What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-01 compared with 2023-08-02 · 370 added, 198 removed, 1385 unchanged (29% of the section changed)

3 unchanged sentences

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

September 30,

2023 March 31,

50 unchanged sentences

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Three Months Ended June 30,

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

2023 2022 2023 2022

INVESTMENT INCOME

3 unchanged sentences

Affiliate investments

6,318 4,286 11,934 8,296

Cash and cash equivalents

333 29 620 32

Total interest income

2 unchanged sentences

Non-Control/Non-Affiliate investments

— 4,825 — 4,829

Affiliate investments

— — 1,907 1,552

Total dividend income

— 4,825 1,907 6,381

Success fee income

Non-Control/Non-Affiliate investments

— 1,733 — 6,733

Total success fee income

— 1,733 — 6,733

Total investment income

3 unchanged sentences

Loan servicing fee (A)

2,325 1,916 4,497 3,674

Incentive fee (A)

11,540 768 13,734 3,777

Administration fee (A)

334 562 856 942

Interest expense on borrowings

6,104 3,857 11,078 7,641

Amortization of deferred financing costs and discounts

574 450 1,119 898

Professional fees

335 938 619 1,233

Other general and administrative expenses

828 816 1,513 2,013

Expenses before credits from Adviser

6 unchanged sentences

22,007 9,379 33,867 21,305

NET INVESTMENT INCOME

NET INVESTMENT (LOSS) INCOME

$ ( 1,730 ) $ 11,416 $ 6,710 $ 18,787

2 unchanged sentences

Non-Control/Non-Affiliate investments

$ 289 $ 2,302 $ 289 $ 7,031

Affiliate investments

Control investments

— — 882 ( 277 )

Total net realized gain

289 2,302 1,444 6,754

Net unrealized appreciation (depreciation):

Non-Control/Non-Affiliate investments

46,367 ( 985 ) 49,795 14,004

Affiliate investments

1 unchanged sentence

Control investments

Total net unrealized (depreciation) appreciation

Net realized and unrealized gain 346 4,664

Total net unrealized appreciation (depreciation)

48,797 ( 10,643 ) 47,988 ( 10,431 )

Net realized and unrealized gain (loss) 49,086 ( 8,341 ) 49,432 ( 3,677 )

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

1 unchanged sentence

BASIC AND DILUTED PER COMMON SHARE:

Net investment income

Net investment (loss) income

$ ( 0.05 ) $ 0.34 $ 0.20 $ 0.57

29 unchanged sentences

$ 436,435 $ 446,409

Net investment (loss) income $ ( 1,730 ) $ 11,416

Net realized gain on investments 289 2,302

Net unrealized appreciation (depreciation) of investments 48,745 ( 10,643 )

Net unrealized depreciation of other 52 —

Net increase in net assets from operations

DISTRIBUTIONS (A)

Distributions to common stockholders from net investment income ( $ 0.20 and $ 0.14 per share, respectively)

( 6,665 ) ( 4,678 )

Distributions to common stockholders from net realized gains ( $ 0.16 and $ 0.08 per share, respectively)

( 5,519 ) ( 2,797 )

Net decrease in net assets from distributions

( 12,184 ) ( 7,475 )

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 INCREASE (DECREASE) IN NET ASSETS

39,231 ( 3,939 )

NET ASSETS, SEPTEMBER 30

$ 475,666 $ 442,470

(A) Refer to Note 8 — Distributions to Common Stockholders in the accompanying Notes to Consolidated Financial Statements for additional information.

3 unchanged sentences

(IN THOUSANDS)

Three Months Ended June 30,

Six Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

8 unchanged sentences

( 1,444 ) ( 6,754 )

Net unrealized depreciation (appreciation) of investments

Net unrealized (appreciation) depreciation of investments

( 47,925 ) 10,431

Net unrealized depreciation of other

8 unchanged sentences

Increase in accounts payable and accrued expenses

Increase (decrease) in interest payable

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

Increase in fee due to Administrator (A)

Increase in interest payable

Increase (decrease) in fees due to Adviser (A)

8,264 ( 1,578 )

Decrease in fee due to Administrator (A)

( 327 ) ( 12 )

Increase in other liabilities

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of common stock

Discounts, commissions, and offering costs for issuance of common stock ( 46 ) ( 6 )

Proceeds from line of credit

127,000 41,500

Repayments on line of credit

( 82,900 ) ( 24,900 )

Proceeds from issuance of notes payable 74,750 —

16 unchanged sentences

CONSOLIDATED SCHEDULE OF INVESTMENTS

JUNE 30, 2023

SEPTEMBER 30, 2023

(DOLLAR AMOUNTS IN THOUSANDS)

17 unchanged sentences

Counsel Press, Inc.

– Term Debt (SOFR+ 11.8 %, 16.9 % Cash, Due 3/2024) (J)

– Term Debt (SOFR+ 11.8 %, 17.1 % Cash, Due 3/2024) (Q)

21,100 21,100 22,114

Counsel Press, Inc.

– Term Debt (SOFR+ 13.0 %, 18.1 % Cash, Due 3/2024) (J)

– Term Debt (SOFR+ 13.0 %, 18.3 % Cash, Due 3/2024) (Q)

6,400 6,400 6,724

2 unchanged sentences

57,700 57,700 57,700

Mason West, LLC – Term Debt (SOFR+ 10.0 %, 15.1 % Cash, Due 7/2025) (J)

Mason West, LLC – Term Debt (SOFR+ 10.0 %, 15.3 % Cash, Due 7/2025) (Q)

25,250 25,250 26,942

18 unchanged sentences

– Line of Credit, $ 2,000 available (SOFR+ 8.0 %, 13.3 % Cash, Due 6/2024) (J)

2,000 2,000 2,000

Nocturne Luxury Villas, Inc.

