficient levels of liquidity to support our existing portfolio companies;

• the belief that our cash and cash equivalent balances are not exposed to any significant credit risk;

• our ability to consummate credit facilities in the future on commercially reasonable terms, if at all;

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• the fluctuation of the fair value of our investments due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value;

• the belief that the deployment of capital into Structured Finance Securities will improve our performing income yield;

• the ability to secure financial maintenance covenants in the loans we invest.

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Distributions declared 1.19 1.36 1.34

Our NAV per common share increased from $12.09 at December 31, 2023 to $12.85 at December 31, 2024, primarily due to net gains on our investment portfolio of $11.7 million, or $0.87 per common share.

Our NAV per common share decreased from $12.85 at December 31, 2024 to $9.19 at December 31, 2025, primarily due to net losses on our investment portfolio of $45.0 million, or $3.35 per common share.

For the year ended December 31, 2025, our aggregate distributions of $1.19 per common share exceeded our net investment income of $0.92 per common share.

During the year ended December 31, 2025, net investment income decreased $4.3 million compared to the prior year.

The decrease in net investment income was primarily due to a decrease in total investment income of $9.0 million, partially offset by a decrease in total expenses of $5.5 million.

During the year ended December 31, 2025, total investment income decreased by $7.3 million, primarily due to a decrease in interest income of $4.9 million, while total expenses decreased by $2.9 million, primarily due to a decrease in incentive fees of $2.4 million.

See “—Results of Operations” for additional details.

Our weighted-average performing income yield on interest-bearing investments decreased from 13.9% during the year ended December 31, 2023 to 13.4% during the year ended December 31, 2024.

The decrease in our income yield was primarily due to a decrease in the effective yield of our Structured Finance Security portfolio related to the aging of subordinated note securities.

Our weighted-average performing income yield on interest-bearing investments increased from 13.4% during the year ended December 31, 2024 to 13.6% during the year ended December 31, 2025.

The increase in our income yield was primarily due to an increase in the effective yield of our Structured Finance Security portfolio, and partially offset by a decrease in the yield of our debt investments.

See “ — Portfolio Composition and Investment Activity ’ for additional details.

Our total outstanding debt decreased from $302.4 million at December 31, 2023 to $248.4 million at December 31, 2024.

Our weighted-average debt interest costs increased from 6.0% during the year ended December 31, 2023 to 6.4% for the year ended December 31, 2024, primarily due to the full repayment of our SBA debentures on March 1, 2024, which carried a low effective interest rate of 3.26%, and an increase in the cost of debt on our BNP Facility.

As of December 31, 2024, we had outstanding debt of $126.0 million contractually maturing in February 2026, which comprised 51% of our total outstanding debt.

See “—Liquidity and Capital Resources—Contractual Obligations and Off-Balance Sheet Arrangements” for additional details.

During the year ended December 31, 2024, our portfolio experienced net gains of $11.7 million, comprised of net unrealized appreciation of $28.9 million, partially offset by net realized losses of $17.1 million.

During the year ended December 31, 2024, our net gain of $11.7 million was primarily driven by net unrealized appreciation of $18.4 million in our common equity investment in Pfanstiehl Holdings, Inc., partially offset by net unrealized depreciation of $6.6 million on our current non-accrual loans.

As of December 31, 2024, our portfolio had non-accrual loans with an aggregate fair value of $20.8 million, or 9.3% of our total loan portfolio at fair value, compared to non-accrual loans with an aggregate fair value of $12.1 million, or 4.8% of our total loan portfolio at fair value, at December 31, 2023.

Our total outstanding debt decreased from $248.4 million at December 31, 2024 to $220.5 million at December 31, 2025, primarily due to decreases in the outstanding debt balances of our BNP Facility and Unsecured Notes.

Our weighted-average debt interest costs increased from 6.4% during the year ended December 31, 2024 to 6.6% for the year ended December 31, 2025, primarily due to the redemption of the 4.75% Unsecured Notes Due February 2026 and the issuance of $69.0 million of 7.50% Unsecured Notes Due July 2028 and a $25.0 million 8.00% Unsecured Note Due August 2029.

See “—Liquidity and Capital Resources—Contractual Obligations and Off-Balance Sheet Arrangements” and “— Recent Developments” for additional details.

During the year ended December 31, 2025, our portfolio experienced net losses of $45.0 million, comprised of net unrealized depreciation, net of deferred tax expense, of $32.8 million and net realized losses, net of tax expense, of $12.2 million.

During the year ended December 31, 2025, our net unrealized depreciation of $32.8 million was primarily driven by net unrealized depreciation of $23.0 million on our equity investments and net unrealized depreciation of $8.9 million on our current non-accrual loans.

During the year ended December 31, 2025, our net realized loss was primarily due to net realized losses of $6.9 million and $4.8 million related to the sale of Structured Finance Securities and debt investments, respectively.

As of December 31, 2025, our portfolio had non-accrual loans with an aggregate fair value of $14.4 million, or 4.2% of our total investments at fair value, compared to non-accrual loans with an aggregate fair value of $20.8 million, or 5.1% of our total investments at fair value, at December 31, 2024.

As of December 31, 2025, our common equity investment in Pfanstiehl Holdings, Inc., a global manufacturer of high-purity pharmaceutical ingredients, accounted for 23.2% of our portfolio at fair value and 64.5% of our total net assets, respectively.

Primarily due to an improvement in financial operating performance during the year ended December 31, 2024, the fair value of our investment in the common equity of Pfanstiehl Holdings, Inc.

increased by $18.4 million, or $1.37 per common share, to $89.3 million.

During the year ended December 31, 2025, the fair value of our investment in the common equity of Pfanstiehl Holdings, Inc.

decreased by $9.9 million, or $0.74 per common share, to $79.4 million.

The value of this investment is substantially comprised of unrealized appreciation of $79.2 million.

The valuation of this investment is based on significant unobservable inputs.

The valuation’s unobservable inputs incorporate discounts for the minority-interest and illiquid nature of the security;

however, the valuation, in accordance with fair value concepts, is based on assumptions applicable to an orderly transaction between market participants and does not reflect the impact of a forced sale or entity-specific liquidity constraints.

As a result, there can be no assurance that we would be able to realize this value in a timely manner, or at all.

A deterioration or improvement in the operating performance of the company or other factors underlying the valuation of this investment could have a material impact on our NAV.

At December 31, 2024, our asset coverage ratio of 169% exceeded the minimum asset coverage requirement of 150% under the 1940 Act, and we remained in compliance with all applicable covenants under our outstanding debt facilities.

As of December 31, 2024, we had unused commitments of $24.0 million under our Banc of California Credit Facility and $82.7 million under our BNP Facility, each of which are subject to a borrowing base and other covenants.

As of December 31, 2024, we had unfunded investment commitments of $18.8 million to 10 issuers.

As of December 31, 2025, the aggregate amount outstanding of the senior securities issued by us was $220.5 million, for which our asset coverage was 156%, exceeding our minimum asset coverage requirement of 150% under the 1940 Act.

As of December 31, 2025, we remained in compliance with all applicable covenants under our outstanding debt facilities.

As of December 31, 2025, we had an unused commitment of $20.5 million under our Banc of California Credit Facility, subject to the terms of the borrowing base and other covenants.

As of December 31, 2025, we had unfunded investment commitments of $13.2 million to fund outstanding commitments to portfolio companies.

On February 26, 2026, the Board declared a distribution of $0.17 per share for the first quarter of 2026, payable on March 31, 2026, to stockholders of record as of March 20, 2026.

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These assumed cash flows represent significant estimates and are subject to a reasonable possibility of near-term changes due to economic and credit market conditions, and the effect of these changes could be material.

The Company ultimately may not realize income accreted on CLO subordinated note securities.

We ultimately may not realize income accreted on CLO subordinated note securities.

The valuation of our Structured Finance Securities makes use of similar assumptions, plus a discount rate assumption, to develop estimated cash flows that are discounted to estimated net present value.

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We periodically evaluate the realizability of such amounts and, if necessary, subsequently adjust the estimated yield.

An optional redemption feature of a CLO allows a majority of the holders of the CLO subordinated notes issued by the CLO issuer, after the end of a specified non-call period, to cause the redemption of the CLO subordinated notes issued by the CLO with proceeds paid through either the liquidation of the CLO’s assets or a refinancing with new debt.

