What changed in this filing

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Item 1. Financial Statements

2023-02-01 compared with 2022-11-01 · 243 added, 207 removed, 1543 unchanged (23% of the section changed)

3 unchanged sentences

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

September 30,

2022 March 31,

34 unchanged sentences

38,083 45,148

Overdistributed net investment income

Underdistributed (overdistributed) net investment income

427 ( 12,995 )

13 unchanged sentences

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2022 2021 2022 2021

11 unchanged sentences

Non-Control/Non-Affiliate investments

4,825 1 4,829 3

Affiliate investments

22 unchanged sentences

Dividends on mandatorily redeemable preferred stock

— 802 — 2,306

Amortization of deferred financing costs and discounts

12 unchanged sentences

13,025 8,343 34,330 45,046

NET INVESTMENT INCOME (LOSS)

NET INVESTMENT INCOME

$ 8,569 $ 8,399 $ 27,356 $ 8,260

74 unchanged sentences

$ 442,470 $ 440,701

(A) Refer t o Note 9 — Distributions to Common Stockholders in the accompanying Notes to Consolidated Financial Statements for additional information.

Net investment income $ 8,569 $ 8,399

Net realized gain on investments 3,844 22,049

Net unrealized appreciation (depreciation) of investments 3,366 ( 20,102 )

Net increase in net assets from operations

15,779 10,346

DISTRIBUTIONS (A)

Distributions to common stockholders from net investment income ( $ 0.22 and $ 0.23 per share, respectively)

( 7,360 ) ( 7,456 )

Distributions to common stockholders from net realized gains ( $ 0.14 and $ 0.09 per share, respectively)

( 4,652 ) ( 3,002 )

Net decrease in net assets from distributions

( 12,012 ) ( 10,458 )

CAPITAL ACTIVITY

Issuance of common stock

Discounts, commissions, and offering costs for issuance of common stock

Net increase in net assets from capital activity

NET (DECREASE) INCREASE IN NET ASSETS

6,721 ( 112 )

NET ASSETS, DECEMBER 31

$ 449,191 $ 440,589

(A) Refer to Note 9 — Distributions to Common Stockholders in the accompanying Notes to Consolidated Financial Statements for additional information.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

2 unchanged sentences

(IN THOUSANDS)

Six Months Ended September 30,

Nine Months Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

$ 30,889 $ 85,620

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:

Adjustments to reconcile net increase in net assets resulting from operations to net cash (used in) provided by operating activities:

Purchase of investments

3 unchanged sentences

Net proceeds from the sale and recapitalization of investments

35,533 50,018

Net realized gain on investments

4 unchanged sentences

Amortization of premiums, discounts, and acquisition costs, net

( 12 ) ( 14 )

Amortization of deferred financing costs and discounts

1 unchanged sentence

Changes in assets and liabilities:

Decrease in interest receivable

(Increase) decrease in interest receivable

( 1,036 ) 156

Decrease (increase) in due from administrative agent

4 unchanged sentences

(Decrease) increase in fees due to Adviser (A)

( 1,578 ) 15,698

Decrease in fee due to Administrator (A)

( 63 ) ( 39 )

Increase (decrease) in other liabilities

Net cash used in operating activities ( 9,445 ) ( 6,286 )

Net cash (used in) provided by operating activities ( 13,405 ) 39,293

CASH FLOWS FROM FINANCING ACTIVITIES

11 unchanged sentences

( 30,943 ) ( 27,395 )

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

1,757 ( 13,047 )

14 unchanged sentences

CONSOLIDATED SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2022

DECEMBER 31, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

6 unchanged sentences

Dema/Mai Holdings, Inc.

– Line of Credit, $ 2,200 available (L+ 8.0 %, 11.1 % Cash, Due 7/2023) (K)

$ 800 $ 800 $ 800

Dema/Mai Holdings, Inc.

– Term Debt (L+ 11.0 %, 15.4 % Cash, Due 7/2027) (K)

$ 38,250 $ 38,250 $ 38,250

39,050 39,050

Diversified/Conglomerate Manufacturing – 1.2 %

Phoenix Door Systems, Inc – Line of Credit, $ 0 available (L+ 7.0 %, 10.1 % Cash ( 0.3 % Unused Fee), Due 3/2024) (J)

Phoenix Door Systems, Inc.

– Line of Credit, $ 0 available (L+ 7.0 %, 11.4 % Cash ( 0.3 % Unused Fee), Due 3/2024) (J)

2,550 2,550 2,423

33 unchanged sentences

– Line of Credit, $ 0 available (L+ 8.0 %, 12.4 % Cash, Due 6/2024) (K)

2,000 2,000 2,000

Nocturne Villa Rentals, Inc.

16 unchanged sentences

25,696 20,891

Automobile – 0.3 %

Country Club Enterprises, LLC – Term Debt (L+ 8.0 %, 11.1 % Cash, Due 7/2027) (J)

1,500 1,500 1,499

Country Club Enterprises, LLC – Guaranty ($ 1,000 ) (Q)

Cargo Transport – 2.9 %

10 unchanged sentences

Total Secured Second Lien Debt $ 54,340 $ 49,551

Preferred Equity – 37.0 %

Buildings and Real Estate – 5.5 %

Dema/Mai Holdings, Inc.

- Preferred Equity (C)(K)

21,000 $ 21,000 $ 24,877

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2022

DECEMBER 31, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

2 unchanged sentences

Cost Fair Value

Preferred Equity – 36.2 %

Buildings and Real Estate – 4.7 %

Dema/Mai Holdings, Inc.

- Preferred Equity (C)(K)

21,000 $ 21,000 $ 21,000

Diversified/Conglomerate Services – 11.5 %

56 unchanged sentences

Total Non-Control/Non-Affiliate Investments $ 431,305 $ 501,343

AFFILIATE INVESTMENTS (N) – 57.5 %

Secured First Lien Debt – 36.5 %

Diversified/Conglomerate Manufacturing – 0.8 %

Edge Adhesives Holdings, Inc.

(L) – Term Debt (L+ 5.5 %, 9.9 % Cash, Due 8/2024) (G)(K)

9,210 $ 9,210 $ 3,677

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2022

DECEMBER 31, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

2 unchanged sentences

Cost Fair Value

AFFILIATE INVESTMENTS (N) – 56.1 %

Secured First Lien Debt – 33.3 %

Diversified/Conglomerate Manufacturing – 0.9 %

Edge Adhesives Holdings, Inc.

(L) – Term Debt (L+ 5.5 %, 8.6 % Cash, Due 8/2024) (K)

9,210 $ 9,210 $ 3,825

Diversified/Conglomerate Services – 18.4 %

42 unchanged sentences

3,200 3,200 —

The Mountain Corporation – Delayed Draw Term Debt, $ 0 available (L+ 4.0 %, 7.1 % Cash, Due 4/2024) (G)(K)

1,500 1,500 —

Total Secured Second Lien Debt

9 unchanged sentences

8,199 8,199 —

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

Company and Investment (A)(B)(D)(E)

Principal/Shares/ Units (F)(I)

Cost Fair Value

Diversified/Conglomerate Services – 2.9 %

11 unchanged sentences

6,180 — 35,028

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

DECEMBER 31, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

Company and Investment (A)(B)(D)(E)

Principal/Shares/ Units (F)(I)

Cost Fair Value

Mining, Steel, Iron and Non-Precious Metals – 1.1 %

34 unchanged sentences

Additionally, under Section 55 of the Investment Company Act of 1940, as amended (the "1940 Act"), we may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70 % of our total assets.

As of September 30, 2022, our investment in Funko Acquisition Holdings, LLC ("Funko") was considered a non-qualifying asset under Section 55 of the 1940 Act and represented less than 0.1 % of total investments, at fair value.