6 unchanged sentences

27,981 27,981 27,981

Printing and Publishing Total – 2.7 %

Oil and Gas – 7.3 %

The E3 Company, LLC – Line of Credit, $ 1,000 available (SOFR+ 5.5 %, 10.8 % Cash, Due 2/2025) (J)

1,000 1,000 1,000

The E3 Company, LLC – Term Debt (SOFR+ 9.0 %, 14.3 % Cash, Due 9/2028) (J)

33,750 33,750 33,750

34,750 34,750

Printing and Publishing – 2.5 %

Home Concepts Acquisition, Inc.

5 unchanged sentences

Total Secured First Lien Debt $ 349,231 $ 351,984

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2023

(DOLLAR AMOUNTS IN THOUSANDS)

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

Principal/Shares/ Units (F)(H)

Cost Fair Value

Secured Second Lien Debt – 11.4 %

8 unchanged sentences

Cargo Transport – 2.7 %

Diligent Delivery Systems – Term Debt (SOFR+ 9.0 %, 14.1 % Cash, Due 5/2024) (J)

Diligent Delivery Systems – Term Debt (SOFR+ 9.0 %, 14.3 % Cash, Due 5/2024) (Q)

13,000 13,000 13,000

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

JUNE 30, 2023

(DOLLAR AMOUNTS IN THOUSANDS)

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

Principal/Shares/ Units (F)(H)

Cost Fair Value

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 3.3 %

14 unchanged sentences

Counsel Press, Inc.

– Preferred Stock (C)(J)

– Preferred Stock (C)(Q)

6,995 6,995 49,223

2 unchanged sentences

10,080 — 6,586

Mason West, LLC – Preferred Stock (C)(J)

Mason West, LLC – Preferred Stock (C)(Q)

11,206 11,206 20,939

24 unchanged sentences

29,757 4,823 8,621

Printing and Publishing Total - 0.8 %

Oil and Gas – 2.4 %

The E3 Company, LLC – Preferred Stock (C)(J)

11,233 11,233 11,233

Printing and Publishing - 0.7 %

Home Concepts Acquisition, Inc.

8 unchanged sentences

16,957 $ 11,513 $ —

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2023

(DOLLAR AMOUNTS IN THOUSANDS)

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

Principal/Shares/ Units (F)(H)

Cost Fair Value

Cargo Transport – 0.3 %

Diligent Delivery Systems – Common Stock Warrants (C)(J)

Diligent Delivery Systems – Common Stock Warrants (C)(Q)

Diversified/Conglomerate Manufacturing– 0.0 %

9 unchanged sentences

221,500 222 2,440

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

JUNE 30, 2023

(DOLLAR AMOUNTS IN THOUSANDS)

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

Principal/Shares/ Units (F)(H)

Cost Fair Value

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0 %

27 unchanged sentences

43,000 43,000 43,000

Mining, Steel, Iron and Non-Precious Metals Total – 4.2 %

Mining, Steel, Iron and Non-Precious Metals – 3.9 %

Utah Pacific Bridge & Steel, Ltd.

3 unchanged sentences

B+T Group Acquisition, Inc.

(K) – Line of Credit, $ 0 available (SOFR+ 11.0 %, 16.1 % Cash, Due 12/2024) (J)

(K) – Line of Credit, $ 0 available (SOFR+ 2.0 %, 7.3 % Cash, Due 12/2024) (I)

2,800 2,800 2,282

B+T Group Acquisition, Inc.

(K) – Term Debt (SOFR+ 11.0 %, 16.1 % Cash, Due 12/2024) (J)

(K) – Term Debt (SOFR+ 2.0 %, 7.3 % Cash, Due 12/2024) (I)

14,000 14,000 11,410

1 unchanged sentence

Total Secured First Lien Debt $ 187,758 $ 156,520

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2023

(DOLLAR AMOUNTS IN THOUSANDS)

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

Principal/Shares/ Units (F)(H)

Cost Fair Value

Secured Second Lien Debt – 10.2 %

3 unchanged sentences

$ 26,618 $ 26,618 $ 23,657

Diversified/Conglomerate Services Total – 5.7 %

Diversified/Conglomerate Services – 5.2 %

Nth Degree, Inc.

– Term Debt (SOFR+ 8.5 %, 13.6 % Cash, Due 6/2029) (J)

– Term Debt (SOFR+ 8.5 %, 13.8 % Cash, Due 6/2029) (I)

25,000 $ 25,000 $ 24,750

10 unchanged sentences

8,199 8,199 —

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

JUNE 30, 2023

(DOLLAR AMOUNTS IN THOUSANDS)

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

Principal/Shares/ Units (F)(H)

Cost Fair Value

Diversified/Conglomerate Services – 1.6 %

34 unchanged sentences

Total Secured First Lien Debt $ 4,550 $ —

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2023

(DOLLAR AMOUNTS IN THOUSANDS)

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

Principal/Shares/ Units (F)(H)

Cost Fair Value

Secured Second Lien Debt – 0.0 %

8 unchanged sentences

Total Preferred Equity $ 6,899 $ —

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

JUNE 30, 2023

(DOLLAR AMOUNTS IN THOUSANDS)

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

Principal/Shares/ Units (F)(H)

Cost Fair Value

Common Equity/Equivalents – 0.0 %

8 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 June 30, 2023, 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 Secured Overnight Financing Rate ("SOFR"), which was 5.1 % as of June 30, 2023.

As of September 30, 2023, 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 Secured Overnight Financing Rate ("SOFR"), which was 5.3 % as of September 30, 2023.

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 June 30, 2023.

(D) Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of September 30, 2023.

(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.

4 unchanged sentences

Warrants are represented as a percentage of ownership, as applicable.

(I) Reserved.

(I) Fair value was based on an internal yield analysis or on estimates of value submitted by a third-party valuation firm.

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

(J) Fair value was based on the total enterprise value of the portfolio company, which is generally allocated to the portfolio company’s securities in order of their relative priority in the capital structure.

5 unchanged sentences

(N) Control investments, as defined by the 1940 Act, are those where we have the power to exercise a controlling influence over the management or policies of the portfolio company, which may include owning, with the power to vote, more than 25.0% of the issued and outstanding voting securities.