The optional redemption is effectively a voluntary prepayment of the CLO subordinated notes issued by the CLO prior to the stated maturity of such securities.

When the optional redemption feature has been exercised on a CLO subordinated note, distributions received are first recorded as a return of capital until its cost basis is reduced to zero and thereafter recorded as realized gains.

The principal amount of the CLO subordinated notes is not reduced for distributions received until the security is fully redeemed.

Commencing on the optional redemption date, we cease accruing income on our CLO subordinated notes that will be redeemed.

CLO subordinated notes that have been optionally redeemed are realized when the deal has been fully liquidated and discharged.

Non-Accrual Loans :

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When a loan is placed on non-accrual status, accrued and unpaid cash interest is reversed.

PIK income that has been contractually capitalized to the principal balance of the investment prior to the non-accrual designation date is not reserved against interest or dividend income, but rather is assessed through the valuation of the investment with corresponding adjustments to unrealized appreciation/depreciation, as applicable.

Interest income and Net Loan Fees are no longer recognized as of the date the loan is placed on non-accrual status.

Depending upon management’s judgment, interest payments subsequently received on non-accrual investments may be recognized as interest income or applied as a reduction to amortized cost.

Interest accruals and Net Loan Fee amortization are resumed on non-accrual investments only when they are brought current with respect to principal and interest payments and, in management’s judgment, it is probable that we will collect all principal and interest from the investment.

Interest accruals and Net Loan Fee amortization are resumed on non-accrual investments only when they are brought current with respect to principal and interest payments or until a restructuring occurs, and, in management’s judgment, it is probable that we will collect all principal and interest from the investment.

Acquisition Cost of Investments :

Our middle-market lending activities may involve the acquisition of multiple financial instruments or rights either in an initial transaction, or in subsequent or “follow-on” transactions, including amendments to existing securities.

Our lending activities may involve the acquisition of multiple financial instruments or rights either in an initial transaction, or in subsequent or “follow-on” transactions, including amendments to existing securities.

These financial instruments can include loans, preferred and common stock, warrants, or membership interests in limited liability companies.

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These allocations are generally based on the relative fair value of the instruments at the time of the transaction, a process involving fair value estimates which is also a critical accounting policy and significant estimate.

Once determined, these allocations directly affect the discount/premium and yield on debt securities, the cost and net gains/losses on equity securities, and ICTI.

Once determined, these

allocations directly affect the discount/premium and yield on debt securities, the cost and net gains/losses on equity securities, and ICTI.

These allocations require an understanding of the terms and conditions of the underlying agreements and requires significant management judgment.

Fair value estimates.

As of December 31, 2024, total investments of $409.7 million, representing approximately 96% of our total assets, were carried at fair value on the consolidated statement of assets and liabilities.

As of December 31, 2025, total investments of $342.0 million, representing approximately 99% of our total assets, were carried at fair value on the consolidated statements of assets and liabilities.

As discussed more fully in “Item 8.

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The hierarchy gives the highest priority to quoted, active market prices for identical assets and liabilities (Level 1) and the lowest priority to valuation techniques that require significant management judgment because one or more of the significant inputs are unobservable in the market place (Level 3).

All of our investments carried at fair value are classified as Level 2 and Level 3, with 95% of our investments classified as Level 3 as of December 31,

All of our investments carried at fair value are classified as either Level 2 and Level 3, with 96% of our investments classified as Level 3 as of December 31, 2025.

In accordance with our investment strategy, we typically do not hold equity securities or other instruments that are actively traded on an exchange (Level 1).

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OFS Advisor’s base management fee reduction is renewable on an annual basis and OFS Advisor is not entitled to recoup the amount of the base management fee reduced with respect to the OFSCC-FS Assets.

OFS Advisor most recently renewed the agreement to reduce its base management fee for the 2025 calendar year on January 8, 2025.

OFS Advisor’s services under the Investment Advisory Agreement are not exclusive to us and OFS Advisor is free to furnish similar services to other entities, including other funds advised or sub-advised by OFS Advisor, so long as its services to us are not impaired.

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Those transactions include purchases and sales, and so-called “joint” transactions, in which a BDC and one or more of its affiliates engage in certain types of profit-making activities.

Any person that owns, directly or indirectly, five percent or more of a BDC’s outstanding voting securities will be considered an affiliate of the BDC for purposes of the 1940 Act, and a BDC generally is prohibited from engaging in purchases from, sales of assets to, or joint transactions with, such affiliates, absent the prior approval of the BDC’s independent directors.

Additionally, without the approval of the SEC, a BDC is prohibited from engaging in purchases from, sales of assets to, or joint transactions with, the BDC’s officers, directors, and employees, and advisor (and its control affiliates).

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and (4) the proposed investment by us would not benefit OFS Advisor, the other Affiliated Funds that are participating in the investment, or any affiliated person of any of them (other than parties to the transaction), except to the extent permitted by the exemptive relief and applicable law, including the limitations set forth in Section 57(k) of the 1940 Act.

In addition, we may file an application for an amendment to our existing Order to permit us to co-invest in our existing portfolio companies with certain affiliates that are private funds even if such other funds had not previously invested in such existing portfolio companies, subject to certain conditions.

However, if filed, there is no guarantee that such application will be granted.

In addition, we have submitted a new application for exemptive relief that, if granted, would supersede our existing Order and permit us to co-invest pursuant to a different set of conditions than those in our existing Order.

However, there is no guarantee that the SEC will grant such application.

Conflicts may arise when we make an investment in conjunction with an investment being made by an Affiliated Account, or in a transaction where an Affiliated Account has already made an investment.

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We also held equity investments in 15 portfolio companies with a fair value of $100.6 million and 14 investments in Structured Finance Securities with a fair value of $61.6 million.

Certain portfolio investments represent a larger percentage of our total assets or net assets and may involve longer expected holding periods or more limited liquidity alternatives than smaller positions, which management and the Board consider in connection with portfolio monitoring and valuation.

Portfolio Yields .

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(2) Realized yield is calculated as (a) the actual amount earned on interest-bearing investments, including interest, prepayment fees and amortization of Net Loan Fees, divided by (b) the weighted-average of total interest-bearing investments at amortized cost, in each case, including debt investments on non-accrual status and non-performing Structured Finance Securities.

For the year ended December 31, 2024, the decrease in our weighted-average performing income yield was primarily due to a decrease in the effective yield of our Structured Finance Security portfolio.

During the third and fourth quarter of 2024, we began rotating our Structured Finance Security portfolio, by deploying net capital of $0.6 million into higher-yielding positions with longer average reinvestment periods remaining, which we believe will improve our performing income yield.

For the year ended December 31, 2025, our weighted-average performing income yield increased 0.2% compared to the prior year, primarily due to an increase in the effective yield of our CLO subordinated note securities, partially offset by a decrease in the income yield on our debt investments as a result of lower SOFR rates driven by Federal Reserve rate reductions.

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.

As of December 31, 2024, 91% of our total loan

portfolio, at fair value, consisted of variable rate investments, generally indexed to SOFR.

As of December 31, 2025, 89% of our total loan portfolio, at fair value, consisted of variable rate investments, generally indexed to SOFR.

See additional information under “ Item 7A.

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Second lien debt investments 24,924 9,409 42,313 34,331

Subordinated debt investments — — 4,680 —

Preferred equity 14,287 12,567 10,190 12,248

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As of December 31, 2024, the amortized cost and fair value of unitranche investments was $128.1 million and $119.2 million, respectively.

Unitranche loans generally provide leverage levels comparable to a combination of first lien and second lien or subordinated loans.

Investments in “last out” pieces of unitranche loans will be similar to second lien loans in that such investments will be junior in priority to the “first out” piece of the same unitranche loan with respect to payment of principal and interest.

As of December 31, 2025, 100% of our loan portfolio and 53% of our total portfolio consisted of first lien and second lien loans, based on fair value.

As of December 31, 2024, the three largest industries of our debt and equity investments by fair value, were (1) Manufacturing (36.7%), (2) Health Care and Social Assistance (20.1%) and (3) Administrative and Support and Waste Management and Remediation Services (6.5%) totaling approximately 63.3% of our debt and equity investment portfolio.

