OFS Capital Corp 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation: • our ability and experience operating a BDC, or maintaining our tax treatment as a RIC under Subchapter M of the Code; • our dependence on key personnel; • our ability to maintain or develop referral relationships; • our ability to replicate historical results; • the ability of OFS Advisor to identify, invest in and monitor companies that meet our investment criteria; • the belief that the carrying amounts of our financial instruments, such as cash, cash equivalents, receivables and payables approximate the fair value of such items due to the short maturity of such instruments and that such financial instruments are held with high credit quality institutions to mitigate the risk of loss due to credit risk; • actual and potential conflicts of interest with OFS Advisor and other affiliates of OFSAM Holdings; • constraint on investment 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; • the creation of leveraged lending opportunities as a result of the large amount of unfunded buyout commitments driving demand for leveraged buyouts over the next several years; • our ability to incur additional leverage pursuant to Section 61(a)(2) of the 1940 Act and the impact of such leverage on our net investment income and results of operations; • competition for investment opportunities; • 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, the escalated armed conflict and heightened regional tensions in the Middle East, activity in South America, instability in the 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; • the percentage of investments that will bear interest on a floating rate or fixed rate basis; • the holding period of our investments; • the impact of alternative reference rates on our business, including potential additional interest rate reductions approved by the U.S. Federal Reserve, which may impact our investment income, cost of funding and the valuation of our investments; • 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 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 78 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; • the effect of laws or regulations, including accounting pronouncements and rule issuances, governing our operations; • the ability to continue generating strong risk-adjusted net returns by assembling a diversified portfolio of investments across a broad range of industries; • the impact of information technology system failures, data security breaches, data privacy compliance, network disruptions, cybersecurity attacks and the increasing use of artificial intelligence and machine learning technology; • the need and availability of additional capital on favorable terms to finance growth given our expectation to distribute substantially all of our net ordinary income and net realized capital gains to our stockholders; • 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; and • the ability to secure financial maintenance covenants in the loans we invest. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Annual Report on Form 10-K should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include, among others, those described or identified in “Part 1, Item 1A. Risk Factors” in this Annual Report on Form 10-K. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual Report on Form 10-K. We have based the forward-looking statements on information available to us on the date of this Annual Report on Form 10-K. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The forward-looking statements and projections contained in this annual report on Form 10-K are excluded from the safe harbor protection provided by Section 21E of the Securities Exchange Act. The following analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto contained elsewhere in this Annual Report on Form 10-K. Overview Key performance metrics per common share are presented below: December 31, 2025 December 31, 2024 Net asset value $ 9.19 $ 12.85 Year Ended December 31, 2025 2024 2023 Net investment income $ 0.92 $ 1.25 $ 1.50 Net increase (decrease) in net assets resulting from operations (2.47) 2.12 (0.04) Distributions declared 1.19 1.36 1.34 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. 79 During the year ended December 31, 2025, net investment income decreased $4.3 million compared to the prior year. 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 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 $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. 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’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. 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. Critical Accounting Policies and Significant Estimates The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. Critical accounting policies are those that require management to make subjective or complex judgments about the effect of matters that are inherently uncertain and may change in subsequent periods. Changes that may be required in the underlying assumptions or estimates in these areas could have a material impact on our current and future financial condition and results of operations. Our critical accounting policies and estimates are those relating to revenue recognition and fair value estimates. Management has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board. For a description of our revenue recognition and fair value policies, see “Item 8. Financial Statements and Supplementary Data—Note 2” of this report. 