(B) Unless indicated otherwise, all cash interest rates are indexed to 30-day London Interbank Offered Rate ("LIBOR" or "L"), which was 3.1 % as of September 30, 2022.

As of December 31, 2022, our investment in Funko Acquisition Holdings, LLC ("Funko") was considered a non-qualifying asset under Section 55 of the 1940 Act and represented less than 0.1 % of total investments, at fair value.

(B) Unless indicated otherwise, all cash interest rates are indexed to 30-day London Interbank Offered Rate ("LIBOR" or "L"), which was 4.4 % as of December 31, 2022.

If applicable, paid-in-kind interest rates are noted separately from the cash interest rate.

3 unchanged sentences

(D) Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of September 30, 2022.

(D) Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of December 31, 2022.

(E) Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, "Fair Value Measurements and Disclosures" ("ASC 820") fair value hierarchy.

1 unchanged sentence

(F) Where applicable, aggregates all shares of a class of stock owned without regard to specific series owned within such class (some series of which may or may not be voting shares) or aggregates all warrants to purchase shares of a class of stock owned without regard to specific series of such class of stock such warrants allow us to purchase.

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

(G) Debt security is on non-accrual status.

6 unchanged sentences

Refer to Note 3— Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

DECEMBER 31, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

(L) One of our affiliated funds, Gladstone Capital Corporation, co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S.

9 unchanged sentences

is traded on the Nasdaq Global Select Market under the trading symbol “FNKO.” Refer to Note 3— Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

(Q) Refer to Note 10— Commitments and Contingencies in the accompanying Notes to Consolidated Financial Statements for additional information regarding this guaranty.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

321 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

DECEMBER 31, 2022

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA AND AS OTHERWISE INDICATED)

11 unchanged sentences

We intend that our investment portfolio over time will consist of approximately 75.0 % in debt investments and 25.0 % in equity investments, at cost.

As of September 30, 2022, our investment portfolio was comprised of 76.6 % in debt investments and 23.4 % in equity investments, at cost.

As of December 31, 2022, our investment portfolio was comprised of 77.2 % in debt investments and 22.8 % in equity investments, at cost.

Gladstone Business Investment, LLC (“Business Investment”), a wholly-owned subsidiary of ours, was established on August 11, 2006 for the sole purpose of holding certain investments pledged as collateral under our line of credit.

14 unchanged sentences

In our opinion, all adjustments, consisting solely of normal recurring accruals, necessary for the fair statement of financial statements for the interim periods have been included.

The results of operations for the three and six months ended September 30, 2022 are not necessarily indicative of results that ultimately may be achieved for the fiscal year ending March 31, 2023 or any future interim period.

The results of operations for the three and nine months ended December 31, 2022 are not necessarily indicative of results that ultimately may be achieved for the fiscal year ending March 31, 2023 or any future interim period.

The interim financial statements and notes thereto should be read in conjunction with the financial

10 unchanged sentences

Board Responsibility

In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to designate its investment adviser as a valuation designee to perform fair value determinations for its investment portfolio, subject to the active oversight of such board.

In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to designate its investment adviser as a valuation designee (the "Valuation Designee") to perform fair value determinations for its investment portfolio, subject to the active oversight of such board.

Our board of directors (the “Board of Directors”) has approved investment valuation policies and procedures pursuant to Rule 2a-5 (the “Policy”) and, in July 2022, designated the Adviser to serve as the Board of Directors’ Valuation Designee.

In accordance with the 1940 Act and SEC Rule 2a-5, our Board of Directors has the ultimate responsibility for reviewing and determining, in good faith, the fair value of our investments for which market quotations are not readily available based on our Policy and for overseeing the valuation designee.

In accordance with the 1940 Act, our Board of Directors has the ultimate responsibility for reviewing and determining, in good faith, the fair value of our investments for which market quotations are not readily available based on our Policy and for overseeing the Valuation Designee.

Such review and oversight includes receiving written fair value determinations and supporting materials provided by the Valuation Designee, in coordination with the Administrator and with the oversight by the Company’s chief valuation officer (collectively, the “Valuation Team”).

The Valuation Committee of our Board of Directors (comprised entirely of independent directors) meets to review the valuation determinations and supporting materials, discusses the information provided by the Valuation Team, determines whether the Valuation Team has followed the Policy, and reviews other facts and circumstances, including current valuation risks, conflicts of interest, material valuation matters, appropriateness of valuation methodologies, back-testing results, price challenges/overrides, and ongoing monitoring and oversight of pricing services.

After the Valuation Committee concludes its meeting, it and the chief valuation officer, representing the Valuation Designee, present the Valuation Committee’s findings to the entire Board of Directors so that the full Board of Directors may review and approve in good faith the Valuation Designee’s determined fair values of such investments in accordance with the Policy.

After the Valuation Committee concludes its meeting, it and the chief valuation officer, representing the Valuation Designee, present the Valuation Committee’s findings on the Valuation Designee's recommendations to the entire Board of Directors so that the full Board of Directors may review and approve in good faith the Valuation Designee’s determined fair values of such investments in accordance with the Policy.

There is no single standard for determining fair value (especially for privately-held businesses), as fair value depends upon the specific facts and circumstances of each individual investment.

54 unchanged sentences

Generally, non-accrual loans are restored to accrual status when past-due principal and interest are paid and, in management’s judgment, are likely to remain current, or, due to a restructuring, the interest income is deemed to be collectible.

As of September 30, 2022, our loans to J.R.

As of December 31, 2022, our loans to Edge Adhesives Holdings, Inc., J.R.

– Atlanta, LLC (“J.R.

4 unchanged sentences

Paid-in-kind (“PIK”) interest, computed at the contractual rate specified in the loan agreement, is added to the principal balance of the loan and recorded as interest income.

As of September 30, 2022 and March 31, 2022, we did not have any loans with a PIK interest component.

As of December 31, 2022 and March 31, 2022, we did not have any loans with a PIK interest component.

Success Fee Income Recognition

6 unchanged sentences

In accordance with the Advisory Agreement, we pay the Adviser fees as compensation for its services, consisting of a base management fee and an incentive fee.

Additionally, we pay the Adviser a loan servicing fee as compensation for its services as servicer under the terms of the Fifth Amended and Restated Credit Agreement dated April 30, 2013, as amended (the "Credit Facility").

We are also party to the Administration Agreement with the Administrator, which is owned and controlled by our chairman and chief executive officer, whereby we pay separately for administrative services.

4 unchanged sentences

ASU 2022-03 is effective for annual reporting periods beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted.

Our adoption of ASU 2022-03 did not have a material impact on our financial position, results of operations or cash flows .

Our early adoption of ASU 2022-03 did not have a material impact on our financial position, results of operations or cash flows .

In accordance with ASC 820, we determine the fair value of our investments to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between willing market participants on the measurement date.

9 unchanged sentences

The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

As of September 30, 2022 and March 31, 2022, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in Funko Acquisition Holdings, LLC (“Funko”), which was valued using Level 2 inputs.

As of December 31, 2022 and March 31, 2022, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in Funko Acquisition Holdings, LLC (“Funko”), which was valued using Level 2 inputs.

We transfer investments in and out of Level 1, 2 and 3 of the valuation hierarchy as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period.

There were no transfers in or out of Level 1, 2 and 3 during the six months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022 and March 31, 2022, our investments, by security type, at fair value were categorized as follows within the ASC 820 fair value hierarchy:

There were no transfers in or out of Level 1, 2 and 3 during the nine months ended December 31, 2022 and 2021, respectively.