As of December 31, 2025, the three largest industries of our debt and equity investments by fair value, were (1) Manufacturing (34.6%), (2) Health Care and Social Assistance (17.5%) and (3) Real Estate and Rental and Leasing (8.0%), totaling approximately 60.1% of our debt and equity investment portfolio.

For a full summary of our investment portfolio by industry, see “ Note 4, Investments ” to the consolidated financial statements included in “Item 8.

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The following table presents our ten largest investments by issuer based on fair value as of December 31, 2025 (dollar amounts in thousands):

Issuer Name Type Amortized Cost Fair Value % of Total Portfolio, at Fair Value

Issuer Name Type Amortized Cost Fair Value % of Total Portfolio, at Fair Value % of Net Assets, at Fair Value

Pfanstiehl Holdings, Inc.

Equity $ 217 $ 79,421 23.2 % 64.5 %

Inergex Holdings, LLC Debt 17,002 17,128 4.2 %

SS Acquisition, LLC Debt 16,871 16,871 4.1 %

Kreg LLC Debt 18,568 18,073 5.3 14.7

Tolemar Acquisition, Inc.

Debt 16,272 15,405 3.8 %

Honor HN Buyer Inc Debt 14,879 15,046 3.7 %

SS Acquisition, LLC Debt 17,221 17,328 5.1 14.0

Inergex Holdings, LLC Debt 16,906 16,960 5.0 13.9

Contract Datascan Holdings, Inc.

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One GI LLC Debt 12,561 11,419 3.3 9.3

Tolemar Acquisition, Inc.

Debt 14,946 10,645 3.1 8.6

Boca Home Care Holdings, Inc.

Debt and Equity 10,840 10,374 3.0 8.4

Envocore Holding, LLC (F/K/A LRI Holding, LLC) Debt and Equity 17,473 8,549 2.5 6.9

Canyon CLO 2019-1, Ltd.

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As of December 31, 2025, we had no Structured Finance Securities that have been optionally redeemed.

During the year ended December 31, 2024, we sold Structure Finance Securities for aggregate net proceeds of $20.1 million and recognized a realized loss of $3.5 million.

During the year ended December 31, 2025, we sold certain Structure Finance Securities for aggregate net proceeds of $12.0 million, resulting in an aggregate net realized loss of $6.9 million, of which $1.5 million was recognized in the current year net of reversal for previously recognized unrealized depreciation.

Investment Activity.

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Non-cash Investment Activity

During the year ended December 31, 2024, we wrote off our preferred and common equity investments in Master Cutlery, LLC, resulting in a net realized loss of $3.5 million.

The net realized loss of $3.5 million was fully recognized in prior fiscal years and did not impact our NAV during the current year.

During the year ended December 31, 2024, our first lien debt investment in GoTo Group underwent a restructuring, whereby our first lien debt investment was exchanged at a price equal to 77% of par for new first lien debt investments in the company.

We recognized a realized loss of $0.7 million on the debt restructure corresponding to the amount forgiven upon the exchange.

During the year ended December 31, 2024, we restructured our first lien debt investments in Avison Young Inc.

to, among other things, exchange our first lien debt investments for new first lien debt investments, preferred equity and common equity.

The cost of the existing first lien debt investments was ascribed to the new investments received in the exchange, and no realized loss was recognized.

We also invested an incremental $0.8 million in new-issue first lien debt.

During the year ended December 31, 2024, our first lien debt investment in Wellful Inc.

underwent a restructuring, under which our investment was restructured at an effective price equal to approximately 83.5% of par for a combination of cash consideration and a new first lien debt investment in the company.

We recognized a realized loss of $1.1 million on the debt restructure corresponding to the amount forgiven upon the restructuring.

During the year ended December 31, 2025, we restructured our first lien debt investment in JP Intermediate B, LLC to, among other things, exchange our first lien debt investment for new first lien debt and common equity investments.

The cost of the existing first lien debt investment was ascribed to the new investments received in the exchange, and no realized loss was recognized.

As of December 31, 2025, these restructured investments had an amortized cost of and fair value of $4.5 million and $1.5 million, respectively.

In connection with the completion of the restructuring transaction, we also invested $0.3 million in a new first lien facility.

During the year ended December 31, 2025, we restructured our first lien debt and common equity investments in SSJA Bariatric Management LLC, to, among other things, exchange our first lien debt and common equity investments for new first lien debt and common equity.

The cost of the existing first lien debt and common equity investments was ascribed to the new investments received in the exchange, and no realized loss was recognized.

As of December 31, 2025, these investments had an amortized cost and fair value of $13.5 million and $5.5 million, respectively.

In connection with the completion of the restructuring transaction, we also invested $0.2 million in a new first lien facility.

See “Part 1, Item 1A.

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Second lien debt 6,584 2,018

Subordinated debt 4,680 —

Total $ 39,124 $ 20,803

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and (b) net unrealized appreciation or depreciation on portfolio investments, net of deferred taxes.

In the period in which a realized gain or loss is recognized, such gain or loss will be offset by the reversal of previously recognized unrealized appreciation or depreciation, and the net gain (loss) recognized in

that period will generally be smaller.

The net unrealized appreciation or depreciation on debt securities is also reversed when those investments are redeemed or paid off prior to maturity.

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Comparison of investment income for the years ended December 31, 2025 and 2024 .

Total interest income decreased $4.9 million during the year ended December 31, 2025 compared to the prior year, primarily due to a decrease in cash interest income, partially offset by an increase in accretion of interest income on CLO subordinated notes.

The decrease in cash interest income compared to the prior year was primarily due to a smaller average investment portfolio, at cost, and the impact of lower SOFR rates driven by the U.S.

Federal Reserve rate cuts.

During the year ended December 31, 2025, dividend income decreased $2.2 million compared to the prior year.

The decrease in cash dividends was primarily due to non-recurring dividends of $1.9 million recognized during the prior year related to the sale of a preferred equity investment.

During the year ended December 31, 2025, we recognized total PIK income of $2.7 million, which represented 6.7% of total investment income.

During the year ended December 31, 2024, we recognized total PIK income of $2.7 million, which represented 5.7% of total investment income.

Fee income is primarily comprised of unused fees, prepayment fees and syndication fees that generally result from periodic transactions rather than from holding portfolio investments, and are considered non-recurring.

We may receive syndication fees on investments where OFS Advisor sources, structures and arranges the lending group.

During the year ended December 31, 2025, total fee income decreased $0.1 million compared to the prior year, primarily due to a decrease in syndication fees.

Comparison of investment income for the years ended December 31, 2024 and 2023 .

Total interest income decreased $11.3 million during the year ended December 31, 2024 compared to the prior year, primarily due to a decrease in cash interest income of $9.5 million.

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During the year ended December 31, 2024, dividend income increased $2.3 million compared to the prior year, primarily due to an increase of $2.4 million in cash dividends.

The increase in cash dividends was primarily due to non-recurring dividends of $1.9 million from TRS Services, LLC million recognized upon the sale of our preferred equity investment as well as a $0.5 million increase in dividends from our common equity investment in Pfanstiehl Holdings, Inc.

The increase in cash dividends was primarily due to non-recurring dividends of $1.9 million from TRS Services, LLC recognized upon the sale of our preferred equity investment, as well as a $0.5 million increase in dividends from our common equity investment in Pfanstiehl Holdings, Inc.

During the year ended December 31, 2024, we recognized total PIK income of $2.7 million, which represented 5.7% of total investment income.

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During the year ended December 31, 2024, total fee income remained stable compared to the prior year.

Comparison of investment income for the years ended December 31, 2023 and 2022 .

Total interest income increased $8.4 million during the year ended December 31, 2023 compared to the prior year, primarily due to an increase in cash interest income of $6.6 million.

The increase in cash interest income was primarily due to elevated reference interest rates as our loan portfolio predominately consisted of floating rate loans throughout the year.

During the year ended December 31, 2023, total PIK interest income increased $0.9 million compared to the prior year.

The increase in PIK interest income primarily related to two credit agreement amendments that increased the contractual PIK interest or converted cash interest to PIK interest.

During the year ended December 31, 2023, dividend income increased $0.4 million compared to the prior year, primarily due to an increase of $0.7 million in preferred equity PIK dividends.