80 Revenue recognition. Interest Income : Our recognition of interest income from our loan and CLO debt investments is recognized on an accrual basis based upon the outstanding principal amount and contractual interest terms of the debt investment. Net Loan Fees are amortized or accreted into interest income over the life, or estimated life in the case of CLO debt securities, of the respective debt investment. Upon the prepayment of a debt investment, we accelerate the remaining Net Loan Fees into interest income. PIK Income: Our recognition of PIK interest and dividends includes ongoing assessment of collectibility. We discontinue accrual of PIK income when there is reasonable doubt that the income will ultimately be collected. This includes assessments of the fair value of the investment relative to par or cost and other judgments of management. PIK income is included in our ICTI and, therefore, affects the amount we are required to pay to our stockholders in the form of distributions in order to maintain our tax treatment as a RIC, even though we may have not yet collected the cash. CLO Subordinated Notes and Loan Accumulation Facilities: Interest income on our CLO subordinated note securities is recognized in accordance with ASC Subtopic 325-40, Beneficial Interests in Securitized Financial Assets (“ASC 325-40”), which contemplates estimating an effective yield to expected redemption utilizing estimated future cash flows from the investment. The expected cash flows of the underlying portfolio and to our security are developed utilizing a number of assumptions, including, among others, estimates of default rates, prepayment rates, redemption timing, reinvestment prices, and liquidation-redemption price. These assumptions, and correspondingly the estimated cash flows and accretable yields, are reviewed and updated at each payment date, generally quarterly. 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. 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. Interest income from our investments in Loan Accumulation Facilities is recognized on an accrual basis based on an estimated yield. Income notes associated with our Loan Accumulation Facility investments generally earn returns equal to the actual income earned on facility assets less costs of senior financing and manager costs. 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 through 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 recorded as realized gains thereafter. 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 : We review, for placement on non-accrual status, all loans and CLO mezzanine debt investments when they become past due on principal and interest, and/or when there is reasonable doubt that principal or interest will be collected. 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 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 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. Acquired rights can include fixed or variable fees that can be either guaranteed or contingent upon operating performance of the underlying portfolio companies. Moreover, these fees may be payable in cash or additional securities. The revenue recognized on these instruments is a function of the fee or other consideration allocated to them, including amounts allocated to loan syndication fees at the time of acquisition. 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 81 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, 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. Financial Statements and Supplementary Data—Note 2” , GAAP requires us to categorize fair value measurements according to a three-level valuation hierarchy. 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 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). On September 7, 2022, pursuant to Rule 2a-5, our Board designated OFS Advisor as the valuation designee to perform fair value determinations relating to our investments for which market quotations are not readily available, and, as prescribed in Rule 2a-5, the Board maintains oversight of OFS Advisor in its capacity as valuation designee. We have engaged third-party valuation firms to provide assistance to OFS Advisor in determining the fair value of the majority of our investments. As described in “Item 8. Financial Statements and Supplementary Data—Note 5 ”, under the oversight of the Board, we follow a process to determine these unobservable inputs used in the fair value estimates of our investments. The most significant unobservable inputs in the Level 3 fair value measurements are the discount rates (discounted cash flows approach) and EBITDA or revenue multiples (market approach). Investments classified as Level 2 are measured on the basis of Indicative Prices provided by pricing services. Our discounted cash flow valuations involve a determination of discount rate commensurate with the risk inherent in each investment. OFS Advisor, with the assistance of independent third-party valuation firms, uses two primary methods to estimate discount rates on Portfolio Company Investments, as applicable: a method based upon a hypothetical recapitalization of the entity given its current operating performance and current market