As of December 31, 2022 and March 31, 2022, our investments, by security type, at fair value were categorized as follows within the ASC 820 fair value hierarchy:

Fair Value Measurements

3 unchanged sentences

Observable Inputs

As of September 30, 2022:

As of December 31, 2022:

Secured first lien debt

4 unchanged sentences

Common equity/equivalents

Total Investments as of September 30, 2022

Total Investments as of December 31, 2022

$ 760,463 $ — $ 31 $ 760,432

16 unchanged sentences

(our units in Funko can be converted into common shares of Funko, Inc.) at the reporting date less a discount for lack of marketability, as our investment was subject to certain restrictions.

The following table presents our investments, valued using Level 3 inputs within the ASC 820 fair value hierarchy, and carried at fair value as of September 30, 2022 and March 31, 2022, by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type:

The following table presents our investments, valued using Level 3 inputs within the ASC 820 fair value hierarchy, and carried at fair value as of December 31, 2022 and March 31, 2022, by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type:

Total Recurring Fair Value Measurements

2 unchanged sentences

Valued Using Level 3 Inputs

September 30, 2022 March 31, 2022

December 31, 2022 March 31, 2022

Non-Control/Non-Affiliate Investments

17 unchanged sentences

Total investments at fair value using Level 3 inputs $ 760,432 $ 714,322

(A) Excludes our investment in Funko with a fair value of $ 58 thousand and $ 74 thousand as of September 30, 2022 and March 31, 2022, respectively, which was valued using Level 2 inputs.

In accordance with ASC 820, the following table provides quantitative information about our investments valued using Level 3 fair value measurements as of September 30, 2022 and March 31, 2022.

(A) Excludes our investment in Funko with a fair value of $ 31 thousand and $ 74 thousand as of December 31, 2022 and March 31, 2022, respectively, which was valued using Level 2 inputs.

In accordance with ASC 820, the following table provides quantitative information about our investments valued using Level 3 fair value measurements as of December 31, 2022 and March 31, 2022.

The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements.

4 unchanged sentences

Input Range / Weighted-Average as of

September 30,

2022 March 31,

2022 September 30,

2022 December 31,

2022 March 31,

40 unchanged sentences

Total $ 760,432 $ 714,322

(A) Fair value as of both September 30, 2022 and March 31, 2022 excludes our investment in Funko with a fair value of $ 58 thousand and $ 74 thousand, respectively, which was valued using Level 2 inputs.

(A) Fair value as of both December 31, 2022 and March 31, 2022 excludes our investment in Funko with a fair value of $ 31 thousand and $ 74 thousand, respectively, which was valued using Level 2 inputs.

Fair value measurements can be sensitive to changes in one or more of the valuation inputs.

2 unchanged sentences

Changes in Level 3 Fair Value Measurements of Investments

The following tables provide our portfolio’s changes in fair value, broken out by security type, during the three and six months ended September 30, 2022 and 2021 for all investments for which the Adviser determines fair value using unobservable (Level 3) inputs.

The following tables provide our portfolio’s changes in fair value, broken out by security type, during the three and nine months ended December 31, 2022 and 2021 for all investments for which the Adviser determines fair value using unobservable (Level 3) inputs.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

1 unchanged sentence

Equivalents Total

Three Months ended September 30, 2022:

Fair value as of June 30, 2022

Three Months ended December 31, 2022:

Fair value as of September 30, 2022

$ 420,907 $ 76,751 $ 229,430 $ 10,789 $ 737,877

5 unchanged sentences

Reversal of previously recorded (appreciation) depreciation upon realization (B)

— 10,001 — — 10,001

New investments, repayments and settlements (C):

5 unchanged sentences

Transfers (E)

( 14,418 ) 14,418 — — —

Fair value as of September 30, 2022

Fair value as of December 31, 2022

$ 447,491 $ 76,169 $ 221,774 $ 14,998 $ 760,432

1 unchanged sentence

Equivalents Total

Six Months ended September 30, 2022:

Nine Months Ended December 31, 2022

Fair value as of March 31, 2022 $ 425,087 $ 67,958 $ 217,599 $ 3,678 $ 714,322

14 unchanged sentences

( 14,418 ) 14,418 — — —

Fair value as of September 30, 2022

Fair value as of December 31, 2022

$ 447,491 $ 76,169 $ 221,774 $ 14,998 $ 760,432

Three Months ended September 30, 2021:

Fair value as of June 30, 2021

Three Months ended December 31, 2021:

Fair value as of September 30, 2021

$ 431,413 $ 68,489 $ 228,931 $ 7,592 $ 736,425

1 unchanged sentence

Net realized gain (loss) (A)

— — 21,939 — 21,939

Net unrealized appreciation (depreciation) (B)

1 unchanged sentence

Reversal of previously recorded (appreciation) depreciation upon realization (B)

— — ( 25,425 ) — ( 25,425 )

New investments, repayments and settlements (C) :

2 unchanged sentences

Settlements / repayments

Transfers (E)

( 32,838 ) — — — ( 32,838 )

Fair value as of September 30, 2021

— — ( 41,768 ) — ( 41,768 )

Six Months ended September 30, 2021:

Transfers (E)

Fair value as of December 31, 2021

$ 433,834 $ 68,294 $ 196,104 $ 2,426 $ 700,658

Nine Months Ended December 31, 2021:

Fair value as of March 31, 2021

15 unchanged sentences

45,043 ( 45,043 ) ( 16,034 ) 16,034 —

Fair value as of September 30, 2021

Fair value as of December 31, 2021

$ 433,834 $ 68,294 $ 196,104 $ 2,426 $ 700,658

(A) Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the respective periods ended September 30, 2022 and 2021.

(B) Included in net unrealized appreciation (depreciation) of investments on our accompanying Consolidated Statements of Operations for the respective periods ended September 30, 2022 and 2021.

(A) Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the respective periods ended December 31, 2022 and 2021.

(B) Included in net unrealized appreciation (depreciation) of investments on our accompanying Consolidated Statements of Operations for the respective periods ended December 31, 2022 and 2021.

(C) Includes increases in the cost basis of investments resulting from new portfolio investments, the amortization of discounts and other non-cash disbursements to portfolio companies, as well as decreases in the cost basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs, and other cost-basis adjustments.

(D) Includes $ 10.1 million return of preferred equity cost basis from Horizon Facilities Services, Inc.

Transfers represent (1) secured second lien debt of Ginsey with a total cost basis and fair value of $ 12.2 million, which was converted into secured first lien debt during the three months ended September 30, 2022 and (2) secured first lien debt of PSI Molded Plastics, Inc.

with a total cost basis and fair value of $ 26.6 million, which was converted into secured second lien debt during the three months ended September 30, 2022.

Transfers represent (1) secured second lien debt of J.R.

Hobbs with a total cost basis and fair value of $ 52.5 million and $ 52.4 million, respectively, which was converted into secured first lien debt during the three months ended June 30, 2021, (2) secured first lien debt of D.P.M.S., Inc.

(D) The three and nine months ended December 31, 2022, includes $ 13.4 million of proceeds from the recapitalization of Old World Christmas, Inc.

("Old World").

The nine months ended December 31, 2022 also includes $ 12.3 million of proceeds from the recapitalization of Horizon Facilities Services, Inc.

(E) There were no transfers in the three months ended December 31, 2022.

For the nine months ended December 31, 2022, transfers include (1) secured second lien debt of Ginsey with a total cost basis and fair value of $ 12.2 million, which was converted into secured first lien debt in August 2022 and (2) secured first lien debt of PSI Molded Plastics, Inc.

with a total cost basis and fair value of $ 26.6 million, which was converted into secured second lien debt in September 2022.

For the three and nine months ended December 31, 2021, transfers include preferred equity of SOG Specialty Knives & Tools, LLC with a total cost and fair value of $ 0.6 million and $ 0.0 million , respectively, which was converted into common equity of Gladstone SOG Investments, Inc.

in December 2021.