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

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2023

(DOLLAR AMOUNTS IN THOUSANDS)

(O) Our investment in Funko was valued using Level 2 inputs within the ASC 820 fair value hierarchy.

5 unchanged sentences

(P) Debt security is subject to an interest rate ceiling.

(Q) Fair value was based on the expected exit or payoff amount, where such event has occurred or is expected to occur imminently.

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

300 unchanged sentences

Warrants are represented as a percentage of ownership, as applicable.

(I) Fair value was based on internal yield analysis or on estimates of value submitted by ICE Data Pricing and Reference Data, LLC.

(I) Fair value was based on an internal yield analysis or on estimates of value submitted by a third-party valuation firm.

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

18 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

SEPTEMBER 30, 2023

(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 June 30, 2023, our investment portfolio was comprised of 77.5 % in debt investments and 22.5 % in equity investments, at cost.

As of September 30, 2023, our investment portfolio was comprised of 78.0 % in debt investments and 22.0 % 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 months ended June 30, 2023 are not necessarily indicative of results that ultimately may be achieved for the fiscal year ending March 31, 2024 or any future interim period.

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

thereto included in our annual report on Form 10-K for the fiscal year ended March 31, 2023, as filed with the SEC on May 10, 2023.

The results of operations for the three and six months ended September 30, 2023 are not necessarily indicative of results that ultimately may be achieved for the fiscal year ending March 31, 2024 or any future interim period.

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

statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended March 31, 2023, as filed with the SEC on May 10, 2023.

Use of Estimates

17 unchanged sentences

The Valuation Team engages third-party valuation firms to provide independent assessments of fair value of certain of our investments.

ICE Data Pricing and Reference Data, LLC (“ICE”), a valuation specialist, generally provides estimates of fair value on our debt investments.

The Valuation Team generally assigns ICE’s estimates of fair value to our debt investments where we do not have the ability to effectuate a sale of the applicable portfolio company.

The Valuation Team corroborates ICE’s estimates of fair value using one or more of the valuation techniques discussed below.

The Valuation Team’s estimate of value on a specific debt investment may significantly differ from ICE’s.

When this occurs, our Valuation Committee and Board of Directors review whether the Valuation Team has followed the Policy and the Valuation Committee reviews

whether the Valuation Designee’s determined fair value is reasonable in light of the Policy and other relevant facts and circumstances.

A third-party valuation firm generally provides estimates of fair value on our debt investments.

The Valuation Team generally assigns the third-party valuation firm’s estimates of fair value to our debt investments where we do not have the ability to effectuate a sale of the applicable portfolio company.

The Valuation Team corroborates this third-party valuation firm’s estimates of fair value using one or more of the valuation techniques discussed below.

The Valuation Team’s estimate of value on a specific debt investment may significantly differ from the third-party valuation firm’s.

When this occurs, our Valuation Committee and Board of Directors review whether the Valuation Team has followed the Policy and

the Valuation Committee reviews whether the Valuation Designee’s determined fair value is reasonable in light of the Policy and other relevant facts and circumstances.

We may engage other independent valuation firms to provide earnings multiple ranges, as well as other information, and evaluate such information for incorporation into the total enterprise value (“TEV”) of certain of our investments.

19 unchanged sentences

This technique develops a modified discount rate that incorporates risk premiums including, among other things, increased probability of default, increased loss upon default, and increased liquidity risk.

Generally, the Valuation Team uses the yield analysis to corroborate both estimates of value provided by ICE and market quotes.

Generally, the Valuation Team uses the yield analysis to corroborate both estimates of value provided by a third-party valuation firm and market quotes.

• Market Quotes — For our investments for which a limited market exists, we generally base fair value on readily available and reliable market quotations, which are corroborated by the Valuation Team (generally by using the yield analysis described above).

3 unchanged sentences

For securities that are publicly traded, we generally base fair value on the closing market price of the securities we hold as of the reporting date.

For restricted securities that are publicly traded, we generally base fair value on the closing market price of the securities we hold as of the reporting date less a discount for the restriction, which includes consideration of the nature and term to expiration of the restriction.

• Investments in Funds — For equity investments in other funds for which we cannot effectuate a sale of the fund, the Valuation Team generally determines the fair value of our invested capital at the net asset value (“NAV”) provided by the fund.

16 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 June 30, 2023, our loans to Edge Adhesives Holdings, Inc.

As of September 30, 2023, our loans to Edge Adhesives Holdings, Inc.

("Edge"), 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 June 30, 2023 and March 31, 2023, we did not have any loans with a PIK interest component.

As of September 30, 2023 and March 31, 2023, we did not have any loans with a PIK interest component.

Success Fee Income Recognition

25 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 June 30, 2023 and March 31, 2023, 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 September 30, 2023 and March 31, 2023, 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 three months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and March 31, 2023, 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 six months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023 and March 31, 2023, 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 June 30, 2023:

As of September 30, 2023:

Secured first lien debt

4 unchanged sentences

Common equity/equivalents

Total Investments as of June 30, 2023

Total Investments as of September 30, 2023

$ 915,636 $ — $ 22 $ 915,614

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 June 30, 2023 and March 31, 2023, 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 September 30, 2023 and March 31, 2023, 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

June 30, 2023 March 31, 2023

September 30, 2023 March 31, 2023

Non-Control/Non-Affiliate Investments

17 unchanged sentences

Total investments at fair value using Level 3 inputs $ 915,614 $ 753,516

(A) Excludes our investment in Funko with a fair value of $ 31 thousand and $ 27 thousand as of June 30, 2023 and March 31, 2023, 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 June 30, 2023 and March 31, 2023.

(A) Excludes our investment in Funko with a fair value of $ 22 thousand and $ 27 thousand as of September 30, 2023 and March 31, 2023, 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, 2023 and March 31, 2023.