conditions; and a synthetic debt rating method, which assigns a surrogate debt rating to the entity based on known industry standards for assigning such ratings and then estimates the discount rate based on observed market yields for actual rated debt. OFS Advisor may also use a relative value method to estimate yields, which involves estimating the discount rate of non-traded subject debt investments based on an expected or assumed relationship between Indicative Prices on traded debt and the subject debt for a portfolio company. All methods for estimating the discount rate generally involve calibration of unobservable inputs utilized in estimating the discount rate on the subject investment to its internal rate of return at close or purchase date. These methods generally produce a range of discount rates, and we generally select the midpoint of the range for use in fair value measures, subject to considerations of any prepayment fees associated with the debt. Our market approach valuations, generally applied to equity investments and investments in impaired debt, involve a determination of an enterprise value multiple to a financial performance metric of the portfolio company, generally trailing historical EBITDA or revenue. 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. We may also utilize other portfolio-company earnings metrics to determine enterprise value, such as forecast EBITDA or revenue, or a weighting of multiple factors. At times, we may also use a discounted cash flow technique in valuing our equity securities or a combination of multiple valuation approaches. These methods generally produce a range of multiplier values and we generally select the midpoint of the range for fair value measures. 82 The following table illustrates the impact of our fair value measures if we selected the low or high end of the range for all investments at December 31, 2025 (in thousands): Fair Value at December 31, 2025 Range of Fair Value Investment Type Low-end High-end Debt investments: First lien $ 170,405 $ 166,657 $ 174,483 Second lien 9,409 8,803 11,900 Structured Finance Securities: Subordinated notes 53,531 50,261 56,475 Mezzanine debt 8,074 7,925 8,222 Equity investments: Preferred equity 12,567 10,504 14,869 Common equity, warrants and other 88,029 80,871 95,408 $ 342,015 $ 325,021 $ 361,357 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 and cash equivalents 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 “Part 1, Item 1—Management and Other Agreements” and “Item 8—Financial Statements and Supplementary Data—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 “Part 1, Item 1—Management and Other Agreements” and “Item 8–Financial Statements and Supplementary Data—Note 3.” • A license agreement with OFSAM, the parent company of OFS Advisor, under which OFSAM has agreed to grant us a non-exclusive, royalty-free license to use the name “OFS.” Under this agreement, we have a right to use the “OFS” name for so long as OFS Advisor or one of its affiliates remains our investment adviser. Other than with respect to this limited license, we have no legal right to the “OFS” name. This license agreement will remain in effect for so long as the Investment Advisory Agreement with OFS Advisor is in effect. For the years ending December 31, 2025, 2024 and 2023, OFS Advisor agreed to reduce its base management fee attributable to all of the OFSCC-FS Assets to 0.25% per quarter (1.00% annualized) of the average value of the OFSCC-FS Assets (other than cash and cash equivalents but including assets purchased with borrowed amounts) at the end of the two most recently completed calendar quarters. 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’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. OFS Advisor also serves as the investment adviser to other funds, including HPCI and OCCI. Additionally, OFS Advisor provides sub-advisory services to: (i) CMFT Securities Investments, LLC, a wholly owned subsidiary of CIM Real Estate Finance Trust, Inc., a corporation that qualifies as a real estate investment trust; and (ii) CIM Real Assets & Credit Fund, an externally managed registered investment company that operates as an interval fund that invests primarily in a combination of real estate, credit and related investments. The 1940 Act generally prohibits BDCs from knowingly participating in certain transactions with their affiliates without the prior approval of their independent directors and, in some cases, of the SEC. 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 83 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). BDCs may, however, invest alongside certain related parties or their respective other clients in certain circumstances where doing so is consistent with current law and SEC staff interpretations. For example, a BDC may invest alongside such accounts consistent with guidance promulgated by the SEC staff permitting the BDC and such other accounts to purchase interests in a single class of privately placed securities so long as certain conditions are met, including that the BDC’s advisor, acting on the BDC’s behalf and on behalf of other clients, negotiates no term other than price. Co-investment with such other accounts is not permitted or appropriate under this guidance when there is an opportunity to invest in different securities of the same issuer or where the