For the nine months ended December 31, 2021, transfers also include (1) secured second lien debt of J.R.

Hobbs with a total cost basis and fair value of $ 52.5 million and $ 52.4 million, respectively, which was converted into secured first lien debt in June 2021, (2) secured first lien debt of D.P.M.S., Inc.

with a total cost basis and fair value of $ 12.3 million and $ 7.3 million, respectively, which was converted into secured second lien debt of Galaxy Technologies Holdings, Inc.

(“Galaxy Technologies Holdings”) during the three months ended September 30, 2021 and (3) preferred equity of Galaxy Technologies, Inc.

with a total cost basis and fair value of $ 11.5 million and $ 16.0 million, respectively, which was converted into common equity of Galaxy Technologies Holdings during the three months ended September 30, 2021.

(“Galaxy Technologies Holdings”) in September 2021, and (3) preferred equity of Galaxy Technologies, Inc.

with a total cost basis and fair value of $ 11.5 million and $ 16.0 million, respectively, which was converted into common equity of Galaxy Technologies Holdings in September 2021.

Investment Activity

During the six months ended September 30, 2022, the following significant transactions occurred:

During the nine months ended December 31, 2022, the following significant transactions occurred:

• In May 2022, we invested an additional $ 6.4 million in the form of secured first lien debt in Nocturne Villa Rentals, Inc.

9 unchanged sentences

In connection with this investment, we received equity proceeds of $ 12.3 million, which were recognized as a $ 10.1 million return of preferred equity cost basis and a realized gain of $ 2.2 million, as well as dividend income of $ 3.1 million and success fee income of $ 1.7 million.

• In August 2022, in conjunction with a refinancing at Ginsey, our outstanding $ 13.3 million of secured second lien debt was reduced to $ 12.2 million and converted to secured first lien debt.

• In August 2022, in conjunction with a refinancing at Ginsey, our $ 13.3 million secured second lien debt investment was reduced to $ 12.2 million and converted to secured first lien debt.

The reduction in our cost basis was the result of a $ 5.1 million payment made by Ginsey to extinguish our secured borrowing liability, which was partially offset by an additional investment in Ginsey of $ 4.0 million.

Refer to Note 5 - Borrowings for discussion of the secured borrowing liability.

• In October 2022, we invested an additional $ 8.4 million in the form of secured first lien debt in Nocturne to fund an add-on acquisition.

• In November 2022, our $ 1.5 million secured second lien debt investment in Country Club Enterprises, LLC ("CCE") was repaid at par.

In connection with the repayment, we received success fee income of $ 1.1 million and our $ 1.0 million guaranty was released.

Refer to Note 10 - Commitments and Contingencies for discussion of the guaranty.

• In December 2022, we recapitalized our investment in Old World and invested an additional $ 15.5 million in the form of secured first lien debt.

In connection with this investment, we received proceeds of $ 17.9 million, of which $ 13.4 million was recognized as a realized gain and $ 4.5 million was recognized as dividend income.

• In December 2022, we entered into a new $ 3.2 million secured second lien term loan with The Mountain, replacing our previously outstanding second lien term loan and second lien delayed draw term loan with an aggregate cost basis of $ 13.2 million, which resulted in a realized loss of $ 10.0 million.

Investment Concentrations

As of September 30, 2022, our investment portfolio consisted of investments in 26 portfolio companies located in 18 states across 15 different industries with an aggregate fair value of $ 737.9 million.

Our investments in Horizon, Old World Christmas, Inc., Dema/Mai, Counsel Press, Inc., and Nocturne represented our five largest portfolio investments at fair value and collectively comprised $ 315.7 million, or 42.8 %, of our total investment portfolio at fair value as of September 30, 2022.

The following table summarizes our investments by security type as of September 30, 2022 and March 31, 2022:

September 30, 2022 March 31, 2022

As of December 31, 2022, our investment portfolio consisted of investments in 25 portfolio companies located in 19 states across 14 different industries with an aggregate fair value of $ 760.5 million.

Our investments in Old World, Horizon, Dema/Mai, Brunswick Bowling Products, Inc., and Nocturne represented our five largest portfolio investments at fair value and collectively comprised $ 328.7 million, or 43.2 %, of our total investment portfolio at fair value as of December 31, 2022.

The following table summarizes our investments by security type as of December 31, 2022 and March 31, 2022:

December 31, 2022 March 31, 2022

Cost Fair Value Cost Fair Value

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$ 722,380 100.0 % $ 760,463 100.0 % $ 669,248 100.0 % $ 714,396 100.0 %

Investments at fair value consisted of the following industry classifications as of September 30, 2022 and March 31, 2022:

September 30, 2022 March 31, 2022

Investments at fair value consisted of the following industry classifications as of December 31, 2022 and March 31, 2022:

December 31, 2022 March 31, 2022

Fair Value Percentage of

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Healthcare, Education, and Childcare 37,638 5.0 % 39,252 5.5 %

Aerospace and Defense 23,746 3.2 % 25,296 3.5 %

Chemicals, Plastics, and Rubber 26,618 3.5 % 26,618 3.7 %

Mining, Steel, Iron and Non-Precious Metals 23,044 3.0 % 24,250 3.4 %

Aerospace and Defense 20,891 2.7 % 25,296 3.5 %

Telecommunications 19,453 2.6 % 32,467 4.6 %

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Investments at fair value were included in the following geographic regions of the U.S.

as of September 30, 2022 and March 31, 2022:

September 30, 2022 March 31, 2022

as of December 31, 2022 and March 31, 2022:

December 31, 2022 March 31, 2022

Location Fair Value Percentage of

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Investment Principal Repayments

The following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of September 30, 2022:

For the remaining six months ending March 31, 2023

The following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of December 31, 2022:

For the remaining three months ending March 31, 2023

For the fiscal years ending March 31:

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Total contractual repayments $ 557,347

Adjustments to cost basis of debt investments ( 3 )

Investments in equity securities 165,033

Total cost basis of investments held as of September 30, 2022:

Total cost basis of investments held as of December 31, 2022:

Receivables from Portfolio Companies

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We write off accounts receivable when we have exhausted collection efforts and have deemed the receivables uncollectible.

As of September 30, 2022 and March 31, 2022, we had gross receivables from portfolio companies of $ 2.1 million and $ 1.7 million, respectively.

As of September 30, 2022 and March 31, 2022, the allowance for uncollectible receivables was $ 1.4 million and $ 1.3 million, respectively.

As of December 31, 2022 and March 31, 2022, we had gross receivables from portfolio companies of $ 2.5 million and $ 1.7 million, respectively.

As of December 31, 2022 and March 31, 2022, the allowance for uncollectible receivables was $ 1.5 million and $ 1.3 million, respectively.

RELATED PARTY TRANSACTIONS

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David Dullum (our president) is also the executive vice president of private equity (buyouts) of the Adviser.

Michael LiCalsi, our general counsel and secretary (who also serves as the Administrator’s president, general counsel and secretary), is also the executive vice president of administration of our Adviser.

The following table summarizes the base management fees, loan servicing fees, incentive fees, and associated non-contractual, unconditional, and irrevocable credits reflected in our accompanying Consolidated Statements of Operations :

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2022 2021 2022 2021

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The Adviser non-contractually, unconditionally, and irrevocably credits 100 % of any fees received for such services against the base management fee that we would otherwise be required to pay to the Adviser;

however, pursuant to the terms of the Advisory Agreement, a small percentage of certain of such fees, totaling $ 70 thousand and $ 106 thousand for the three and six months ended September 30, 2022, respectively, and $ 63 thousand and $ 132 thousand for the three and six months ended September 30, 2021, respectively, was retained by the Adviser in the form of reimbursement, at cost, for tasks completed by personnel of the Adviser, primarily related to the valuation of portfolio companies.

however, pursuant to the terms of the Advisory Agreement, a small percentage of certain of such fees, totaling $ 40.0 thousand and $ 0.1 million for the three and nine months ended December 31, 2022, respectively, and $ 0.1 million and $ 0.2 million for the three and nine months ended December 31, 2021, respectively, was

retained by the Adviser in the form of reimbursement, at cost, for tasks completed by personnel of the Adviser, primarily related to the valuation of portfolio companies.