During the year ended December 31, 2023, we recognized total PIK income of $2.6 million, which represented 4.6% of total investment income.

During the year ended December 31, 2022, we recognized total PIK income of $1.0 million, which represented 2.0% of total investment income.

During the year ended December 31, 2023, total fee income decreased $0.6 million compared to the prior year, primarily due to a decrease in syndication and prepayment fees.

Operating expenses for the years ended December 31, 2025, 2024 and 2023, are presented below (in thousands):

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Income Incentive Fee 1,758 4,178 5,040

Capital Gains Fee — — (1,916)

Professional fees 1,623 1,630 1,681

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Comparison of expenses for the years ended December 31, 2025 and 2024 .

Interest expense for the year ended December 31, 2025 decreased $0.1 million compared to the prior year, primarily due to a decrease of $9.1 million in our average outstanding debt balances compared to the prior year, partially offset by an increase in the weighted-average effective interest rate of our outstanding debt related to the partial redemption of the 4.75% Unsecured Notes Due February 2026 and the issuance of $69.0 million of 7.50% Unsecured Notes Due July 2028 and a $25.0 million 8.00% Unsecured Note Due August 2029.

Base management fee expense for the year ended December 31, 2025 decreased $0.2 million compared to the prior year, primarily due to our average investment portfolio at fair value decreasing from $404.7 million during the year ended December 31, 2024 to $381.5 million during the year ended December 31, 2025.

The Income Incentive Fee for the year ended December 31, 2025 decreased $2.4 million compared to the prior year, primarily due to a decrease in net investment income.

Comparison of expenses for the years ended December 31, 2024 and 2023 .

Interest expense for the year ended December 31, 2024 decreased $2.8 million compared to the prior year, primarily due to a decrease of $63.6 million in our average outstanding debt balances compared to the prior year.

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Base management fee expense for the year ended December 31, 2024 decreased $1.2 million compared to the prior year, primarily due to our average investment portfolio at fair value decreasing from $474.5 million during the year ended December 31, 2023 to $404.7 million during the year ended December 31, 2024.

The Income Incentive Fee for the year ended December 31, 2024 decreased $0.9 million compared to the prior year, primarily due to a decrease in our average interest-bearing investment portfolio, at cost, which reduced our net investment income during the current year.

Other expenses for the year ended December 31, 2024 decreased $0.4 million compared to the prior year, primarily due to the reduction in intangible asset amortization of $0.3 million related to the full repayment of our outstanding SBA debentures in March 2024.

Comparison of expenses for the years ended December 31, 2023 and 2022 .

Interest expense increased by $2.5 million during the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to an increase in our weighted-average debt interest costs from 4.8% to 6.0%.

The increase in our debt interest costs was primarily due to an increase in the cost of debt on our BNP Facility resulting from variable SOFR rate increases.

The BNP Facility’s effective interest rate increased to 8.3% during the year ended December 31, 2023, from 4.4% during the year ended December 31, 2022.

Base management fee expense decreased by $0.8 million during the year ended December 31, 2023, due to a decrease in our average total assets, primarily due to our average investment portfolio at fair value decreasing to $474.5 million during the year ended December 31, 2023 from $525.8 million during the year ended December 31, 2022.

The decrease in the average investment portfolio at fair value during the year ended December 31, 2023 primarily related to net repayments on portfolio investments of $63.8 million and net losses on portfolio investments of $20.4 million, respectively.

The Income Incentive Fee increased by $2.8 million during the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to an increase in our net interest margin of $6.0 million.

During the year ended December 31, 2023, we did not incur a Capital Gains Fee as compared to 2022, when we fully reversed the Capital Gains Fee of $1.9 million that was accrued in 2021.

The Capital Gains Fee previously accrued during the year ended December 31, 2021 was neither contractually due nor payable under the terms of the Investment Advisory Agreement.

During the year ended December 31, 2023, professional fees, administration fees and other expenses remained stable compared to the prior year at $5.0 million.

Net realized and unrealized gain (loss) on investments.

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Structured Finance Securities (10,853) 2,471 (5,374)

Current/deferred income tax (expense) benefit (519) (120) 182

Current/deferred income tax expense (310) (519) (120)

Net gain (loss) on investments $ (44,972) $ 11,730 $ (20,412)

Year ended December 31, 2025

During the year ended December 31, 2024, our portfolio experienced net gains of $11.7 million, comprised of net unrealized appreciation of $28.9 million, net of taxes, partially offset by net realized losses of $17.1 million, net of taxes.

During the year ended December 31, 2024, our net unrealized appreciation of $28.9 million, net of taxes, primarily related to net unrealized appreciation of $18.4 million in the common equity investment in Pfanstiehl Holdings, Inc.

During the year ended December 31, 2025, our portfolio experienced net losses of $45.0 million, comprised of net unrealized depreciation of $32.8 million, net of deferred taxes, and net realized losses of $12.2 million, net of taxes.

During the year ended December 31, 2025, our net unrealized depreciation of $32.8 million, net of deferred taxes, was primarily due to net unrealized depreciation of $23.0 million on our equity investments and net unrealized depreciation of $8.9 million on our current non-accrual loans.

During the year ended December 31, 2025, we recognized net realized losses of $12.2 million, primarily due to net realized losses of $6.9 million related to the sale of Structured Finance Securities and $4.8 million related to the sale of debt investments.

Year ended December 31, 2024

During the year ended December 31, 2024, our portfolio experienced net gains of $11.7 million, comprised of net unrealized appreciation of $28.9 million, net of deferred taxes, partially offset by net realized losses of $17.1 million, net of taxes.

During the year ended December 31, 2024, our net unrealized appreciation of $28.9 million, net of deferred taxes, primarily related to net unrealized appreciation of $18.4 million in the common equity investment in Pfanstiehl Holdings, Inc.

as well as the reversal of previously recognized unrealized depreciation on exited investments.

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During the year ended December 31, 2023, we recognized net realized losses of $11.4 million, primarily due to the write-off our non-accrual loan and equity investment in Eblens Holdings, Inc., resulting in a realized loss of $10.5 million, of which $9.0 million was recognized in prior fiscal years.

Year ended December 31, 2022

During the year ended December 31, 2022, our portfolio experienced net losses of $25.8 million, primarily related to unrealized depreciation of $23.0 million and $14.2 million on our debt investments and Structured Finance Securities, respectively, offset by unrealized appreciation of $13.1 million on our equity investments.

The unrealized depreciation on our debt investments and Structured Finance Securities was primarily due to the widening of liquid credit market spreads.

Company specific performance factors on a few non-accrual investments also contributed to the unrealized depreciation on our debt investments.

Our common equity investment in Pfanstiehl Holdings, Inc.

experienced unrealized gains of $19.7 million during the year ended December 31, 2022.

Losses on Extinguishment of Debt

Year ended December 31, 2025

During the year ended December 31, 2024, we did not recognize a loss on extinguishment of debt.

During the year ended December 31, 2025, we redeemed an aggregate $109.0 million of the $125.0 million of Unsecured Notes Due February 2026, and, as a result, we recognized a loss on extinguishment of debt of $0.4 million related to the acceleration of unamortized deferred debt issuance costs and make-whole premium payments on the redeemed notes.

During the year ended December 31, 2025, we elected to reduce the maximum facility amount on the BNP Facility from $150.0 million to $80.0 million, and, as a result, we recognized a loss on extinguishment of debt of $0.1 million related to the acceleration of deferred borrowing costs on the commitment reduction.

Year ended December 31, 2024

During the year ended December 31, 2023, we redeemed $19.0 million of SBA debentures and, as a result, we recognized a loss on extinguishment of debt of $0.2 million related to the acceleration of unamortized deferred borrowing costs and prepaid (or breakage) interest on the redeemed debentures.

During the year ended December 31, 2024, we did not recognize a loss on extinguishment of debt.

Year ended December 31, 2023

Non-GAAP Financial Measure – Adjusted Net Investment Income

On a supplemental basis, we disclose Adjusted NII (including on a per share basis), which is a financial measure calculated and presented on basis other than in accordance with GAAP.

Adjusted NII represents net investment income, excluding the capital gains incentive fee, in periods in which such expense occurs.

