Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
a) Disclosure Controls and Procedures
As of March 31, 2023 (the end of the period covered by this report), we, including our chief executive officer and chief financial officer, evaluated the effectiveness and design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including the chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective at a reasonable assurance level in timely alerting management, including the chief executive officer and chief financial officer, of material information about us required to be included in periodic SEC filings. However, in evaluation of the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
b) Management’s Annual Report on Internal Control over Financial Reporting
Refer to Management’s Annual Report on Internal Control over Financial Reporting located in Item 8 of this Form 10-K.
c) Attestation Report of the Independent Registered Public Accounting Firm
Not Applicable.
d) Change in Internal Control over Financial Reporting
There were no changes in internal controls for the three months ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
During the three months ended March 31, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement”.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
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PART III
We will file a definitive Proxy Statement for our 2023 Annual Meeting of Stockholders (the “2023 Proxy Statement”) with the SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of the 2023 Proxy Statement that specifically address the items set forth herein are incorporated by reference.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 is hereby incorporated by reference from our 2023 Proxy Statement under the captions “ Election of Directors ” and “ Information Regarding the Board of Directors and Corporate Governance. ”
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is hereby incorporated by reference from our 2023 Proxy Statement under the captions “ Executive Compensation ” and “ Director Compensation For Fiscal 2023 .”
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 is hereby incorporated by reference from our 2023 Proxy Statement under the caption “ Security Ownership of Certain Beneficial Owners and Management .”
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Item 13 is hereby incorporated by reference from our 2023 Proxy Statement under the captions “ Certain Transactions ” and “ Information Regarding the Board of Directors and Corporate Governance .”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 is hereby incorporated by reference from our 2023 Proxy Statement under the caption “ Independent Registered Public Accounting Firm Fees .”
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
a. DOCUMENTS FILED AS PART OF THIS REPORT
1. The following financial statements are filed herewith:
Report of Independent Registered Public Accounting Firm
71
Consolidated Statements of Assets and Liabilities as of March 31, 202 3 and 202 2
73
Consolidated Statements of Operations for the years ended March 31, 202 3 , 202 2 , and 202 1
74
Consolidated Statements of Changes in Net Assets for the years ended March 31, 202 3 , 20 2 2 , and 20 21
75
Consolidated Statements of Cash Flows for the years ended March 31, 202 3 , 202 2 , and 20 21
76
Consolidated Schedules of Investments as of March 31, 202 3 and 202 2
83
Notes to Consolidated Financial Statements
88
2. The following financial statement schedule is filed herewith:
Schedule 12-14 Investments in and Advances to Affiliates 126
No other financial statement schedules are filed herewith because (1) such schedules are not required or (2) the information has been presented in the aforementioned financial statements.
3. Exhibits
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:
3.1 Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit A.2 to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-123699), filed May 13, 2005.
3.2 Second Amended and Restated Bylaws, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00704), filed May 15, 2020.
4.1 Specimen Stock Certificate, incorporated by reference to Exhibit d to Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-123699), filed June 21, 2005.
4.2 Indenture, dated as of May 22, 2020, between Gladstone Investment Corporation and UMB Bank, National Association, as trustee incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 814-00704), filed May 22, 2020.
4.3 Second Supplemental Indenture between Gladstone Investment Corporation and UMB Bank, National Association, dated as of March 2, 2021, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 814-00704), filed March 2, 2021.
4.4 Third Supplemental Indenture between Gladstone Investment Corporation and UMB Bank, National Association, dated as of August 18, 2021, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 814-00704), filed August 18, 2021.
4.5* Description of Securities
10.1 Stock Transfer Agency Agreement between the Registrant and The Bank of New York, incorporated by reference to Exhibit k.1 to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-123699), filed May 13, 2005.
10.2 Custody Agreement between the Registrant and The Bank of New York, incorporated by reference to Exhibit j to Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-123699), filed June 21, 2005.
10.3 Investment Advisory and Management Agreement between the Registrant and Gladstone Management Corporation, dated June 22, 2005, incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K (File No. 814-00704), filed June 14, 2006.