Loan Servicing Fee

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The entire portfolio’s aggregate unrealized capital depreciation, if any, equals the sum of the deficit between the fair value of each investment security as of the applicable calculation date and the original cost of such investment security.

As of and for the period ended September 30, 2022, no capital gains-based incentive fees were contractually due to the Adviser.

As of and for the nine months ended December 31, 2022, no capital gains-based incentive fees were contractually due to the Adviser.

During the year ended March 31, 2022, capital gains-based incentive fees of $ 5.3 million were contractually due and paid to the Adviser.

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Accordingly, a GAAP accrual is calculated at the end of the reporting period based on (i) cumulative aggregate realized capital gains since our inception, plus (ii) the entire portfolio’s aggregate unrealized capital appreciation, if any, less (iii) cumulative aggregate realized capital losses since our inception, less (iv) the entire portfolio’s aggregate unrealized capital depreciation, if any.

If such amount is positive at the

end of a reporting period, a capital gains-based incentive fee equal to 20.0 % of such amount, less the aggregate amount of capital gains-based incentive fees accrued in all prior years, is recorded, regardless of whether such amount is contractually due under the terms of the Advisory Agreement.

If such amount is positive at the end of a reporting period, a capital gains-based incentive fee equal to 20.0 % of such amount, less the aggregate amount of capital gains-based incentive fees accrued in all prior years, is recorded, regardless of whether such amount is contractually due under the terms of the Advisory Agreement.

If such amount is negative, then there is no accrual for such period and prior period accruals are reversed, as appropriate.

During the three and six months ended September 30, 2022, we recorded a reversal of $ 1.7 million and $ 0.7 million, respectively, of previously accrued capital gains-based incentive fees.

During the three and six months ended September 30, 2021, we recorded capital gains-based incentive fees of $ 5.6 million and $ 15.9 million, respectively.

During the three and nine months ended December 31, 2022, we recorded capital gains-based incentive fees of $ 1.4 million and $ 0.7 million, respectively.

During the three and nine months ended December 31, 2021, we recorded capital gains-based incentive fees of $ 0.4 million and $ 16.3 million, respectively.

Transactions with the Administrator

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Another of our officers, Mr.

LiCalsi (our general counsel and secretary), serves as the Administrator’s president as well as the executive vice president of administration for the Adviser.

LiCalsi (our general counsel and secretary), serves as the Administrator’s president as well as the executive vice president of administration, general counsel, and secretary for the Adviser.

Our allocable portion of the Administrator’s expenses is generally derived by multiplying the Administrator’s total expenses by the approximate percentage of time during the current quarter the Administrator’s employees performed services for us in relation to their time spent performing services for all companies serviced by the Administrator.

On July 12, 2022, our Board of Directors, including a majority of the directors who are not parties to the Administration Agreement or interested persons of either party, approved the annual renewal of the Administration Agreement through August 31, 2023.

Administration fees for the three and nine months ended December 31, 2022 were $ 0.4 million and $ 1.4 million, respectively, and for the three and nine months ended December 31, 2021 were $ 0.4 million and $ 1.4 million, respectively.

Transactions with Gladstone Securities, LLC

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Any such fees paid by portfolio companies to Gladstone Securities do not impact the fees we pay to the Adviser or the non-contractual, unconditional, and irrevocable credits against the base management fee.

During the three and six months ended September 30, 2022, the fees received by Gladstone Securities from our portfolio companies totaled $ 1.0 million and $ 1.3 million.

During the three and six months ended September 30, 2021, the fees received by Gladstone Securities from our portfolio companies totaled $ 0.3 million and $ 0.4 million.

During the three and nine months ended December 31, 2022, the fees received by Gladstone Securities from our portfolio companies totaled $ 0.3 million and $ 1.6 million, respectively.

During the three and nine months ended December 31, 2021, the fees received by Gladstone Securities from our portfolio companies totaled $ 2.8 million and $ 3.2 million, respectively.

Related Party Fees Due

Amounts due to related parties on our accompanying Consolidated Statements of Assets and Liabilities were as follows:

As of September 30,

As of December 31,

As of March 31,

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Total related party fees due $ 30,726 $ 29,915

(A) Includes a capital gains-based incentive fee of $ 24.7 million and $ 25.4 million as of September 30, 2022 and March 31, 2022, respectively, recorded in accordance with GAAP requirements, and which was not contractually due under the terms of the Advisory Agreement.

(A) Includes a capital gains-based incentive fee of $ 26.1 million and $ 25.4 million as of December 31, 2022 and March 31, 2022, respectively, recorded in accordance with GAAP requirements, and which was not contractually due under the terms of the Advisory Agreement.

Refer to Note 4 — Related Party Transactions — Transactions with the Adviser — Incentive Fee for additional information, including capital gains-based incentive fee payments made.

Net expenses receivable from Gladstone Capital Corporation, one of our affiliated funds, for reimbursement purposes, which includes certain co-investment expenses, totaled $ 13 thousand and $ 27 thousand, as of September 30, 2022 and March 31, 2022, respectively.

Net expenses receivable from Gladstone Capital Corporation, one of our affiliated funds, for reimbursement purposes, which includes certain co-investment expenses, totaled $ 16 thousand and $ 27 thousand, as of December 31, 2022 and March 31, 2022, respectively.

These amounts are generally settled in the quarter subsequent to being incurred and have been included in Other assets, net on the accompanying Consolidated Statements of Assets and Liabilities.

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The revolving period was extended to February 29, 2024, and if not renewed or extended by such date, all principal and interest will be due and payable on February 28, 2026 ( two years after the revolving period end date).

As of September 30, 2022, the Credit Facility provided a one-year extension option that may be exercised on or before March 8, 2023, subject to approval by all lenders.

As of December 31, 2022, the Credit Facility provided a one-year extension option that may be exercised on or before March 8, 2023, subject to approval by all lenders.

On August 10, 2020, we, through Business Investment, entered into Amendment No.

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The following tables summarize noteworthy information related to the Credit Facility:

As of September 30, 2022

As of December 31, 2022

As of March 31, 2022

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$ 150,400 $ 180,000

For the Three Months Ended September 30,

For the Six Months Ended September 30,

For the Three Months Ended December 31,

For the Nine Months Ended December 31,

2022 2021 2022 2021

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Commitment (unused) fees incurred $ 394 $ 406 $ 1,279 $ 1,191

(A) Availability is subject to various constraints, characteristics and applicable advance rates based on collateral quality under the Credit Facility, which equated to an adjusted availability of $ 163.4 million and $ 180.0 million as of September 30, 2022 and March 31, 2022, respectively.

(A) Availability is subject to various constraints, characteristics and applicable advance rates based on collateral quality under the Credit Facility, which equated to an adjusted availability of $ 150.4 million and $ 180.0 million as of December 31, 2022 and March 31, 2022, respectively.

(B) Excludes the impact of deferred financing costs and includes unused commitment fees.

