Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of Transfers Between Levels, Change In Investments Measured at Fair Value Using Level 3 Inputs, and Unrealized Appreciation (Depreciation) for Assets Still Held

The following table presents the Company’s transfers of Level 2 and Level 3 debt investments for the years ended December 31, 2025 and 2024, respectively:


	Year Ended December 31,
	2025		2024
Transfers from Level 2 to Level 3	$	1,289	$	2,596
Transfers from Level 3 to Level 2	—		8,591

The following tables present changes in investments measured at fair value using Level 3 inputs for the years ended December 31, 2025 and 2024:


	Year Ended December 31, 2025
	First Lien Debt Investments		Second Lien Debt Investments		Preferred Equity		Common Equity and Warrants		Structured Finance Securities		Total
Level 3 assets, December 31, 2024	$	168,037	$	34,331	$	12,248	$	96,337	$	76,875	$	387,828
Net realized gain (loss) on investments	7		(3,786)		—		(498)		(6,933)		(11,210)
Net change in unrealized appreciation (depreciation) on investments	2,521		(7,533)		(3,777)		(19,264)		(3,920)		(31,973)
Amortization of Net Loan Fees	473		198		—		—		231		902
Accretion of interest income on Structured Finance Securities	—		—		—		—		11,558		11,558
Capitalized PIK interest and dividends	523		850		1,346		—		—		2,719
Amendment fees received	(58)		—		—		—		—		(58)
Purchase and origination of portfolio investments	25,172		—		2,750		—		19,628		47,550
Proceeds from principal payments on portfolio investments	(10,544)		(7,061)		—		—		(9,133)		(26,738)
Sale and redemption of portfolio investments	(19,174)		(7,590)		—		(927)		(12,048)		(39,739)
Distributions received from portfolio investments	—		—		—		(269)		(14,653)		(14,922)
Conversion from debt investments to equity investments	(12,650)		—		—		12,650		—		—
Transfers from Level 2 to Level 3	1,289		—		—		—		—		1,289

Level 3 assets, December 31, 2025	$	155,596	$	9,409	$	12,567	$	88,029	$	61,605	$	327,206


	Year Ended December 31, 2024
	First Lien Debt Investments		Second Lien Debt Investments		Subordinated Debt Investments		Preferred Equity		Common Equity and Warrants		Structured Finance Securities		Total
Level 3 assets, December 31, 2023	$	186,831	$	48,429	$	—	$	13,240	$	76,689	$	79,045	$	404,234
Net realized gain (loss) on investments	(2,663)		(2,136)		(4,376)		(2,911)		807		(3,518)		(14,797)
Net change in unrealized appreciation (depreciation) on investments	(18)		(498)		4,680		221		18,820		5,967		29,172
Amortization of Net Loan Fees	937		413		—		—		—		243		1,593
Accretion of interest income on Structured Finance Securities	—		—		—		—		—		8,731		8,731
Capitalized PIK interest and dividends	669		966		—		1,098		—		—		2,733
Amendment fees received	(281)		—		—		—		—		—		(281)
Purchase and origination of portfolio investments	49,662		8,291		—		—		—		27,369		85,322
Proceeds from principal payments on portfolio investments	(44,511)		(14,069)		(304)		—		—		(5,250)		(64,134)
Sale and redemption of portfolio investments	(13,925)		(7,065)		—		(669)		(1,379)		(20,117)		(43,155)
Distributions received from portfolio investments	—		—		—		—		—		(15,595)		(15,595)
Conversion from debt investments to equity investments	(2,669)		—		—		1,269		1,400		—		—
Transfers from Level 2 to Level 3	2,596		—		—		—		—		—		2,596
Transfers from Level 3 to Level 2	(8,591)		—		—		—		—		—		(8,591)
Level 3 assets, December 31, 2024	$	168,037	$	34,331	$	—	$	12,248	$	96,337	$	76,875	$	387,828

The net unrealized appreciation (depreciation) reported in the Company’s consolidated statements of operations for the years ended December 31, 2025 and 2024, attributable to the Company’s Level 3 assets still held at those respective year ends was as follows:


	Year Ended December 31,
	2025		2024
Debt investments	$	(6,688)	$	(6,518)
Equity investments	(23,541)		18,680
Structured Finance Securities	(9,081)		2,190
Net unrealized appreciation (depreciation) on investments held	$	(39,310)	$	14,352

Schedule of Investment Portfolio Measured at Fair Value on a Recurring Basis

The following tables present the Company’s investment portfolio measured at fair value on a recurring basis as of December 31, 2025 and 2024, respectively.