10.4 Administration Agreement between the Registrant and Gladstone Administration, LLC, dated June 22, 2005, incorporated by reference to Exhibit 10.2 to the Annual Report on Form 10-K (File No. 814-00704), filed June 14, 2006.
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10.5 Custodial Agreement by and among Gladstone Business Investment, LLC, the Registrant, Gladstone Management Corporation, The Bank of New York Trust Company, N.A. and Deutsche Bank AG, New York Branch, dated October 19, 2006, incorporated by reference to Exhibit 2.j.2 to Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 (File No. 333-181879), filed June 7, 2013.
10.6 Amendment No. 1 to Custodial Agreement by and among Gladstone Business Investment, LLC, the Registrant, Gladstone Management Corporation, The Bank of New York Trust Company, N.A. and Deutsche Bank AG, New York Branch, dated April 14, 2009, incorporated by reference to Exhibit 2.j.3 to Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 (File No. 333-181879), filed June 7, 2013.
10.7 Fifth Amended and Restated Credit Agreement, dated as of April 30, 2013, by and among Gladstone Business Investment, LLC, Gladstone Management Corporation, the Financial Institutions as party thereto, and Key Equipment Finance, Inc., incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00704), filed May 2, 2013.
10.8 Joinder Agreement, dated as of June 12, 2013, by and among Gladstone Business Investment, LLC, Gladstone Management Corporation, Key Equipment Finance Inc. and EverBank Commercial Finance, Inc., incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00704), filed June 17, 2013.
10.9
Joinder Agreement, dated as of June 12, 2013, by and among Gladstone Business Investment, LLC, Gladstone Management Corporation, Key Equipment Finance Inc. and AloStar Bank of Commerce, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K (File No. 814-00704), filed June 17, 2013.
10.10 Amendment No. 1 to Fifth Amended and Restated Credit Agreement, dated as of June 26, 2014, by and among Gladstone Business Investment, LLC, Gladstone Management Corporation, the Financial Institutions as party thereto, and Key Equipment Finance, a division of KeyBank National Association, by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00704), filed June 30, 2014.
10.11 Joinder Agreement, dated as of September 19, 2014, by and among Gladstone Business Investment, LLC, Gladstone Management Corporation, Key Equipment Finance, a division of KeyBank National Association, and East West Bank, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00704), filed September 22, 2014.
10.12 Joinder Agreement, dated as of September 19, 2014, by and among Gladstone Business Investment, LLC, Gladstone Management Corporation, Key Equipment Finance, a division of KeyBank National Association, and Manufacturers and Traders Trust, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 814-00704), filed September 22, 2014.
10.13 Joinder Agreement, dated as of September 19, 2014, by and among Gladstone Business Investment, LLC, Gladstone Management Corporation, Key Equipment Finance, a division of KeyBank National Association, and Customers Bank, incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 814-00704), filed September 22, 2014.
10.14 Joinder Agreement, dated as of September 19, 2014, by and among Gladstone Business Investment, LLC, Gladstone Management Corporation, Key Equipment Finance, a division of KeyBank National Association, and Talmer Bank and Trust, incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K (File No. 814-00704), filed September 22, 2014.
10.15 Amendment No. 2 to Fifth Amended and Restated Credit Agreement, dated November 16, 2016, by and among Gladstone Business Investment, LLC, Gladstone Management Corporation, Keybank National Association, AloStar Bank of Commerce, Manufacturers and Traders Trust, East West Bank, Chemical Bank (as successor in interest to Talmer Bank and Trust) and Customers Bank, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 811-23191), filed November 17, 2016.
10.16 Amendment No. 3 to Fifth Amended and Restated Credit Agreement, dated January 20, 2017, by and among Gladstone Business Investment, LLC, Gladstone Management Corporation, Keybank National Association, AloStar Bank of Commerce, Manufacturers and Traders Trust, East West Bank, Chemical Bank (as successor in interest to Talmer Bank and Trust) and Customers Bank, incorporated by reference to Exhibit 2.k.12 to Post-Effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-204996), filed May 11, 2017.
10.17 Amendment No. 4 to Fifth Amended and Restated Credit Agreement, dated as of August 22, 2018 by and among Gladstone Business Investment, LLC, as Borrower, Gladstone Management Corporation, as Servicer, Keybank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00704), filed August 23, 2018.