Among other things, the Credit Facility contains a performance guaranty that requires us to maintain (i) a minimum net worth (defined in the Credit Facility to include our mandatory redeemable term preferred stock) of the greater of $ 210.0 million or $ 210.0 million plus 50 % of all equity and subordinated debt raised, minus 50 % of any equity or subordinated debt redeemed or retired after November 16, 2016, which equated to $ 286.5 million as of September 30, 2022;

Among other things, the Credit Facility contains a performance guaranty that requires us to maintain:

(i) a minimum net worth (defined in the Credit Facility to include our mandatory redeemable term preferred stock) of the greater of $ 210.0 million or $ 210.0 million plus 50 % of all equity and subordinated debt raised, minus 50 % of any equity or subordinated debt redeemed or retired after November 16, 2016, which equated to $ 288.0 million as of December 31, 2022;

(ii) asset coverage with respect to senior securities representing indebtedness of at least 150 % (or such percentage as may be set forth in Section 18 of the 1940 Act, as modified by Section 61 of the 1940 Act);

and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code.

As of September 30, 2022, and as defined in the performance guaranty of the Credit Facility, we had a net worth of $ 698.6 million, asset coverage on our senior securities representing indebtedness of 254.1 %, calculated in compliance with the requirements of Sections 18 and 61 of the 1940 Act, and an active status as a BDC and RIC.

As of September 30, 2022, we were in compliance with all covenants under the Credit Facility.

As of December 31, 2022, and as defined in the performance guaranty of the Credit Facility, we had a net worth of $ 705.7 million, asset coverage on our senior securities representing indebtedness of 250.5 %, calculated in compliance with the requirements of Sections 18 and 61 of the 1940 Act, and an active status as a BDC and RIC.

As of December 31, 2022, we were in compliance with all covenants under the Credit Facility.

We elected to apply the fair value option of ASC Topic 825, “ Financial Instruments ,” to the Credit Facility, which was consistent with our application of ASC 820 to our investments.

Generally, the fair value of the Credit Facility is determined using a yield analysis, which includes a DCF calculation and also takes into account the assumptions the Valuation Team believes market participants would use, including the estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of similar securities as of the measurement date.

As of September 30, 2022 and March 31, 2022, the discount rate used to determine the fair value of the Credit Facility was 30-day LIBOR, with a 0.5 % floor, plus 2.85 % per annum, plus an unused commitment fee of 1.0 %.

As of December 31, 2022 and March 31, 2022, the discount rate used to determine the fair value of the Credit Facility was 30-day LIBOR, with a 0.5 % floor, plus 2.85 % per annum, plus an unused commitment fee of 1.0 %.

Generally, an increase or decrease in the discount rate used in the DCF calculation may result in a corresponding decrease or increase, respectively, in the fair value of the Credit Facility.

As of each of September 30, 2022 and March 31, 2022, the Credit Facility was valued using Level 3 inputs and any changes in its fair value are recorded in Net unrealized appreciation (depreciation) of other on our accompanying Consolidated Statements of Operations.

The following tables provide relevant information and disclosures about the Credit Facility as of September 30, 2022 and March 31, 2022, and for the three and six months ended September 30, 2022 and 2021, as required by ASC 820:

As of each of December 31, 2022 and March 31, 2022, the Credit Facility was valued using Level 3 inputs and any changes in its fair value are recorded in Net unrealized appreciation (depreciation) of other on our accompanying Consolidated Statements of Operations.

The following tables provide relevant information and disclosures about the Credit Facility as of December 31, 2022 and March 31, 2022, and for the three and nine months ended December 31, 2022 and 2021, as required by ASC 820:

Level 3 – Borrowings

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Statements of Assets and Liabilities Using Significant Unobservable Inputs (Level 3)

September 30, 2022 March 31, 2022

December 31, 2022 March 31, 2022

Credit Facility $ 29,600 $ —

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Credit Facility

Three Months Ended September 30, 2022:

Fair value at June 30, 2022 $ —

Three Months Ended December 31, 2022:

Fair value at September 30, 2022 $ 16,600

Borrowings 41,400

1 unchanged sentence

Unrealized appreciation (depreciation) —

Fair value at September 30, 2022

Six Months Ended September 30, 2022:

Fair value at December 31, 2022

Nine Months Ended December 31, 2022:

Fair value at March 31, 2022

2 unchanged sentences

Unrealized appreciation (depreciation) —

Fair value at September 30, 2022

Fair value at December 31, 2022

Fair Value Measurements of Borrowings Using Significant Unobservable Inputs (Level 3)

1 unchanged sentence

Credit Facility

Three Months Ended September 30, 2021:

Fair value at June 30, 2021

Three Months Ended December 31, 2021:

Fair value at September 30, 2021

Borrowings 49,000

1 unchanged sentence

Unrealized appreciation (depreciation) —

Fair value at September 30, 2021

Six Months Ended September 30, 2021:

Fair value at December 31, 2021

Nine Months Ended December 31, 2021:

Fair value at March 31, 2021

2 unchanged sentences

Unrealized appreciation (depreciation) —

Fair value at September 30, 2021

The fair value of the collateral under the Credit Facility was $ 624.9 million and $ 537.5 million as of September 30, 2022 and March 31, 2022, respectively.

Fair value at December 31, 2021

The fair value of the collateral under the Credit Facility was $ 641.0 million and $ 537.5 million as of December 31, 2022 and March 31, 2022, respectively.

Notes Payable

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Total underwriting discounts, commissions, and offering costs related to this offering were $ 3.3 million, which have been recorded as discounts to the aggregate principal amount on our accompanying Consolidated Statements of Assets and Liabilities and are being amortized over the period ending November 1, 2028, the maturity date.

The following tables summarize our 2026 Notes and 2028 Notes as of September 30, 2022 and March 31, 2022:

As of September 30, 2022:

The following tables summarize our 2026 Notes and 2028 Notes as of December 31, 2022 and March 31, 2022:

As of December 31, 2022:

Description Ticker

23 unchanged sentences

The 2028 Notes can be redeemed at our option at any time on or after November 1, 2023.

(B) As of September 30, 2022 and March 31, 2022, asset coverage on our senior securities representing indebtedness, calculated pursuant to Sections 18 and 61 of the 1940 Act, was 254.1 % and 252.9 %, respectively.

(B) As of December 31, 2022 and March 31, 2022, asset coverage on our senior securities representing indebtedness, calculated pursuant to Sections 18 and 61 of the 1940 Act, was 250.5 % and 252.9 %, respectively.

The fair value, based on the last reported closing prices, of the 2026 Notes and 2028 Notes as of September 30, 2022 was $ 121.8 million and $ 124.8 million, respectively.

The fair value, based on the last reported closing prices, of the 2026 Notes and 2028 Notes as of December 31, 2022 was $ 117.7 million and $ 117.3 million, respectively.

The fair value, based on the last reported closing prices, of the 2026 Notes and 2028 Notes as of March 31, 2022 was $ 128.3 million and $ 134.3 million, respectively.

9 unchanged sentences

In connection with the voluntary redemption of our Series E Term Preferred Stock, we incurred a loss on extinguishment of debt of $ 2.0 million, which was recorded in Realized loss on other in our accompanying Consolidated Statements of Operations and which was primarily comprised of unamortized deferred issuance costs at the time of redemption.

The following tables summarize dividends declared by our Board of Directors and paid by us on our Series E Term Preferred Stock during the six months ended September 30, 2021:

For the Six Months Ended September 30, 2021 :

The following table summarizes dividends declared by our Board of Directors and paid by us on our Series E Term Preferred Stock during the nine months ended December 31, 2021:

For the Nine Months Ended December 31, 2021 :

Declaration Date Record

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The registration statement permits us to issue, through one or more transactions, up to an aggregate of $ 300.0 million in securities, consisting of common stock, preferred stock, subscription rights, debt securities, and warrants to purchase common stock, preferred stock, or debt securities, including through concurrent, separate offerings of such securities.

As of September 30, 2022, we had the ability to issue up to $ 299.5 million of the securities registered under the registration statement.

As of December 31, 2022, we had the ability to issue up to $ 296.5 million of the securities registered under the registration statement.