Security	Level 1		Level 2		Level 3		Fair Value at December 31, 2025
Debt investments	$	—	$	14,809	$	165,005	$	179,814
Equity investments	—		—		100,596		100,596
Structured Finance Securities	—		—		61,605		61,605
	$	—	$	14,809	$	327,206	$	342,015


Security	Level 1		Level 2		Level 3		Fair Value at December 31, 2024
Debt investments	$	—	$	21,837	$	202,368	$	224,205
Equity investments	—		—		108,585		108,585
Structured Finance Securities	—		—		76,875		76,875
	$	—	$	21,837	$	387,828	$	409,665

Schedule of Significant Level 3 Inputs

The following tables provide the primary quantitative information about valuation techniques and the Company’s unobservable inputs to its Level 3 fair value measurements as of December 31, 2025 and 2024. The Company may make changes to the valuation techniques, among techniques otherwise commonly utilized in accordance with its valuation policies, and/or the weighting of techniques used for particular investments based on changes in facts-and-circumstances and depending on the availability of, or changes in, information in order to produce the best estimate of fair value as of the measurement date. In addition to the techniques and unobservable inputs noted in the tables below and in accordance with OFS Advisor’s valuation policy, OFS Advisor, as valuation designee, may also use other valuation techniques and methodologies when determining the fair value measurements of the Company’s investment assets. The tables are not intended to be all-inclusive and only present the most significant unobservable input(s) relevant to the valuation designee’s determination of fair value.

Fair Value at December 31, 2025

Valuation technique

Unobservable inputs

Range

(Weighted average)(1)

Debt investments:

First lien

115,014

Discounted cash flow

Discount rates

8.61% - 37.50% (12.77%)

21,925

Market approach

EBITDA multiples

3.00x - 8.00x (6.11x)

8,225

Market approach

Revenue multiples

0.35x - 0.50x (0.35x)

10,432

Market approach

Transaction Price

Second lien

2,500

Discounted cash flow

Discount rates

13.70% - 13.70% (13.70%)

448

Market approach

EBITDA multiples

9.00x - 9.00x (9.00x)

6,461

Market approach

Revenue multiples

0.35x - 0.90x (0.70x)

Structured Finance Securities:

Subordinated notes(2)

53,368

Discounted cash flow

Discount rates

13.00% - 27.50% (18.73%)

Constant default rate

2.00% - 3.00% (2.08%)

Recovery rate

65.00% - 65.00% (65.00%)

Mezzanine debt(2)

8,074

Discounted cash flow

Discount margin

9.10% - 10.70% (9.62%)

Constant default rate

2.00% - 2.00% (2.00%)

Recovery rate

65.00% - 65.00% (65.00%)

Subordinated notes

163

Market approach

Net asset value liquidation(3)

Equity investments:

Preferred equity

12,448

Market approach

EBITDA multiples

7.25x - 8.50x (8.46x)

119

Market approach

Revenue multiples

0.50x - 0.50x (0.50x)

Common equity, warrants and other

88,029

Market approach

EBITDA multiples

6.00x - 14.75x (12.33x)

—

Market approach

Revenue multiples

0.35x - 0.50x (0.44x)

327,206

(1) Weighted average is calculated based on the fair value of investments.

(2) The cash flows utilized in the discounted cash flow calculations assume: (i) liquidation of (a) certain distressed investments and (b) all investments currently in default held by the issuing CLO at their current market prices; and (ii) redeployment of proceeds at the issuing CLO’s assumed reinvestment rate.

(3) NAV liquidation represents the fair value, or estimated expected residual value, of the investment.