different investments could be expected to result in a conflict between the BDC’s interests and those of other accounts. The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with certain affiliates absent an order from the SEC permitting the BDC to do so. On August 4, 2020, we received our existing Order, which superseded a previous order that we received on October 12, 2016, and provides us with greater flexibility to enter into co-investment transactions with certain Affiliated Funds in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions. We are generally permitted to co-invest with Affiliated Funds if, under the terms of the Order, a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including that: (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned; (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies; (3) the investment by our affiliates would not disadvantage us, and our participation would not be on a basis different from or less advantageous than that on which our affiliates are investing; 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 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. Investment opportunities are, from time to time, appropriate for more than one account in the same, different or overlapping securities of a portfolio company’s capital structure. Conflicts arise in determining the terms of investments, particularly where these accounts may invest in different types of securities in a single portfolio company. Potential conflicts arise when addressing, among other things, questions as to whether payment obligations and covenants should be enforced, modified or waived, or whether debt should be restructured, modified or refinanced. See “ Item 1. Business—Regulations—Conflicts of Interest” and “Item 1A. Risk Factors—Risks Related to OFS Advisor and its Affiliates—We have potential conflicts of interest related to the purchases and sales that OFS Advisor makes on our behalf and/or on behalf of Affiliated Accounts .” Portfolio Composition and Investment Activity Our portfolio consists of debt and equity investments, as well as indirect investments in such securities through investment in other investment companies including Structured Finance Securities. Portfolio Composition. As of December 31, 2025, the fair value of our debt investment portfolio totaled $179.8 million in 34 portfolio companies, of which 95% and 5% were first lien and second lien loans, respectively. 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. 84 Portfolio Yields . The following table presents weighted-average yield metrics for our portfolio: Year Ended December 31, 2025 2024 Weighted-average performing income yield (1) : Debt investments 12.2 % 13.2 % Structured Finance Securities 16.9 % 13.9 % Interest-bearing investments 13.6 % 13.4 % Weighted-average realized yield : Interest-bearing investments (2) 11.7 % 11.8 % (1) Performing income yield is calculated as (a) the actual amount earned on performing interest-bearing investments, including interest, prepayment fees and amortization of Net Loan Fees, divided by (b) the weighted-average of total performing interest-bearing investments at amortized cost . (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, 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, 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. Quantitative and Qualitative Disclosures About Market Risk. ” Debt and Equity Investments . The following table summarizes the composition of our debt and equity investments by type as of December 31, 2025 and 2024 (dollar amounts in thousands): December 31, 2025 December 31, 2024 Amortized Cost Fair Value Amortized Cost Fair Value First lien debt investments (1) $ 188,236 $ 170,405 $ 209,696 $ 189,874 Second lien debt investments 24,924 9,409 42,313 34,331 Preferred equity 14,287 12,567 10,190 12,248 Common equity, warrants and other 23,320 88,029 12,365 96,337 Total debt and equity investments $ 250,767 $ 280,410 $ 274,564 $ 332,790 Number of portfolio companies 43 43 46 46 (1) Includes unitranche investments (which are loans that combine both senior and subordinated debt, in a first lien position), as of December 31, 2025, with an amortized cost and fair value of $130.3 million and $116.3 million, respectively. 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, 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. Financial Statements and Supplementary Data” of this report. 85 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 % of Net Assets, at Fair Value Pfanstiehl Holdings, Inc. Equity $ 217 $ 79,421 23.2 % 64.5 % Kreg LLC Debt 18,568 18,073 5.3 14.7 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. Equity 12,607 12,085 3.5 9.8 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. Structured Finance Security 9,581 8,539 2.5 6.9 Total $ 130,920 $ 193,393 56.5 % 157.0 % As of December 31, 2025, approximately 4.9% and 13.6% of our total portfolio at fair value and net assets, respectively, were comprised of Structured Finance Securities managed by a single adviser. A deterioration or improvement in the operating performance of these portfolio investments, or other factors underlying the valuation of these investments, could have a material impact on our NAV. Structured Finance Securities . The following table summarizes our Structured Finance Securities as of December 31, 2025 and December 