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,

2023 March 31,

2023 June 30,

2023 September 30,

2023 March 31,

8 unchanged sentences

$ 15,483 – $ 109,615 /$ 94,957

— 5,391 Yield Analysis Discount Rate N/A 19.4 % – 19.9 % / 19.7 %

13,692 5,391 Yield Analysis Discount Rate 24.9 % – 24.9 % / 24.9 %

19.4 % – 19.9 % / 19.7 %

Secured second

3 unchanged sentences

$ 4,112 – $ 6,379 / $ 5,501

— 12,984 Yield Analysis Discount Rate N/A 14.0 % – 14.0 % / 14.0 %

24,750 12,984 Yield Analysis Discount Rate 14.1 % – 14.1 % / 14.1 %

14.0 % – 14.0 % / 14.0 %

equity 267,596 222,585 TEV EBITDA multiple 3.7 x – 10.8 x /

13 unchanged sentences

Total $ 915,614 $ 753,516

(A) Fair value as of both June 30, 2023 and March 31, 2023 excludes our investment in Funko with a fair value of $ 31 thousand and $ 27 thousand, respectively, which was valued using Level 2 inputs.

(A) Fair value as of both September 30, 2023 and March 31, 2023 excludes our investment in Funko with a fair value of $ 22 thousand and $ 27 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 months ended June 30, 2023 and 2022 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 six months ended September 30, 2023 and 2022 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 June 30, 2023:

Fair value as of March 31, 2023

Three Months ended September 30, 2023:

Fair value as of June 30, 2023

$ 452,215 $ 104,794 $ 214,258 $ 28,780 $ 800,047

1 unchanged sentence

Net realized gain (loss) (A)

Net unrealized appreciation (depreciation) (B)

889 ( 2,047 ) 41,925 7,987 48,754

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

New investments, repayments and settlements (C):

Issuances / originations

55,400 — 11,413 — 66,813

Settlements / repayments

Fair value as of September 30, 2023

$ 508,504 $ 102,747 $ 267,596 $ 36,767 $ 915,614

Debt Preferred

Equivalents Total

Six Months Ended September 30, 2023

Fair value as of March 31, 2023 $ 437,517 $ 75,734 $ 222,585 $ 17,680 $ 753,516

Total gain (loss):

Net realized gain (loss) (A)

— — 273 882 1,155

Net unrealized appreciation (depreciation) (B)

7 unchanged sentences

— — ( 273 ) ( 1,502 ) ( 1,775 )

Fair value as of September 30, 2023

$ 508,504 $ 102,747 $ 267,596 $ 36,767 $ 915,614

Three Months ended September 30, 2022:

Fair value as of June 30, 2022

$ 376,752 $ 67,936 $ 238,665 $ 6,072 $ 689,425

Three Months ended June 30, 2022:

Total gain (loss):

Net realized gain (loss) (A)

— — 2,218 — 2,218

Net unrealized appreciation (depreciation) (B)

( 11,677 ) ( 4,507 ) 845 4,717 ( 10,622 )

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

New investments, repayments and settlements (C) :

Issuances / originations

70,250 4,000 — — 74,250

Settlements / repayments

— ( 5,096 ) — — ( 5,096 )

— — ( 12,298 ) — ( 12,298 )

Transfers (E)

( 14,418 ) 14,418 — — —

Fair value as of September 30, 2022

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

Six Months Ended September 30, 2022:

Fair value as of March 31, 2022

13 unchanged sentences

— — ( 21,926 ) — ( 21,926 )

Fair value as of June 30, 2022

Transfers (E)

( 14,418 ) 14,418 — — —

(A) Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the respective periods ended June 30, 2023 and 2022.

(B) Included in net unrealized appreciation (depreciation) of investments on our accompanying Consolidated Statements of Operations for the respective periods ended June 30, 2023 and 2022.

Fair value as of September 30, 2022

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

(A) Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the respective periods ended September 30, 2023 and 2022.

(B) Included in net unrealized appreciation (depreciation) of investments on our accompanying Consolidated Statements of Operations for the respective periods ended September 30, 2023 and 2022.

(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) The three months ended June 30, 2023 includes $ 0.3 million of proceeds from the recapitalization of Old World Christmas, Inc.

(D) The six months ended September 30, 2023 includes $ 0.3 million of proceeds from the recapitalization of Old World Christmas, Inc.

("Old World").

The three and six months ended September 30, 2022 include $ 10.1 million return of equity cost basis from Horizon Facilities Services, Inc.

Transfers represent (1) secured second lien debt of Ginsey Home Solutions, Inc.

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.

Investment Activity

During the three months ended June 30, 2023, the following significant transactions occurred:

During the six months ended September 30, 2023, the following significant transactions occurred:

• In May 2023, we invested $ 15.3 million in a new portfolio company, Home Concepts Acquisition, Inc.

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Home Concepts, headquartered in Santa Barbara, California, is a leading home improvement advertising publication focusing on connecting homeowners to high-quality residential repair and remodeling businesses.

• In June 2023, we recapitalized our investment in Old World and invested an additional $ 2.5 million in the form of secured first lien debt.

• In June 2023, we recapitalized our existing investment in Old World and invested an additional $ 2.5 million in the form of secured first lien debt.

In connection with this investment, we received proceeds of $ 2.2 million, of which $ 1.9 million was recognized as dividend income and $ 0.3 million was recognized as a realized gain.

2 unchanged sentences

As a result of the escrow release, there are no remaining assets held by Gladstone SOG Investments, Inc.

• In August 2023, we invested an additional $ 18.7 million in the form of secured first lien debt in Nocturne Villa Rentals, Inc.

("Nocturne") to fund an add-on acquisition.

• In September 2023, we invested $ 46.0 million in a new portfolio company, The E3 Company, LLC ("E3"), in the form of $ 34.8 million of secured first lien debt and $ 11.2 million of preferred equity.

E3, headquartered in Kilgore, Texas, is a market leader in advanced pressure management solutions for oil and gas well completions.