Common Equity Offering

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and Virtu Americas LLC (each a “Sales Agent”), under which we have the ability to issue and sell shares of our common stock, from time to time, through the Sales Agents, up to an aggregate offering price of $ 50.0 million in what is commonly referred to as an “at-the-market” program (“Common Stock ATM Program”).

As of September 30, 2022, we had remaining capacity to sell up to an additional $ 49.5 million of common stock under the Common Stock ATM program.

During the three and six months ended September 30, 2022, we sold 29,640 shares of our common stock under the Common Stock ATM Program at a weighted-average gross price of $ 15.75 per share and raised approximately $ 0.5 million of gross proceeds.

As of December 31, 2022, we had remaining capacity to sell up to an additional $ 46.5 million of common stock under the Common Stock ATM program.

During the three months ended December 31, 2022, we sold 212,338 shares of our common stock under the Common Stock ATM Program at a weighted-average gross price of $ 14.11 per share, raising approximately $ 3.0 million of gross proceeds.

The weighted-average net price per share, after deducting commissions and offering costs borne by us, was $ 13.91 and resulted in total net proceeds of approximately $ 3.0 million.

These sales were above our then current

estimated NAV per share.

We did not sell any shares of our common stock under the Common Stock ATM Program during the three and six months ended September 30, 2021.

All sales were above our then current estimated NAV per share.

We did not sell any shares of our common stock under the common stock at-the-market program during the three months ended December 31, 2021.

During the nine months ended December 31, 2022, we sold 241,978 shares of our common stock under the Common Stock ATM Program at a weighted-average gross price of $ 14.31 per share, raising approximately $ 3.5 million of gross proceeds.

The weighted-average net price per share, after deducting commissions and offering costs borne by us, was $ 14.11 and resulted in total net proceeds of approximately $ 3.4 million.

All sales were above our then current estimated NAV per share.

We did not sell any shares of our common stock under a common stock at-the-market program during the nine months ended December 31, 2021.

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER WEIGHTED-AVERAGE COMMON SHARE

The following table sets forth the computation of basic and diluted Net increase in net assets resulting from operations per weighted-average common share for the three and six months ended September 30, 2022 and 2021:

Three Months Ended September 30, Six Months Ended September 30,

The following table sets forth the computation of basic and diluted Net increase in net assets resulting from operations per weighted-average common share for the three and nine months ended December 31, 2022 and 2021:

Three Months Ended December 31, Nine Months Ended December 31,

2022 2021 2022 2021

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Estimates made on a quarterly basis are updated as of each interim reporting date.

If we determined the tax characterization of cash distributions paid to common stockholders during the current calendar year as of September 30, 2022, 61.1 % would be from ordinary income and 38.9 % would be from capital gains.

We paid the following cash distributions to our common stockholders for the six months ended September 30, 2022 and 2021:

For the Six Months Ended September 30, 2022 :

The tax characterization of cash distributions paid to common stockholders during the calendar year ended December 31, 2022 was 61.2 % from ordinary income and 38.8 % from capital gains.

We paid the following cash distributions to our common stockholders for the nine months ended December 31, 2022 and 2021:

For the Nine Months Ended December 31, 2022 :

Declaration Date

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July 12, 2022 September 22, 2022 September 30, 2022 0.075

Six Months Ended September 30, 2022 $ 0.570

For the Six Months Ended September 30, 2021 :

October 11, 2022 October 21, 2022 October 31, 2022 0.080

October 11, 2022 November 18, 2022 November 30, 2022 0.080

October 11, 2022 December 6, 2022 December 15, 2022 0.120 (A)

October 11, 2022 December 20, 2022 December 30, 2022 0.080

Nine Months Ended December 31, 2022 $ 0.930

For the Nine Months Ended December 31, 2021 :

Declaration Date

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July 13, 2021 September 22, 2021 September 30, 2021 0.070

Six Months Ended September 30, 2021 $ 0.510

October 12, 2021 October 22, 2021 October 29, 2021 0.075

October 12, 2021 November 19, 2021 November 30, 2021 0.075

October 12, 2021 December 7, 2021 December 15, 2021 0.090 (A)

October 12, 2021 December 23, 2021 December 31, 2021 0.075

Nine Months Ended December 31, 2021 $ 0.825

(A) Represents a supplemental distribution to common stockholders.

Aggregate cash distributions to our common stockholders declared and paid were $ 18.9 million and $ 16.9 million for the six months ended September 30, 2022 and 2021, respectively.

Aggregate cash distributions to our common stockholders declared and paid were $ 30.9 million and $ 27.4 million for the nine months ended December 31, 2022 and 2021, respectively.

For the fiscal year ended March 31, 2022, Investment Company Taxable Income exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $ 13.9 million of the first distributions paid subsequent to fiscal year-end, as having been paid in the prior year.

In addition, for the fiscal year ended March 31, 2022 net capital gains exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $ 15.7 million of the first distributions paid subsequent to fiscal year-end as having been paid in the prior year.

For the three and six months ended September 30, 2022, we recorded $ 0.4 million and $ 1.3 million, respectively, of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and increased Overdistributed net investment income and Accumulated net realized gain in excess of distributions on our accompanying Consolidated Statements of Assets and Liabilities .

For the three months ended September 30, 2021, we recorded $ 2.1 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and increased Overdistributed net investment income and Accumulated net realized gain in excess of distributions on our accompanying Consolidated Statements of Assets and Liabilities .

For the six months ended September 30, 2021, we recorded $ 2.7 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and Overdistributed net investment income and increased Accumulated net realized gain in excess of distributions on our accompanying Consolidated Statements of Assets and Liabilities .

For the three months ended December 31, 2022, we recorded $ 0.3 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and Accumulated net realized gain in excess of distributions and increased Underdistributed net investment income on our accompanying Consolidated Statements of Assets and Liabilities .

For the nine months ended December 31, 2022, we recorded $ 1.6 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and increased Underdistributed net investment income and Accumulated net realized gain in excess of distributions on our accompanying Consolidated Statements of Assets and Liabilities .

For the three months ended December 31, 2021, we recorded $ 0.1 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and increased Overdistributed net investment income on our accompanying Consolidated Statements of Assets and Liabilities .

For the nine months ended December 31, 2021, we recorded $ 2.8 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and Overdistributed net investment income and increased Accumulated net realized gain in excess of distributions on our accompanying Consolidated Statements of Assets and Liabilities .

We may distribute our net long-term capital gains, if any, in cash or elect to retain some or all of such gains, pay taxes at the U.S.

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Based on current knowledge, we do not believe that loss contingencies, if any, arising from pending investigations, litigation or regulatory matters will have a material adverse effect on our financial condition, results of operation or cash flows.

Additionally, based on our current knowledge, we do not believe such loss contingencies are both probable and estimable and therefore, as of September 30, 2022 and March 31, 2022, we had no established reserves for such loss contingencies.

Additionally, based on our current knowledge, we do not believe such loss contingencies are both probable and estimable and therefore, as of December 31, 2022 and March 31, 2022, we had no established reserves for such loss contingencies.

Escrow Holdbacks

2 unchanged sentences

We establish reserves and holdbacks against escrow amounts if we determine that it is probable and estimable that a portion of the escrow amounts will not ultimately be released or received at the end of the escrow period.

Reserves and holdbacks against escrow amounts were $ 0.9 million and $ 0.2 million as of September 30, 2022 and March 31, 2022, respectively.

Reserves and holdbacks against escrow amounts were $ 0.3 million and $ 0.2 million as of December 31, 2022 and March 31, 2022, respectively.

Financial Commitments and Obligations

1 unchanged sentence

Since these lines of credit and delayed draw term debt commitments have expiration dates and we expect many will never be fully drawn, the total line of credit and delayed draw term debt commitment amounts do not necessarily represent future cash requirements.