10.18 Amendment No. 5 to Fifth Amended and Restated Credit Agreement, dated as of August 10, 2020 by and among Gladstone Business Investment, LLC, as Borrower, Gladstone Management Corporation, as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00704), filed August 11, 2020.
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10.19 Amendment No. 6 to Fifth Amended and Restated Credit Agreement, dated as of March 8, 2021 by and among Gladstone Business Investment, LLC, as Borrower, Gladstone Management Corporation, as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00704), filed March 8, 2021.
10.20* Amendment No. 7 to Fifth Amended and Restated Credit Agreement, dated as of April 10, 2023 by and among Gladstone Business Investment, LLC, as Borrower, Gladstone Management Corporation, as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto.
21* Subsidiaries of the Registrant .
23.1* Consent of Registered Public Accounting Firm
31.1* Certification of Chief Executive Officer filed pursuant to section 302 of The Sarbanes-Oxley Act of 2002.
31.2* Certification of Chief Financial Officer filed pursuant to section 302 of The Sarbanes-Oxley Act of 2002.
32.1**
Certification of Chief Executive Officer furnished pursuant to section 906 of The Sarbanes-Oxley Act of 2002.
32.2**
Certification of Chief Financial Officer furnished pursuant to section 906 of The Sarbanes-Oxley Act of 2002.
101.INS*** XBRL Instance Document
101.SCH*** XBRL Taxonomy Extension Schema Document
101.CAL*** XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*** XBRL Taxonomy Extension Label Linkbase Document
101.PRE*** XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*** XBRL Definition Linkbase
104 Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)
* Filed herewith
** Furnished herewith
*** Attached as Exhibit 101 to this Annual Report on Form 10-K are the following materials, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) the Consolidated Statements of Assets and Liabilities as of March 31, 2023 and 2022, (ii) the Consolidated Statements of Operations for the years ended March 31, 2023, 2022 and 2021, (iii) the Consolidated Statements of Changes in Net Assets for the years ended March 31, 2023, 2022 and 2021, (iv) the Consolidated Statements of Cash Flows for the years ended March 31, 2023, 2022 and 2021, (v) the Consolidated Schedules of Investments as of March 31, 2023 and 2022 and (vi) the Notes to Consolidated Financial Statements.
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Item 16. Form 10-K Summary.
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GLADSTONE INVESTMENT CORPORATION
Date: May 10, 2023
By: /s/ RACHAEL EASTON
Rachael Easton
Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: May 10, 2023
By: /s/ DAVID GLADSTONE
David Gladstone
Chief Executive Officer and Chairman of the Board of Directors (principal executive officer)
Date: May 10, 2023
By: /s/ RACHAEL EASTON
Rachael Easton
Chief Financial Officer and Treasurer (principal financial and accounting officer)
Date: May 10, 2023
By: /s/ ANTHONY W. PARKER
Anthony W. Parker
Director
Date: May 10, 2023
By: /s/ MICHELA A. ENGLISH
Michela A. English
Director
Date: May 10, 2023
By: /s/ PAUL ADELGREN
Paul Adelgren
Director
Date: May 10, 2023
By: /s/ JOHN H. OUTLAND
John H. Outland
Director
Date: May 10, 2023
By: /s/ WALTER H. WILKINSON, JR.
Walter H. Wilkinson, Jr.