Investment Concentrations

As of June 30, 2023, our investment portfolio consisted of investments in 25 portfolio companies located in 19 states across 15 different industries with an aggregate fair value of $ 800.1 million.

Our investments in Old World, Horizon Facilities Services, Inc., Nocturne Luxury Villas, Inc.

("Nocturne"), Brunswick Bowling Products, Inc.

and Dema/Mai Holdings, Inc.

represented our five largest portfolio investments at fair value and collectively comprised $ 321.1 million, or 40.1 %, of our total investment portfolio at fair value as of June 30, 2023.

The following table summarizes our investments by security type as of June 30, 2023 and March 31, 2023:

June 30, 2023 March 31, 2023

As of September 30, 2023, our investment portfolio consisted of investments in 26 portfolio companies located in 19 states across 16 different industries with an aggregate fair value of $ 915.6 million.

Our investments in Nocturne, Counsel Press, Inc., Old World, Brunswick Bowling Products, Inc.

and Horizon Facilities Services, Inc.

represented our five largest portfolio investments at fair value and collectively comprised $ 364.9 million, or 39.9 %, of our total investment portfolio at fair value as of September 30, 2023.

The following table summarizes our investments by security type as of September 30, 2023 and March 31, 2023:

September 30, 2023 March 31, 2023

Cost Fair Value Cost Fair Value

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$ 834,798 100.0 % $ 915,636 100.0 % $ 720,630 100.0 % $ 753,543 100.0 %

Investments at fair value consisted of the following industry classifications as of June 30, 2023 and March 31, 2023:

June 30, 2023 March 31, 2023

Investments at fair value consisted of the following industry classifications as of September 30, 2023 and March 31, 2023:

September 30, 2023 March 31, 2023

Fair Value Percentage of

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Buildings and Real Estate 58,696 6.4 % 60,571 8.0 %

Leisure, Amusement, Motion Pictures, and Entertainment 39,948 5.0 % 47,616 6.3 %

Healthcare, Education, and Childcare 48,008 5.2 % 37,445 5.0 %

Oil and Gas 45,983 5.0 % — — %

Leisure, Amusement, Motion Pictures, and Entertainment 38,509 4.2 % 47,616 6.3 %

Mining, Steel, Iron and Non-Precious Metals 27,490 3.0 % 25,998 3.5 %

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) 26,705 2.9 % 20,088 2.7 %

Aerospace and Defense 25,696 2.8 % 22,215 2.8 %

Chemicals, Plastics, and Rubber 23,657 2.6 % 24,891 3.3 %

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) 23,075 2.9 % 20,088 2.7 %

Telecommunications 16,800 2.1 % 18,987 2.5 %

Printing and Publishing 15,275 1.7 % — — %

Cargo Transport 14,157 1.6 % 14,707 2.0 %

Diversified/Conglomerate Manufacturing 10,077 1.3 % 9,646 1.3 %

Telecommunications 13,692 1.5 % 18,987 2.5 %

Other < 2.0% 10,315 1.1 % 9,673 1.3 %

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

as of June 30, 2023 and March 31, 2023:

June 30, 2023 March 31, 2023

as of September 30, 2023 and March 31, 2023:

September 30, 2023 March 31, 2023

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 June 30, 2023:

For the remaining nine months ending March 31, 2024

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, 2023:

For the remaining six months ending March 31, 2024

For the fiscal years ending March 31:

2 unchanged sentences

Investments in equity securities 184,101

Total cost basis of investments held as of June 30, 2023:

Total cost basis of investments held as of September 30, 2023:

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 June 30, 2023 and March 31, 2023, we had gross receivables from portfolio companies of $ 2.3 million and $ 2.2 million, respectively.

As of both June 30, 2023 and March 31, 2023, the allowance for uncollectible receivables was $ 1.6 million.

As of September 30, 2023 and March 31, 2023, we had gross receivables from portfolio companies of $ 2.3 million and $ 2.2 million, respectively.

As of both September 30, 2023 and March 31, 2023, the allowance for uncollectible receivables was $ 1.5 million and $ 1.6 million, respectively.

RELATED PARTY TRANSACTIONS

6 unchanged sentences

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 June 30,

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

2023 2022 2023 2022

Average total assets subject to base management fee (A)

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Multiplied by prorated annual base management fee of 2.0 %

0.5 % 0.5 % 1.0 % 1.0 %

Base management fee (B)

4,341 3,613 8,272 7,176

Credits to fees from Adviser - other (B)

2 unchanged sentences

Loan servicing fee (B)

2,325 1,916 4,497 3,674

Credits to base management fee - loan servicing fee (B)

3 unchanged sentences

Incentive fee – capital gains-based (C)

9,807 ( 1,669 ) 9,874 ( 736 )

Total incentive fee (B)

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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 $ 75 thousand for the three months ended June 30, 2023 and $ 36 thousand for the three months ended June 30, 2022, 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 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.

For the three months ended September 30, 2023 and 2022, these credits totaled $ 83 thousand and $ 70 thousand, respectively.

For the six months ended September 30, 2023 and 2022, these credits totaled $ 158 thousand and $ 106 thousand, respectively.

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 three months ended June 30, 2023, no capital gains-based incentive fees were contractually due to the Adviser.

As of and for the six months ended September 30, 2023, no capital gains-based incentive fees were contractually due to the Adviser.

During the year ended March 31, 2023, no capital gains-based incentive fees were contractually due and paid to the Adviser.

5 unchanged sentences

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

During the three months ended June 30, 2023, we recorded capital gains-based incentive fees of $ 0.1 million.

During the three months ended June 30, 2022, we recorded capital gains-based incentive fees of $ 0.9 million.

During the three and six months ended September 30, 2023, we recorded capital gains-based incentive fees of $ 9.8 million and $ 9.9 million, respectively.

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

Transactions with the Administrator

5 unchanged sentences

On July 11, 2023, 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, 2024.

Administration fees for the three months ended June 30, 2023 and 2022, were $ 0.5 million and $ 0.4 million, respectively.