31, 2024 (dollar amounts in thousands): December 31, 2025 December 31, 2024 Amortized Cost Fair Value Amortized Cost Fair Value Subordinated notes $ 68,670 $ 53,531 $ 76,122 $ 64,301 Mezzanine debt 8,963 8,074 12,861 12,574 Total Structured Finance Securities $ 77,633 $ 61,605 $ 88,983 $ 76,875 Number of Structured Finance Securities 14 14 18 18 Non-performing Structured Finance Securities are securities that have not been optionally redeemed and have an effective yield of 0.0%, as remaining residual distributions are anticipated to be recognized as a return of capital. As of December 31, 2025, the amortized cost and fair value of non-performing Structured Finance Securities were $2.3 million and $0.2 million, respectively. As of December 31, 2025, we had no Structured Finance Securities that have been optionally redeemed. 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. 86 Investment Activity. The following is a summary of our cash investment activity for the years ended December 31, 2025 and 2024 (dollar amounts in millions): Year Ended December 31, 2025 2024 Investments in debt and equity securities $ 30.9 $ 66.0 Investments in Structured Finance Securities 19.6 27.4 Total investment purchases and originations $ 50.5 $ 93.4 Proceeds from principal payments on portfolio investments $ 26.9 $ 67.1 Proceeds from sales or redemptions of portfolio investments 46.8 46.1 Proceeds from distributions received from portfolio investments 14.9 15.6 Total proceeds from principal payments, sales or redemptions, and distributions received from portfolio investments $ 88.6 $ 128.8 Non-cash Investment Activity 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. Risk Factors—Risks Related to Our Investments—The documents governing our Broadly Syndicated Loans, the loans to our portfolio companies and the loans underlying our CLO investments may allow for “priming transactions.” Risk Monitoring 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 “Part 1, Item 1. Business—Portfolio Review/Risk Monitoring.” The following table shows the classification of our debt investments portfolio by risk category as of December 31, 2025 and 2024 (dollar amounts in thousands): Debt Investments as of December 31, 2025 2024 Risk Category Amortized Cost Fair Value % of Debt Investments, at Fair Value Amortized Cost Fair Value % of Debt Investments, at Fair Value 1 (Low Risk) $ — $ — — % $ — $ — — % 2 (Below Average Risk) — — — — — — 3 (Average) 131,812 128,363 71.4 160,017 157,941 70.5 4 (Special Mention) 67,235 44,209 24.6 73,388 57,003 25.4 5 (Substandard) 14,113 7,242 4.0 14,113 7,159 3.2 6 (Doubtful) — — — 4,491 2,102 0.9 7 (Loss) — — — — — — $ 213,160 $ 179,814 100.0 % $ 252,009 $ 224,205 100.0 % 87 Non-Accrual Loans As of December 31, 2025 The following table shows the classification of our debt investments on non-accrual status (dollar amounts in thousands): December 31, 2025 Amortized Cost Fair Value First lien debt $ 14,326 $ 7,491 Second lien debt 22,241 6,909 Total $ 36,567 $ 14,400 As of December 31, 2024 The following table shows the classification of our debt investments on non-accrual status (dollar amounts in thousands): December 31, 2024 Amortized Cost Fair Value First lien debt $ 32,540 $ 18,785 Second lien debt 6,584 2,018 Total $ 39,124 $ 20,803 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. Net Investment Income . NII is a key performance metric in obtaining part of our investment objective of providing current income to stockholders. NII can be a general indicator of ICTI and the amount of distributions that will be required to be made due to RIC requirements. One of our main objectives is to increase NII, and, in turn, increase distributions to stockholders. Net Gain (Loss) on Investments. Net gain (loss) on investments consists of the sum of: (a) realized gains and losses from the sale, redemption or write-off of portfolio investments, net of taxes; 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. Net Increase (Decrease) in Net Assets Resulting From Operations : Net increase (decrease) in net assets resulting from operations is a key metric in assessing our performance and the overall profit or loss of our operations. Net Asset Value : NAV is a key performance metric related to our investment objective to provide our stockholders with both current income and capital appreciation primarily through debt investments and, to a lesser extent, equity investments. NAV per share is increased (decreased) by our net increase (decrease) in net assets resulting from operations, decreased by distributions paid to common stockholders, and increased (decreased) by any capital share transactions depending on if the price transacted is accretive or dilutive to NAV, as applicable. As a result, annual comparisons of net increase (decrease) in net assets resulting from operations may not be meaningful. Portfolio Yield : Portfolio yield is a key financial metric of our investment portfolio in order to achieve our investment objective of providing current income to stockholders. Portfolio yield is a gross figure and does not contemplate changes in our costs, including on our debt and other expenses. See “ Portfolio Composition and Investment Activity—Portfolio Yields ” for additional information. We do not believe that our historical operating performance is necessarily indicative of our future results of operations that we expect to report in future periods. Our investment strategy is to maintain a leveraged credit investment portfolio, primarily focused on investments in middle-market companies in the United States, including debt investments and, to a lesser extent, equity investments, including warrants and other minority equity securities. Moreover, as a BDC and a RIC, we are also subject to certain constraints on our operations, including, but not limited to, limitations imposed by the 1940 Act and the Code. For the reasons described above, the results of operations described below may not necessarily be indicative of the results we expect to report in future periods. 