Director
Date: May 10, 2023
By: /s/ PAULA NOVARA
Paula Novara
Director
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SCHEDULE 12-14
GLADSTONE INVESTMENT CORPORATION
INVESTMENTS IN AND ADVANCES TO AFFILIATES
(AMOUNTS IN THOUSANDS)
Company and Investment (A)(B)(C)(D)(E)
Principal/
Shares/Units (F)(G)
Net
Realized
Gain
(Loss) for
Period (O)
Amount of
Investment
Income (H)
Value as of
March 31, 2022
Gross
Additions (I)
Gross
Reductions (J)
Net Unrealized
Appreciation
(Depreciation) Value as of
March 31, 2023
AFFILIATE INVESTMENTS – 58.2%
Secured First Lien Debt – 35.8%
Chemicals, Plastics, and Rubber – 0.0%
PSI Molded Plastics, Inc. – Term Debt (M)
$ — $ — $ — $ 26,618 $ — $ (26,618) $ — $ —
Diversified/Conglomerate Manufacturing – 1.0%
Edge Adhesives Holdings, Inc. – Term Debt (L+5.5%, 10.4% Cash, Due 8/2024) (K)
9,210 — 354 9,072 — — (4,817) 4,255
Diversified/Conglomerate Services – 17.7%
ImageWorks Display and Marketing Group, Inc. – Term Debt (L+11.0%, 15.9% Cash, Due 11/2025)
22,000 — 4,046 22,000 — — — 22,000
J.R. Hobbs Co. - Atlanta, LLC - Line of Credit, $0 available ( L + 6.0%, 10.9% Cash, Due 6/2025) (K)(L)
5,000 — — — 5,000 — (2,256) 2,744
J.R. Hobbs Co. - Atlanta, LLC - Term Debt (L+6.0%, 10.9% Cash, Due 6/2025) (K)
16,500 — — 15,023 — — (5,969) 9,054
J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+10.3%, 15.1% Cash, Due 6/2025) (K)
26,000 — — 23,672 — — (9,404) 14,268
J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+6.0%, 10.9% Cash, Due 6/2025) (K)
2,438 — — 2,219 — — (881) 1,338
The Maids International, LLC – Term Debt (L+10.5%, 15.4% Cash, Due 3/2025)
28,560 — 3,911 28,560 — — — 28,560
— 7,957 91,474 5,000 — (18,510) 77,964
Home and Office Furnishings, Housewares, and Durable Consumer Products – 9.2%
Old World Christmas, Inc. – Term Debt (L+9.5%, 14.4% Cash, Due 12/2025)
40,500 — 9,520 25,000 15,500 — — 40,500
Mining, Steel, Iron and Non-Precious Metals Total – 4.1%
Utah Pacific Bridge & Steel, Ltd. (L+10.0%, 14.9% Cash, Due 7/2026)
18,250 — 2,406 18,250 — — — 18,250
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GLADSTONE INVESTMENT CORPORATION
INVESTMENTS IN AND ADVANCES TO AFFILIATES (Continued)
(AMOUNTS IN THOUSANDS)
Company and Investment (A)(B)(C)(D)(E)
Principal/
Shares/Units (F)(G)
Net
Realized
Gain
(Loss) for
Period (O)
Amount of
Investment
Income (H)
Value as of
March 31, 2022
Gross
Additions (I)
Gross
Reductions (J)
Net Unrealized
Appreciation
(Depreciation) Value as of
March 31, 2023
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Line of Credit (N)
$ — $ — $ — $ 3,400 $ — $ (2,412) $ (988) $ —
The Mountain Corporation – Line of Credit (N)
— — — 800 100 — (900) —
— — 4,200 100 (2,412) (1,888) —
Telecommunications – 3.8%
B+T Group Acquisition, Inc. – Line of Credit, $0 available (L+11.0%, 15.9% Cash, Due 12/2024)
2,800 — 402 2,800 — — — 2,800
B+T Group Acquisition, Inc. – Term Debt (L+11.0%, 15.9% Cash, Due 12/2024)
14,000 — 2,008 14,000 — — — 14,000
— 2,410 16,800 — — — 16,800
Total Secured First Lien Debt
$ — $ 22,647 $ 191,414 $ 20,600 $ (29,030) $ (25,215) $ 157,769
Secured Second Lien Debt – 5.7%
Diversified/Conglomerate Services – 5.7%
PSI Molded Plastics, Inc. – Term Debt ( L +5.5%, 10.4% Cash, Due 1/2024) (M)
$ 26,618 $ — $ 2,295 $ — $ 26,618 $ — $ (1,726) $ 24,892
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Term Debt (N)
— (10,000) — 923 — (10,000) 9,077 —
The Mountain Corporation – Delayed Draw Term Debt (N)
— — — 118 — — (118) —
(10,000) — 1,041 — (10,000) 8,959 —
Total Secured Second Lien Debt
$ (10,000) $ 2,295 $ 1,041 $ 26,618 $ (10,000) $ 7,233 $ 24,892
Preferred Equity – 13.2%
Chemicals, Plastics, and Rubber – 0.0%
PSI Molded Plastics, Inc. – Preferred Stock
158,598 $ — $ — $ — $ — $ — $ — $ —
Diversified/Conglomerate Manufacturing – 0.0%
Edge Adhesives Holdings, Inc. – Preferred Stock