Administration fees for the three and six months ended September 30, 2023 were $ 0.3 million and $ 0.9 million, respectively.

Administration fees for the three and six months ended September 30, 2022 were $ 0.6 million and $ 0.9 million, respectively.

Transactions with Gladstone Securities, LLC

5 unchanged sentences

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 each of the three months ended June 30, 2023 and 2022, the fees received by Gladstone Securities from our portfolio companies totaled $ 0.3 million.

During the six months ended September 30, 2023, the fees received by Gladstone Securities from our portfolio companies totaled $ 0.3 million.

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, respectively.

Related Party Fees Due

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

As of June 30,

As of September 30,

As of March 31,

6 unchanged sentences

Total related party fees due $ 37,652 $ 29,635

(A) Includes a capital gains-based incentive fee of $ 25.2 million and $ 25.1 million as of June 30, 2023 and March 31, 2023, 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 $ 35.0 million and $ 25.1 million as of September 30, 2023 and March 31, 2023, 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.

There were no co-investment expenses as of June 30, 2023 and March 31, 2023.

Co-investment expenses as of September 30, 2023 were $ 19 thousand.

There were no co-investment expenses as of March 31, 2023.

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.

9 unchanged sentences

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

As of June 30, 2023

As of September 30, 2023

As of March 31, 2023

3 unchanged sentences

$ 100,700 $ 144,800

For the Three Months Ended June 30,

For the Three Months Ended September 30,

For the Six Months Ended September 30,

2023 2022 2023 2022

Weighted-average borrowings outstanding $ 50,373 $ 11,671 $ 46,967 $ 5,867

Effective interest rate (B)

10.9 % 20.1 % 11.0 % 35.5 %

Commitment (unused) fees incurred $ 319 $ 431 $ 664 $ 886

(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 $ 133.8 million and $ 144.8 million as of June 30, 2023 and March 31, 2023, 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 $ 100.7 million and $ 144.8 million as of September 30, 2023 and March 31, 2023, 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 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 $ 326.4 million as of June 30, 2023;

(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 June 30, 2023, and as defined in the performance guaranty of the Credit Facility, we had a net worth of $ 766.1 million, asset coverage on our senior securities representing indebtedness of 211.0 %, 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 June 30, 2023, we were in compliance with all covenants under the Credit Facility.

As of September 30, 2023, and as defined in the performance guaranty of the Credit Facility, we had a net worth of $ 805.9 million, asset coverage on our senior securities representing indebtedness of 211.5 %, 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 September 30, 2023, 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 June 30, 2023, the discount rate used to determine the fair value of the Credit Facility was 30-day Term SOFR, with a 0.35 % floor, plus 3.10 % per annum, plus an unused commitment fee of 1.0 %.

As of September 30, 2023, the discount rate used to determine the fair value of the Credit Facility was 30-day Term SOFR, with a 0.35 % floor, plus 3.25 % per annum, plus an unused commitment fee of 0.75 %.

As of March 31, 2023, the discount rate used to determine the fair value of the Credit Facility was 30-day LIBOR, with a 0.5 % floor, plus 2.94 % 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 June 30, 2023 and March 31, 2023, 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 June 30, 2023 and March 31, 2023, and for the three months ended June 30, 2023 and 2022, as required by ASC 820:

As of each of September 30, 2023 and March 31, 2023, 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, 2023 and March 31, 2023, and for the three and six months ended September 30, 2023 and 2022, as required by ASC 820:

Level 3 – Borrowings

2 unchanged sentences

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

June 30, 2023 March 31, 2023

September 30, 2023 March 31, 2023

Credit Facility $ 79,208 $ 35,171

2 unchanged sentences

Credit Facility

Three Months Ended June 30, 2023:

Three Months Ended September 30, 2023:

Fair value at June 30, 2023

Borrowings 95,200

Repayments ( 62,100 )

Unrealized depreciation ( 52 )

Fair value at September 30, 2023

Six Months Ended September 30, 2023:

Fair value at March 31, 2023

2 unchanged sentences

Unrealized depreciation ( 63 )

Fair value at June 30, 2023

Fair value at September 30, 2023

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

1 unchanged sentence

Credit Facility

Three Months Ended June 30, 2022:

Three Months Ended September 30, 2022:

Fair value at June 30, 2022

Borrowings 41,500

Repayments ( 24,900 )

Unrealized appreciation (depreciation) —

Fair value at September 30, 2022

Six Months Ended September 30, 2022

Fair value at March 31, 2022

Borrowings 41,500

Repayments ( 24,900 )

Unrealized appreciation (depreciation) —

Fair value at June 30, 2022

The fair value of the collateral under the Credit Facility was $ 701.1 million and $ 639.5 million as of June 30, 2023 and March 31, 2023, respectively.

Fair value at September 30, 2022

The fair value of the collateral under the Credit Facility was $ 774.9 million and $ 639.5 million as of September 30, 2023 and March 31, 2023, respectively.

Notes Payable

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Total underwriting discounts, commissions, and offering costs related to this offering were $ 2.5 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 August 1, 2028, the maturity date.

The following tables summarize our 5.00 % 2026 Notes, 4.875 % 2028 Notes and 8.00 % 2028 Notes as of June 30, 2023 and March 31, 2023:

As of June 30, 2023:

The following tables summarize our 5.00 % 2026 Notes, 4.875 % 2028 Notes and 8.00 % 2028 Notes as of September 30, 2023 and March 31, 2023:

As of September 30, 2023:

Description Ticker

27 unchanged sentences

Notes payable, net (C)

(A) The 5.00 % 2026 Notes can be redeemed at our option at any time.

The 4.875 % 2028 Notes can be redeemed at our option at any time on or after November 1, 2023.

(A) The 5.00 % 2026 Notes and the 4.875 % 2028 Notes can be redeemed at our option at any time.

The 8.00 % 2028 Notes can be redeemed at our option at any time on or after August 1, 2025.