88 Comparison of years ended December 31, 2025, 2024 and 2023. Consolidated operating results for the years ended December 31, 2025, 2024 and 2023 are as follows (in thousands): Year Ended December 31, 2025 2024 2023 Investment income Interest income: Cash interest income $ 24,010 $ 30,454 $ 39,915 PIK interest income 1,373 1,635 1,461 Net Loan Fee amortization 988 1,626 1,730 Accretion of interest income on CLO subordinated notes 11,558 8,731 10,857 Other interest income 466 888 706 Total interest income 38,395 43,334 54,669 Dividend income: Cash dividends 546 3,027 659 PIK dividends 1,346 1,098 1,136 Total dividend income 1,892 4,125 1,795 Fee income: Prepayment and other fees 118 136 383 Syndication fees 286 369 96 Total fee income 404 505 479 Total investment income 40,691 47,964 56,943 Total expenses 28,307 31,252 36,783 Net investment income 12,384 16,712 20,160 Net gain (loss) on investments (44,973) 11,730 (20,412) Loss on extinguishment of debt (504) — (213) Net increase (decrease) in net assets resulting from operations $ (33,093) $ 28,442 $ (465) 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. The decrease in cash interest income was primarily due a smaller average investment portfolio, at cost. 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 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. 89 During the year ended December 31, 2024, we recognized total PIK income of $2.7 million, which represented 5.7% of total investment income. 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, 2024, we recognized $1.0 million of PIK interest on a second lien debt investment that has a loan contract comprised of only PIK interest. Fee income is primarily comprised of unused loan commitment 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, 2024, total fee income remained stable compared to the prior year. Expenses. Operating expenses for the years ended December 31, 2025, 2024 and 2023, are presented below (in thousands): Year Ended December 31, 2025 2024 2023 Interest expense $ 16,510 $ 16,648 $ 19,482 Base management fees 5,769 5,993 7,218 Income Incentive Fee 1,758 4,178 5,040 Professional fees 1,623 1,630 1,681 Administration fees 1,557 1,521 1,680 Other expenses 1,090 1,282 1,682 Total expenses $ 28,307 $ 31,252 $ 36,783 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. During the year ended December 31, 2024, we fully repaid our outstanding SBA debentures totaling $31.9 million and reduced the total amount outstanding under the BNP Facility by $23.2 million. 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 return on net assets 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. 90 Net realized and unrealized gain (loss) on investments. Net realized and unrealized gain (loss) on investments, by investment type, for the years ended December 31, 2025, 2024 and 2023, are presented below (in thousands): Year Ended December 31, 2025 2024 2023 Debt investments $ (10,292) $ (7,340) $ (5,174) Equity investments (23,517) 17,118 (9,744) Structured Finance Securities (10,853) 2,471 (5,374) 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, 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. During the year ended December 31, 2024, we recognized net realized losses of $17.1 million, primarily due to a $7.8 million loss upon the write-off of our debt and equity investments in Master Cutlery, LLC, an aggregate net realized loss of $7.3 million upon the sale or restructure of debt investments, as well as an aggregate $3.5 million realized loss on the sale of Structured Finance Securities. Year ended December 31, 2023 During the year ended December 31, 2023, our portfolio experienced net losses of $20.4 million, comprised of net realized losses of $11.4 million and net unrealized depreciation of $9.0 million. During the year ended December 31, 2023, our net loss of $20.4 million primarily related to net unrealized depreciation of $14.5 million in the common equity of Pfanstiehl Holdings, Inc. During the year ended December 31, 2023, our loan portfolio experienced net losses of $5.2 million, primarily related to net unrealized depreciation of $4.3 million on our non-accrual loans. 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. Losses on Extinguishment of Debt Year ended December 31, 2025 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. 