8,199 — — — — — — —
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GLADSTONE INVESTMENT CORPORATION
INVESTMENTS IN AND ADVANCES TO AFFILIATES (Continued)
(AMOUNTS IN THOUSANDS)
Company and Investment (A)(B)(C)(D)(E)
Principal/
Shares/Units (F)(G)
Net
Realized
Gain
(Loss) for
Period (O)
Amount of
Investment
Income (H)
Value as of
March 31, 2022
Gross
Additions (I)
Gross
Reductions (J)
Net Unrealized
Appreciation
(Depreciation) Value as of
March 31, 2023
Diversified/Conglomerate Services – 3.2%
ImageWorks Display and Marketing Group, Inc. – Preferred Stock
67,490 $ — $ — $ 16,405 $ — $ — $ (5,479) $ 10,926
J.R. Hobbs Co. – Atlanta, LLC – Preferred Stock
10,920 — — — — — — —
The Maids International, LLC - Preferred Stock
6,640 — — 2,679 — — 521 3,200
— — 19,084 — — (4,958) 14,126
Home and Office Furnishings, Housewares, and Durable Consumer Products – 7.7%
Old World Christmas, Inc. – Preferred Stock
6,180 13,371 — 37,842 — — (3,852) 33,990
Mining, Steel, Iron and Non-Precious Metals - 1.8%
Utah Pacific Bridge & Steel, Ltd. - Preferred Stock 6,000 — — 6,000 — — 1,748 7,748
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Preferred Stock (N)
— — — — — — — —
Telecommunications – 0.5%
B+T Group Acquisition, Inc. – Preferred Stock
14,304 — — 14,746 — — (12,559) 2,187
Total Preferred Equity
$ 13,371 $ — $ 77,672 $ — $ — $ (19,621) $ 58,051
Common Equity/Equivalents – 3.5%
Diversified/Conglomerate Services - 3.5%
Nth Degree Investment Group, LLC – Common Stock
14,360,000 $ — $ — $ 511 $ — $ — $ 14,732 $ 15,243
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Common Stock (N)
— — — — — — — —
Telecommunications - 0.0%
B+T Group Acquisition, Inc. - Common Stock Warrants
3.5 % — — 921 — — (921) —
Total Common Equity/Equivalents
$ — $ — $ 1,432 $ — $ — $ 13,811 $ 15,243
TOTAL AFFILIATE INVESTMENTS $ 3,371 $ 24,942 $ 271,559 $ 47,218 $ (39,030) $ (23,792) $ 255,955
CONTROL INVESTMENTS – 0.2%
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GLADSTONE INVESTMENT CORPORATION
INVESTMENTS IN AND ADVANCES TO AFFILIATES (Continued)
(AMOUNTS IN THOUSANDS)
Company and Investment (A)(B)(C)(D)(E)
Principal/
Shares/Units (F)(G)
Net
Realized
Gain
(Loss) for
Period (O)
Amount of
Investment
Income (H)
Value as of
March 31, 2022
Gross
Additions (I)
Gross
Reductions (J)
Net Unrealized
Appreciation
(Depreciation) Value as of
March 31, 2023
Secured First Lien Debt – 0.0%
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Line of Credit, $150 available, (L +5.0%, 9.9% Cash, Due 5/2023) (K)(N)
$ 4,550 $ — $ — $ — $ 2,661 $ — $ (2,661) $ —
Total Secured Second Lien Debt $ — $ — $ — $ 2,661 $ — $ (2,661) $ —
Secured Second Lien Debt – 0.0%
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Term Debt (L +4.0%, 8.9% Cash, Due 4/2024) (K)(N)
$ 3,200 $ — $ — $ — $ — $ — $ — $ —
Total Secured Second Lien Debt $ — $ — $ — $ — $ — $ — $ —
Preferred Equity – 0.0%
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Preferred Stock (N)
6,899 $ — $ — $ — $ — $ — $ — $ —
Total Preferred Equity $ — $ — $ — $ — $ — $ — $ —
Common Equity/Equivalents – 0.2%
Leisure, Amusement, Motion Pictures, and Entertainment – 0.2%
Gladstone SOG Investments, Inc. - Common Stock (P)
100 $ (277) $ — $ 713 $ — $ — $ — $ 713
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation - Common Stock (N)
751 — — — — — — —
Total Common Equity/Equivalents $ (277) $ — $ 713 $ — $ — $ — $ 713
TOTAL CONTROL INVESTMENTS $ (277) $ — $ 713 $ 2,661 $ — $ (2,661) $ 713
TOTAL AFFILIATE AND CONTROL INVESTMENTS
$ 3,094 $ 24,942 $ 272,272 $ 49,879 $ (39,030) $ (26,453) $ 256,668