(B) As of June 30, 2023 and March 31, 2023, asset coverage on our senior securities representing indebtedness, calculated pursuant to Sections 18 and 61 of the 1940 Act, was 211.0 % and 244.7 %, respectively.

(B) As of September 30, 2023 and March 31, 2023, asset coverage on our senior securities representing indebtedness, calculated pursuant to Sections 18 and 61 of the 1940 Act, was 211.5 % and 244.7 %, respectively.

The fair value, based on the last reported closing prices, of the 5.00 % 2026 Notes, 4.875 % 2028 Notes and 8.00 % 2028 Notes as of June 30, 2023 was $ 120.3 million, $ 119.7 million, and $ 75.1 million, respectively.

The fair value, based on the last reported closing prices, of the 5.00 % 2026 Notes, 4.875 % 2028 Notes and 8.00 % 2028 Notes as of September 30, 2023 was $ 119.0 million, $ 121.5 million, and $ 75.8 million, respectively.

The fair value, based on the last reported closing prices, of the 5.00 % 2026 Notes and 4.875 % 2028 Notes as of March 31, 2023 was $ 121.5 million and $ 127.4 million, respectively.

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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 June 30, 2023, we had the ability to issue up to $ 219.8 million of the $ 300.0 million of securities registered under the registration statement.

As of September 30, 2023, we had the ability to issue up to $ 215.6 million of the $ 300.0 million of securities registered under the registration statement.

Common Equity Offering

1 unchanged sentence

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, having an aggregate offering price of up to $ 50.0 million in what is commonly referred to as an “at-the-market” program (“Common Stock ATM Program”).

As of June 30, 2023, we had remaining capacity to sell up to an additional $ 44.5 million of common stock under the Common Stock ATM program.

We did not sell any shares under the Common Stock ATM Program during the three months ended June 30, 2023.

In August 2023, we entered into an equity distribution agreement with B.

Riley Securities, Inc.

and entered into amendments to the agreements with Oppenheimer & Co.

and Virtu Americas LLC in order to add B.

Riley Securities, Inc.

as a Sales Agent for the Common Stock ATM Program.

As of September 30, 2023, we had remaining capacity to sell up to an additional $ 40.4 million of common stock under the Common Stock ATM program.

During the three and six months ended September 30, 2023, we sold 304,170 shares of our common stock under the Common Stock ATM Program at a weighted-average gross price of $ 13.55 per share, raising approximately $ 4.1 million of gross proceeds.

The weighted-average net price per share, after deducting commissions and offering costs borne by us, was $ 13.35 and resulted in total net proceeds of approximately $ 4.1 million.

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

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, raising approximately $ 0.5 million of gross proceeds.

The weighted-average net price per share, after deducting commissions and offering costs borne by us, was $ 15.59 and resulted in total net proceeds of approximately $ 0.5 million.

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

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 months ended June 30, 2023 and 2022:

Three Months Ended June 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 six months ended September 30, 2023 and 2022:

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

2023 2022 2023 2022

Net increase in net assets resulting from operations

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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 June 30, 2023, 80.4 % would be from ordinary income and 19.6 % would be from capital gains.

We paid the following cash distributions to our common stockholders for the three months ended June 30, 2023 and 2022:

For the Three Months Ended June 30, 2023 :

If we determined the tax characterization of cash distributions paid to common stockholders during the current calendar year as of September 30, 2023, 72.7 % would be from ordinary income and 27.3 % would be from capital gains.

We paid the following cash distributions to our common stockholders for the six months ended September 30, 2023 and 2022:

For the Six Months Ended September 30, 2023 :

Declaration Date

4 unchanged sentences

April 11, 2023 June 21, 2023 June 30, 2023 0.08

Three Months Ended June 30, 2023 $ 0.36

For the Three Months Ended June 30, 2022 :

July 11, 2023 July 21, 2023 July 31, 2023 0.08

July 11, 2023 August 23, 2023 August 31, 2023 0.08

July 11, 2023 September 7, 2023 September 15, 2023 0.12 (A)

July 11, 2023 September 21, 2023 September 29, 2023 0.08

Six Months Ended September 30, 2023 $ 0.720

For the Six Months Ended September 30, 2022 :

Declaration Date

4 unchanged sentences

April 12, 2022 June 22, 2022 June 30, 2022 0.075

Three Months Ended June 30, 2022 $ 0.345

July 12, 2022 July 22, 2022 July 29, 2022 0.075

July 12, 2022 August 23, 2022 August 31, 2022 0.075

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

Six Months Ended September 30, 2022 $ 0.570

(A) Represents a supplemental distribution to common stockholders.

Aggregate cash distributions to our common stockholders declared and paid were $ 12.1 million and $ 11.5 million for the three months ended June 30, 2023 and 2022, respectively.

Aggregate cash distributions to our common stockholders declared and paid were $ 24.3 million and $ 18.9 million for the six months ended September 30, 2023 and 2022, respectively.

For the fiscal year ended March 31, 2023, Investment Company Taxable Income exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $ 21.4 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, 2023 net capital gains exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $ 10.6 million of the first distributions paid subsequent to fiscal year-end as having been paid in the prior year.

For the three months ended June 30, 2023, we recorded $ 0.6 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which increased Capital in excess of par value and Overdistributed net investment income and decreased Accumulated net realized gain in excess of distributions on our accompanying Consolidated Statements of Assets and Liabilities .

For the three months ended June 30, 2022, we recorded $ 0.9 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 three months ended September 30, 2023, we recorded $ 0.5 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 three months ended September 30, 2022, we recorded $ 0.4 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, 2023, we recorded $ 0.1 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which increased Capital in excess of par value and Overdistributed net investment income and decreased Accumulated net realized gain in excess of distributions on our accompanying Consolidated Statements of Assets and Liabilities .

For the six months ended September 30, 2022, we recorded $ 1.3 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 .

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 June 30, 2023 and March 31, 2023, 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 September 30, 2023 and March 31, 2023, we had no established reserves for such loss contingencies.