GAAP requires recognition of a capital gains incentive fee in our financial statements when aggregate net realized and unrealized capital gains, if any, on a cumulative basis is positive from the date of the election to be a BDC through the reporting date.

Such fees are subject to further conditions specified in the Investment Advisory Agreement, principally related to the realization of such net gains, before OFS Advisor is entitled to payment, and such recognized fees are subject to the risk of reversal should unrealized gains diminish to become losses.

Management believes that Adjusted NII is a useful indicator of operations exclusive of any net capital gains incentive fee, as net investment income does not include the net gains, realized or unrealized, associated with the capital gains incentive fee.

Management believes Adjusted NII facilitates the analysis of our results of operations and provides greater transparency into the determination of incentive fees.

Adjusted NII is not meant as a substitute for net investment income determined in accordance with GAAP and should be considered in the context of the entirety of our reported results of operations, financial position and cash flows determined in accordance with GAAP.

The following table provides a reconciliation from net investment income (the most comparable GAAP measure) to Adjusted NII for the years ended December 31, 2024, 2023 and 2022 (dollar amounts in thousands, except per share data):

Year Ended December 31,

2024 2023 2022

(000's) Per Share (000's) Per Share (000's) Per Share

Net investment income

$ 16,712 $ 1.25 $ 20,160 $ 1.50 $ 18,352 $ 1.37

Capital Gains Fee

— — — — (1,916) (0.14)

$ 16,712 $ 1.25 $ 20,160 $ 1.50 $ 16,436 $ 1.23

During the year ended December 31, 2022, we reversed the previously accrued Capital Gains Fees of $1.9 million due to a reduction in net unrealized appreciation on the investment portfolio.

Although these non-GAAP financial measures are intended to enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP.

Comparison of the three months ended December 31, 2025 and September 30, 2025.

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Net investment income 2,696 2,940

Net gain (loss) on investments 21,399 (1,915)

Net increase in net assets resulting from operations $ 25,475 $ 1,688

During the three months ended December 31, 2024, cash interest income decreased $0.8 million compared to the three months ended September 30, 2024, primarily due to a smaller average investment portfolio, at cost, and a reduction in reference interest rates as our loan portfolio predominately consisted of floating rate loans.

During the three months ended December 31, 2024, dividend income increased $0.6 million, primarily due to a non-recurring cash dividend of $0.5 million from our common equity investment in Pfanstiehl Holdings, Inc.

Net loss on investments (13,532) (7,775)

Loss on extinguishment of debt (12) (492)

Net decrease in net assets resulting from operations $ (10,848) $ (5,327)

During the three months ended December 31, 2025, total investment income decreased $1.2 million compared to the three months ended September 30, 2025, primarily due to a decrease in non-recurring income (cash dividends, other interest income and syndication fees).

During the three months ended December 31, 2025, PIK interest income decreased $0.3 million, primarily due to the placement of a second lien debt investment on non-accrual status.

Operating expenses for the three months ended December 31, 2025 and September 30, 2025 are presented below (in thousands):

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Total expenses $ 6,673 $ 7,611

During the three months ended December 31, 2024, total expenses increased $0.3 million compared to the prior quarter, primarily due to an aggregate increase in base management fees and the Income Incentive Fee of $0.2 million.

Net realized and unrealized gain (loss) on investments.

Net gain (loss) by investment type for the three months ended December 31, 2024 and September 30, 2024 were as follows (in thousands):

During the three months ended December 31, 2025, total expenses decreased $0.9 million compared to the prior quarter, primarily due to a decrease in the Income Incentive Fee of $0.6 million.

During the three months ended December 31, 2025, interest expense decreased $0.3 million primarily due to the prior quarter non-recurring timing delay between the issuance dates and redemption dates of the Unsecured Notes that caused a one-time incurrence of additional interest expense in the prior quarter.

Net realized and unrealized loss on investments.

Net loss by investment type for the three months ended December 31, 2025 and September 30, 2025 were as follows (in thousands):

Three Months Ended

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Current/deferred income tax expense (276) (279)

Net gain (loss) on investments $ 21,399 $ (1,915)

Net gain (loss) on investments for the three months ended December 31, 2024

During the three months ended December 31, 2024, our portfolio experienced net gains of $21.4 million, primarily due to net unrealized appreciation of $15.6 million on our common equity investment in Pfanstiehl Holdings, Inc.

Net gain (loss) on investments for the three months ended September 30, 2024

For the three months ended September 30, 2024, we recognized a net loss on investments of $1.9 million, primarily comprised of aggregate net losses of $5.6 million on our loans and Structured Finance Securities, and partially offset by net gains of $3.7 million on our equity securities.

Net loss on investments $ (13,531) $ (7,775)

Net loss on investments for the three months ended December 31, 2025

During the three months ended December 31, 2025, our portfolio experienced net losses of $13.5 million, primarily due to net unrealized depreciation of $8.3 million on our current non-accrual debt investments and $3.4 million on our Structured Finance Securities.

Net loss on investments for the three months ended September 30, 2025

For the three months ended September 30, 2025, we recognized a net loss on investments of $7.8 million, primarily due to net unrealized depreciation of $4.5 million on our common equity investment in Pfanstiehl Holdings, Inc.

and a net loss of $4.2 million on our Structured Finance Securities, partially offset by a net gain of $3.2 million on our debt investments.

Portfolio Yields .

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(2) Realized yield is calculated as ( a) the actual amount earned on interest-bearing investments, including interest, prepayment fees and amortization of Net Loan Fees, divided by (b) the weighted-average of total interest-bearing investments at amortized cost , in each case, including debt investments on non-accrual status and non-performing Structured Finance Securities.

For the three months ended December 31, 2024, the weighted average performing income yield on interest-bearing investments increased primarily due to the rotation of our Structured Finance Security portfolio into higher-yielding positions with longer average reinvestment periods remaining during the current and prior quarter.

For the three months ended December 31, 2025, the weighted average performing income yield on interest-bearing investments increased primarily due to non-recurring Net Loan Fee acceleration related to the repayment of a CLO mezzanine debt security and an increase in the effective yield of our CLO subordinate note securities.

Liquidity and Capital Resources

At December 31, 2025, we held cash of $3.4 million, which includes $2.4 million held by OFSCC-FS.

Distributions from OFSCC-FS to the Parent are restricted by the terms and conditions of the BNP Facility.

Distributions from OFSCC-FS to the Parent were restricted by the terms and conditions of the BNP Facility.

During the year ended December 31, 2025, the Parent received $10.4 million in cash distributions from OFSCC-FS.

Prior to surrendering our SBIC license on April 17, 2024, our use of cash held by SBIC I LP was restricted by SBA regulation, including limitations on the amount of cash SBIC I LP could distribute to the Parent.

At December 31, 2024, we had an unused commitment of $24.0 million under our Banc of California Credit Facility, as well as an unused commitment of $82.7 million under the BNP Facility, both of which are subject to borrowing base requirements and other covenants.

As of December 31, 2024, the aggregate amount outstanding of the senior securities issued by us was $248.4 million, for which our asset coverage was 169%, exceeding our minimum assert coverage requirement of 150% under the 1940 Act.

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.

At December 31, 2025, we had an unused commitment of $20.5 million under our Banc of California Credit Facility, subject to the terms of the borrowing base and other covenants.

The reinvestment period of the BNP Facility expired on September 30, 2025, after which the ability to access the unused commitment of the facility terminated.

On February 18, 2026, in connection with the closing of the Natixis Facility, OFSCC-FS repaid in full all outstanding obligations due, and terminated all commitments, under the BNP Facility.

All liens securing the BNP Facility were released upon such repayment.

On February 18, 2026, OFSCC-FS entered into the Natixis Facility, which provides for borrowings in an aggregate principal amount up to $80.0 million.

Borrowings under the Natixis Facility will bear interest at a rate based on SOFR for the applicable one- or three-month interest period, plus an applicable spread.

Interest is payable quarterly in arrears.

Any amounts borrowed under the Natixis Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on the earlier of:

(i) February 18, 2031;

or (ii) upon the occurrence of certain other events that result in accelerated maturity under the Natixis Facility.

As of December 31, 2025, we had unfunded commitments of $13.2 million to fund outstanding commitments to portfolio companies.