Fair Value at December 31, 2024

Valuation technique

Unobservable inputs

Range

(Weighted average)(1)

Debt investments:

First lien

123,028

Discounted cash flow

Discount rates

9.01% - 32.50% (13.07%)

16,684

Market approach

EBITDA multiples

3.00x - 7.27x (5.43x)

9,232

Market approach

Revenue multiples

0.40x - 0.40x (0.40x)

19,093

Market approach

Transaction Price

Second lien

27,400

Discounted cash flow

Discount rates

10.84% - 33.45% (15.31%)

4,913

Market approach

EBITDA multiples

8.43x - 8.43x (8.43x)

2,018

Market approach

Revenue multiples

0.40x - 0.40x (0.40x)

Structured Finance Securities(2):

Subordinated notes

61,308

Discounted cash flow

Discount rates

15.00% - 40.00% (22.25%)

Constant default rate

2.00% - 3.00% (2.07%)

Recovery rate

65.00% - 65.00% (65.00%)

2,993

Market approach

Transaction Price

Mezzanine debt

12,574

Discounted cash flow

Discount margin

7.60% - 9.90% (8.89%)

Constant default rate

2.00% - 3.00% (2.25%)

Recovery rate

65.00% - 65.00% (65.00%)

Equity investments:

Preferred equity

12,248

Market approach

EBITDA multiples

7.00x - 8.50x (8.46x)

Common equity, warrants and other

96,337

Market approach

EBITDA multiples

5.85x - 15.75x (13.66x)

—

Market approach

Revenue multiples

0.00x - 0.40x (0.40x)

387,828

(1) Weighted average is calculated based on the fair value of investments.

Schedule of Carrying Values and Fair Values of Debt

The following tables present the fair value measurements of the Company’s debt and the level within the fair value hierarchy of the significant unobservable inputs used to determine such fair values as of December 31, 2025 and 2024:


	December 31, 2025
Description	Level 1(1)		Level 2		Level 3(2)		Total
Banc of California Credit Facility	$	—	$	—	$	4,500	$	4,500
BNP Facility	—		—		50,950		50,950
OFS Capital Corporation 4.75% Notes due 2026	—		—		15,961		15,961
OFS Capital Corporation 7.50% Notes due 2028	70,877		—		—		70,877
OFS Capital Corporation 4.95% Notes due 2028	52,118		—		—		52,118
OFS Capital Corporation 8.00% Note due 2029	—		—		25,333		25,333
Total debt	$	122,995	$	—	$	96,744	$	219,739


	December 31, 2024
Description	Level 1(1)		Level 2		Level 3(2)		Total
Banc of California Credit Facility	$	—	$	—	$	1,000	$	1,000
BNP Facility	—		—		67,350		67,350
OFS Capital Corporation 4.75% Notes due 2026	—		—		121,326		121,326
OFS Capital Corporation 4.95% Notes due 2028	49,698		—		—		49,698
Total debt	$	49,698	$	—	$	189,676	$	239,374

(1) For Level 1 measurements, fair value is estimated by using the closing price of the security on The Nasdaq Global Select Market.

(2) For Level 3 measurements, fair value is estimated through discounting remaining payments using current market rates for similar instruments at the measurement date through the legal maturity date.

The following are the carrying values and fair values of the Company’s debt as of December 31, 2025 and 2024:


	December 31, 2025				December 31, 2024
Description	Carrying Value(1)		Fair Value		Carrying Value(1)		Fair Value
Banc of California Credit Facility	$	4,500	$	4,500	$	1,000	$	1,000
BNP Facility	50,950		50,950		67,350		67,350
OFS Capital Corporation 4.75% Notes due 2026	15,988		15,961		124,097		121,326
OFS Capital Corporation 7.50% Notes due 2028	67,498		70,877		—		—
OFS Capital Corporation 4.95% Notes due 2028	54,420		52,118		54,215		49,698
OFS Capital Corporation 8.00% Note due 2029	24,282		25,333		—		—

Total debt	$	217,638	$	219,739	$	246,662	$	239,374

(1) Carrying value is calculated as the outstanding principal amount less unamortized deferred debt issuance costs. See Note 2 for details.

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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