Escrow Holdbacks

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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 $ 0.1 million as of each of June 30, 2023 and March 31, 2023.

Reserves and holdbacks against escrow amounts were $ 31 thousand and $ 85 thousand as of September 30, 2023 and March 31, 2023, respectively.

Financial Commitments and Obligations

We may have line of credit and delayed draw term debt commitments to certain of our portfolio companies that have not been fully drawn.

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 June 30, 2023 and March 31, 2023 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 June 30, 2023 and March 31, 2023, which are not reflected as liabilities in the accompanying Consolidated Statements of Assets and Liabilities:

June 30, 2023 March 31, 2023

Unused line of credit and delayed draw term debt commitments

We may have line of credit commitments to certain of our portfolio companies that have not been fully drawn.

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

We estimate the fair value of the combined unused line of credit commitments as of September 30, 2023 and March 31, 2023 to be insignificant.

The following table summarizes the principal balances of unused line of credit as of September 30, 2023 and March 31, 2023, which are not reflected as liabilities in the accompanying Consolidated Statements of Assets and Liabilities:

September 30, 2023 March 31, 2023

Unused line of credit commitments

$ 5,000 $ 2,150

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FINANCIAL HIGHLIGHTS

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended

September 30,

2023 2022 2023 2022

Per Common Share Data:

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Income from investment operations (B)

Net investment income

Net realized gain on investments and other

Net unrealized (depreciation) appreciation of investments

Net investment (loss) income

( 0.05 ) 0.34 0.20 0.57

Net realized gain

0.01 0.07 0.04 0.20

Net unrealized appreciation (depreciation) 1.44 ( 0.32 ) 1.43 ( 0.32 )

Total from investment operations

1.40 0.09 1.67 0.45

Effect of equity capital activity (B)

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( 0.36 ) ( 0.22 ) ( 0.72 ) ( 0.57 )

Other, net (B)(E)

Other, net (B)(D)

— — ( 0.01 ) —

Net asset value at end of period (A)

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$ 12.74 $ 12.10 12.74 12.10

Total investment return (F)

Total investment return (E)

0.42 % ( 12.64 ) % 1.54 % ( 21.91 ) %

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$ 475,666 $ 442,470 $ 475,666 $ 442,470

Average net assets (G)

Average net assets (F)

$ 452,907 $ 449,419 445,936 447,398

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Ratios/Supplemental Data:

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

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

19.44 % 8.35 % 15.19 % 9.52 %

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

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

( 1.53 ) % 10.16 % 3.01 % 8.40 %

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For further information on the estimated character of our distributions to common stockholders, including changes in estimates, as applicable, refer to Note 8 — Distributions to Common Stockholders .

(D) Reserved.

(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.

(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.

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

(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 13.95 % and 12.96 % for the three months ended June 30, 2023 and 2022, 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 4.55 % and 4.37 % for the three months ended June 30, 2023 and 2022, respectively.

(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 23.30 % and 11.50 % for the three months ended September 30, 2023 and 2022, respectively, and 18.70 % and 12.23 % for the six months ended September 30, 2023 and 2022, 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 ( 5.39 )% and 7.01 % for the three months ended September 30, 2023 and 2022, respectively, and ( 0.50 )% and 5.69 % for the six months ended September 30, 2023 and 2022, respectively.

UNCONSOLIDATED SIGNIFICANT SUBSIDIARIES

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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 three month periods ended June 30, 2023 and 2022.

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 months ended September 30, 2023 and 2022.

SUBSEQUENT EVENTS

Investment Activity

• In October 2023, we invested an additional $ 64.7 million in the form of secured second lien debt and common equity in SFEG Holdings, Inc.

to fund an add-on acquisition.

In connection with the investment, our existing preferred equity with a cost basis of $ 4.8 million was converted to common equity.

• In October 2023, we exited our investment in Counsel Press, Inc., which resulted in success fee income of $ 1.4 million, a realized gain of $ 43.5 million and the repayment of our debt investment of $ 27.5 million at par.

Distributions and Dividends

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

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

Payment Date Distribution per Common Share

July 21, 2023 July 31, 2023 $ 0.08

August 23, 2023 August 31, 2023 0.08

September 7, 2023 September 15, 2023 0.12 (A)

September 21, 2023 September 29, 2023 0.08

October 20, 2023 October 31, 2023 $ 0.08

November 7, 2023 November 17, 2023 0.12 (A)

November 20, 2023 November 30, 2023 0.08

December 5, 2023 December 15, 2023 0.88 (A)

December 18, 2023 December 29, 2023 0.08

Total for the Quarter:

(A) Represents a supplemental distribution to common stockholders.

In July 2023, we sold 304,170 shares of our common stock under our common stock ATM program at a weighted-average gross price of $ 13.55 per share and raised approximately $ 4.1 million in net proceeds.

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

Revolving Line of Credit

On October 30, 2023, we, through our wholly-owned subsidiary, Business Investment, entered into Amendment No.

8 to the Credit Facility.

Among other things, the revolving period was extended to October 30, 2026, and if not renewed or extended by such date, all principal and interest will be due and payable by October 30, 2028 ( two years after the revolving period end date).

Advances under the Credit Facility generally bear interest at 30-day Term SOFR, subject to a floor of 0.35 %, plus 3.15 % per annum until October 30, 2026, with the margin then increasing to 3.40 % for the period from October 30, 2026 to October 30, 2027, and increasing further to 3.65 % thereafter with a SOFR credit spread adjustment of 10 basis points.

The Credit Facility has an unused commitment fee on the daily unused commitment amount of 0.50 % per annum if the daily unused commitment amount is less than or equal to 50% of the total commitment amount, 0.75 % per annum if the daily unused commitment amount is greater than 50% but less than or equal to 65% of the total commitment amount, and 1.00 % per annum if the daily unused commitment amount is greater than 65% of the total commitment amount.

The size of the Credit Facility was reduced from $ 180.0 million to $ 135.0 million.

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