91 Year ended December 31, 2024 During the year ended December 31, 2024, we did not recognize a loss on extinguishment of debt. Year ended December 31, 2023 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. Comparison of the three months ended December 31, 2025 and September 30, 2025. Consolidated operating results for the three months ended December 31, 2025 and September 30, 2025, are as follows (in thousands): Three Months Ended December 31, 2025 September 30, 2025 Investment income Interest income: Cash interest income $ 5,506 $ 5,664 PIK interest income 167 419 Net Loan Fee amortization 276 310 Accretion of interest income on CLO subordinated notes 2,864 2,850 Other interest income 50 301 Total interest income 8,863 9,544 Dividend income: PIK dividends 412 351 Cash dividends 31 494 Total dividend income 443 845 Fee income: Syndication fees 33 132 Prepayment and other fees 30 30 Total fee income 63 162 Total investment income 9,369 10,551 Total expenses 6,673 7,611 Net investment income 2,696 2,940 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. 92 Expenses. Operating expenses for the three months ended December 31, 2025 and September 30, 2025 are presented below (in thousands): Three Months Ended December 31, 2025 September 30, 2025 Interest expense $ 4,267 $ 4,542 Base management fees 1,331 1,410 Income Incentive Fee — 607 Professional fees 396 388 Administration fees 394 387 Other expenses 285 277 Total expenses $ 6,673 $ 7,611 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 December 31, 2025 September 30, 2025 Debt investments $ (3,123) $ 3,161 Equity investments (6,696) (6,507) Structured Finance Securities (3,436) (4,150) Current/deferred income tax expense (276) (279) 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 . The following table presents weighted-average yield metrics for our portfolio: Three Months Ended December 31, 2025 September 30, 2025 Weighted-average performing income yield (1) : Debt investments 11.9 % 11.8 % Structured Finance Securities 17.5 % 17.0 % Interest-bearing investments 13.5 % 13.3 % Weighted-average realized yield : Interest-bearing investments (2) 11.6 % 11.5 % (1) Performing income yield is calculated as (a) the actual amount earned on performing interest-bearing investments, including interest, prepayment fees and amortization of Net Loan Fees, divided by (b) the weighted-average of total performing interest-bearing investments at amortized cost . 93 (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, 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 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. 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. 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. 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. 94 Sources and Uses of Cash and Cash Equivalents. 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. As discussed in “Item 8. Financial Statements and Supplementary Data—Note 3” , we pay OFS Advisor a quarterly incentive fee with respect to our pre-incentive fee net investment income, which includes investment income that has not been received in cash. In addition, we must distribute substantially all our taxable income, which approximates, but will not always equal, the cash we generate from net investment income to maintain our RIC tax treatment. We also obtain cash to fund investments or general corporate activities from the issuance of securities and our revolving lines of credit. These principal sources and uses of cash and liquidity are presented below (in thousands): Year Ended December 31, 2025 2024 2023 Cash from net investment income (1) $ 9,659 $ 13,707 $ 17,742 Net repayments and sales of portfolio investments (1) 33,980 19,303 63,824 Net cash provided by operating activities 43,639 33,010 81,566 Distributions paid to stockholders (2) (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) Payment of deferred debt issuance costs (374) — — Net cash used by financing activities (46,348) (72,291) (51,154) Net increase (decrease) in cash and cash equivalents $ (2,709) $ (39,281) $ 30,412 (1) Cash from net investment income includes all other cash flows from operating activities reported in our statements of cash flows. 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. Borrowings 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 . We are party to the BLA with Banc of California, as lender, to provide us with a senior secured revolving credit facility, or the Banc of California Credit Facility. 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 non-performing loans, and as otherwise specified in the BLA. The 95 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. The BLA also contains customary events of default, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-default to other indebtedness, bankruptcy, change in investment advisor, and the occurrence of a material adverse change in our financial condition. As of December 31, 2025, we were in compliance in all material respects with the applicable covenants. As of December 31, 2025, the terms of the Banc of California Credit Facility were as follows (dollar amounts in thousands): Principal Outstanding Unused Commitment Floor Rate Interest Rate Stated Coupon Annual Commitment Fee Maturity Date (1) Banc of California Credit Facility $ 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; (ii) increase the interest rate floor from 4.00% to 5.00%; and (iii) eliminate the 0.50% unused line fee and replace it with an annual commitment fee of 0.50%. 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 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. As of December 31, 2025, the BNP Facility had the following terms and balances (dollar amounts in thousands): 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. 