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.

Sources and Uses of Cash and Cash Equivalents.

We generate cash through operations from net investment income and the net proceeds from liquidation of portfolio investments, and use cash in our operations in the net purchase of portfolio investments.

We generate operating cash flows from net investment income and the net proceeds from liquidation of portfolio investments, and use cash in our operations in the net purchase of portfolio investments.

Significant variations may exist between net investment income and cash from net investment income, primarily due to the recognition of non-cash investment income, including Net Loan Fee amortization, PIK interest, and PIK dividends, which generally will not be fully realized in cash until we exit the investment, as well as accreted interest income on Structured Finance Securities, which may not coincide with cash distributions from these investments.

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$ 9,659 $ 13,707 $ 17,742

Net (purchases and originations) repayments of portfolio investments (1)

Net repayments and sales of portfolio investments (1)

33,980 19,303 63,824

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Distributions paid to stockholders (2)

Net borrowings (repayments) under revolving line of credits (22,150) (14,200) 4,700

(15,944) (18,221) (17,954)

Net repayments under revolving line of credits (12,900) (22,150) (14,200)

Proceeds from issuance of the Unsecured Notes, net of discounts 91,870 — —

Redemption of Unsecured Notes (109,000) — —

Repayments of SBA debentures — (31,920) (19,000)

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(1) Cash from net investment income includes all other cash flows from operating activities reported in our statements of cash flows.

Net purchases and originations/repayments and sales of portfolio investments includes the purchase and origination of portfolio investments, proceeds from principal payments on portfolio investments, proceeds from sale or redemption of portfolio investments, changes in receivable for investments sold, payable from investments purchased as reported in our statements of cash flows, as well as differences in proceeds from distributions received from Structured Finance Securities relative to accretion of interest income on Structured Finance Securities.

Net repayments and sales of portfolio investments includes the purchase and origination of portfolio investments, proceeds from principal payments on portfolio investments, proceeds from sale or redemption of portfolio investments, changes in receivable for investments sold, payable from investments purchased as reported in our statements of cash flows, as well as differences in proceeds from distributions received from Structured Finance Securities relative to accretion of interest income on Structured Finance Securities.

(2) For the year ended December 31, 2025, we estimated distributions paid to stockholders were comprised of ordinary income of 32.8% and a tax return of capital of 67.2%.

The determination of the tax attributes of our distributions is made annually as of the end of our fiscal year based upon our estimated ICTI and distributions paid for the full year.

Each year, if required, a statement on Form 1099-DIV identifying the source of the distribution is mailed to our stockholders.

During the year ended December 31, 2025, cash and cash equivalents decreased $2.7 million.

During the year ended December 31, 2025, net cash provided by operating activities of $43.6 million was primarily driven by the repayment and sale of portfolio investments, which were partially used in connection with the net repayments of outstanding debt of $27.9 million.

During the year ended December 31, 2024, cash and cash equivalents decreased $39.3 million, primarily due to aggregate net repayments on our outstanding debt of $54.1 million, partially offset by $19.3 million of net repayments on portfolio investments.

During the year ended December 31, 2023, cash and cash equivalents increased $30.4 million, primarily due to $63.8 million of net repayments on portfolio investments, partially offset by aggregate net repayments on our outstanding debt of $33.2 million.

During the year ended December 31, 2022, cash and cash equivalents decreased $28.1 million, primarily due to the use of $31.1 million in financing activities.

Our net cash used by financing activities primarily related to the redemption of $19.0 million in SBA debentures and $15.4 million of distributions paid to stockholders, respectively.

SBA Debentures .

On March 1, 2024, SBIC I LP fully repaid its outstanding SBA debentures totaling $31.9 million, and, on April 17, 2024, surrendered its license to operate as a SBIC.

As of December 31, 2025, we had $220.5 million of outstanding debt with a weighted-average effective interest rate of 7.1%.

Banc of California Credit Facility .

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The Banc of California Credit Facility is available for general corporate purposes including investment funding.

The maximum availability of the Banc of California Credit Facility is equal to 50% of the aggregate outstanding principal amount of eligible loans included in the borrowing base, which typically excludes Structured Finance Securities and as otherwise specified in the BLA.

The Banc of California Credit Facility is guaranteed by OFSCC-MB and secured by all of our and OFSCC-MB’s current and future assets, excluding assets held by OFSCC-FS and SBIC I LP, and our partnership interests in SBIC I LP.

As of December 31, 2024, OFSCC-MB and us held aggregate total assets of $179.4 million.

Banc of California Credit Facility is guaranteed by OFSCC-MB and secured by all of our and OFSCC-MB’s current and future assets, excluding assets held by OFSCC-FS and SBIC I LP, and our partnership interests in SBIC I LP.

As of December 31, 2025, OFSCC-MB and us held aggregate investments of $140.5 million, at fair value.

The BLA contains customary terms and conditions, including, without limitation, affirmative and negative covenants such as information reporting requirements, a minimum tangible NAV, a minimum quarterly net investment income after incentive fees, and a maximum ratio of total liabilities divided by NAV.

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$ 4,500 $ 20,500 5.00% Prime + 0.25% 7.00 % 0.50% February 28, 2026

(1) On January 9, 2026, we amended the Banc of California Credit Facility to extend the maturity date from February 28, 2026 to February 28, 2028.

On April 22, 2022, we amended the Banc of California Credit Facility to:

(i) increase the maximum amount available from $25.0 million to $35.0 million;

and (ii) extend the maturity date from February 28, 2023 to February 28, 2024.

On December 15, 2022, we amended the Banc of California Credit Facility to:

(i) reduce the maximum amount available from $35.0 million to $25.0 million;

and (ii) eliminate the No Net Losses covenant, which restricted net losses (defined as income after adjustments to the investment portfolio for gains and losses, realized and unrealized, also shown as net increase (decrease) in net assets resulting from operations) in more than two quarters during the prior four quarters then ended.

On December 15, 2023, we amended the Banc of California Credit Facility to:

(i) extend the maturity date from February 28, 2024 to February 28, 2026;

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and (iii) eliminate the 0.50% unused line fee and replace it with an annual commitment fee of 0.50%.

On December 15, 2022, we amended the Banc of California Credit Facility to:

(i) reduce the maximum amount available under the Banc of California Credit Facility from $35.0 million to $25.0 million;

On April 22, 2022, we amended the Banc of California Credit Facility to:

(i) increase the maximum amount available under the Banc of California Credit Facility from $25.0 million to $35.0 million;

and (ii) extend the maturity date of the Banc of California Credit Facility from February 28, 2023 to February 28, 2024.

On January 9, 2026, we amended the Banc of California Credit Facility to extend the maturity date from February 28, 2026 to February 28, 2028.

BNP Facility .

On June 20, 2019, we entered into the a revolving credit and security agreement by and among OFSCC-FS, the lenders from time to time parties thereto, BNP Paribas, as administrative agent, OFSCC-FS Holdings, LLC, a wholly owned subsidiary of the Company, as equityholder, the Company, as servicer, Citibank, N.A., as collateral agent and Virtus Group, LP, as collateral administrator, which provides for borrowings in an aggregate principal amount up to $150.0 million.

Borrowings under the BNP Facility bear interest at a variable rate of SOFR plus a variable margin (2.65% floor), which is determined on the basis of industry-recognized portfolio company metrics at the time of funding.

The BNP Facility will mature on the earlier of June 20, 2027 or upon certain other events defined in the credit agreement which result in accelerated maturity.

The reinvestment period of the BNP Facility ends on June 20, 2025, upon which the ability to access the unused commitment of the facility terminates.

The BNP Facility also contains customary events of default, including, without limitation, nonpayment, failure to maintain valid ownership interest in all of the collateral and bankruptcy.

Borrowings under the BNP Facility are secured by substantially all of the assets held by OFSCC-FS.

On June 20, 2019, we entered into the a revolving credit and security agreement by and among OFSCC-FS, the lenders from time to time parties thereto, BNP Paribas, as administrative agent, OFSCC-FS Holdings, LLC, a wholly owned subsidiary of the Company, as equityholder, the Company, as servicer, Citibank, N.A., as collateral agent and Virtus Group, LP, as collateral administrator, which provided for borrowings in an aggregate principal amount up to $80.0 million during its reinvestment period.