(A) Certain of the listed securities are issued by affiliate(s) of the indicated portfolio company. The majority of the securities listed, together with certain non-control and non-affiliate investments, totaling $639.5 million at fair value, are pledged as collateral to our revolving line of credit, as described further in Note 5— Borrowings in the accompanying Notes to Consolidated Financial Statements . 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 March 31, 2023, our investment in Funko Acquisition Holdings, LLC (“Funko”) is considered a non-qualifying asset under Section 55 of the 1940 Act and represents less than 0.1% of total investments, at fair value.
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GLADSTONE INVESTMENT CORPORATION
INVESTMENTS IN AND ADVANCES TO AFFILIATES (Continued)
(AMOUNTS IN THOUSANDS)
(B) Common stock, warrants, options and, in some cases, preferred stock are generally non-income-producing and restricted.
(C) Unless indicated otherwise, all cash interest rates are indexed to 30-day London Interbank Offered Rate (“LIBOR”), which was 4.9% as of March 31, 2023. If applicable, paid-in-kind interest rates are noted separately from the cash interest rate. Certain securities are subject to an interest rate floor. The cash interest rate is the greater of the floor or LIBOR plus a spread. Due dates represent the contractual maturity date.
(D) Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of March 31, 2023.
(E) Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the Financial Accounting Standards Board Accounting Standard Codification Topic 820, “ Fair Value Measurements and Disclosures ” fair value hierarchy. Refer to Note 3 — Investments in the accompanying Notes to Consolidated Financial Statements for additional information.
(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.
(G) Represents the principal balance, presented in thousands, for debt investments and the number of shares/units held for equity investments as of March 31, 2023. Warrants are represented as a percentage of ownership, as applicable, as of March 31, 2023.
(H) Represents the total amount of interest, dividend, success fee, or other investment income credited to income for the portion of the year ending March 31, 2023 an investment was an affiliate investment or control investment and on accrual status, as appropriate.
(I) Gross additions include increases in investments resulting from new portfolio investments, the amortization of discounts and fees, and the exchange of one or more existing securities for one or more new securities during the year ended March 31, 2023.
(J) Gross reductions include decreases in investments resulting from principal collections related to investment repayments or sales, the amortization of premiums and acquisition costs, and the exchange of one or more existing securities for one or more new securities during the year ended March 31, 2023.
(K) Debt security is on non-accrual status as of March 31, 2023.
(L) New investment during the year ended March 31, 2023.
(M) PSI Molded Plastics, Inc.'s term debt was transferred from first lien to second liend debt during the year ended March 31, 2023.
(N) During the year ended March 31, 2023, we restructured our investments in The Mountain Corporation, which resulted in the remaining investments being converted from affiliate investments to control investments.
(O) Net realized gain (loss) excludes amounts related to portfolio companies no longer in the portfolio for the periods presented.
** Information related to the amount of equity in the net profit and loss for the period for the investments listed has not been included in this schedule. This information is not considered to be meaningful due to the complex capital structures of the portfolio companies, with different classes of equity securities outstanding with different preferences in liquidation. These investments are not consolidated, nor are they accounted for under the equity method of accounting.
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