96 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. Because the Unsecured Notes are not secured by any of our assets, they are effectively subordinated to all existing and future secured unsubordinated indebtedness (or any indebtedness that is initially unsecured as to which we subsequently grant a security interest), to the extent of the value of the assets securing such indebtedness, including, without limitation, borrowings under the Banc of California Credit Facility. In order to, among other things, reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may, from time to time, purchase the Unsecured Notes for cash in open market purchases and/or privately negotiated transactions. We will evaluate any such transactions in light of then-existing market conditions, taking into account our current liquidity, prospects for future access to capital, contractual restrictions and other factors. The amounts involved in any such transactions, individually or in the aggregate, may be material. As of December 31, 2025, the Unsecured Notes had the following terms and balances (dollar amounts in thousands): 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. (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. 97 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): Year Ended Average Dollar Borrowings Weighted-Average Interest Rate December 31, 2025 $ 251,696 6.56 % December 31, 2024 260,792 6.38 December 31, 2023 324,357 6.01 The following table shows the scheduled maturities of the principal balances of our outstanding borrowings as of December 31, 2025: Principal Due by Year Debt liabilities Total 2026 2027 2028 2029 2030 Banc of California Credit Facility (1) $ 4,500 $ 4,500 $ — $ — $ — $ — 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 $ — (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 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. In addition, we intend to distribute to our stockholders substantially all of our taxable income in order to satisfy the requirements applicable to RICs under Subchapter M of the Code. Consequently, we may not have the funds or the ability to fund new investments or make additional investments in our portfolio companies. The illiquidity of 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). However, Section 61(a)(2) of the 1940 Act provides that a BDC may reduce its asset coverage ratio, provided that certain conditions are met. Specifically, Section 61(a)(2) provides that in order for a BDC whose common stock is traded on a national securities exchange to be subject to 150% asset coverage, the BDC must either obtain: (i) approval of the required majority of its non-interested directors who have no financial interest in the proposal, which would become effective one year after the date of such approval; 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 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—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. 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. 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 98 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. Bank Trust Company, National Association and Citibank N.A., and we do not believe they are exposed to any significant credit risk. Contractual Obligations and Off-Balance Sheet Arrangements 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: (i) the Investment Advisory Agreement, pursuant to which OFS Advisor has agreed to serve as our investment adviser; and (ii) the Administration Agreement, pursuant to which OFS Services has agreed to furnish us with the facilities and administrative services necessary to conduct our day-to-day operations. We may become a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized on the balance sheet. 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 borrowing capacity under the Banc of California Credit Facility. Distributions We are taxed as a RIC under the Code. 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. Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, which includes contractual PIK interest, and the amortization of discounts and fees. Cash collections of income resulting from contractual PIK interest and dividends or the amortization of discounts and fees generally occur upon the repayment of the loans or debt securities that include such items. Non-cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation, and amortization expense. Our Board maintains a variable dividend policy with the objective of distributing quarterly distributions in an amount not less than 90% of our taxable quarterly income or potential annual income for a particular year. In addition, during the year, we may pay a special dividend, such that we may make additional, non-recurring, distributions of accumulated taxable income, while maintaining the option to spill over our excess taxable income to a following year. We may choose to retain a portion of our taxable income in any year and pay the 4% U.S. federal excise tax on the retained amounts. For the years ended December 31, 2025, 2024 and 2023, we recognized U.S. 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. Financial Statements and Supplementary Data—Note 10.” 99 Recent Developments 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. 100