Borrowings under the BNP Facility bore interest at a variable rate of SOFR plus a variable margin (2.65% floor), which is determined on the basis of industry-recognized portfolio company metrics at the time of funding.

The reinvestment period of the BNP Facility expired on September 30, 2025, after which the ability to access the unused commitment of the facility and make additional investments under the facility terminated.

On February 18, 2026, in connection with the closing of the Natixis Facility, OFSCC-FS repaid in full all outstanding obligations due, and terminated all commitments, under the BNP Facility.

All liens securing the BNP Facility were released upon such repayment.

Borrowings under the BNP Facility were secured by substantially all of the assets held by OFSCC-FS.

As of December 31, 2025, total assets held by OFSCC-FS were $132.9 million.

On June 24, 2022, OFSCC-FS amended the BNP Facility to, among other things:

(i) extend the reinvestment period under the BNP Facility for three years from June 20, 2022 to June 20, 2025;

(ii) extend the maturity date under the BNP Facility from June 20, 2024 to June 20, 2027;

(iii) convert the benchmark interest rate from LIBOR to SOFR;

(iv) increase the applicable margin by 0.40% on all classes of loans;

and (v) increase the applicable margin floor from 1.925% to 2.65%.

As of December 31, 2025, the BNP Facility had the following terms and balances (dollar amounts in thousands):

Principal Outstanding Unused Commitment Interest Rate Margin Floor Stated Coupon Maturity

BNP Facility $ 67,350 $82,650 SOFR + 2.65% 2.65% 7.16% June 20, 2027

Principal Outstanding (1)

Unused Commitment (2)

Interest Rate Margin Floor Stated Coupon Maturity

BNP Facility $ 50,950 N/A SOFR + 2.65% 2.65% 6.47% June 20, 2027

(1) On February 18, 2026, in connection with the closing of the Natixis Facility, OFSCC-FS repaid in full all outstanding obligations due.

(2) As of December 31, 2025, the unused commitment under the BNP Facility was $0, following the expiration of the reinvestment period on September 30, 2025.

Unsecured Notes .

At December 31, 2024 and 2023, the Unsecured Notes totaled $180.0 million in aggregate principal debt.

During the years ended December 31, 2024 and 2023, we did not issue, redeem or repurchase any Unsecured Notes.

At December 31, 2025 and 2024, the aggregate principal debt of our Unsecured Notes totaled $165.0 million and $180.0 million, respectively.

Issuance and Redemption of Unsecured Notes During the Year Ended December 31, 2025

On July 23, 2025, we closed the public offering of $69.0 million aggregate principal amount of our Unsecured Notes Due July 2028, which included $9.0 million of aggregate principal amount related to the underwriters’ option to cover overallotments.

The net proceeds to us from the Unsecured Notes Due July 2028, after deducting underwriting fees of $1.4 million and offering expenses of $0.3 million, was $67.3 million.

The Unsecured Notes Due July 2028 bear interest at a stated rate of 7.50% and will mature on July 31, 2028.

We may redeem the Unsecured Notes Due July 2028 in whole or in part at any time, or from time to time, on or after July 31, 2026.

On August 8, 2025, we entered into the Securities Purchase Agreement, pursuant to which we sold in a private placement a $25.0 million aggregate principal amount Unsecured Note Due August 2029.

The net proceeds to us from the Unsecured Note Due August 2029, after deducting discounts and offering expenses of $0.8 million, was $24.2 million.

The Unsecured Note Due August 2029 bears interest at a stated rate of 8.00% and will mature on August 8, 2029.

We may redeem the Unsecured Note Due August 2029 in whole or in part at any time.

In connection with, and using the proceeds from, the issuance of the Unsecured Notes Due July 2028 and Unsecured Note Due August 2029, on August 11, 2025 and August 21, 2025, we redeemed $94.0 million in aggregate principal amount of the Unsecured Notes Due February 2026, which resulted in a leverage-neutral refinancing.

The Unsecured Notes Due February 2026 were redeemed at 100% of their principal amount, plus accrued interest and a make-whole premium payments.

We recognized a loss on extinguishment of debt of $0.3 million related to the acceleration of unamortized deferred debt issuance costs and make-whole premium payments on the redeemed notes.

On December 30, 2025, we redeemed $15.0 million of the issued and outstanding Unsecured Notes Due February 2026, plus accrued interest.

As of December 31, 2025, we had $16.0 million of outstanding Unsecured Notes Due February 2026, which were redeemed in full on February 9, 2026.

See “ — Recent Developments ” for additional information.

The Unsecured Notes are direct unsecured obligations and rank equal in right of payment with all of our current and future unsecured indebtedness.

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As of December 31, 2025, the Unsecured Notes had the following terms and balances (dollar amounts in thousands):

Unsecured Notes Principal Stated Interest Rate (1)

Effective Interest Rate (2)

Unsecured Notes Due February 2026 $ 125,000 4.75 % 5.39 % February 10, 2026

Unsecured Notes Due October 2028 55,000 4.95 5.32 October 31, 2028

Total $ 180,000

(1) The weighted-average fixed cash interest rate on the Unsecured Notes as of December 31, 2024 was 4.81%.

Unsecured Notes Principal Stated Interest Rate Effective Interest Rate (1)

Optional Redemption Date Maturity

Unsecured Notes Due February 2026 (2)

$ 16,000 4.75 % 5.44 % Callable February 10, 2026

Unsecured Notes Due July 2028 69,000 7.50 8.34 July 31, 2026 July 31, 2028

Unsecured Notes Due October 2028 55,000 4.95 5.32 Callable October 31, 2028

Unsecured Note Due August 2029 25,000 8.00 8.80 Callable August 8, 2029

Total / Weighted-Average $ 165,000 6.46 % 7.12 %

(1) The effective interest rate on the Unsecured Notes includes deferred debt issuance cost amortization.

(3) We may redeem the Unsecured Notes Due February 2026 in whole or in part at any time, or from time to time.

We are required to pay a “make-whole” premium if the redemption date is prior to November 10, 2025.

We may redeem the Unsecured Notes Due October 2028 in whole or in part at any time, or from time to time.

(2) On February 9, 2026, we redeemed in full the $16.0 million in aggregate principal amount of our Unsecured Notes Due February 2026.

See “ — Recent Developments ” for additional information.

SBA Debentures .

On March 1, 2024, SBIC I LP fully repaid its outstanding SBA debentures totaling $31.9 million, and, on April 17, 2024, surrendered its license to operate as a SBIC.

The average dollar borrowings and average interest rate related to our debt for the years ended December 31, 2025, 2024 and 2023, were as follows (dollar amounts in thousands):

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BNP Facility (2)

50,950 — 50,950 — — —

Unsecured Notes (3)

165,000 16,000 — 124,000 25,000 —

Total $ 220,450 $ 20,500 $ 50,950 $ 124,000 $ 25,000 $ —

As of December 31, 2024, we had $248.4 million of outstanding debt with a weighted-average effective interest rate of 6.2%.

Our Unsecured Notes Due February 2026 and the Banc of California Facility, which represents 51% of our outstanding debt, mature in February 2026.

(1) On January 9, 2026, we amended the Banc of California Credit Facility to extend the maturity date from February 28, 2026 to February 28, 2028.

(2) On February 18, 2026, in connection with the closing of the Natixis Facility, OFSCC-FS repaid in full all outstanding obligations due, and terminated all commitments, under the BNP Facility.

The maturity date of the Natixis Facility is February 18, 2031, subject to earlier termination under certain conditions set forth in the Natixis Facility.

(3) On February 9, 2026, we redeemed in full the $16.0 million in aggregate principal amount of our Unsecured Notes Due February 2026.

See “ — Recent Developments ” for additional information.

Other Liquidity Matters.

We expect to fund the growth of our investment portfolio utilizing future equity offerings, and issuances of senior securities or future borrowings to the extent permitted by the 1940 Act.

On June 26, 2024, our stockholders approved a proposal to authorize us, with approval of our Board, to sell or otherwise issue shares of our common stock (during a twelve-month period) at a price below our then-current NAV per share in one or more offerings, subject to certain limitations (including that the cumulative number of shares sold pursuant to such authority does not exceed 25% of our then outstanding common stock immediately prior to each such sale).

