UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31,
2015

or

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

For the transition period from _____________
to _______________



Commission file number: 814-00672










OHA Investment Corporation



(Exact name of registrant as specified in
its charter)








|Maryland                                        |  | 20-1371499         
|----------------------------------------------- |  | -------------------
|(State or other jurisdiction of                 |  | (I.R.S. Employer   
|incorporation or organization)                  |  | Identification No.)
|                                                |  |                    
|1114 Avenue of the Americas,
        27th Floor |  | 10036              
|New York, New York                              |  | (Zip Code)         
|(Address of principal executiveoffices)         |  |                    

(212) 852-1900

(Registrant’s telephone number, including
area code)



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



Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes  ̈
No  ̈



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





|Large accelerated filer  ̈ | Accelerated filer x | Non-accelerated filer  ̈                     | Smaller reporting company  ̈
|------------------------- | ------------------- | ------------------------------------------- | ---------------------------
|                          |                     | (Do not check if smaller
reporting company) |                            







Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ̈ No x



As of May 7, 2015, there were 20,342,483 shares
of the registrant’s common stock outstanding.











Table
of Contents



|PART I – FINANCIAL INFORMATION                                                                 | 1 
|---------------------------------------------------------------------------------------------- | --
|                                                                                               |   
|Item 1. Financial Statements.                                                                  | 1 
|                                                                                               |   
|Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 25
|                                                                                               |   
|Item 3. Quantitative and Qualitative Disclosures About Market Risk.                            | 31
|                                                                                               |   
|Item 4. Controls and Procedures.                                                               | 31
|                                                                                               |   
|PART II – OTHER INFORMATION                                                                    | 32
|                                                                                               |   
|Item 1. Legal Proceedings.                                                                     | 32
|                                                                                               |   
|Item 1A. Risk Factors.                                                                         | 32
|                                                                                               |   
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.                           | 32
|                                                                                               |   
|Item 6. Exhibits.                                                                              | 32
|                                                                                               |   
|SIGNATURES                                                                                     | 33











PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.



OHA INVESTMENT CORPORATION

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share
and Per Share Amounts)



|                                                              |  | March 31,   |         |   | December 31, |  
|------------------------------------------------------------- |  | ----------- | ------- | - | ------------ | -
|                                                              |  | 2015        |         |   | 2014         |  
|                                                              |  | (Unaudited) |         |   |              |  
|Assets                                                        |  |             |         |   |              |  
|Investments in portfolio securities at fair value             |  |             |         |   |              |  
|Control investments                                           |  |             |         |   |              |  
|(cost: $29,101 and $28,661, respectively)                     |  | $           | 5,491   |   |              | $
|Affiliate investments                                         |  |             |         |   |              |  
|(cost: $18,116 and $17,986, respectively)                     |  |             | 17,928  |   |              |  
|Non-affiliate investments                                     |  |             |         |   |              |  
|(cost: $172,968 and $153,100, respectively)                   |  |             | 169,149 |   |              |  
|Total portfolio investments                                   |  |             |         |   |              |  
|(cost: $220,185 and $199,747, respectively)                   |  |             | 192,568 |   |              |  
|Investments in U.S. Treasury Bills at fair value              |  |             |         |   |              |  
|(cost: $30,601 and $30,600, respectively)                     |  |             | 30,601  |   |              |  
|Total investments                                             |  |             | 223,169 |   |              |  
|Cash and cash equivalents                                     |  |             | 29,960  |   |              |  
|Accounts receivable and other current assets                  |  |             | 306     |   |              |  
|Interest receivable                                           |  |             | 2,135   |   |              |  
|Deferred loan costs and other prepaid assets                  |  |             | 1,267   |   |              |  
|Total current assets                                          |  |             | 33,668  |   |              |  
|Total assets                                                  |  | $           | 256,837 |   |              | $
|                                                              |  |             |         |   |              |  
|Liabilities and net assets                                    |  |             |         |   |              |  
|Current liabilities                                           |  |             |         |   |              |  
|Accounts payable and accrued expenses                         |  | $           | 2,123   |   |              | $
|Management fees payable                                       |  |             | 678     |   |              |  
|Dividends payable                                             |  |             | 2,465   |   |              |  
|Income taxes payable                                          |  |             | 131     |   |              |  
|Short-term debt                                               |  |             | 30,000  |   |              |  
|Total current liabilities                                     |  |             | 35,397  |   |              |  
|Long-term debt                                                |  |             | 72,000  |   |              |  
|Total liabilities                                             |  |             | 107,397 |   |              |  
|Commitments and contingencies  (Note 6)                       |  |             |         |   |              |  
|Net assets                                                    |  |             |         |   |              |  
|Common stock, $.001 par value, 250,000,000 shares authorized; |  |             |         |   |              |  
|20,543,939 and 20,616,422 shares issued and outstanding       |  |             | 21      |   |              |  
|Paid-in capital in excess of par                              |  |             | 244,099 |   |              |  
|Undistributed net investment income (loss)                    |  |             | (4,861  | ) |              |  
|Undistributed net realized capital gain (loss)                |  |             | (65,319 | ) |              |  
|Net unrealized appreciation (depreciation) on investments     |  |             | (24,500 | ) |              |  
|Total net assets                                              |  |             | 149,440 |   |              |  
|Total liabilities and net assets                              |  | $           | 256,837 |   |              | $
|Net asset value per share                                     |  | $           | 7.27    |   |              | $



(See accompanying notes to consolidated financial
statements)



1







OHA INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS
OF OPERATIONS

(In Thousands, Except Per
Share Data)

(Unaudited)



|                                                                      |  | For The Three Months Ended |       
|--------------------------------------------------------------------- |  | -------------------------- | ------
|                                                                      |  | March 31,                  |       
|                                                                      |  | 2015                       |       
|Investment income                                                     |  |                            |       
|Interest income:                                                      |  |                            |       
|Control investments                                                   |  | $                          | -     
|Affiliate investments                                                 |  |                            | 602   
|Non-affiliate investments                                             |  |                            | 3,175 
|Dividend income:                                                      |  |                            |       
|Non-affiliate investments                                             |  |                            | 988   
|Royalty income, net of amortization:                                  |  |                            |       
|Control investments                                                   |  |                            | 13    
|Non-affiliate investments                                             |  |                            | -     
|Other income                                                          |  |                            | 38    
|Total investment income                                               |  |                            | 4,816 
|Operating expenses                                                    |  |                            |       
|Interest expense and bank fees                                        |  |                            | 652   
|Management fees                                                       |  |                            | 678   
|Costs related to strategic alternatives review                        |  |                            | -     
|Professional fees, net of legal fees of $287 and $557,                |  |                            |       
|respectively, related to ATP bankruptcy (See Note 6)                  |  |                            | 531   
|Other general and administrative expenses                             |  |                            | 764   
|Total operating expenses                                              |  |                            | 2,625 
|Income tax provision, net                                             |  |                            | 22    
|Net investment income                                                 |  |                            | 2,169 
|Net realized capital gain (loss) on investments                       |  |                            |       
|Control investments                                                   |  |                            | (21   
|Affiliate investments                                                 |  |                            | -     
|Non-affiliate investments                                             |  |                            | -     
|Total net realized capital gain (loss) on investments                 |  |                            | (21   
|Net unrealized appreciation (depreciation) on investments             |  |                            |       
|Control investments                                                   |  |                            | (1,224
|Affiliate investments                                                 |  |                            | 368   
|Non-affiliate investments                                             |  |                            | (3,177
|Total net unrealized appreciation (depreciation) on investments       |  |                            | (4,033
|                                                                      |  |                            |       
|Net decrease in net assets resulting from operations                  |  | $                          | (1,885
|                                                                      |  |                            |       
|Net decrease in net assets resulting from operations per common share |  | $                          | (0.09 
|                                                                      |  |                            |       
|Dividends declared per common share                                   |  | $                          | 0.12  
|Weighted average shares outstanding - basic and diluted               |  |                            | 20,612



(See accompanying notes to consolidated financial
statements)



2







OHA INVESTMENT CORPORATION

CONSOLIDATED STATEMENT
OF CHANGES IN NET ASSETS

(In Thousands, Except Per
Share Data)

(Unaudited)



|                                                          |  | For The Three Months Ended |        
|--------------------------------------------------------- |  | -------------------------- | -------
|                                                          |  | March 31,                  |        
|                                                          |  | 2015                       |        
|Increase (decrease) in net assets from operations         |  |                            |        
|Net investment income                                     |  | $                          | 2,169  
|Net realized capital loss on investments                  |  |                            | (21    
|Net unrealized appreciation (depreciation) on investments |  |                            | (4,033 
|Net decrease in net assets resulting from operations      |  |                            | (1,885 
|Distributions to common stockholders                      |  |                            |        
|Distributions from net investment income                  |  |                            | (2,465 
|Return of capital                                         |  |                            | -      
|Net decrease in net assets from distributions             |  |                            | (2,465 
|Capital transactions                                      |  |                            |        
|Acquisition of common stock under repurchase plan         |  |                            | (374   
|Net decrease in net assets from capital transactions      |  |                            | (374   
|Net decrease in net assets                                |  |                            | (4,724 
|Net assets, beginning of period                           |  |                            | 154,164
|Net assets, end of period                                 |  | $                          | 149,440
|Net asset value per common share at end of period         |  | $                          | 7.27   
|Common shares outstanding at end of period                |  |                            | 20,544 



(See accompanying notes to consolidated financial
statements)



3







OHA INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS
OF CASH FLOWS

(In Thousands)

(Unaudited)



|                                                                                                                                          |  | For The Three Months Ended |        
|----------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | -------
|                                                                                                                                          |  | March 31,                  |        
|                                                                                                                                          |  | 2015                       |        
|Cash flows from operating activities                                                                                                      |  |                            |        
|Net decrease in net assets resulting from operations                                                                                      |  | $                          | (1,885 
|Adjustments to reconcile net decrease in net assets resulting from operations
    to net cash provided by (used in) operating activities: |  |                            |        
|Payment-in-kind interest                                                                                                                  |  |                            | (118   
|Net amortization of premiums, discounts and fees                                                                                          |  |                            | (106   
|Net realized capital (gain) loss on investments                                                                                           |  |                            | 21     
|Net unrealized depreciation (appreciation) on investments                                                                                 |  |                            | 4,033  
|Amortization of deferred loan costs                                                                                                       |  |                            | 283    
|Effects of changes in operating assets and liabilities:                                                                                   |  |                            |        
|Accounts receivable and other current assets                                                                                              |  |                            | 10     
|Interest receivable                                                                                                                       |  |                            | (45    
|Prepaid assets                                                                                                                            |  |                            | 1      
|Payables and accrued expenses                                                                                                             |  |                            | 220    
|Purchase of investments in portfolio securities                                                                                           |  |                            | (21,108
|Proceeds from redemption of investments in portfolio securities                                                                           |  |                            | 873    
|Purchase of investments in U.S. Treasury Bills                                                                                            |  |                            | (30,601
|Proceeds from redemption of investments in U.S. Treasury Bills                                                                            |  |                            | 30,600 
|Net cash provided by (used in) operating activities                                                                                       |  |                            | (17,822
|Cash flows from financing activities                                                                                                      |  |                            |        
|Borrowings under revolving credit facilities                                                                                              |  |                            | 80,000 
|Repayments on revolving credit facilities                                                                                                 |  |                            | (60,000
|Acquisition of common stock under repurchase plan                                                                                         |  |                            | (374   
|Dividends paid                                                                                                                            |  |                            | (3,299 
|Net cash provided by financing activities                                                                                                 |  |                            | 16,327 
|Net increase (decrease) in cash and cash equivalents                                                                                      |  |                            | (1,495 
|Cash and cash equivalents, beginning of period                                                                                            |  |                            | 31,455 
|Cash and cash equivalents, end of period                                                                                                  |  | $                          | 29,960 



(See accompanying notes to consolidated financial
statements)



4







OHA INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF
INVESTMENTS

March 31, 2015

(In Thousands, Except Share
Amounts and Percentages)

(Unaudited)



|Portfolio Company                                    |  | Industry Segment           |  | Investment (1)                             |  | Principal |        |  | Cost |   |        | Fair Value (2) | 
|---------------------------------------------------- |  | -------------------------- |  | ------------------------------------------ |  | --------- | ------ |  | ---- | - | ------ | -------------- | 
|PORTFOLIO INVESTMENTS                                |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Control Investments - (More than 25% owned)          |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Contour Highwall Holdings, LLC                       |  | Coal Mining                |  | Senior Secured Term Loan                   |  | $         | 10,757 |  |      | $ | 10,778 |                | 
|                                                     |  |                            |  | (12%, due 10/14/2015) (6) (14)             |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | Unsecured Promissory Note                  |  |           | 440    |  |      |   | 440    |                | 
|                                                     |  |                            |  | (6%, due 4/11/2016) (6)                    |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | 800 Membership Units representing          |  |           |        |  |      |   | -      |                | 
|                                                     |  |                            |  | 80% of the common equity (10)              |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Spirit Resources, LLC                                |  | Oil & Natural Gas          |  | Tranche A - Senior Secured Term Loan       |  |           | 5,500  |  |      |   | 5,464  |                | 
|                                                     |  | Production and Development |  | (The greater of 8% or LIBOR + 4%,          |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | due 4/28/2015) (6) (16)                    |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | Tranche B - Senior Secured Term Loan       |  |           | 4,409  |  |      |   | 4,409  |                | 
|                                                     |  |                            |  | (The greater of 15% PIK or LIBOR + 11%,    |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | due 10/28/2015) (6)                        |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | 80,000 Preferred Units representing        |  |           |        |  |      |   | 8,000  |                | 
|                                                     |  |                            |  | 100% of the outstanding equity             |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | 3% Overriding Royalty Interest             |  |           |        |  |      |   | 10     |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Subtotal Control Investments - (More than 25% owned) |  |                            |  |                                            |  |           |        |  |      | $ | 29,101 |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Affiliate Investments - (5% to 25% owned)            |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|OCI Holdings, LLC                                    |  | Home Health Services       |  | Subordinated Note                          |  | $         | 15,818 |  |      | $ | 15,616 |                | 
|                                                     |  |                            |  | (The greater of 12% or LIBOR + 11% cash    |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | plus 3% PIK, due 8/15/2018) (13)           |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | OHA/OCI Investments, LLC Class A           |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | Units representing 20.8% diluted ownership |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | of OCI Holdings, LLC                       |  |           |        |  |      |   | 2,500  |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Subtotal Affiliate Investments - (5% to 25% owned)   |  |                            |  |                                            |  |           |        |  |      | $ | 18,116 |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Non-affiliate Investments - (Less than 5% owned)     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Castex Energy 2005, LP                               |  | Oil & Natural Gas          |  | Redeemable Preferred LP Units              |  | $         | 50,000 |  |      | $ | 50,018 |                | 
|                                                     |  | Production and Development |  | (current pay 8% cash, due 7/1/2016) (9)    |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|ATP Oil & Gas Corporation/                           |  | Oil & Natural Gas          |  | Limited Term Royalty Interest              |  |           |        |  |      |   | 26,413 |                | 
|Bennu Oil & Gas, LLC                                 |  | Production and Development |  | (Notional rate of 13.2%) (15)              |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Foundation Building Materials, LLC                   |  | Building Materials         |  | Second Lien Term Loan                      |  |           | 18,700 |  |      |   | 18,515 |                | 
|                                                     |  |                            |  | (The greater of 12% or LIBOR + 1%,         |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | due 4/30/2019)                             |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Shoreline Energy, LLC                                |  | Oil & Natural Gas          |  | Second Lien Term Loan                      |  |           | 13,222 |  |      |   | 12,893 |                | 
|                                                     |  | Production and Development |  | (The greater of 10.25% or LIBOR +          |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | 9%, or the greater of 10.25% or            |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | Prime + 8%, due 3/30/2019)                 |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Talos Production, LLC                                |  | Oil & Natural Gas          |  | Senior Unsecured Notes                     |  |           | 12,000 |  |      |   | 11,954 |                | 
|                                                     |  | Production and Development |  | (9.75%, due 2/15/2018) (3)                 |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Citadel Plastics Holdings, Inc.                      |  | Chemicals                  |  | Second Lien Term Loan                      |  |           | 10,000 |  |      |   | 9,904  |                | 
|                                                     |  |                            |  | (The greater of 9% or LIBOR + 8%,          |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | due 11/5/2021) (3)                         |  |           |        |  |      |   |        |                | 



(See accompanying notes to consolidated financial
statements)



5







OHA INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF
INVESTMENTS

March 31, 2015

(In Thousands, Except Share
Amounts and Percentages)

(Unaudited — Continued)



|Portfolio Company                                            |  | Industry Segment               |  | Investment (1)                                   |  | Principal |        |  | Cost |   |         | Fair Value (2) | 
|------------------------------------------------------------ |  | ------------------------------ |  | ------------------------------------------------ |  | --------- | ------ |  | ---- | - | ------- | -------------- | 
|PORTFOLIO INVESTMENTS - Continued                            |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Non-affiliate Investments - (Less than 5% owned) - Continued |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Appriss Holdings, Inc.                                       |  | Information Services           |  | Second Lien Term Loan                            |  | $         | 10,000 |  |      | $ | 9,856   |                | 
|                                                             |  |                                |  | (The greater of 9.25% or LIBOR +                 |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  | 8.25%, due 5/21/2021)                            |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|WP Mustang (Electronic                                       |  | Financial Services             |  | Second Lien Term Loan                            |  |           | 10,000 |  |      |   | 9,830   |                | 
|Funds Services, LLC)                                         |  |                                |  | (The greater of 8.5% or LIBOR +                  |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  | 7.5%, due 5/29/2022) (3)                         |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|KOVA International, Inc.                                     |  | Medical Supplies               |  | Senior Subordinated Notes                        |  |           | 9,000  |  |      |   | 8,874   |                | 
|                                                             |  | Manufacturing and Distribution |  | (12.75%, due 8/15/2018)                          |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Gramercy Park CLO Ltd. (5)                                   |  | Financial Services             |  | Subordinated Notes, Residual Interest            |  |           | 9,000  |  |      |   | 6,892   |                | 
|                                                             |  |                                |  | (11.95%, based on cost, due 7/17/2023) (3)       |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Huff Energy Holdings, Inc.                                   |  | Oil & Natural Gas              |  | Senior Secured Term Loan                         |  |           | 5,020  |  |      |   | 4,989   |                | 
|                                                             |  | Production and Development     |  | (The greater of 12.5% or LIBOR +                 |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  | 8.5%, due 11/20/2015)                            |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  | 3% Overriding Royalty Interest (11)              |  |           |        |  |      |   | 42      |                | 
|                                                             |  |                                |  | Warrants (12)                                    |  |           |        |  |      |   | 42      |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Stardust Financial Holdings (Hanson)                         |  | Building Materials             |  | Second Lien Term Loan                            |  |           | 2,500  |  |      |   | 2,278   |                | 
|                                                             |  |                                |  | (The greater of 10.5% or LIBOR +                 |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  | 1%, due 3/13/2023) (3)                           |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Globe BG, LLC                                                |  | Coal Production                |  | Contingent earn-out related to July 2011 sale    |  |           |        |  |      |   | -       |                | 
|                                                             |  |                                |  | of royalty interests in Alden Resources, LLC (8) |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Myriant Corporation                                          |  | Alternative Fuels and          |  | 131,741 shares of common stock, representing     |  |           |        |  |      |   | 419     |                | 
|                                                             |  | Specialty Chemicals            |  | 0.56% of the outstanding common shares           |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  | Warrants (7)                                     |  |           |        |  |      |   | 49      |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Subtotal Non-affiliate Investments - (Less than 5% owned)    |  |                                |  |                                                  |  |           |        |  |      | $ | 172,968 |                | 
|Subtotal Portfolio Investments (86.3% of total investments)  |  |                                |  |                                                  |  |           |        |  |      | $ | 220,185 |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|GOVERNMENT SECURITIES                                        |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|U.S. Treasury Bills (4)                                      |  |                                |  |                                                  |  | $         | 30,601 |  |      | $ | 30,601  |                | 
|Subtotal Government Securities (13.7% of total investments)  |  |                                |  |                                                  |  |           |        |  |      | $ | 30,601  |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|TOTAL INVESTMENTS                                            |  |                                |  |                                                  |  |           |        |  |      | $ | 250,786 |                | 



(See accompanying notes to consolidated financial
statements)



6







OHA INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF
INVESTMENTS

March 31, 2015

(Unaudited — Continued)



NOTES TO CONSOLIDATED SCHEDULE OF INVESTMENTS



| | (1) | All of our portfolio investments are pledged as collateral for obligations under our Investment Facility. Our investments in
U.S. Treasury Bills are pledged as collateral for obligations under our Treasury Facility. See Note 3 of Notes to Consolidated
Financial Statements. Percentages represent interest rates in effect at the end of the period and due dates represent the contractual
maturity dates. Warrants, common stocks, units and earn-outs are non-income producing securities, unless otherwise stated.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Our Board of Directors determines, in good faith, the fair value of our investments. Fair value is determined using unobservable
inputs (Level 3 hierarchy), unless otherwise stated.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Fair value is determined using prices with observable market inputs (Level 2 hierarchy). See Note 7 of Notes to Consolidated
Financial Statements.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Fair value is determined using prices for identical securities in active markets (Level 1 hierarchy). See Note 7 of Notes to
Consolidated Financial Statements.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | We have determined that this investment is not a “qualifying asset” under Section 55(a) of the 1940 Act. Under
the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent
at least 70% of our total assets. The status of these assets under the 1940 Act is subject to change. We monitor the status of
these assets on an ongoing basis.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | Investment on non-accrual status.
| | --- | ---------------------------------



| | (7) | Myriant Corporation warrants expire on August 15, 2015 and provide us the right to purchase 32,680 shares of Myriant Corporation
common stock at a purchase price of $10.00 per share.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | Contingent payment of up to $6.8 million is dependent upon Alden Resources, LLC’s ability
to achieve certain sales volume and operating efficiency levels during the three-year period ended July 2014. The
reporting and review mechanism to conclude the ultimate value of the earn-out has not yet been completed. Globe BG, LLC has informally
advised us that the company’s relative cost of production has not improved since July 2011.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (9) | Upon redemption, we will receive the outstanding face amount plus an option to elect to receive either: a) a cash payment resulting
in a total 12% IRR (inclusive of the 8% cash distributions) or b) our pro rata share of 2% of the outstanding regular limited partner
interests in Castex Energy 2005, LP (0.67% net to us).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (10) | The fair value of our Contour Highwall Holdings, LLC, or Contour, membership units also includes the value attributable to
our ownership of 8,000 shares of common stock of Bundy Auger Mining, Inc., an affiliate of Contour.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (11) | Huff Energy Holdings, Inc., or HEH, overriding royalty interests are effective the earlier of repayment in full of the Term
Loan or the maturity date of the Term Loan. HEH has the right to purchase the overriding royalty interests on, or before, the maturity
date of the Term Loan for $50,000, provided that the Term Loan is repaid by the maturity date.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (12) | HEH warrants expire seven years after repayment of the Term Loan and entitle us to purchase 30% of the outstanding equity at
$0.01 per share. HEH has the right to purchase these warrants on, or before, the maturity date of the Term Loan for $50,000, provided
that the Term Loan is repaid by the maturity date.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (13) | Effective July 9, 2014, we executed a third amendment to our credit agreement with OCI Holdings, LLC, or OCI, to amend certain
covenant limits in exchange for increases in OCI’s interest to the greater of 12% or LIBOR plus 11% cash, plus 3% payment-in-kind,
or PIK.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (14) | Contour has not made its September 2014 through March 2015 interest payments on the Senior Secured Term Loan. This investment
was placed on non-accrual effective October 1, 2014.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (15) | For more information, please refer to the discussion of the ATP litigation under the heading “Legal Proceedings”
in Note 6 to the Consolidated Financial Statements.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (16) | Spirit Resources, LLC, or Spirit, has not made its November 2014 through March 2015 interest payments on the Tranche A Senior
Secured Term Loan. This investment was placed on non-accrual effective November 1, 2014.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(See accompanying notes to consolidated financial
statements)



7







OHA INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF
INVESTMENTS

December 31, 2014

(In Thousands, Except Share
Amounts and Percentages)



|Portfolio Company                                    |  | Industry Segment           |  | Investment (1)                             |  | Principal |        |  | Cost |   |        | Fair Value (2) | 
|---------------------------------------------------- |  | -------------------------- |  | ------------------------------------------ |  | --------- | ------ |  | ---- | - | ------ | -------------- | 
|PORTFOLIO INVESTMENTS                                |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Control Investments - (More than 25% owned)          |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Contour Highwall Holdings, LLC                       |  | Coal Mining                |  | Senior Secured Term Loan                   |  | $         | 10,757 |  |      | $ | 10,778 |                | 
|                                                     |  |                            |  | (12%, due 10/14/2015) (6) (14)             |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | 800 Membership Units representing          |  |           |        |  |      |   | -      |                | 
|                                                     |  |                            |  | 80% of the common equity (10)              |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Spirit Resources, LLC                                |  | Oil & Natural Gas          |  | Tranche A - Senior Secured Term Loan       |  |           | 5,500  |  |      |   | 5,464  |                | 
|                                                     |  | Production and Development |  | (The greater of 8% or LIBOR + 4%,          |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | due 4/28/2015) (6) (16)                    |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | Tranche B - Senior Secured Term Loan       |  |           | 4,409  |  |      |   | 4,409  |                | 
|                                                     |  |                            |  | (The greater of 15% PIK or LIBOR + 11%,    |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | due 10/28/2015) (6)                        |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | 80,000 Preferred Units representing        |  |           |        |  |      |   | 8,000  |                | 
|                                                     |  |                            |  | 100% of the outstanding equity             |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | 3% Overriding Royalty Interest             |  |           |        |  |      |   | 10     |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Subtotal Control Investments - (More than 25% owned) |  |                            |  |                                            |  |           |        |  |      | $ | 28,661 |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Affiliate Investments - (5% to 25% owned)            |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|OCI Holdings, LLC                                    |  | Home Health Services       |  | Subordinated Note                          |  | $         | 15,700 |  |      | $ | 15,486 |                | 
|                                                     |  |                            |  | (The greater of 12% or LIBOR + 11% cash    |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | plus 3% PIK, due 8/15/2018) (13)           |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | OHA/OCI Investments, LLC Class A           |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | Units representing 20.8% diluted ownership |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | of OCI Holdings, LLC                       |  |           |        |  |      |   | 2,500  |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Subtotal Affiliate Investments - (5% to 25% owned)   |  |                            |  |                                            |  |           |        |  |      | $ | 17,986 |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Non-affiliate Investments - (Less than 5% owned)     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Castex Energy 2005, LP                               |  | Oil & Natural Gas          |  | Redeemable Preferred LP Units              |  | $         | 50,000 |  |      | $ | 50,021 |                | 
|                                                     |  | Production and Development |  | (current pay 8% cash, due 7/1/2016) (9)    |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|ATP Oil & Gas Corporation/                           |  | Oil & Natural Gas          |  | Limited Term Royalty Interest              |  |           |        |  |      |   | 26,767 |                | 
|Bennu Oil & Gas, LLC                                 |  | Production and Development |  | (Notional rate of 13.2%) (15)              |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Shoreline Energy, LLC                                |  | Oil & Natural Gas          |  | Second Lien Term Loan                      |  |           | 13,417 |  |      |   | 13,071 |                | 
|                                                     |  | Production and Development |  | (The greater of 10.25% or LIBOR +          |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | 9%, or the greater of 10.25% or            |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | Prime + 8%, due 3/30/2019)                 |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Talos Production, LLC                                |  | Oil & Natural Gas          |  | Senior Unsecured Notes                     |  |           | 12,000 |  |      |   | 11,951 |                | 
|                                                     |  | Production and Development |  | (9.75%, due 2/15/2018) (3)                 |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  |                                            |  |           |        |  |      |   |        |                | 
|Citadel Plastics Holdings, Inc.                      |  | Chemicals                  |  | Second Lien Term Loan                      |  |           | 10,000 |  |      |   | 9,901  |                | 
|                                                     |  |                            |  | (The greater of 9% or LIBOR + 8%,          |  |           |        |  |      |   |        |                | 
|                                                     |  |                            |  | due 11/5/2021) (3)                         |  |           |        |  |      |   |        |                | 



(See accompanying notes
to consolidated financial statements)



8







CONSOLIDATED SCHEDULE OF
INVESTMENTS

December 31, 2014

(In Thousands, Except Share
Amounts and Percentages)

(Continued)



|Portfolio Company                                            |  | Industry Segment               |  | Investment (1)                                   |  | Principal |        |  | Cost |   |         | Fair Value (2) | 
|------------------------------------------------------------ |  | ------------------------------ |  | ------------------------------------------------ |  | --------- | ------ |  | ---- | - | ------- | -------------- | 
|PORTFOLIO INVESTMENTS - Continued                            |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Non-affiliate Investments - (Less than 5% owned) - Continued |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Appriss Holdings, Inc.                                       |  | Information Services           |  | Second Lien Term Loan                            |  | $         | 10,000 |  |      | $ | 9,852   |                | 
|                                                             |  |                                |  | (The greater of 9.25% or LIBOR +                 |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  | 8.25%, due 5/21/2021)                            |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|WP Mustang (Electronic                                       |  | Financial Services             |  | Second Lien Term Loan                            |  |           | 10,000 |  |      |   | 9,826   |                | 
|Funds Services, LLC)                                         |  |                                |  | (The greater of 8.5% or LIBOR +                  |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  | 7.5%, due 5/29/2022) (3)                         |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|KOVA International, Inc.                                     |  | Medical Supplies               |  | Senior Subordinated Notes                        |  |           | 9,000  |  |      |   | 8,867   |                | 
|                                                             |  | Manufacturing and Distribution |  | (12.75%, due 8/15/2018)                          |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Gramercy Park CLO Ltd. (5)                                   |  | Financial Services             |  | Subordinated Notes, Residual Interest            |  |           | 9,000  |  |      |   | 7,014   |                | 
|                                                             |  |                                |  | (11.95%, based on cost, due 7/17/2023) (3)       |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Huff Energy Holdings, Inc.                                   |  | Oil & Natural Gas              |  | Senior Secured Term Loan                         |  |           | 5,320  |  |      |   | 5,278   |                | 
|                                                             |  | Production and Development     |  | (The greater of 12.5% or LIBOR +                 |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  | 8.5%, due 11/20/2015)                            |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  | 3% Overriding Royalty Interest (11)              |  |           |        |  |      |   | 42      |                | 
|                                                             |  |                                |  | Warrants (12)                                    |  |           |        |  |      |   | 42      |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Globe BG, LLC                                                |  | Coal Production                |  | Contingent earn-out related to July 2011 sale    |  |           |        |  |      |   | -       |                | 
|                                                             |  |                                |  | of royalty interests in Alden Resources, LLC (8) |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Myriant Corporation                                          |  | Alternative Fuels and          |  | 131,741 shares of common stock, representing     |  |           |        |  |      |   | 419     |                | 
|                                                             |  | Specialty Chemicals            |  | 0.56% of the outstanding common shares           |  |           |        |  |      |   |         |                | 
|                                                             |  |                                |  | Warrants (7)                                     |  |           |        |  |      |   | 49      |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|Subtotal Non-affiliate Investments - (Less than 5% owned)    |  |                                |  |                                                  |  |           |        |  |      | $ | 153,100 |                | 
|Subtotal Portfolio Investments (85.2% of total investments)  |  |                                |  |                                                  |  |           |        |  |      | $ | 199,747 |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|GOVERNMENT SECURITIES                                        |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|U.S. Treasury Bills (4)                                      |  |                                |  |                                                  |  | $         | 30,600 |  |      | $ | 30,600  |                | 
|Subtotal Government Securities (14.8% of total investments)  |  |                                |  |                                                  |  |           |        |  |      | $ | 30,600  |                | 
|                                                             |  |                                |  |                                                  |  |           |        |  |      |   |         |                | 
|TOTAL INVESTMENTS                                            |  |                                |  |                                                  |  |           |        |  |      | $ | 230,347 |                | 



(See accompanying notes to consolidated financial
statements)



9







OHA INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF
INVESTMENTS

December 31, 2014

(Continued)



NOTES TO CONSOLIDATED SCHEDULE OF INVESTMENTS



| | (1) | All of our portfolio investments are pledged as collateral for obligations under our Investment Facility. Our investments in
U.S. Treasury Bills are pledged as collateral for obligations under our Treasury Facility. See Note 3 of Notes to Consolidated
Financial Statements. Percentages represent interest rates in effect at the end of the period and due dates represent the contractual
maturity dates. Warrants, common stocks, units and earn-outs are non-income producing securities, unless otherwise stated.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Our Board of Directors determines, in good faith, the fair value of our investments. Fair value is determined using unobservable
inputs (Level 3 hierarchy), unless otherwise stated.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Fair value is determined using prices with observable market inputs (Level 2 hierarchy). See Note 7 of Notes to Consolidated
Financial Statements.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Fair value is determined using prices for identical securities in active markets (Level 1 hierarchy). See Note 7 of Notes to
Consolidated Financial Statements.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | We have determined that this investment is not a “qualifying asset” under Section 55(a) of the 1940 Act. Under
the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent
at least 70% of our total assets. The status of these assets under the 1940 Act is subject to change. We monitor the status of
these assets on an ongoing basis.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | Non-accrual status.
| | --- | -------------------



| | (7) | Myriant Corporation warrants expire on August 15, 2015 and provide us the right to purchase 32,680 shares of Myriant Corporation
common stock at a purchase price of $10.00 per share.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | Contingent payment of up to $6.8 million is dependent upon Alden Resources, LLC’s ability
to achieve certain sales volume and operating efficiency levels during the three-year period ended July 2014. The
reporting and review mechanism to conclude the ultimate value of the earn-out has not yet been completed. Globe BG, LLC has informally
advised us that the company’s relative cost of production has not improved since July 2011.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (9) | Upon redemption, we will receive the outstanding face amount plus an option to elect to receive either: a) a cash payment resulting
in a total 12% IRR (inclusive of the 8% cash distributions) or b) our pro rata share of 2% of the outstanding regular limited partner
interests in Castex Energy 2005, LP (0.67% net to us).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (10) | The fair value of our Contour Highwall Holdings, LLC, or Contour, membership units also includes the value attributable to
our ownership of 8,000 shares of common stock of Bundy Auger Mining, Inc., an affiliate of Contour.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (11) | Huff Energy Holdings, Inc., or HEH, overriding royalty interests are effective the earlier of repayment in full of the Term
Loan or the maturity date of the Term Loan. HEH has the right to purchase the overriding royalty interests on, or before, the maturity
date of the Term Loan for $50,000, provided that the Term Loan is repaid by the maturity date.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (12) | HEH warrants expire seven years after repayment of the Term Loan and entitle us to purchase 30% of the outstanding equity at
$0.01 per share. HEH has the right to purchase these warrants on, or before, the maturity date of the Term Loan for $50,000, provided
that the Term Loan is repaid by the maturity date.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (13) | Effective July 9, 2014, we executed a third amendment to our credit agreement with OCI Holdings, LLC, or OCI, to amend certain
covenant limits in exchange for increases in OCI’s interest to the greater of 12% or LIBOR plus 11% cash, plus 3% payment-in-kind,
or PIK.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (14) | Contour has not made its September 2014 through December 2014 interest payments on the Senior Secured Term Loan.
| | ---- | ----------------------------------------------------------------------------------------------------------------



| | (15) | For more information, please refer to the discussion of the ATP litigation under the heading “Legal Proceedings”
in Note 6 to the Consolidated Financial Statements.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (16) | Spirit Resources, LLC, or Spirit, has not made its November 2014 through December 2014 interest payments on the Tranche A Senior
Secured Term Loan.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------



(See accompanying notes to consolidated financial
statements)



10







OHA INVESTMENT CORPORATION

CONSOLIDATED FINANCIAL
HIGHLIGHTS

(Unaudited)



|                                                                            |  | For the Three Months Ended March 31, |        
|--------------------------------------------------------------------------- |  | ------------------------------------ | -------
|Per Share Data  (1)                                                         |  |                                      | 2015   
|Net asset value, beginning of period                                        |  | $                                    | 7.48   
|Net investment income                                                       |  |                                      | 0.11   
|Net realized and unrealized loss on investments (2)                         |  |                                      | (0.20  
|Net decrease in net assets resulting from operations                        |  |                                      | (0.09  
|Distributions to common stockholders                                        |  |                                      |        
|Distributions from net operating income                                     |  |                                      | (0.12  
|Return of capital                                                           |  |                                      | -      
|Net decrease in net assets from distributions                               |  |                                      | (0.12  
|Net asset value, end of period                                              |  | $                                    | 7.27   
|                                                                            |  |                                      |        
|Market value, beginning of period                                           |  | $                                    | 4.69   
|Market value, end of period                                                 |  | $                                    | 5.27   
|Market value return  (3)                                                    |  |                                      | 14.9   
|Net asset value return (3)                                                  |  |                                      | (0.6   
|                                                                            |  |                                      |        
|Ratios and Supplemental Data                                                |  |                                      |        
|($ and shares in thousands)                                                 |  |                                      |        
|Net assets, end of period                                                   |  | $                                    | 149,440
|Average net assets                                                          |  | $                                    | 153,219
|Common shares outstanding, end of period                                    |  |                                      | 20,544 
|Net investment income/average net assets (4)                                |  |                                      | 5.7    
|Portfolio turnover rate                                                     |  |                                      | 0.5    
|Total operating expenses/average net assets (4) (5)                         |  |                                      | 7.0    
|Net decrease in net assets resulting from operations/average net assets (4) |  |                                      | (5.0   
|                                                                            |  |                                      |        
|Expense Ratios (as a percentage of average net assets) (4)                  |  |                                      |        
|Interest expense and bank fees                                              |  |                                      | 1.7    
|Management fees                                                             |  |                                      | 1.8    
|Costs related to strategic alternatives review                              |  |                                      | 0.0    
|Other operating expenses (5)                                                |  |                                      | 3.5    
|Total operating expenses (5)                                                |  |                                      | 7.0    



| | (1) | Per Share Data is based on weighted average number of
common shares outstanding for the period.
| | --- | -----------------------------------------------------------------------------------------------

| | (2) | May include a balancing amount necessary to reconcile
the change in net asset value per share with other per share information presented. This amount may not agree with the aggregate
gains and losses for the period because the difference in the net asset value at the beginning and end of the period may not equal
the per share changes of the line items disclosed.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Return calculations assume reinvestment of dividends
and are not annualized.
| | --- | ----------------------------------------------------------------------------

| | (4) | Annualized.
| | --- | -----------

| | (5) | Net of legal fee reimbursements of $0.3 million and $0.6
million in 2015 and 2014, respectively. Excluding these legal fee reimbursements, other operating expense ratio and total operating
expense ratios would have been 4.3% and 7.7% and 4.5% and 9.7%, respectively, for the three months ended March 31, 2015 and 2014.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(See accompanying notes to consolidated financial
statements)



11







OHA INVESTMENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

March 31, 2015

(Unaudited)



Note 1: Organization and Recent Developments



These consolidated financial statements present
the financial position, results of operations and cash flows of OHA Investment Corporation and its consolidated subsidiaries. The
terms “we,” “us,” “our” and “OHAI” refer to OHA Investment Corporation and its
consolidated subsidiaries. We are a specialty finance company that was organized in July 2004 as a Maryland corporation. Our investment
objective is to generate both current income and capital appreciation primarily through debt investments with certain equity components.
We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business
development company, or a BDC, under the Investment Company Act of 1940, or the 1940 Act. For federal income tax purposes we operate
so as to be treated as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended,
or the Code. We have several direct and indirect subsidiaries that are single-member limited liability companies and wholly-owned
limited partnerships established to hold certain portfolio investments or provide services to us in accordance with specific rules
prescribed for a company operating as a RIC. We consolidate the financial results of our wholly-owned subsidiaries for financial
reporting purposes, and we do not consolidate the financial results of our portfolio companies.



On September 30, 2014, our stockholders approved
the appointment of Oak Hill Advisors, L.P., or OHA, as our new investment advisor, replacing NGP Investment Advisor, LP, which
had been our investment advisor since our inception. In connection with this change in investment advisor, we changed our name
from NGP Capital Resources Company to OHA Investment Corporation. OHA is a registered investment adviser under the Investment Advisers
Act of 1940. OHA acts as our investment advisor and administrator pursuant to an investment advisory agreement and an administration
agreement, respectively, each dated as of September 30, 2014, which we refer to as the Investment Advisory Agreement and the Administration
Agreement, respectively (see Note 4).



Note 2: Basis of Presentation



These interim unaudited consolidated financial
statements include the accounts of OHAI and its subsidiaries. We eliminate all significant intercompany accounts and transactions.
Certain prior period amounts have been reclassified to conform to current period presentation.



We prepare the interim consolidated financial
statements pursuant to the rules and regulations of the Securities and Exchange Commission. We omit certain information and footnote
disclosures normally included in audited financial statements prepared in accordance with accounting principles generally accepted
in the United States of America, or GAAP, pursuant to such rules and regulations. We believe we include all adjustments, which
are of a normal recurring nature, so that these financial statements fairly present our financial position, results of operations
and cash flows. Interim results are not necessarily indicative of results for a full year. You should read these unaudited
consolidated financial statements in conjunction with the consolidated financial statements and related notes included in our Annual
Report on Form 10-K for the year ended December 31, 2014.



Preparing interim consolidated financial statements
in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial
statements and the accompanying notes thereto, including the estimated fair values of our investment portfolio discussed in Note
7. Although we believe our estimates and assumptions are reasonable, actual results could differ from these estimates.



Distributions



We record distributions to stockholders on the
ex-dividend date. We currently intend that our distributions each year will be sufficient to maintain our status as a RIC for federal
income tax purposes and to eliminate federal excise tax liability. We currently intend to make distributions to stockholders on
a quarterly basis that total substantially all of our net taxable income for the year. We also intend to make distributions
of net realized capital gains, if any, at least annually. However, we may in the future decide to retain such capital gains for
investment and designate such retained amounts as deemed distributions. Each quarter, we estimate our annual taxable earnings.
The Board of Directors considers this estimate and determines the distribution amount, if any. We generally declare our dividends
each quarter and pay them shortly thereafter. The following table summarizes our recent distribution history:



12







|                   |  | Per Share |      |  |             |                    |             
|------------------ |  | --------- | ---- |  | ----------- | ------------------ | ------------
|Declaration Date   |  | Amount    |      |  | Record Date |                    | Payment Date
|March 18, 2014     |  | $         | 0.16 |  |             | March 31, 2014     |             
|June 10, 2014      |  |           | 0.16 |  |             | June 30, 2014      |             
|September 11, 2014 |  |           | 0.16 |  |             | September 30, 2014 |             
|December 17, 2014  |  |           | 0.16 |  |             | December 31, 2014  |             
|March 3, 2015      |  |           | 0.12 |  |             | March 31, 2015     |             



Note 3: Credit Facilities and Borrowings



On May 23, 2013, we entered into the $72.0 million
Third Amended and Restated Revolving Credit Agreement, or the Investment Facility, which replaced our previous credit facility.
The total amounts outstanding under the Investment Facility were $72.0 million and $52.0 million as of March 31, 2015 and December
31, 2014, respectively. Substantially all of our assets, except our investments in U.S. Treasury Bills, are pledged as collateral
for the obligations under the Investment Facility. The Investment Facility matures on May 23, 2016, and bears interest, at our
option, at either (i) LIBOR plus 325 to 475 basis points, or (ii) the base rate plus 225 to 375 basis points, both based on our
amounts outstanding. As of March 31, 2015, the average interest rate on our outstanding balance of $72.0 million was 3.9%, and
there was no additional amount available for borrowing under the Investment Facility. We repaid $25.0 million of the balance outstanding
under the Investment Facility in early April 2015.



On March 31, 2011, we entered into a $30.0 million
Treasury Secured Revolving Credit Agreement, or the Treasury Facility, that can only be used to purchase U.S. Treasury Bills. Proceeds
from the Treasury Facility facilitate the growth of our investment portfolio and provide flexibility in the sizing of our portfolio
investments. The Treasury Facility has been amended from time to time, generally to extend the expiration date and, in some cases,
to revise the size of the facility. On September 24, 2014, we entered into a fifth amendment to the Treasury Facility which extended
the expiration date to September 24, 2015, reduced the size of the Treasury Facility to $30.0 million, and permitted the appointment
of OHA as our investment advisor. Borrowings under the Treasury Facility bear interest, at our option, at either (i) LIBOR plus
150 basis points or (ii) the base rate plus 50 basis points. We have the right at any time to prepay the amounts outstanding under
the Treasury Facility, in whole or in part, without premium or penalty. As of March 31, 2015, we had $30.0 million outstanding
and no additional amount available for borrowing under the Treasury Facility, and the interest rate on our outstanding balance
was 1.7%. We repaid the entire balance outstanding under the Treasury Facility in April 2015 with proceeds from the sale of U.S.
Treasury Bills.



Both the Investment Facility and the Treasury
Facility contain affirmative and reporting covenants and certain financial ratio and restrictive covenants. We have complied with
these covenants throughout 2015 and 2014 and had no existing defaults or events of default under either facility. The most restrictive
covenants, with terms as defined in the credit agreements, are:



| | · | maintaining a ratio of net asset value to consolidated total indebtedness (excluding net hedging liabilities) of not less than
2.25:1.0,
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

| | · | maintaining a ratio of net asset value to consolidated total indebtedness (including net hedging liabilities) of not less than
2.0:1.0,
| | - | ---------------------------------------------------------------------------------------------------------------------------------------

| | · | maintaining a ratio of EBITDA (excluding revenue from cash collateral) to interest expense (excluding interest on loans under
the Treasury Facility) of not less than 3.0:1.0, and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | maintaining a ratio of collateral to the aggregate principal amount of loans under the Treasury Facility of not less than 1.02:1.0.
| | - | -----------------------------------------------------------------------------------------------------------------------------------



Note 4: Investment Management



Investment Advisory Agreement



On September 30, 2014, we entered into an Investment
Advisory Agreement with OHA, an investment adviser registered under the 1940 Act, pursuant to which OHA replaced NGP Investment
Advisor, LP as our investment advisor. The initial term of the Investment Advisory Agreement is for two years, with automatic,
one-year renewals, subject to approval by our Board of Directors, a majority of whom are not “interested” persons (as
defined in the 1940 Act) of us. Pursuant to the Investment Advisory Agreement, OHA implements our business strategy on a day-to-day
basis and performs certain services for us, subject to the supervision of our Board of Directors. Under the Investment Advisory
Agreement, we pay OHA a fee consisting of two components — a base management fee and an incentive fee.



13







Base Management Fee:The base management
fee is paid quarterly in arrears, and is calculated by multiplying the average value of our total assets (excluding cash, cash
equivalents and U.S. Treasury Bills that are purchased with borrowed funds solely for the purpose of satisfying quarter-end diversification
requirements related to our election to be taxed as a RIC under the Code), as of the end of the two immediately prior fiscal quarters,
by a rate of 1.75% per annum, with a 0.25% reduction in this 1.75% annual rate for the first year following September 30, 2014.



Incentive Fee:The incentive fee consists
of two parts. The first part, the investment income incentive fee, is calculated and payable quarterly in arrears based on our
pre-incentive fee net investment income for the fiscal quarter for which the fee is being calculated. Pre-incentive fee net investment
income means interest income, dividend income, royalty payments, net profits interest payments, and any other income (including
any other fees, such as commitment, origination, syndication, structuring, diligence, monitoring and consulting fees or other fees
that we receive from portfolio companies) accrued during the fiscal quarter, minus our operating expenses for the quarter (including
the base management fee, expenses payable under the Administration Agreement, and any interest expense and dividends paid on any
issued and outstanding preferred stock, but excluding the incentive fee). Net investment income includes, in the case of investments
with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon
securities), accrued income that we have not yet received in cash. Accordingly, we may pay an incentive fee based partly on accrued
investment income, the collection of which is uncertain or deferred. Net investment income does not include any realized capital
gains, realized capital losses, or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income, expressed
as a rate of return on the value of our net assets (defined as total assets less liabilities at the end of the immediately preceding
fiscal quarter) is compared to a “hurdle rate” of 1.75% per quarter (7% annualized). OHA receives no incentive fee
for any fiscal quarter in which our pre-incentive fee net investment income does not exceed the hurdle rate. OHA receives an incentive
fee equal to 100% of our pre-incentive fee net investment income for any fiscal quarter in which our pre-incentive fee net investment
income exceeds the hurdle rate but is less than 2.1875% (8.75% annualized) of net assets (also referred to as the “catch
up” provision) plus 20% of our pre-incentive fee net investment income for such fiscal quarter greater than 2.1875% (8.75%
annualized) of net assets. We have not incurred any investment income incentive fees since the Investment Advisory Agreement went
into effect on September 30, 2014.



The second part of the incentive fee, the capital
gains fee, is determined and payable in arrears as of the end of each fiscal year (or, upon termination of the Investment Advisory
Agreement, as of the termination date). The capital gains fee is equal to 20% of our cumulative aggregate realized capital gains
from the date of the Investment Advisory Agreement through the end of that fiscal year, computed net of our cumulative aggregate
realized capital losses and cumulative aggregate unrealized depreciation on investments for the same time period. The aggregate
amount of any previously paid capital gains incentive fees to OHA is subtracted from the capital gains incentive fee calculated.
If such amount is negative, then there is no capital gains fee for such year. For the purposes of the capital gains fee, any gains
and losses associated with our investment portfolio as of September 30, 2014 shall be excluded from the capital gains fee calculation.
We have not incurred any capital gains fees since the Investment Advisory Agreement went into effect on September 30, 2014.



The Investment Advisory Agreement may be terminated
at any time, without the payment of any penalty, by a vote of our Board of Directors or the holders of a majority of our shares
on 60 days’ written notice to OHA, and would automatically terminate in the event of its “assignment” (within
the meaning of the 1940 Act). Either party may terminate the Investment Advisory Agreement without penalty upon not more than 60
days’ written notice to the other. Pursuant to the Investment Advisory Agreement, OHA pays the compensation expense of its
investment professionals, who provide management and investment advisory services to us. We bear all other costs and expenses of
our operations and transactions.



Previous Investment Advisory Agreement



Prior to the September 30, 2014 appointment
of OHA as our investment advisor, we had a similar investment advisory agreement with our previous investment advisor, NGP Investment
Advisor, LP. The fee structure under our previous investment advisory agreement consisted of two components — a base management
fee and an incentive fee.



Base Management Fee: Under the previous
investment advisory agreement, we calculated the quarterly base management fee as 0.45% (1.8% annualized) of the average of our
total assets (inclusive of all cash and cash equivalents without any exclusions) as of the end of the two most recent fiscal quarters,
payable quarterly in arrears.



Incentive Fee: The incentive fee under
the previous investment advisory agreement consisted of two parts. We calculated the first part of the incentive fee, the investment
income incentive fee, as 20% of the excess, if any, of our net investment income for the quarter that exceeded a quarterly hurdle
rate equal to 2% (8% annualized) of our net assets, with no “catch up” provision. We calculated and paid this investment
income incentive fee quarterly in arrears. For the purpose of this fee calculation, net investment income was defined similarly
to that under the Investment Advisory Agreement. We did not incur any investment income incentive fees in 2014 under the previous
investment advisory agreement.



14







We calculated the second part of the incentive
fee, the capital gains fee, as (1) 20% of (a) our net realized capital gains (realized capital gains less realized capital losses)
on a cumulative basis from the closing date of our initial public offering to the end of such fiscal year, less (b) any unrealized
capital depreciation at the end of such fiscal year, less (2) the aggregate amount of all capital gains fees paid to NGP Investment
Advisor, LP in prior fiscal years. We determined and paid the capital gains fee in arrears as of the end of each fiscal year. We
did not incur any capital gains fees under the previous investment advisory agreement since 2007.



Administration Agreement



On September 30, 2014, we entered into an Administration
Agreement with OHA pursuant to which OHA replaced NGP Administration, LLC as our administrator and furnishes us with certain administrative
services, personnel and facilities. The Administration Agreement has an initial term of two years. Payments under the Administration
Agreement are equal to our allocable portion of OHA’s overhead in performing its obligations under the Administration Agreement,
including all administrative services necessary for our operation and the conduct of our business. The aggregate amount of certain
costs and expenses payable by us under the Investment Advisory Agreement and the Administration Agreement for the period from October
1, 2014 to September 30, 2015 shall not exceed $2.5 million (the “Cap”); provided that, generally speaking, interest
expense and bank fees, management and incentive fees, legal and professional fees, insurance expenses, taxes and costs related
to the change in investment advisor are not subject to the Cap. The Administration Agreement may be terminated at any time, without
penalty, by a vote of our Board of Directors or by OHA upon 60 days’ written notice to the other party.



Prior to the September 30, 2014 appointment
of OHA as our administrator, we had a similar administration agreement with our previous administrator, NGP Administration, LLC,
with similar provisions as the Administration Agreement, except that under the previous administration agreement, (i) there was
no Cap on expenses payable by us, and (ii) a portion of compensation costs of investment professionals and certain other costs
were allocated to us that are not allocable to us under the Administration Agreement.



We owed $156,000 and $229,000 to OHA under
the Administration Agreement as of March 31, 2015 and December 31, 2014, respectively, for expenses incurred on our behalf
for the final month of the respective quarterly period. We include these amounts in accounts payable and accrued expenses on
our consolidated balance sheets.



Note 5: Federal Income Taxes



We operate so as to qualify, for tax purposes,
as a RIC under Subchapter M of Chapter 1 of the Code. As a RIC, we are generally not subject to corporate-level U.S. federal income
taxes on the portion of our investment company taxable income and net capital gain (i.e., realized net long-term capital gains
in excess of realized net short-term capital losses) that we distribute to our stockholders. To qualify as a RIC, we are required,
among other things, to distribute to our stockholders each year at least 90% of investment company taxable income, as defined by
the Code, and to meet certain asset-diversification requirements.



Certain of our wholly-owned subsidiaries, or
Taxable Subsidiaries, have elected to be taxed as corporations for federal income tax purposes. The Taxable Subsidiaries hold
certain of our portfolio investments and are consolidated for financial reporting purposes, but not for income tax reporting purposes. These
Taxable Subsidiaries permit us to hold equity investments in portfolio companies that are “pass through” entities for
tax purposes, in order to comply with the “source-of-income” requirements that must be satisfied to maintain our qualification
as a RIC. The Taxable Subsidiaries may generate net income tax expense or benefit, which is reflected on our consolidated statements
of operations.



Note 6: Commitments and Contingencies



We have continuing obligations under the Investment
Advisory Agreement and the Administration Agreement with OHA. See Note 4. The agreements provide that, absent willful misfeasance,
bad faith or gross negligence in the performance of its duties or the reckless disregard of its duties and obligations, OHA and
its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with OHA will
be entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys’
fees and amounts reasonably paid in settlement) arising from the rendering of services under the agreements or otherwise as our
investment advisor or administrator. The agreements also provide that OHA and its affiliates will not be liable to us or any stockholder
for any error of judgment, mistake of law, any loss or damage with respect to any of our investments or any action taken or omitted
to be taken by OHA in connection with the performance of any of its duties or obligations under the agreements or otherwise as
investment advisor or administrator to us, except to the extent specified in Section 36(b) of the 1940 Act concerning loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for services. In the normal course of business, we
enter into a variety of undertakings containing a variety of representations that may expose us to some risk of loss. We do not
expect significant losses, if any, from such undertakings.



15







Legal Proceedings



From time to time, we are involved in various
legal proceedings arising in the normal course of business. While we cannot predict the outcome of these proceedings with certainty,
we do not believe that an adverse result in any pending legal proceeding, other than those described below, individually or in
the aggregate, would be material to our business, financial condition or cash flows.



ATP Litigation. On August 17, 2012, ATP
Oil & Gas Corporation, or ATP, filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy
Court for the Southern District of Texas. Prior to the bankruptcy filing, we purchased limited term overriding royalty interests,
or ORRIs, in certain offshore oil and gas producing properties operated by ATP (generally, the Gomez and Telemark properties).
On August 23, 2012, on a motion filed by ATP, the bankruptcy judge presiding over ATP’s case signed an order (Bankr. Dkt.
No. 191) requiring ATP to pay amounts received after August 17, 2012 to those parties it believes are entitled to receive them,
including the ORRI holders, provided that the owners of the ORRIs execute a disgorgement agreement providing for the repayment
of any amounts that the bankruptcy court later finds to have been inappropriately paid. We executed the disgorgement agreement
and began receiving monthly distributions in September 2012 from ATP of our share of production proceeds received by ATP after
August 17, 2012. As of March 15, 2015, our unrecovered investment was $26.5 million, and we had received aggregate production payments
of $33.9 million subject to the disgorgement agreement; both of these amounts are the subject of disputes in the litigation described
herein.



As of March 31, 2015, we had incurred legal
and consulting fees totaling $5.1 million in connection with the enforcement of our rights under the ORRIs. On various occasions,
we have provided notice that such legal expenses will be added to our unrecovered investment balance to the extent they are not
reimbursed. To date, we have not received any payments on account of legal expenses aside from our receipt of regular monthly production
payments. We add our legal expenses to the unrecovered investment balance in accordance with our transaction documents. As of March
31, 2015, $4.7 million of the $5.1 million in legal and consulting fees have been added to, and are thus included in, the unrecovered
investment balance under the terms of our transaction documents. The remaining amounts of legal and consulting fees, totaling $0.4
million and $0.1 million as of March 31, 2015 and December 31, 2014, respectively, are included in accounts receivable and other
current assets on our consolidated balance sheets and are, thus, not included in the unrecovered investment balance as of such
dates.



On October 17, 2012, we filed a lawsuit against
ATP styled: NGP Capital Resources Company v. ATP Oil & Gas Corporation, Adv. Proc. No. 12-03443, in the U.S. Bankruptcy
Court for the Southern District of Texas, seeking a declaration that the ORRIs are our property and not property of ATP and that
the conveyance and purchase and sale documents are not executory contracts that may be rejected in order to remove or recharacterize
our interests in the properties (the “Adversary Proceeding”). ATP filed an answer and counterclaim in which it (a)
denies that the ORRIs are valid and enforceable, (b) seeks a declaration that (i) the ORRIs are a financing agreement and not a
true sale and (ii) the ORRIs are executory contracts that are subject to rejection under 11 U.S.C. Sec. 365, and (c) seeks disgorgement
from us of amounts paid to us since August 17, 2012, the date of filing of ATP’s Chapter 11 proceeding. The United States,
on behalf of the Department of the Interior, intervened in the lawsuit, arguing that the underlying leases are unexpired leases
of real property or executory contracts (and not real property conveyances) and are subject to rejection by ATP. Certain service
companies claiming statutory liens or privileges have intervened in the lawsuit for the purposes of establishing that their alleged
statutory liens and privileges are superior to our rights and asserting related claims for disgorgement of proceeds paid to us
by ATP. The Bank of New York Mellon Trust Company, N.A., the secondary lien holder, has also intervened in the lawsuit, arguing
(i) the ORRIs are a financing agreement and not a true sale, (ii) our claims are barred, waived, released and/or otherwise foreclosed
by the express terms of the conveyance of the ORRIs, and (iii) either we have not met a condition precedent or we failed to perform
or substantially perform our contractual obligations. The issues in the lawsuit have been bifurcated such that the issues of (i)
whether the conveyances and transactions between us and ATP constituted outright transfers of ownership and (ii) whether the conveyances
are executory contracts or leases that ATP may reject, will be tried first as “Phase 1” of the legal proceedings. Any
additional claims, including the service company statutory lien claims and related issues, will be decided later if necessary in
“Phase 2.” This lawsuit is currently pending, and the initial trial date was abated along with certain other deadlines
pending consideration of various motions. In that context, a Motion for Summary Judgment that we filed was denied, and we subsequently
filed a motion to appeal the denial on an interlocutory basis. After our motion to appeal was denied by the United States District
Court, we filed a Motion for Reconsideration of the summary judgment denial with the bankruptcy court on June 17, 2014. A new scheduling
order has not been entered. We intend to vigorously defend our position that the ORRIs constitute real property interests and are
fully valid and enforceable pursuant to their terms, and we intend to vigorously defend our position that the service companies’
statutory liens and privileges do not attach to our ORRIs and/or are not superior to our rights.



16







Separately, ATP (through a motion filed by the
Official Committee of Unsecured Creditors on October 31, 2012) threatened to bring a fraudulent transfer action against us, in
which ATP would allege that (a) ATP was insolvent at the time of the assignment of the ORRIs to us, (b) ATP received less than
fair value from us in exchange for the assignments of the ORRIs and (c) as a result, the assignments should be set aside. The
motion was abated, and the referenced claim has not been asserted. We vigorously deny these allegations.



On April 23, 2013, the Department of the Interior,
on behalf of the Bureau of Safety and Environmental Enforcement, issued an order directing that the wells on the Gomez properties
be shut in and that operations cease. Operations and production ceased on the Gomez properties on April 30, 2013. On June 13, 2013,
the bankruptcy court entered an order (Bankr. Dkt. No. 1999) approving ATP’s request (set forth in Bankr. Dkt. No. 1902)
to reject and/or abandon and relinquish its interests in the Gomez properties and related agreements, or the Abandonment Order.
Consequently, we no longer receive payments attributable to the Gomez properties.



On May 7, 2013, ATP conducted an auction of
its assets, and ATP selected a credit bid from Credit Suisse AG, as administrative and collateral agent to those lenders who are
parties to that certain Senior Secured Super Priority Priming Debtor in Possession Credit Agreement dated August 29, 2012, or the
DIP Lenders, based on a reduction in the amount of ATP’s outstanding indebtedness to Credit Suisse AG, or the Credit Bid,
as the highest and best bid. The Credit Bid did not include an offer to purchase the Gomez properties, but it included an offer
to purchase the Telemark properties. On October 17, 2013, the bankruptcy court entered its Final Sale Order approving the sale
(Bankr. Dkt. No. 2706). Under the Final Sale Order, Bennu Oil & Gas, LLC, or Bennu, a newly formed company owned by the DIP
Lenders, was authorized to purchase certain ATP assets, including the Telemark properties, as well as claims asserted by ATP in
our pending lawsuit relating to the Telemark properties. Our ORRI continues to burden the Telemark properties subject to a resolution
of the issues in our pending lawsuit against ATP. The sale to Bennu closed on November 1, 2013. On May 20, 2014, Bennu substituted
into our lawsuit for ATP with respect to any claims that relate to assets purchased from ATP.



On March 7, 2014, Bennu filed complaints seeking
declaratory judgments that it acquired the Telemark properties free and clear of liens asserted by certain statutory lien claimants,
thereby commencing the adversary proceedings styled Bennu Oil & Gas LLC v. Frank’s Casing Crew & Rental Tools,
Inc., et. al., (Adv. No. 14-03060), or the Frank’s Casing Adversary, and Bennu Oil & Gas LLC v. Advanced Fire
& Safety LLC, et. al., (Adv. No. 14-03056), or the Advanced Fire Adversary. We sought and were granted leave to intervene
in the Frank’s Casing and Advanced Fire Adversaries to protect our rights in connection with any determinations relating
to the extent, validity and priority of liens against the Telemark properties. Many of the defendants in these proceedings failed
to plead or otherwise defend in response to the lawsuits. Notices of voluntary dismissal were filed by Bennu with respect to certain
defendants, and on March 19, 2015, the bankruptcy court entered a default judgment in the Advanced Fire Adversary against the remaining
defendants, determining that Bennu purchased the Telemark properties free and clear of the liens asserted by the defendants. The
judgment was entered without prejudice to us, and any claims and defenses between us and Bennu remain unaffected by the judgment.
On April 7, 2015, a similar default judgment was entered in the Frank’s Casing Adversary.



On June 26, 2014, the bankruptcy court entered
an order converting ATP’s bankruptcy case to a case under Chapter 7 of the U.S. Bankruptcy Code. Rodney D. Tow was appointed
as Chapter 7 Trustee of ATP’s bankruptcy estate.



On July 10, 2014, we filed, in our Adversary
Proceeding, a Motion for Leave to amend our complaint to, among other things, add claims and defenses based on facts that occurred
after the filing of our complaint, as well as claims and defenses specifically applicable to Bennu. On September 3, 2014, Bennu
filed a Motion to Dismiss claims between Bennu and us, as well as an objection to our Motion for Leave. In connection with
the Motion to Dismiss, Bennu stated that it does not desire to pursue affirmative claims against us for recharacterization or disgorgement,
and it disclaimed any intention to sue us regarding the characterization of the ORRIs. The Motion to Dismiss does not seek to determine
any claims, including our claims, any claims of the bankruptcy estate or the claims of the numerous intervenors involved in the
litigation, nor does it preclude Bennu or a succeeding party from refiling such claims in the future.



On October 1, 2014, we filed an objection to
the Motion to Dismiss, asserting that Bennu is the owner of all recharacterization claims against us and requesting that the judge
enter a declaratory judgment (rather than an order of dismissal) holding that the ORRIs do, in fact, constitute real property interests
that are not subject to recharacterization as a loan or otherwise, and are fully valid and enforceable pursuant to their terms.
In related briefings, the Trustee asserted that Bennu does not own recharacterization claims relating to the Gomez properties,
and objected to entry of a judgment in our favor due to alleged prejudice that would result against the estate’s alleged
claims. Bennu asserted in response that it owns all recharacterization claims against us, but it is opposed to entry of a judgment
in our favor. On November 13, 2014, Bennu filed a Motion to Determine Ownership of Claims, or the Ownership Motion, asserting that
it is the sole owner of claims seeking to recharacterize the nature and validity of the ORRIs. On January 28, 2015, the bankruptcy
court entered an order on the Ownership Motion (Adv. Dkt. No. 236), which determined, among other things, that Bennu has the exclusive
right to seek to recharacterize the ORRIs as something other than a vested ownership in hydrocarbons to be produced. It also determined
that (i) the Trustee has the exclusive right to seek to avoid payments made to OHA under sections 544, 547 and 548 of the Bankruptcy
Code and (ii) the Trustee may only pursue claims under section 549 that were not purchased by Bennu. On February 24, 2015, the
Trustee filed an Amended Counterclaim against us seeking to avoid and recover alleged preferential transfers in the amount of $3.4
million. The Trustee also seeks to avoid post-petition royalty payments made to us from the Gomez Properties in the amount of $9.6
million and from the Telemark Properties in the amount of $13.4 million. On April 1, 2015, we filed our Motion to Dismiss the Trustee’s
Amended Counterclaim [Dkt. No. 249] arguing that the Amended Counterclaim should be dismissed, because Bennu purchased the recharacterization
claims and the exclusive right to seek to recharacterize our ORRIs as anything other than a vested ownership interest. Also on
April 1, 2015, Bennu filed a Motion to Enforce the Final Sale Order [Dkt. No. 248], arguing that the Trustee has no right to assert
any section 549 claims against us. A hearing on our Motion to Dismiss and Bennu’s Motion to Enforce has been scheduled for
May 21, 2015.



17







On April 30, 2015, we and Bennu filed an Expedited
Joint Motion to Enter Agreed Judgment [Dkt. No. 251], seeking entry of an Agreed Judgment determining that, among other things,
the ORRIs are a real property interest and a “production payment” within the meaning of Sections 101(42A) and 541(b)
of the United States Bankruptcy Code, and that the ORRIs are not and never were property of ATP’s bankruptcy estate. In connection
with the Joint Motion, we entered into a Settlement and Release Agreement with Bennu pursuant to which, in exchange for Bennu agreeing
to execute and seek entry of the Agreed Judgment, we agreed to withdraw and/or release Bennu from certain claims contemplated in
our July 2014 Motion for Leave mentioned above, primarily relating to our claim for breach of certain contractual Acts of Subordination
which were executed in connection with the conveyance of the ORRIs. Our release of Bennu is contingent upon the bankruptcy court’s
entry of the Agreed Judgment, or another acceptable form of agreed judgment that is final and not subject to appeal. The Joint
Motion to Enter Agreed Judgment may be opposed by the Trustee or other parties. If the Agreed Judgment is entered in the form that
we and Bennu have proposed, such judgment may resolve Phase I of the Adversary Proceeding.



During the 90-day preference period preceding
the filing of ATP’s bankruptcy, we received royalty payments totaling approximately $3.6 million. Through March 31, 2015,
we received post-petition royalty payments from the Gomez properties and the Telemark properties in the amount of $8.3 million
and $25.6 million, respectively. It is estimated that the statutory lien claims asserted by intervenors in the Adversary Proceeding
against our ORRIs are in the principal amount of approximately $35.2 million. At this time, we estimate that there are potential
statutory lien claims (including claims of the intervenors in the Adversary Proceeding, without regard to the validity of such
claims) in the principal amount of approximately $54.2 million. We have or will assert that we have viable defenses with respect
to all of the claims of the statutory lien claimants or any other claim which seeks to avoid or disgorge any prepetition or post-petition
royalty payment which we received in respect of the Telemark or Gomez properties. In the event we do not prevail on our defenses
to the statutory lien claims or any other claim seeking to avoid or disgorge pre-petition or post-petition royalty payments, we
contend that, pursuant to the terms of our transaction documents, we are entitled to include any amounts disgorged on account of
any such claims into the unrecovered investment balance of our ORRIs. Moreover, to the extent we do not prevail on our defenses
to any action brought by the holder of a statutory lien claim, we contend that we would be permitted to seek contribution from
other ORRI and net profits interest holders with respect to any disgorged amounts.



However, in the event our defenses to the claims
of the statutory lien claimants are unsuccessful or we otherwise become liable for disgorgement of any pre-petition or post-petition
royalty payments which we have received from either the Gomez or Telemark properties, the remaining oil and gas reserves associated
with the Telemark properties may be insufficient to provide for a full recovery on our investment. In the event that it is determined
that we are not entitled to include amounts disgorged on account of statutory lien claims or other claims, if any, into the unrecovered
investment balance of our ORRIs, any disgorged amounts will result in a failure to achieve our anticipated return and/or a loss
on our investment.



While we intend to vigorously defend our legal
positions in the Adversary Proceeding, there can be no assurance that we will ultimately prevail in any or all of these matters.



18







Note 7: Fair Value



Our investments consisted of the following as of March
31, 2015 and December 31, 2014:



|                                 |  | March
    31, 2015 |         |  | December
    31, 2014 | 
|-------------------------------- |  | ------------------ | ------- |  | --------------------- | 
|                                 |  |                    |         |  | % of                  | 
|(Dollar amounts in thousands)    |  | Cost               |         |  | Total                 | 
|Portfolio investments            |  |                    |         |  |                       | 
|First lien secured debt          |  | $                  | 25,640  |  |                       | 
|Second lien debt                 |  |                    | 63,276  |  |                       | 
|Subordinated debt                |  |                    | 36,884  |  |                       | 
|Limited term royalties           |  |                    | 26,413  |  |                       | 
|Contingent earn-out              |  |                    | -       |  |                       | 
|Royalty interests                |  |                    | 52      |  |                       | 
|Redeemable preferred units       |  |                    | 50,018  |  |                       | 
|CLO residual interests           |  |                    | 6,892   |  |                       | 
|Equity securities                |  |                    |         |  |                       | 
|Membership and partnership units |  |                    | 10,500  |  |                       | 
|Common stock                     |  |                    | 419     |  |                       | 
|Warrants                         |  |                    | 91      |  |                       | 
|Total equity securities          |  |                    | 11,010  |  |                       | 
|Total portfolio
    investments  |  |                    | 220,185 |  |                       | 
|Government securities            |  |                    |         |  |                       | 
|U.S. Treasury Bills              |  |                    | 30,601  |  |                       | 
|Total investments                |  | $                  | 250,786 |  |                       | 



We account for all of the assets in our investment
portfolio at fair value, following the provisions of the Financial Accounting Standards Board Accounting Standards Codification
Fair Value Measurements and Disclosures, or ASC 820. ASC 820 defines fair value, establishes a framework for measuring fair
value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements
for fair value measurements.



On a quarterly basis, the investment team of
our investment advisor prepares fair value estimates for all of the assets in our portfolio utilizing the income approach and market
approach in accordance with ASC 820 and presents them to a committee of our Board of Directors — the Audit Committee since
OHA has been our investment advisor, and the Valuation Committee under our previous investment advisor. The committee recommends
fair values of each asset to our Board of Directors, which in good faith determines the final fair value for each investment. We
record investments in securities for which market quotations are readily available at such market quotations in our financial statements
as of the valuation date. For investments in securities for which market quotations are unavailable, or which have various degrees
of trading restrictions, the investment team of our investment advisor prepares valuation analyses as generally described below.



| | · | Investment Team Valuation. The investment professionals of our investment advisor prepare fair value recommendations
for each investment.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | · | Investment Team Valuation Documentation. The investment team documents and discusses its preliminary fair value recommendations
with the investment committee and senior management of our investment advisor.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Presentation to Audit Committee. Our investment advisor and senior management present the valuation analyses and fair
value recommendations to the Audit Committee of our Board of Directors. Prior to September 30, 2014, such presentation was made
to the Valuation Committee of our Board of Directors. Effective September 30, 2014, our Board of Directors no longer has a separate
Valuation Committee.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Third Party Valuation Activity. We may, at our discretion, retain an independent valuation firm to review any or all
of the valuation analyses and fair value recommendations provided by the investment team of our investment advisor. Since
December 31, 2014, our general practice is that we have an independent valuation firm review all Level 3 investments (those whose
value is determined using significant unobservable inputs) with recommended fair values in excess of $10 million on a quarterly
basis, and review all Level 3 investments with recommended fair values greater than zero at least annually.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Board of Directors and Audit Committee. The Board of Directors and the Audit Committee (or the Valuation Committee prior
to September 30, 2014) review and discuss the valuation analyses and fair value recommendations provided by the investment team
of our investment advisor and the independent valuation firm, if applicable.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19







| | · | Final Valuation Determination. Our Board of Directors discusses the fair values recommended by the Audit Committee (or
the Valuation Committee prior to September 30, 2014) and determines the fair value of each investment in our portfolio, in good
faith, based on the input of the investment team of our investment advisor, our Audit Committee (or Valuation Committee prior to
September 30, 2014) and the independent valuation firm, if applicable.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ASC 820 defines fair value as the price that
a seller would receive for an asset or pay to transfer a liability in an orderly transaction between independent, knowledgeable
and willing market participants at the measurement date. The fair value definition focuses on exit price in the principal, or most
advantageous, market and prioritizes the use of observable market inputs over unobservable entity-specific inputs. In accordance
with ASC 820, we categorize our investments based on the inputs to our valuation methodologies as follows:



| | · | Level 1 — Quoted unadjusted prices for identical instruments in active markets to which we have access at
the date of measurement.
| | - | ----------------------------------------------------------------------------------------------------------------------------------



| | · | Level 2  — Quoted prices for similar instruments in active markets; quoted prices for identical or similar
instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value
drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices
are not current, little public information exists or instances where prices vary substantially over time or among brokered market
makers.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Level 3 — Model-derived valuations in which one or more significant inputs or significant value drivers are
unobservable. Unobservable inputs are those inputs that reflect our own assumptions that market participants would use to price
the asset or liability based on the best available information.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Fair value accounting classifies financial assets
and liabilities in their entirety based on the lowest level of input that is significant to the estimated fair value measurement.
Our assessment of the significance of a particular input to the fair value measurement requires judgment that may affect the valuation
of assets and liabilities and their placement within the fair value hierarchy levels. We did not have any liabilities measured
at fair value at March 31, 2015 or December 31, 2014.



Debt Securities and Limited-Term Royalties:
  In determining the fair value of our debt investments, we first assess the overall financial health of the portfolio
company through an evaluation of a number of factors, including, as relevant, historical and projected financial results, the portfolio
company's enterprise value, and the nature and realizable value of any collateral. In estimating the portfolio company’s
enterprise value, we analyze the discounted value of estimated future net cash flows of the portfolio company, derived, when appropriate,
from third party valuations of a portfolio company’s assets, such as engineering reserve reports on oil and natural gas properties.
We also use a market approach in determining the portfolio company’s estimated enterprise value, considering recent comparable
transactions involving similar businesses or assets. We also may consider the markets in which the portfolio company operates;
comparison to a peer group of publicly traded securities; the size and scope of the portfolio company and its specific strengths
and weaknesses; recent purchases or sales of securities by the portfolio company; recent offers to purchase the portfolio company;
the estimated value of comparable securities; and other relevant factors. Based upon these analyses, we assess the sources
of cash flow available to the portfolio company to service its debt and the underlying credit risk, and determine an appropriate
yield, or discount rate, to apply to our anticipated cash flows to be collected from each debt investment, recognizing that the
collection of contractual cash flows may come from one or a combination of cash flows generated from continuing operations of the
portfolio company, liquidation of collateral or sale of the portfolio company.  The appropriateness of the yield on our
investments is directly relative to our judgment of the associated risks, using observable yield or price data for similar or comparable
debt investments when available. Fair value determinations using the discounted cash flow method can be sensitive to significant
changes in the inputs. A significant increase (decrease) in the discount rate for a particular security may result in a lower (higher)
value for that security.



We invest primarily in illiquid debt investments
in small and mid-sized private companies, some of which are in the early stages of development, or are start-up companies in need
of growth development capital. There is limited activity, transparency and variable data in the markets in which we invest. In
circumstances where there is limited observable price or yield data of similar or comparable securities, we base our
considerations on our assessments of the credit trends and underlying performance of our portfolio companies and of the markets
in which we invest, relying on the collective judgment of the investment team of our investment advisor and our Board of Directors,
which is based on their extensive experience and expertise investing in public and private securities markets.



20







Equity Securities: We record
our investments in preferred and common equity securities (including warrants or options to acquire equity securities) for which
no market prices are available at fair value based on our pro rata share of the residual equity value available after deducting
all outstanding debt and other obligations, as applicable, from the estimated enterprise value of the portfolio company. To estimate
the enterprise value of the portfolio company, we analyze the discounted cash flows of the portfolio company and indicative pricing
(on an EBITDA multiple, proved reserve and/or units-of-production basis, as appropriate) in recent comparable market transactions
as mentioned above, adjusted for lack of marketability due to the illiquid nature or other restrictions on the sale of the security.
In most cases, we may compute an average of the calculated values of our share of the residual equity value (using multiple approaches
or various assumptions) in determining the fair value of the equity security to be reported in our financial statements. Estimating
a company’s enterprise value involves judgment, and residual equity values can be relatively volatile based on changes in
market conditions, the company’s financial performance and outlook, and other factors. Fair value determinations using market
comparables can be sensitive to significant changes in the inputs. A significant increase (decrease) in the reserve multiple, or
a significant decrease (increase) in the discount for lack of marketability, for a particular equity security may result in a higher
(lower) fair value for that security.



In some cases, where we deem recent or pending
financing or recapitalization transactions involving the portfolio company to be more indicative of enterprise value, we use such
recent transactions to value the enterprise, in lieu of the discounted cash flow or market comparables. In addition, in cases where
we deem appropriate, we may utilize an option pricing method, or OPM, to value the various preferred stock, common stock and warrants
we have in companies with complex capital structures. The OPM treats preferred stock, common stock and warrants as call options
on the enterprise value, with exercise prices based on liquidation preference of the security. The OPM commonly uses the Black-Scholes
model to price the call option and considers the various terms of the stockholder agreements upon liquidation of the enterprise.
In addition, the OPM implicitly considers the effect of the liquidation preference as of a future liquidation date, not as of the
valuation date.



Royalty Interests: We record our investments
in overriding royalty interests at fair value based on a multiple of cash flows generated by such investments, multiples from transactions
involving the sale of comparable assets and/or the discounted value of expected future net cash flows from such investments, adjusted
for lack of marketability due to the illiquid nature or other restrictions on the sale of our investment. We derive appropriate
cash flow multiples from the review of comparable transactions involving similar assets. We derive the discounted value of future
net cash flows, when appropriate, from third party valuations of a portfolio company’s assets, such as engineering reserve
reports of oil and natural gas properties. A significant increase (decrease) in the cash flow multiple, or a significant decrease
(increase) in the discount for lack of marketability, for a particular investment may result in a higher (lower) fair value for
that investment.



Contingent Earn-Out: Our contingent earn-out
investment resulted from the sale of our investment in Alden Resources, LLC to Globe BG, LLC in July 2011. The amount of the payment,
up to $6.8 million, is based on a formula involving the number of clean tons of coal produced multiplied by the difference between
the company’s cost of production in 2010 and the cost of production during the optimal consecutive twelve-month period during
the three-year period ended July 2014. The reporting and review mechanism to conclude the ultimate value of the earn-out has not
yet been completed. Globe has informally advised us that the company’s relative cost of production has not improved since
July 2011, so we have recorded the value of the earn-out at zero.



We hold certain investments in debt or equity
securities that are publicly traded, but for which there are relatively few transactions or for which trading activity is relatively
infrequent. We value these investments at broker quotes as of the balance sheet date or at prices for which such securities were
most recently traded. We consider these investments as Level 2 on the valuation hierarchy, as the values represent quoted prices
for identical instruments in thinly-traded markets.



Due to the inherent uncertainty in the valuation
process, the fair values of our investments may differ materially from the values that would have been used had a ready market
for the securities existed. Additionally, changes in the market environment, portfolio company performance and other events that
may occur over the lives of the investments may cause the gains or losses ultimately realized on our investments to be materially
different than the valuations currently assigned.



We occasionally have investments in our portfolio
that contain payment-in-kind, or PIK, interest or dividend provisions. We compute PIK interest income or PIK dividend income at
the contractual rate specified in each investment agreement, and we add that amount to the principal balance of the investment.
For investments with PIK interest or PIK dividends, we calculate our income accruals on the principal balance plus any PIK amounts.
If the portfolio company’s projected cash flows, further supported by estimated total enterprise value, are not sufficient
to cover the contractual principal and interest or dividend amounts, as applicable, we do not accrue PIK interest income or PIK
dividend income on the investment. To maintain our RIC status, we must pay out this non-cash income to stockholders in the form
of dividends, even though we have not yet collected the cash.



During the three month periods ended March 31,
2015 and 2014, none of our investments in portfolio companies changed among the categories of Control Investments, Affiliate Investments
and Non-Affiliate Investments, and there were no transfers among Levels 3, 2 or 1.



21







The following tables set forth our financial
assets by level within the fair value hierarchy that we accounted for at fair value as of March 31, 2015 and December 31, 2014
(in thousands):



|March 31, 2015:                 |  | Total |         |  | Level 1 |   |        | Level 2 |  |   | Level 3 | 
|------------------------------- |  | ----- | ------- |  | ------- | - | ------ | ------- |  | - | ------- | 
|Portfolio investments           |  |       |         |  |         |   |        |         |  |   |         | 
|Control investments             |  |       |         |  |         |   |        |         |  |   |         | 
|First lien secured debt         |  | $     | 5,226   |  |         | $ | -      |         |  | $ | -       | 
|Royalty interests               |  |       | 265     |  |         |   | -      |         |  |   | -       | 
|Equity securities               |  |       | -       |  |         |   | -      |         |  |   | -       | 
|Total control investments       |  |       | 5,491   |  |         |   | -      |         |  |   | -       | 
|Affiliate investments           |  |       |         |  |         |   |        |         |  |   |         | 
|Subordinated debt               |  |       | 15,818  |  |         |   | -      |         |  |   | -       | 
|Equity securities               |  |       | 2,110   |  |         |   | -      |         |  |   | -       | 
|Total affiliate investments     |  |       | 17,928  |  |         |   | -      |         |  |   | -       | 
|Non-affiliate investments       |  |       |         |  |         |   |        |         |  |   |         | 
|First lien secured debt         |  |       | 5,020   |  |         |   | -      |         |  |   | -       | 
|Second lien debt                |  |       | 62,583  |  |         |   | -      |         |  |   | 22,354  | 
|Subordinated debt               |  |       | 17,400  |  |         |   | -      |         |  |   | 8,400   | 
|Limited term royalties          |  |       | 20,972  |  |         |   | -      |         |  |   | -       | 
|Contingent earn-out             |  |       | -       |  |         |   | -      |         |  |   | -       | 
|Redeemable preferred units      |  |       | 55,475  |  |         |   | -      |         |  |   | -       | 
|CLO residual interests          |  |       | 7,605   |  |         |   | -      |         |  |   | 7,605   | 
|Royalty interests               |  |       | 47      |  |         |   | -      |         |  |   | -       | 
|Equity securities               |  |       | 47      |  |         |   | -      |         |  |   | -       | 
|Total non-affiliate investments |  |       | 169,149 |  |         |   | -      |         |  |   | 38,359  | 
|Total portfolio investments     |  |       | 192,568 |  |         |   | -      |         |  |   | 38,359  | 
|Government securities           |  |       |         |  |         |   |        |         |  |   |         | 
|U.S. Treasury Bills             |  |       | 30,601  |  |         |   | 30,601 |         |  |   | -       | 
|Total investments               |  | $     | 223,169 |  |         | $ | 30,601 |         |  | $ | 38,359  | 



|December 31, 2014:              |  | Total |         |  | Level 1 |   |        | Level 2 |  |   | Level 3 | 
|------------------------------- |  | ----- | ------- |  | ------- | - | ------ | ------- |  | - | ------- | 
|Portfolio investments           |  |       |         |  |         |   |        |         |  |   |         | 
|Control investments             |  |       |         |  |         |   |        |         |  |   |         | 
|First lien secured debt         |  | $     | 5,950   |  |         | $ | -      |         |  | $ | -       | 
|Royalty interests               |  |       | 325     |  |         |   | -      |         |  |   | -       | 
|Equity securities               |  |       | -       |  |         |   | -      |         |  |   | -       | 
|Total control investments       |  |       | 6,275   |  |         |   | -      |         |  |   | -       | 
|Affiliate investments           |  |       |         |  |         |   |        |         |  |   |         | 
|Subordinated debt               |  |       | 15,700  |  |         |   | -      |         |  |   | -       | 
|Equity securities               |  |       | 1,730   |  |         |   | -      |         |  |   | -       | 
|Total affiliate investments     |  |       | 17,430  |  |         |   | -      |         |  |   | -       | 
|Non-affiliate investments       |  |       |         |  |         |   |        |         |  |   |         | 
|First lien secured debt         |  |       | 5,320   |  |         |   | -      |         |  |   | -       | 
|Second lien debt                |  |       | 41,410  |  |         |   | -      |         |  |   | 19,575  | 
|Subordinated debt               |  |       | 19,920  |  |         |   | -      |         |  |   | 10,920  | 
|Limited term royalties          |  |       | 23,700  |  |         |   | -      |         |  |   | -       | 
|Contingent earn-out             |  |       | -       |  |         |   | -      |         |  |   | -       | 
|Redeemable preferred units      |  |       | 54,906  |  |         |   | -      |         |  |   | -       | 
|CLO residual interests          |  |       | 7,110   |  |         |   | -      |         |  |   | 7,110   | 
|Royalty interests               |  |       | 46      |  |         |   | -      |         |  |   | -       | 
|Equity securities               |  |       | 46      |  |         |   | -      |         |  |   | -       | 
|Total non-affiliate investments |  |       | 152,458 |  |         |   | -      |         |  |   | 37,605  | 
|Total portfolio investments     |  |       | 176,163 |  |         |   | -      |         |  |   | 37,605  | 
|Government securities           |  |       |         |  |         |   |        |         |  |   |         | 
|U.S. Treasury Bills             |  |       | 30,600  |  |         |   | 30,600 |         |  |   | -       | 
|Total investments               |  | $     | 206,763 |  |         | $ | 30,600 |         |  | $ | 37,605  | 



22







The following tables present roll-forwards of
the changes in fair value during the three-month periods ended March 31, 2015 and 2014 for all investments for which we determine
fair value using unobservable (Level 3) factors (in thousands):



|                                                                                              |  | First        |        |   |               |   |        |                     |  |   | Royalty Interests, |   |  |             |       
|--------------------------------------------------------------------------------------------- |  | ------------ | ------ | - | ------------- | - | ------ | ------------------- |  | - | ------------------ | - |  | ----------- | ------
|                                                                                              |  | Lien Secured |        |   |               |   |        | Subordinated        |  |   | Contingent         |   |  |             |       
|                                                                                              |  | Debt and     |        |   |               |   |        | Debt and            |  |   | Earn-out           |   |  |             |       
|                                                                                              |  | Limited Term |        |   | Second        |   |        | Redeemable          |  |   | and Equity         |   |  | Total       |       
|                                                                                              |  | Royalties    |        |   | Lien
    Debt |   |        | Preferred
    Units |  |   | Securities         |   |  | Investments |       
|Fair value at December 31, 2014                                                               |  | $            | 34,970 |   |               | $ | 21,835 |                     |  | $ | 79,606             |   |  | $           | 2,147 
|Total gains, (losses) and amortization:                                                       |  |              |        |   |               |   |        |                     |  |   |                    |   |  |             |       
|Net unrealized gains (losses)                                                                 |  |              | (3,109 | ) |               |   | 54     |                     |  |   | 113                |   |  |             | 322   
|Net amortization of premiums, discounts and
    fees                                          |  |              | 57     |   |               |   | 22     |                     |  |   | 16                 |   |  |             | -     
|New investments, repayments and settlements, net:                                             |  |              |        |   |               |   |        |                     |  |   |                    |   |  |             |       
|New investments                                                                               |  |              | -      |   |               |   | 18,513 |                     |  |   | 440                |   |  |             | -     
|Payment-in-kind                                                                               |  |              | -      |   |               |   | -      |                     |  |   | 118                |   |  |             | -     
|Repayments and settlements                                                                    |  |              | (700   | ) |               |   | (195   | )                   |  |   | -                  |   |  |             | -     
|Fair value at March 31, 2015                                                                  |  | $            | 31,218 |   |               | $ | 40,229 |                     |  | $ | 80,293             |   |  | $           | 2,469 
|                                                                                              |  |              |        |   |               |   |        |                     |  |   |                    |   |  |             |       
|Fair value at December 31, 2013                                                               |  | $            | 64,449 |   |               | $ | 31,747 |                     |  | $ | 77,099             |   |  | $           | 8,602 
|Total gains, (losses) and amortization:                                                       |  |              |        |   |               |   |        |                     |  |   |                    |   |  |             |       
|Net realized gains (losses)                                                                   |  |              | -      |   |               |   | -      |                     |  |   | (9,382             | ) |  |             | -     
|Net unrealized gains (losses)                                                                 |  |              | (2,433 | ) |               |   | (26    | )                   |  |   | 9,005              |   |  |             | (5,525
|Net amortization of premiums, discounts and
    fees                                          |  |              | 108    |   |               |   | 25     |                     |  |   | 13                 |   |  |             | (6    
|New investments, repayments and settlements, net:                                             |  |              |        |   |               |   |        |                     |  |   |                    |   |  |             |       
|New investments                                                                               |  |              | 1,116  |   |               |   | -      |                     |  |   | -                  |   |  |             | -     
|Payment-in-kind                                                                               |  |              | 145    |   |               |   | 89     |                     |  |   | 76                 |   |  |             | -     
|Repayments and settlements                                                                    |  |              | (1,439 | ) |               |   | -      |                     |  |   | (70                | ) |  |             | -     
|Fair value at March 31, 2014                                                                  |  | $            | 61,946 |   |               | $ | 31,835 |                     |  | $ | 76,741             |   |  | $           | 3,071 
|                                                                                              |  |              |        |   |               |   |        |                     |  |   |                    |   |  |             |       
|Net change in unrealized gains (losses) from investments still held
    as of reporting date: |  |              |        |   |               |   |        |                     |  |   |                    |   |  |             |       
|March 31, 2015                                                                                |  | $            | (3,109 | ) |               | $ | 54     |                     |  | $ | 113                |   |  | $           | 322   
|March 31, 2014                                                                                |  |              | (2,433 | ) |               |   | (26    | )                   |  |   | (378               | ) |  |             | (5,525



We present net unrealized gains (losses) on
our consolidated statements of operations as “Net unrealized appreciation (depreciation) on investments.”



23







The following table summarizes the significant
unobservable inputs in the fair value measurements of our Level 3 investments by category of investment and valuation technique
as of March 31, 2015 (dollars in thousands):



|                               |  | Fair  |         |  | Valuation |                                | Significant             |                          | Range of |  |                                                          | Weighted | 
|------------------------------ |  | ----- | ------- |  | --------- | ------------------------------ | ----------------------- | ------------------------ | -------- |  | -------------------------------------------------------- | -------- | 
|Type
    of Investment         |  | Value |         |  | Technique |                                | Unobservable
    Inputs |                          | Inputs   |  |                                                          | Average  | 
|First lien secured debt        |  |       |         |  |           |                                |                         |                          |          |  |                                                          |          | 
|and limited term royalties     |  | $     | 25,992  |  |           | Discounted cash flow           |                         | Discount rate            |          |  | 12.5%
                                         - 25.0%   |          | 
|                               |  |       | 726     |  |           | Market comparables             |                         | EBITDA multiples         |          |  | 3.0x                                                     |          | 
|                               |  |       | 4,500   |  |           | Recent or pending transactions |                         | N/A                      |          |  | N/A                                                      |          | 
|                               |  |       | 31,218  |  |           |                                |                         |                          |          |  |                                                          |          | 
|Second lien debt               |  |       | 21,716  |  |           | Market comparables             |                         | EBITDA multiples         |          |  | 3.8x
                                         - 14.7x    |          | 
|                               |  |       |         |  |           |                                |                         | Reserve multiples (1)    |          |  | $9.00
                                         - $12.00  |          | 
|                               |  |       |         |  |           |                                |                         | Production multiples (2) |          |  | $42.00
                                         - $51.00 |          | 
|                               |  |       | 18,513  |  |           | Recent or pending transactions |                         | N/A                      |          |  | N/A                                                      |          | 
|                               |  |       | 40,229  |  |           |                                |                         |                          |          |  |                                                          |          | 
|Subordinated debt and          |  |       |         |  |           |                                |                         |                          |          |  |                                                          |          | 
|redeemable preferred units     |  |       | 80,293  |  |           | Market comparables             |                         | EBITDA multiples         |          |  | 3.0x
                                         - 6.5x     |          | 
|                               |  |       |         |  |           |                                |                         | Reserve multiples (1)    |          |  | $13.20
                                         - $15.60 |          | 
|                               |  |       |         |  |           |                                |                         | Production multiples (2) |          |  | $27.00
                                         - $35.40 |          | 
|Royalty interests, contingent  |  |       |         |  |           |                                |                         |                          |          |  |                                                          |          | 
|earn-out and equity securities |  |       | 2,375   |  |           | Market comparables             |                         | EBITDA multiples         |          |  | 4.0x
                                         - 6.0x     |          | 
|                               |  |       | 94      |  |           | Recent or pending transactions |                         | N/A                      |          |  | N/A                                                      |          | 
|                               |  |       | 2,469   |  |           |                                |                         |                          |          |  |                                                          |          | 
|                               |  | $     | 154,209 |  |           |                                |                         |                          |          |  |                                                          |          | 



________________

| | (1) | Based on recent comparable
transactions involving similar assets, expressed as price per unit of equivalent barrel of oil in proved reserves.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Based on recent comparable transactions involving similar
assets, expressed as price per daily production of equivalent barrel of oil in proved reserves.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



Note 8: Common Stock



On October 31, 2011, our Board of
Directors approved a stock repurchase plan, pursuant to which we may, from time to time, repurchase up to $10.0 million of
our common stock in the open market at prices not to exceed the net asset value of our shares. During 2012 and 2013, we
repurchased an aggregate of 1,129,014 shares of our common stock in the open market at an average price of $6.71 per share,
totaling $7.6 million, in accordance with the approved stock repurchase plan. These repurchases were made at approximate
discounts to the most recently published net asset value of 30%, 26% and 28% in May and November 2012 and May 2013,
respectively. In March 2015, our Board of Directors authorized the Company to repurchase up to the remaining $2.4 million
available to be repurchased under this plan. Between March 16 and March 31, 2015, we repurchased 72,483 shares of our common
stock in the open market at an average price of $5.16 per share, totaling $0.4 million, at a 31% discount to net asset value
calculated as of December 31, 2014. Between April 1 and May 7, 2015, pursuant to a plan executed in accordance with
Rule 10b5-1 of the Securities Exchange Act of 1934, we repurchased 201,456 shares of our common stock in the open market at
an average price of $5.36 per share, totaling $1.0 million, leaving $1.0 million available to be used for stock repurchases under
the stock repurchase plan. Any such share repurchases will be made in accordance with applicable securities laws and
regulations that set certain restrictions on the method, timing, price and volume of stock repurchases, and no assurance can
be given that any particular amount of Company common stock will be repurchased under the plan.



24







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



You should read the following analysis of
our financial condition and results of operations in conjunction with management’s discussion and analysis contained in our
2014 Annual Report on Form 10-K, as well as our consolidated financial statements and the notes thereto included in this Quarterly
Report on Form 10-Q.



Forward-Looking Statements



Certain statements in this Quarterly Report
on Form 10-Q that relate to estimates or expectations of our future performance or financial condition may constitute “forward-looking
statements.” These forward-looking statements are subject to various risks and uncertainties, which could cause actual results
and conditions to differ materially from those projected, including, but not limited to:



| | • | uncertainties associated with the timing and likelihood of investment transaction closings;
| | - | -------------------------------------------------------------------------------------------

| | • | changes in interest rates;
| | - | --------------------------

| | • | the future operating results of our portfolio companies and their ability to achieve their objectives;
| | - | ------------------------------------------------------------------------------------------------------

| | • | changes in regional or national economic conditions and their impact on the industries in which we invest;
| | - | ----------------------------------------------------------------------------------------------------------

| | • | disruptions in the credit and capital markets;
| | - | ----------------------------------------------

| | • | changes in the conditions of the industries in which we invest;
| | - | ---------------------------------------------------------------

| | • | the adequacy of our cash resources and working capital;
| | - | -------------------------------------------------------

| | • | the timing of cash flows, if any, from the operations of our portfolio companies;
| | - | ---------------------------------------------------------------------------------

| | • | the ability of OHA to locate suitable investments for us and to monitor and administer our investments; and
| | - | -----------------------------------------------------------------------------------------------------------

| | • | other factors enumerated in our filings with the Securities and Exchange Commission, or the SEC.
| | - | ------------------------------------------------------------------------------------------------



We may use words such as “anticipates,”
“believes,” “intends,” “plans,” “expects,” “projects,” “estimates,”
“will,” “should,” “may” and similar expressions to identify forward-looking statements. These
forward-looking statements are subject to various risks and uncertainties. Certain factors could cause actual results and conditions
to differ materially from those projected and our historical experience. You should not place undue reliance on such forward-looking
statements, which speak only as of the date they are made. We undertake no obligation to update any forward-looking statements
made herein, unless required by law.



Overview



We are a specialty finance company designed
to provide our investors with current income and capital appreciation. We focus primarily on providing creative direct lending
solutions to middle market private companies across industry sectors. Our investment objective is to generate both current income
and capital appreciation primarily through debt investments, some of which include equity components. Our investment activities
are managed by Oak Hill Advisors, L.P., or OHA, and supervised by our Board of Directors, the majority of whose members are independent
of OHA and its affiliates.



OHA (and its affiliated investment advisors
and predecessor firms) continues to build on its over 20-year history of investing in various asset classes and believes that its
past success is a reflection of the firm’s consistent investment philosophy, strategy and process. As our investment advisor,
OHA seeks to expand our portfolio’s exposure to a broader range of industries beyond energy, focusing on the middle market.
OHA believes that middle market companies are generally less able to secure financing from public financial markets than larger
companies and thus offer better return opportunities for firms able to originate and structure these investments, along with conducting
the necessary diligence to appropriately evaluate these opportunities.



OHA expects that most of our new investments
will be in senior and junior secured, unsecured and subordinated debt securities in U.S. private and small public middle market
companies with maturities ranging from three to seven years. However, OHA seeks to identify attractive investments throughout the
capital structure and thus may invest in equity, distressed debt, residual interests of CLOs and other assets. We may invest in
newly issued securities and acquire investments in the secondary market. We do not currently intend to invest in mortgage-related
structured products.



On September 30, 2014, our stockholders approved
the appointment of OHA as our investment advisor, replacing NGP Investment Advisor, LP, which had been our investment advisor since
our inception. In connection with this change in investment advisor, we changed our name from NGP Capital Resources Company to
OHA Investment Corporation, or OHAI. OHA is a registered investment adviser under the Investment Advisers Act of 1940, or the Advisers
Act. OHA acts as our investment advisor and administrator pursuant to an investment advisory agreement and an administration agreement,
respectively, each dated as of September 30, 2014, which we refer to as the Investment Advisory Agreement and the Administration
Agreement, respectively.



25







The aggregate fair value of our investment portfolio
at March 31, 2015 was $192.3 million, with such value comprised of 15 active portfolio investments compared to 10 active portfolio
investments at September 30, 2014. Under our previous investment advisor, we focused our investments primarily on small and mid-size
companies engaged in the upstream sector of the energy industry, which includes businesses that find, develop and extract energy
resources, including natural gas, crude oil and coal. Consequently, the majority of our current investment portfolio value is comprised
of debt securities and other investments in upstream exploration and production companies engaged in the acquisition, development
and production of oil and natural gas properties in and along the Gulf Coast, in the state and federal waters of the Gulf of Mexico,
and in the Permian Basin, Mid-Continent and Rocky Mountain areas.



Part of our current investment strategy is to
reduce our portfolio concentration in the energy industry and to diversify our portfolio with investments in debt securities of
U.S. private and small public middle market companies across various industry sectors. The concentration of our investment portfolio
in the energy sector decreased from 74% at September 30, 2014 to 56% at March 31, 2105, on a fair value basis.



Our historical focus and current concentration
in the energy sector causes our portfolio to be particularly influenced by commodity prices for oil and natural gas, which declined
dramatically during the fourth quarter of 2014 and remain significantly lower than they have been in recent years. Further decline
in commodity prices or increased volatility in the energy markets, particularly in North America, may further significantly affect
the business, financial condition, results of operations and cash flows of the energy-related businesses in our investment portfolio
and their ability to meet financial commitments, which would negatively impact the fair values of many of our energy-related investments
and, in turn, our net asset value. These factors may also extend the holding period for such investments, thus impacting our ability
to reduce the concentration of energy investments in our portfolio.



Our level of investment activity can and does
vary substantially from period to period depending on many factors. Some of these factors are the amount of debt and equity capital
available to middle market companies, the level of acquisition and divestiture activity for such companies, the general economic
environment and the competitive environment for the types of investments we make, and our own ability to raise capital to fund
our investments, both through the issuance of debt and equity securities. If a substantial portion of our investment portfolio
were to be realized in the near term, no assurance can be given that OHA will be able to source sufficient appropriate investments
for us to timely replace the investment income from the realized investments.



Portfolio and Investment Activity



In March 2015, we purchased an $18.7 million
participation in a second lien term loan to Foundation Building Materials, LLC, or FBM, a national distributor of drywall and related
building products. The FBM Second Lien Term Loan was purchased at a 1% discount, earns interest payable in cash at a rate of 12%
per annum (LIBOR +11% with a 1% Floor) and matures in April 2019.



In March 2015, we also purchased a $2.5 million
participation in a second lien term loan to Stardust Financial Holdings, Inc., an affiliate of Hanson Building Products, or Hanson,
a manufacturer of a diversified range of concrete and clay building products in the United States, Canada and the United Kingdom.
We purchased $2.4 million through the syndication process at a discount of 9% and an additional $0.1 million in the secondary market
at a discount of 6.5%. The Hanson second lien term loan earns interest payable in cash at a rate of 10.5% per annum (LIBOR+9.5%
with a 1% Floor) and matures in March 2023.



In 2011 and 2012, we purchased from ATP Oil
& Gas Corporation, or ATP, limited-term overriding royalty interests, or ORRIs, in certain offshore oil and gas producing properties
operated by ATP in the Gulf of Mexico, including $25.0 million paid on July 3, 2012. Under this arrangement, we purchased the right
to portions (ranging from 5.0% to 10.8%) of the monthly production proceeds from the various oil and gas properties subject to
the ORRIs in ATP’s Gomez and Telemark properties. The terms of the ORRIs provide that they will terminate after we receive
production payments that equal a defined sum calculated (generally) based on our investment in the ORRIs plus a time-value factor
at a rate of 13.2% per annum. On August 17, 2012, ATP filed for protection under Chapter 11 of the U.S. Bankruptcy Code. For more
information, please refer to the discussion of the ATP Litigation under the heading “Legal Proceedings” in Note 6,
“Commitments and Contingencies,” to the Consolidated Financial Statements included elsewhere in this Quarterly Report
on Form 10-Q. As of March 31, 2015, our unrecovered investment was $26.5 million, and we had received aggregate production payments
of $33.9 million subject to a disgorgement agreement. In addition, as of March 31, 2015, we had incurred legal and consulting fees
totaling $5.1 million in connection with the enforcement of our rights under the ORRIs. On various occasions, we have provided
notice that such legal expenses will be added to our unrecovered investment balance to the extent they are not reimbursed. To date,
we have not received any payments on account of legal expenses aside from our receipt of regular monthly production payments. We
add our legal expenses to the unrecovered investment balance in accordance with our transaction documents. As of March 31, 2015,
$4.7 million of the $5.1 million in legal and consulting fees have been added to, and are thus included in, the unrecovered investment
balance under the terms of our transaction documents. The remaining amounts of legal and consulting fees, totaling $0.4 million
and $0.1 million as of March 31, 2015 and December 31, 2014, respectively, are included in accounts receivable and other current
assets on our consolidated balance sheets and are, thus, not included in the unrecovered investment balance as of such dates.



26







The table below shows our portfolio investments
by type as of March 31, 2015 and December 31, 2014. We compute yields on investments using interest rates as of the balance sheet
date and include amortization of original issue discount and market premium or discount, royalty income and other similar investment
income, weighted by their respective costs when averaged. These yields do not include income from any investments on non-accrual
status but do include the cost basis of such investments in the denominator. Such weighted average yields are not necessarily indicative
of expected total returns on a portfolio.



|                                 |  | March 31, 2015 |       |   | December 31, 2014       | 
|-------------------------------- |  | -------------- | ----- | - | ----------------------- | 
|                                 |  | Weighted       |       |   |                         | 
|                                 |  | Average        |       |   | Percentage of Portfolio | 
|                                 |  | Yields         |       |   | Cost                    | 
|First lien secured debt          |  |                | 2.6   | % |                         | 
|Second lien debt                 |  |                | 10.6  | % |                         | 
|Subordinated debt                |  |                | 13.0  | % |                         | 
|Limited term royalties           |  |                | 13.9  | % |                         | 
|Contingent earn-out              |  |                | 0.0   | % |                         | 
|Royalty interests                |  |                | 154.6 | % |                         | 
|Redeemable preferred units       |  |                | 8.0   | % |                         | 
|CLO residual interests (1)       |  |                | 12.2  | % |                         | 
|Equity securities                |  |                |       |   |                         | 
|Membership and partnership units |  |                | 0.0   | % |                         | 
|Common stock                     |  |                | 0.0   | % |                         | 
|Warrants                         |  |                | 0.0   | % |                         | 
|Total equity securities          |  |                | 0.0   | % |                         | 
|Total portfolio investments      |  |                | 9.4   | % |                         | 



(1) Yields from investments in CLO residual
interests represent the implied internal rate of return calculation expected from cash flow streams.



As of March 31, 2015 and December 31, 2014,
the total fair value of our portfolio investments was $192.6 million and $176.2 million, respectively. Of those fair value totals,
approximately $154.2 million, or 80%, as of March 31, 2015, and $138.6 million, or 79%, as of December 31, 2014, are determined
using significant unobservable (i.e., Level 3) inputs.



Results of Operations



Investment Income



During the three months ended March 31, 2015,
our total investment income was $4.8 million, decreasing by $1.0 million, or 18%, compared to $5.9 million in the corresponding
period of 2014. The decrease in 2015 was primarily a result of a decrease in the weighted average yield on our investment portfolio
due to realizations of some higher yielding investments during 2014 and due to the placing of certain investments on non-accrual
status during the fourth quarter of 2014. Our weighted average yield on portfolio investments, on a cost basis, decreased from
10.4% at March 31, 2014 to 9.4% at March 31, 2015. In addition, our average portfolio balance, on a cost basis, declined from $214.7
million during the first quarter of 2014 to $204.7 million during the first quarter of 2015, primarily as a result of the volume
of realizations exceeding the volume of new investments between the two periods.



27







The table below summarizes our non-accruing
and non-income producing investments:



|                                                                           |  | March 31, 2015 |        |  | December 31, 2014 |  
|-------------------------------------------------------------------------- |  | -------------- | ------ |  | ----------------- | -
|(Dollars in thousands)                                                     |  | Cost           |        |  | Fair Value        |  
|Non-accruing investments                                                   |  |                |        |  |                   |  
|Contour Highwall Holdings, LLC (non-accrual 10/01/2014)                    |  | $              | 11,218 |  |                   | $
|Spirit Resources, LLC - Tranche A (non-accrual 11/01/2014)                 |  |                | 5,464  |  |                   |  
|Spirit Resources, LLC - Tranche B (non-accrual 3/31/14)                    |  |                | 4,409  |  |                   |  
|Total non-accruing investments                                             |  |                | 21,091 |  |                   |  
|Non-income producing investments                                           |  |                |        |  |                   |  
|Contour Highwall Holdings, LLC units                                       |  |                | -      |  |                   |  
|Globe BG, LLC (contingent Alden Resources royalty earn-out)                |  |                | -      |  |                   |  
|Huff Energy Holdings, Inc. warrants and overriding royalty (after pay-out) |  |                | 84     |  |                   |  
|Myriant Corporation common stock and warrants                              |  |                | 468    |  |                   |  
|OHA/OCI Investments, LLC Class A Units                                     |  |                | 2,500  |  |                   |  
|Spirit Resources, LLC preferred units                                      |  |                | 8,000  |  |                   |  
|Total non-income producing investments                                     |  |                | 11,052 |  |                   |  
|Total non-accruing and non-income producing investments                    |  | $              | 32,143 |  |                   | $



Operating Expenses



The table below summarizes the components of
our operating expenses (in thousands):



|                                               |  | For The Three Months Ended |      
|---------------------------------------------- |  | -------------------------- | -----
|                                               |  | March 31,                  |      
|                                               |  | 2015                       |      
|Interest expense and bank fees                 |  | $                          | 652  
|Management fees                                |  |                            | 678  
|Costs related to strategic alternatives review |  |                            | -    
|Professional fees and other G&A                |  |                            | 1,295
|Total operating expenses                       |  | $                          | 2,625



For the three months ended March 31, 2015, operating
expenses were $2.6 million, decreasing $1.3 million, or 33%, compared to $3.9 million for the quarter ended March 31, 2014. Management
fees were $0.7 million, or 50%, lower in the quarter ended March 31, 2015 at $0.7 million, compared to the quarter ended March
31, 2014, primarily as a result of the lower base management fee structure in the Investment Advisory Agreement with OHA as compared
to the base management fee structure associated with our former investment advisor. Costs related to our strategic alternatives
review process, which ultimately resulted in the appointment of OHA as our new investment advisor as of September 30, 2014, totaled
$0.5 million during the first quarter of 2014 and did not recur during the first quarter of 2015. Professional fees and other general
and administrative expenses totaled $1.3 million for the quarter ended March 31, 2015, decreasing by $0.2 million, or 14% compared
to the quarter ended March 31, 2014, primarily as a result of lower personnel and insurance costs, partially offset by higher legal
and professional fees.



Operating expenses include our allocable portion
of operating expenses incurred on our behalf by our investment advisor and our administrator. Other general and administrative
expenses include our allocated share of employee, facilities, stockholder services and marketing costs incurred by our administrator.



According to the terms of our previous investment
advisory agreement with NGP Investment Advisor, LP, we calculated the base management fee quarterly as 0.45% of the average of
our total assets (inclusive of all cash and cash equivalents without any exclusions) as of the end of the two most recent fiscal
quarters. According to the terms of our new Investment Advisory Agreement with OHA, effective September 30, 2014, we calculate
the base management as 0.4375% (reduced to 0.375% in the first year) of the average of our total assets (excluding cash, cash equivalents
and U.S. Treasury Bills that are purchased with borrowed funds solely for the purpose of satisfying quarter-end diversification
requirements related to our election to be taxed as a RIC under the Code). Consequently, our base management fee, relative to our
total asset balances, is lower under the Investment Advisory Agreement than it was under our previous investment advisory agreement.



28







Under the Investment Advisory Agreement, the
investment income incentive fee is calculated quarterly at a rate of 20% of quarterly net investment income above a “hurdle
rate” of 1.75% per quarter (7% annualized) with a “catch up” provision. Under our previous investment advisory
agreement, the investment income incentive fee was calculated at 20% of net investment income above a “hurdle rate”
of 2.0% per quarter (8% annualized) with no “catch up” provision. We have not incurred any investment income incentive
fees since the second quarter of 2013. However, if our operating results improve in future periods and exceed the 1.75% quarterly
hurdle rate, we will incur investment income incentive fees.



Net Investment Income



For the three months ended March 31, 2015, net
investment income was $2.2 million, or $0.11 per common share, compared to $1.9 million, or $0.09 per common share, for the three
months ended March 31, 2014. The $0.3 million increase in net investment income was primarily attributable to the $1.3 million
decrease in operating expenses, partially offset by decreases in investment income of $1.0 million, both discussed above.



Net Realized Gains (Losses)



For the three months ended March 31, 2014, we
realized net capital losses of $9.6 million, or $0.47 per common share, primarily as a result of a loss of $9.4 million on the
disposition of our GMX Resources, Inc. Senior Secured Second-Priority Notes due 2018, or the GMX 2018 Notes. The realized loss
on the GMX 2018 Notes was entirely offset by the reversal of previously recognized unrealized depreciation on this investment.



Unrealized Appreciation or Depreciation on Investments



For the three months ended March 31, 2015, net
unrealized depreciation on portfolio investments was $4.0 million, or $0.20 per share, primarily due to decreases in the fair value
of our investments in Talos Production, LLC Senior Unsecured Notes of $2.5 million and our limited-term overriding royalty interest,
or ORRI, in certain properties operated by Bennu Oil & Gas, LLC, or Bennu, of $2.4 million, and our investments in Spirit Resources,
LLC, or Spirit, of $0.8 million, partially offset by increases in the fair value of our investment in Castex 2005 LP Preferred
Units of $0.6 million and Gramercy Park CLO of $0.6 million. Net increases in the fair value of remaining investments totaled $0.5
million in the first quarter of 2015. By comparison, for the three months ended March 31, 2014, net unrealized appreciation on
portfolio investments was $1.3 million, or $0.06 per share, primarily due to the reversal of previously recorded unrealized depreciation,
due to realization, associated with our investment in GMX 2018 Notes of $9.4 million, partially offset by decreases in the fair
value of our investments in Spirit Preferred Units of $3.4 million, Bennu limited-term ORRIs of $2.4 million, OCI Holdings, LLC
Subordinated Notes and Preferred Units of $1.9 million, and net decreases in the value of remaining investments of $0.4 million.



Net Increase (Decrease) in Net Assets Resulting from
Operations



For the three months ended March 31, 2015, we
recorded a net decrease in net assets resulting from operations of $1.9 million, or $0.09 per share, compared to $6.4 million,
or $0.31 per share, for the three months ended March 31, 2014. The $4.5 million, or $0.22 per share, net improvement between the
two periods was primarily attributable to the $0.3 million increase in net investment income and the $4.2 million reduction in
net realized and unrealized losses on our investments, all of which are described above.



Financial Condition, Liquidity and Capital Resources



During the three months ended March 31, 2015,
we generated cash from operations of $2.4 million, excluding net purchases of investments, compared to $3.0 million during the
comparable period of 2014. The lower amount of cash generated from operations in 2015 was primarily attributable to timing differences
involving the invoicing and payment of accounts payable between the two periods.



Our net cash used in operating activities for
the three months ended March 31, 2015 was $17.8 million, compared to $3.1 million of cash provided by operating activities for
the same period of 2014. This increase in net cash used in 2015 was primarily due to higher net purchases of investments in portfolio
securities during 2015. Purchases of portfolio securities during the first three months of 2015 totaled $21.1 million, compared
to $1.1 million during the first three months of 2014. Purchases in 2015 consisted of the FBM Second Lien Term Loan of $18.5 million,
the Hanson Second Lien Term Loan of $2.3 million and additional investments in existing portfolio companies totaling $0.3 million.
Purchases in 2014 consisted of additional investments in existing portfolio companies. Proceeds from the realization of investments
totaled $0.9 million during the first three months of 2015, compared to $1.3 million during the first three months of 2014.



29







At March 31, 2015, we had cash and cash equivalents
totaling $30.0 million. At March 31, 2015, the amount outstanding under our $72.0 million Third Amended and Restated Revolving
Credit Agreement, or the Investment Facility, was $72.0 million, and there was no additional amount available for borrowing. We
repaid $25.0 million of the balance outstanding under the Investment Facility in early April with cash on hand. As of March 31,
2015, the amount outstanding under our $30.0 million Treasury Secured Revolving Credit Agreement, or the Treasury Facility, was
$30.0 million, and there was no additional amount available for borrowing. We repaid the entire balance outstanding under the Treasury
Facility in April 2015 with proceeds from the sale of U.S. Treasury Bills.



During the three months ended March 31, 2015,
we paid cash dividends totaling $3.3 million, or $0.16 per share, to our common stockholders. In March 2015, we declared a first
quarter dividend totaling $2.5 million, or $0.12 per share, which was paid in April 2015. We currently intend to continue to distribute,
out of assets legally available for distribution and as determined by our Board of Directors, in the form of quarterly dividends,
a minimum of 90% of our annual investment company taxable income to our stockholders.



In March 2015, our Board of Directors authorized
the Company to repurchase up to $2.4 million of our common stock pursuant to a stock repurchase plan established in October 2011.
During the first quarter of 2015, we repurchased 72,483 shares of our common stock in the open market at an average price of $5.16
per share, totaling $0.4 million. From April 1 through May 7, 2015, pursuant to a plan executed in accordance with Rule 10b5-1
of the Securities Exchange Act of 1934, we repurchased 201,456 shares of our common stock in the open market at an average price
of $5.36 per share, totaling $1.0 million, leaving $1.0 million available to be used for stock repurchases under the stock repurchase
plan. Any such share repurchases will be made in accordance with applicable securities laws and regulations that set certain restrictions
on the method, timing, price and volume of stock repurchases, and no assurance can be given that any particular amount of Company
common stock will be repurchased under the plan.



Credit Facilities and Borrowings



We have a $72.0 million revolving Investment
Facility. The total amounts outstanding under the Investment Facility were $72.0 million and $52.0 million as of March 31, 2015
and December 31, 2014, respectively. Substantially all of our assets except our investments in U.S. Treasury Bills are collateral
for the obligations under the Investment Facility. The Investment Facility matures on May 23, 2016, and bears interest, at our
option, at either (i) LIBOR plus 325 to 475 basis points, or (ii) the base rate plus 225 to 375 basis points, both based on our
amounts outstanding. As of March 31, 2015, the average interest rate on our outstanding balance of $72.0 million was 3.9%, and
there was no additional amount available for borrowing under the Investment Facility. We repaid $25.0 million of the balance outstanding
under the Investment Facility in early April 2015.



We have a $30.0 million Treasury Facility that
can only be used to purchase U.S. Treasury Bills. Proceeds from the Treasury Facility facilitate the growth of our investment portfolio
and provide flexibility in the sizing of our portfolio investments. As of March 31, 2015, we had $30.0 million outstanding and
no additional amount available for borrowing under the Treasury Facility, and the interest rate on our outstanding balance was
1.7%. We repaid the entire balance outstanding under the Treasury Facility in April 2014 with proceeds from the sale of U.S. Treasury
Bills.



Both the Investment Facility and the Treasury
Facility contain affirmative and reporting covenants and certain financial ratio and restrictive covenants. We have complied with
these covenants throughout 2015 and 2014 and had no existing defaults or events of default under either facility. The most restrictive
covenants, with terms as defined in the credit agreements, are:



| | · | maintaining a ratio of net asset value to consolidated total indebtedness (excluding net hedging liabilities) of not less than
2.25:1.0,
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

| | · | maintaining a ratio of net asset value to consolidated total indebtedness (including net hedging liabilities) of not less than
2.0:1.0,
| | - | ---------------------------------------------------------------------------------------------------------------------------------------

| | · | maintaining a ratio of EBITDA (excluding revenue from cash collateral) to interest expense (excluding interest on loans under
the Treasury Facility) of not less than 3.0:1.0, and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | maintaining a ratio of collateral to the aggregate principal amount of borrowings under the Treasury Facility of not less than
1.02:1.0.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



30







Distributions



We have elected to operate our business to be
taxed as a RIC for federal income tax purposes. As a RIC, we generally are not required to pay corporate-level U.S. federal income
taxes on any ordinary income or capital gains that we distribute to our stockholders as dividends. To maintain our RIC status,
we must meet specific source-of-income and asset diversification requirements and distribute annually an amount equal to at least
90% of our “investment company taxable income” (which generally consists of ordinary income and realized net short-term
capital gains in excess of realized net long-term capital losses, if any, reduced by deductible expenses) and net tax-exempt interest.
In order to avoid certain excise taxes imposed on RICs, we must distribute during each calendar year an amount at least equal to
the sum of (1) 98% of our ordinary income for the calendar year, (2) 98.2% of our capital gain net income (i.e., realized capital
gains in excess of realized capital losses) for the one-year period ended on October 31 of that calendar year, and (3) 100% of
any ordinary income or capital gain net income not distributed in prior years and on which we did not pay corporate-level federal
income taxes. We currently intend to make sufficient distributions to satisfy the annual distribution requirement and to avoid
the excise taxes.



We determine the tax characteristics of our
dividend distributions as of the end of the fiscal year, based on the taxable income for the full year and distributions paid during
the year. Taxable income available for distribution differs from consolidated net investment income under GAAP due to (i)
temporary and permanent differences in income and expense recognition, (ii) capital gains and losses, (iii) activity at taxable
subsidiaries, and (iv) the timing and period of recognition regarding dividends declared in December of one year and paid in January
of the following year. We (or the applicable withholding agent) report the tax characteristics of dividends paid annually
to each stockholder on Form 1099-DIV after the end of the year.



We may not achieve operating results that will
allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition,
we may be limited in our ability to make distributions due to the asset coverage test for borrowings when applicable to us as a
BDC under the 1940 Act and due to provisions in our Investment Facility. If we do not distribute a certain percentage of our income
annually, we will suffer adverse tax consequences, including possible loss of our status as a RIC. We cannot assure stockholders
that they will receive any distributions or distributions at any specific level.



Portfolio Credit Quality



At March 31, 2015, most of our portfolio investments
were in negotiated, and often illiquid, securities of energy-related and middle market businesses, with a concentration in the
energy industry. As of March 31, 2015, we had two investments on non-accrual status with an aggregate cost and fair value of $21.1
million and $5.2 million, respectively. Both of these investments were placed on non-accrual status during the fourth quarter of
2014. Our portfolio investments at fair value were approximately 87% and 88% of the related cost basis as of March 31, 2015 and
December 31, 2014, respectively.



In light of enhancements made in our
financial reporting and valuation processes, which include the expanded use of an independent valuation firm, we discontinued the use of a risk rating system as part of our internal investment monitoring procedures
and did not apply risk
ratings to our portfolio investments effective in the first quarter of 2015.



Contractual Obligations and Off-Balance Sheet Arrangements



The following table summarizes our contractual
payment obligations at March 31, 2015 (in thousands):



|                                |  |       |         |  | Less than |   |        |           |  |   |           |  |  | More than |  
|------------------------------- |  | ----- | ------- |  | --------- | - | ------ | --------- |  | - | --------- |  |  | --------- | -
|Revolving credit facilities(1): |  | Total |         |  | 1 Year    |   |        | 1-3 Years |  |   | 3-5 Years |  |  | 5 Years   |  
|Investment Facility             |  | $     | 72,000  |  |           | $ | -      |           |  | $ | 72,000    |  |  | $         | -
|Treasury Facility               |  |       | 30,000  |  |           |   | 30,000 |           |  |   | -         |  |  |           | -
|Total                           |  | $     | 102,000 |  |           | $ | 30,000 |           |  | $ | 72,000    |  |  | $         | -










(1) Excludes accrued interest amounts.



Item 3. Quantitative and Qualitative Disclosures About Market
Risk.



There have been no material changes from the
information provided in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2014.



Item 4. Controls and Procedures.



Disclosure Controls and Procedures



We maintain disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act), designed
to ensure that information required to be disclosed in our reports that we file under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the SEC and accumulated and communicated to
management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required
disclosures.



31







In connection with the preparation of this Quarterly
Report on Form 10-Q, as of the end of the fiscal period covered by this Quarterly Report on Form 10-Q (March 31, 2015), we performed
an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and our Chief
Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules
13a-15(b) and 15d-15(b) of the Exchange Act. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer
concluded that, as of March 31, 2015, our disclosure controls and procedures were effective in providing reasonable assurance (i)
that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the rules and forms of the SEC and (ii) that such information is accumulated
and communicated to management in a manner that allows timely decisions regarding required disclosure.



Changes in Internal Control over Financial Reporting



No changes in internal control over financial
reporting occurred during the quarter ended March 31, 2015 that have materially affected or are reasonably likely to materially
affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act).



PART II – OTHER INFORMATION



Item 1. Legal Proceedings.



The information set forth under the heading
“Legal Proceedings” in Note 6, “Commitments and Contingencies,” to Notes to Consolidated Financial Statements
included in Item 1 of Part I of this Quarterly Report on Form 10-Q is incorporated herein by reference.



Item 1A. Risk Factors.



During the three months ended March 31, 2015,
there have been no material changes to the risk factors disclosed under Part I, Item 1A, “Risk Factors” in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2014.



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



As discussed in Note 8 to our interim consolidated
financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, on October 31, 2011, our Board of Directors approved
a stock repurchase plan, pursuant to which we may, from time to time, repurchase up to $10.0 million of our common stock in the
open market at prices not to exceed the net asset value of our shares during our open trading periods. During 2012 and 2013, we
repurchased an aggregate of 1,129,014 shares of our common stock in the open market at an average price of $6.71 per share, totaling
$7.6 million, in accordance with the approved stock repurchase plan. In March 2015, our Board of Directors authorized the Company
to repurchase up to the remaining $2.4 million available to be repurchased under this plan. The following table provides information
for the quarter ended March 31, 2015 regarding shares of our common stock that we repurchased in the open market.



|                                                |  |           |        |  |               |   |      | Total Number     |  |  | Approximate      | 
|----------------------------------------------- |  | --------- | ------ |  | ------------- | - | ---- | ---------------- |  |  | ---------------- | 
|                                                |  |           |        |  |               |   |      | of Shares        |  |  | Dollar Value of  | 
|                                                |  | Total     |        |  | Weighted      |   |      | Purchased as     |  |  | Shares that May  | 
|                                                |  | Number    |        |  | Average       |   |      | Part of Publicly |  |  | Yet be Purchased | 
|                                                |  | of Shares |        |  | Price Paid    |   |      | Announced Plans  |  |  | Under the Plans  | 
|First Quarter 2015                              |  | Purchased |        |  | Per
    Share |   |      | or
    Programs  |  |  | or
    Programs  | 
|Month #1:  January 1, 2015 - January 31, 2015   |  |           | -      |  |               | $ | -    |                  |  |  | -                | 
|Month #2:  February 1, 2015 - February 28, 2015 |  |           | -      |  |               |   | -    |                  |  |  | -                | 
|Month #3:  March 1, 2015 - March 31, 2015       |  |           | 72,483 |  |               |   | 5.16 |                  |  |  | 72,483           | 
|Total                                           |  |           | 72,483 |  |               | $ | 5.16 |                  |  |  | 72,483           | 



Item 6. Exhibits.



See “Index to Exhibits” following
the signature page for a description of the exhibits furnished as part of this Quarterly Report on Form 10-Q.



32







SIGNATURES



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



|                   | OHA INVESTMENT CORPORATION
|------------------ | --------------------------
|                   |                           
|Date:  May 8, 2015 | By:                       
|                   |                           
|                   |                           
|                   |                           
|Date:  May 8, 2015 | By:                       
|                   |                           
|                   |                           
|                   |                           



33







Index to Exhibits



|Exhibit No. |  | Exhibit                                                                          
|----------- |  | ---------------------------------------------------------------------------------
|            |  |                                                                                  
|31.1*       |  | Certification required by Rule 13a-14(a)/15d-14(a) by the Chief Executive Officer
|31.2*       |  | Certification required by Rule 13a-14(a)/15d-14(a) by the Chief Financial Officer
|32.1**      |  | Section 1350 Certification by the Chief Executive Officer                        
|32.2**      |  | Section 1350 Certification by the Chief Financial Officer                        

____________

*Filed herewith.

**Furnished herewith.



34