We estimate the fair value of the combined unused line of credit and delayed draw term debt commitments as of September 30, 2022 and March 31, 2022 to be insignificant.

As of September 30, 2022, a guaranty is in place with one of our portfolio companies, Country Club Enterprises, LLC (“CCE”), whereby we have guaranteed $ 1.0 million of CCE’s obligations.

As of September 30, 2022, we have not been required to make any payments on this guaranty, or any guaranties that existed in previous periods, and we consider the credit risk to be remote and the fair value of the guaranty as of September 30, 2022 and March 31, 2022 to be insignificant.

The following table summarizes the principal balances of unused line of credit and delayed draw term debt commitments and guaranties as of September 30, 2022 and March 31, 2022, which are not reflected as liabilities in the accompanying Consolidated Statements of Assets and Liabilities:

September 30, 2022 March 31, 2022

We estimate the fair value of the combined unused line of credit and delayed draw term debt commitments as of December 31, 2022 and March 31, 2022 to be insignificant.

In conjunction with the term loan repayment by CCE in November 2022, our previously outstanding $ 1.0 million guaranty was released and terminated.

We were not required to make any payments on this guaranty, or any guaranties that existed in previous periods.

The following table summarizes the principal balances of unused line of credit and delayed draw term debt commitments and guaranties as of December 31, 2022 and March 31, 2022, which are not reflected as liabilities in the accompanying Consolidated Statements of Assets and Liabilities:

December 31, 2022 March 31, 2022

Unused line of credit and delayed draw term debt commitments

$ 8,200 $ 4,250

$ 9,200 $ 14,500

FINANCIAL HIGHLIGHTS

Three Months Ended September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2022 2021 2022 2021

16 unchanged sentences

( 0.14 ) ( 0.09 ) ( 0.47 ) ( 0.24 )

Net accretive effective of equity offering (D)

0.01 — 0.01 —

Total from equity capital activity

( 0.35 ) ( 0.32 ) ( 0.92 ) ( 0.83 )

Other, net (B)(D)

Other, net (B)(E)

— 0.01 ( 0.01 ) —

5 unchanged sentences

$ 12.91 $ 17.08 $ 12.91 $ 17.08

Total investment return (E)

Total investment return (F)

9.63 % 25.52 % ( 14.36 ) % 47.50 %

4 unchanged sentences

$ 449,191 $ 440,589 $ 449,191 $ 440,589

Average net assets (F)

Average net assets (G)

$ 445,431 $ 439,754 $ 446,742 $ 420,286

3 unchanged sentences

Ratios/Supplemental Data:

Ratio of net expenses to average net assets – annualized (G)

Ratio of net expenses to average net assets – annualized (H)

11.70 % 7.59 % 10.22 % 14.29 %

Ratio of net investment income (loss) to average net assets – annualized (H)

Ratio of net investment income (loss) to average net assets – annualized (I)

7.70 % 7.64 % 8.14 % 2.62 %

3 unchanged sentences

For further information on the estimated character of our distributions to common stockholders, including changes in estimates, as applicable, refer to Note 9 — Distributions to Common Stockholders .

(D) Represents the impact of the different share amounts (weighted-average basic common shares outstanding for the corresponding period and actual common shares outstanding at the end of the period) in the Per Common Share Data calculations and rounding impacts.

(E) Total return equals the change in the market value of our common stock from the beginning of the period, taking into account dividends reinvested in accordance with the terms of our dividend reinvestment plan.

(D) During the nine months ended December 31, 2022, the accretive effect is a result of issuing common shares at a price above the then current NAV per share.

(E) Represents the impact of the different share amounts (weighted-average basic common shares outstanding for the corresponding period and actual common shares outstanding at the end of the period) in the Per Common Share Data calculations and rounding impacts.

(F) Total return equals the change in the market value of our common stock from the beginning of the period, taking into account dividends reinvested in accordance with the terms of our dividend reinvestment plan.

Total return does not take into account distributions that may be characterized as a return of capital.

(F) Calculated using the average balance of net assets at the end of each month of the reporting period.

(G) Ratio of net expenses to average net assets is computed using total expenses, net of any non-contractual, unconditional, and irrevocable credits of fees from the Adviser.

Had we not received any non-contractual, unconditional, and irrevocable credits of fees from the Adviser, the ratio of expenses to average net assets - annualized would have been 11.50 % and 17.90 % for the three months ended September 30, 2022 and 2021, respectively, and 12.23 % and 20.73 % for the six months ended September 30, 2022 and 2021, respectively.

(H) Had we not received any non-contractual, unconditional, and irrevocable credits of fees from the Adviser, the ratio of net investment income (loss) to average net assets - annualized would have been 7.01 % and ( 0.52 )% for the three months ended September 30, 2022 and 2021, respectively, and 5.69 % and ( 2.91 )% for the six months ended September 30, 2022 and 2021, respectively.

(G) Calculated using the average balance of net assets at the end of each month of the reporting period.

(H) Ratio of net expenses to average net assets is computed using total expenses, net of any non-contractual, unconditional, and irrevocable credits of fees from the Adviser.

Had we not received any non-contractual, unconditional, and irrevocable credits of fees from the Adviser, the ratio of expenses to average net assets - annualized would have been 14.24 % and 12.55 % for the three months ended December 31, 2022 and 2021, respectively, and 12.87 % and 17.87 % for the nine months ended December 31, 2022 and 2021, respectively.

(I) Had we not received any non-contractual, unconditional, and irrevocable credits of fees from the Adviser, the ratio of net investment income (loss) to average net assets - annualized would have been 5.15 % and 2.68 % for the three months ended December 31, 2022 and 2021, respectively, and 5.50 % and ( 0.96 )% for the nine months ended December 31, 2022 and 2021, respectively.

UNCONSOLIDATED SIGNIFICANT SUBSIDIARIES

1 unchanged sentence

Further, in accordance with ASC 946, we are precluded from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries.

We did not have any unconsolidated subsidiaries that met any of the significance conditions under Rule 1-02(w) of the SEC’s Regulation S-X as of or during the six month periods ended September 30, 2022 and 2021.

We did not have any unconsolidated subsidiaries that met any of the significance conditions under Rule 1-02(w) of the SEC’s Regulation S-X as of or during the nine month periods ended December 31, 2022 and 2021.

SUBSEQUENT EVENTS

Investment Activity

• In October 2022, we invested an additional $ 8.4 million in the form of secured first lien debt in Nocturne to fund an add-on acquisition.

Distributions and Dividends

In October 2022, our Board of Directors declared the following monthly distributions to common stockholders:

In January 2023, our Board of Directors declared the following monthly distributions to common stockholders:

Payment Date Distribution per Common Share

October 21, 2022 October 31, 2022 $ 0.080

November 18, 2022 November 30, 2022 0.080

December 6, 2022 December 15, 2022 0.120 (A)

December 20, 2022 December 30, 2022 0.080

January 20, 2023 January 31, 2023 $ 0.08

February 17, 2023 February 28, 2023 0.08

March 3, 2023 March 15, 2023 0.24 (A)

March 17, 2023 March 31, 2023 0.08

Total for the Quarter:

(A) Represents a supplemental distribution to common stockholders.

Election of Director

Effective October 11, 2022, Paula Novara was elected to our Board of Directors.

Novara also serves as head of human resources, facilities and office management and IT of the Adviser and certain of its affiliates.

Subsequent to December 31, 2022 and through February 1, 2023, we sold 8,484 shares of our common stock under our common stock ATM Program at a weighted-average gross price of $ 14.01 per share and raised approximately $ 0.1 million in net proceeds.

These sales were above our then-current estimated NAV per share.

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

What changed 10-Q

Item 1. Financial Statements