On July 30, 2025, our stockholders approved a proposal to authorize us, with approval of our Board, to sell or otherwise issue shares of our common stock (during a twelve-month period) at a price below our then-current NAV per share in one or more offerings, subject to certain limitations (including that the cumulative number of shares sold pursuant to such authority does not exceed 25% of our then outstanding common stock immediately prior to each such sale).

We cannot assure stockholders that our plans to raise capital will be successful.

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Consequently, we may not have the funds or the ability to fund new investments or make additional investments in our portfolio companies.

The illiquidity of certain portfolio investments may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded value and incur a capital loss.

The illiquidity of certain portfolio investments, in particular, equity investments, may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded value and incur a capital loss.

A BDC generally is not permitted to incur indebtedness unless, immediately after such borrowing, it has an asset coverage ratio for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets).

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or (ii) obtain stockholder approval (of more than 50% of the votes cast for the proposal at a meeting in which quorum is present), which would become effective on the first day after the date of such stockholder approval.

On May 3, 2018, our Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) thereof, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act.

On May 3, 2018, our Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) thereof, approved the application of the reduced asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act.

As a result, effective May 3, 2019, our minimum required asset coverage ratio decreased from 200% to 150%.

See “Part 1, Item 1A.

Risk Factors—Risks Related to our Business and Structure—Because we received the approval of our Board, we became subject to 150% asset coverage effective May 3, 2019.”

Risk Factors—Risks Related to our Business and Structure—We are subject to reduced asset coverage for borrowings, which increases the maximum amount of leverage we may incur.”

This requirement limits the amount that we may borrow.

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We continue to monitor the current banking environment.

If the banks and financial institutions with whom we have credit facilities enter into receivership, undergo consolidation or become insolvent in the future, our liquidity may be reduced significantly.

Our cash balances at third-party financial institutions generally exceed the federally insured limit.

If the banks and financial institutions with whom we have credit facilities enter into receivership, undergo consolidation or become insolvent in the future, our liquidity may be reduced

significantly.

At various times, our cash balances at third-party financial institutions exceed the federally insured limit.

Our cash and cash equivalent balances are retained in custodian accounts with U.S.

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Contractual Obligations and Off-Balance Sheet Arrangements

At December 31, 2024, we had $6.1 million of cash, as well as access to $24.0 million under our Banc of California Credit Facility and $82.7 million under our BNP Facility, to meet our short-term contractual obligations.

At December 31, 2024, we had $18.8 million of outstanding commitments to fund portfolio investments that can be funded with our current cash or credit facilities.

The reinvestment period of the BNP Facility ends on June 20, 2025, upon which the ability to access the unused commitment of the facility terminates.

If we are unable to amend the BNP Facility to extend the reinvestment period or enter into a new credit facility, our short-term liquidity will be significantly reduced.

Long-term contractual obligations, such as our BNP Facility that matures in 2027 and has $67.4 million outstanding at December 31, 2024, can be repaid by selling OFSCC-FS portfolio investments that have a fair value of $143.0 million at December 31, 2024.

A portion of the OFSCC-FS portfolio includes Broadly Syndicated Loans in larger portfolio companies that generally can be sold over a relatively short period to generate cash.

We cannot, however, be certain that this source of funds will be available and upon terms acceptable to us in sufficient amounts in the future.

If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than its current fair value and incur significant realized losses on our invested capital.

As of December 31, 2024, we had $180.0 million of outstanding Unsecured Notes, of which $125.0 million matures on February 10, 2026.

The Unsecured Notes Due February 2026 can be repaid by issuing additional senior securities to refinance the debt.

If we refinance the Unsecured Notes Due February 2026 by issuing additional senior securities, current market rates for similar debt are higher than the stated rate of 4.75% on the Unsecured Notes Due February 2026.

Contractual Obligations

At December 31, 2025, we had $3.4 million of cash and cash equivalents, as well as an unused commitment of $20.5 million under our Banc of California Credit Facility, to meet our short-term contractual obligations, subject to contractual requirements and regulatory asset coverage requirements.

The stated unused commitment on our Banc of California Credit Facility is subject to a borrowing base and other covenants.

At December 31, 2025, we had $13.2 million of outstanding commitments to fund portfolio investments that can be funded with our current cash or the Banc of California Credit Facility.

Effective September 30, 2025, the reinvestment period of the BNP Facility expired, after which the ability to access the unused commitment of the facility terminated.

On February 18, 2026, in connection with the closing of the Natixis Facility, OFSCC-FS repaid in full all outstanding obligations due, and terminated all commitments, under the BNP Facility.

All liens securing the BNP Facility were released upon such repayment.

Following the extension of our Banc of California Credit Facility executed in January 2026, and the refinancing of our BNP Facility executed in February 2026, we do not have any debt maturities until February 2028.

As of December 31, 2025, we had $16.0 million of outstanding Unsecured Notes Due February 2026 which were fully redeemed on February 9, 2026.

Off-Balance Sheet Arrangements

We have entered into contracts with affiliates under which we will incur material future commitments:

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There is no guarantee that these amounts will be funded to the borrowing party now or in the future.

We continue to believe that we have sufficient levels of liquidity to support our existing portfolio companies and will meet these unfunded commitments by using our cash on hand or utilizing our available borrowings under the Banc of California Credit Facility and BNP Facility.

We continue to believe that we have sufficient levels of liquidity to support our existing portfolio companies and will meet these unfunded commitments by using our cash on hand or utilizing our available borrowing capacity under the Banc of California Credit Facility.

Distributions

We are taxed as a RIC under the Code.

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For the years ended December 31, 2025, 2024 and 2023, we recognized U.S.

federal excise tax expense (benefit) of $(0.1) million, $0 and $0.1 million, respectively.

federal excise tax expense (benefit) of $0, $(0.1) million and $0, respectively.

Each year, a statement on Form 1099-DIV identifying the source of our distributions is provided to our stockholders, as required.

Since our initial public offering in 2012 and through December 31, 2025, distributions to stockholders total $200.4 million, or $16.54 per share on a cumulative basis, which is 110% of the initial public offering price of $15.00.

For a detailed description of our distributions paid for the years ended December 31, 2025, 2024 and 2023, see “Item 8.

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Recent Developments

On January 28, 2025, Jeffrey A.

Cerny notified our Board of his intention to retire.

Cerny’s resignation as Chief Financial Officer and Treasurer is effective on March 31, 2025.

The resignation was not in any way related to a disagreement with us on any matter relating to our operations, policies, practices or otherwise.

Cerny will remain on the Board as a Class III Director.

On January 28, 2025, our Board voted to appoint Kyle Spina as Chief Financial Officer and Treasurer of the Company, effective as of March 31, 2025, to fill the vacancy created by the resignation of Mr.

Final Redemption of 4.75% Notes due February 2026

On January 8, 2026, we issued notices to the holders of the Unsecured Notes Due February 2026 regarding the exercise of our option to redeem on February 9, 2026 $16.0 million, which is equal to the remainder of the outstanding Unsecured Notes Due February 2026, plus accrued interest of $0.4 million.

Banc of California Amendment

On January 9, 2026, we amended the Banc of California Credit Facility to extend the maturity date from February 28, 2026 to February 28, 2028.

Natixis Facility Executed

On February 18, 2026, OFSCC-FS entered into the Natixis Facility, which provides for borrowings in an aggregate principal amount up to $80.0 million.

Borrowings under the Natixis Facility will bear interest at a rate based on SOFR for the applicable one- or three-month interest period, plus an applicable spread.

Interest is payable quarterly in arrears.

Any amounts borrowed under the Natixis Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on the earlier of:

(i) February 18, 2031;

or (ii) upon the occurrence of certain other events that result in accelerated maturity under the Natixis Facility.

Payoff and Termination of BNP Facility

On February 18, 2026, in connection with the closing of the Natixis Facility, OFSCC-FS repaid in full all outstanding obligations due, and terminated all commitments, under the BNP Facility.

All liens securing the BNP Facility were released upon such repayment.

Declaration of a Distribution

On February 26, 2026, our Board declared a distribution of $0.17 per share for the first quarter of 2026, payable on March 31, 2026 to stockholders of record as of March 20, 2026.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis