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Item 2. Management’s Discussion and Analysis

2025-11-04 compared with 2025-08-12 · 306 added, 125 removed, 333 unchanged (56% of the section changed)

39 unchanged sentences

We expect that our investment portfolio over time will consist of approximately 75% in debt investments and 25% in equity investments, at cost.

As of June 30, 2025, our investment portfolio was comprised of 72.1% in debt investments and 27.9% in equity investments, at cost.

As of September 30, 2025, our investment portfolio was comprised of 71.1% in debt investments and 28.9% in equity investments, at cost.

We focus on investing in lower middle market private businesses (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $4 million to $15 million) (“Lower Middle Market”) in the U.S.

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We invest by ourselves or jointly with other funds and/or management of the portfolio company, depending on the opportunity.

In July 2012, the SEC granted us an exemptive order (the “Co-Investment Order”) that expanded our ability to co-invest, under certain circumstances, with certain of our affiliates, including Gladstone Capital Corporation and Gladstone Alternative Income Fund ("Gladstone Alternative") and any future BDC or registered closed-end management investment company that is advised (or sub-advised if it controls the fund) by the Adviser, or any combination of the foregoing, subject to the conditions in the Co-Investment Order.

In July 2012, the SEC granted us exemptive orders (collectively, the “Co-Investment Order”) that expanded our ability to co-invest, under certain circumstances, with certain of our affiliates, including Gladstone Capital Corporation and Gladstone Alternative Income Fund ("Gladstone Alternative") and any future BDC or registered closed-end management investment company that is advised (or sub-advised if it controls the fund) by the Adviser, or any combination of the foregoing, subject to the conditions in the Co-Investment Order.

In September 2025, the SEC granted us a new Co-Investment Order that contains a more flexible requirement that allocations be “fair and equitable” to us and that the Adviser consider the interests of us in allocations and which minimizes certain board approval requirements from the prior Co-Investment Order.

We believe the Co-Investment Order has enhanced and will continue to enhance our ability to further our investment objectives and strategies.

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While the business environment remains competitive, we continue to see new investment opportunities consistent with our investment strategy of providing a combination of debt and equity in support of management and independent sponsor-led buyouts of Lower Middle Market companies in the U.S.

During the three months ended June 30, 2025, we invested in two new portfolio companies.

From our initial public offering in June 2005 through June 30, 2025, we have invested in 64 companies, excluding investments in syndicated loans, for a total of approximately $2.1 billion, before giving effect to principal repayments and divestitures.

During the six months ended September 30, 2025, we invested in three new portfolio companies.

From our initial public offering in June 2005 through September 30, 2025, we have invested in 65 companies, excluding investments in syndicated loans, for a total of approximately $2.2 billion, before giving effect to principal repayments and divestitures.

The majority of the debt securities in our portfolio have a success fee component, which enhances the yield on our debt investments.

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Due to the contingent nature of success fees, there are no guarantees that we will be able to collect any or all of these success fees or know the timing of any such collections.

As a result, as of June 30, 2025, we had unrecognized, contractual success fees of $55.6 million, or $1.49 per common share.

As a result, as of September 30, 2025, we had unrecognized, contractual success fees of $59.3 million, or $1.50 per common share.

Consistent with accounting principles generally accepted in the U.S.

(“GAAP”), we have not recognized success fee receivables and related income in our accompanying Consolidated Financial Statements until earned.

From inception through June 30, 2025, we exited our investments in 33 portfolio companies that we acquired under our buyout strategy.

From inception through September 30, 2025, we exited our investments in 33 portfolio companies that we acquired under our buyout strategy.

In the aggregate, these sales have generated $353.4 million in net realized gains and $45.4 million in other income upon exit, for a total increase to our net assets of $398.8 million.

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The 33 liquidity events have offset any realized losses since inception, which were primarily incurred during the 2008-2009 recession in connection with the sale of performing syndicated loans at a realized loss to pay off a former lender.

The successful exits, in part, enabled us to increase the monthly distribution by 100.0% from March 2011 through June 30, 2025, and allowed us to declare and pay 24 supplemental distributions to common stockholders through June 30, 2025.

The successful exits, in part, enabled us to increase the monthly distribution by 100.0% from March 2011 through September 30, 2025, and allowed us to declare and pay 24 supplemental distributions to common stockholders through September 30, 2025.

Capital Raising

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We have successfully extended the Credit Facility’s revolving period multiple times, most recently to October 2026, and currently have a total commitment amount of $270.0 million (with a potential total commitment of $300.0 million through additional commitments from new or existing lenders).

During the three months ended June 30, 2025, we sold 515,295 shares of our common stock under our "at-the-market" program (the "2024 Common Stock ATM Program") for gross proceeds of approximately $7.3 million.

During the six months ended September 30, 2025, we sold 2,753,656 shares of our common stock under our "at-the-market" program (the "2024 Common Stock ATM Program") for gross proceeds of approximately $38.9 million.

During the year ended March 31, 2025, we issued the 7.875% 2030 Notes for gross proceeds of $126.5 million and sold 148,714 shares of our common stock under our 2024 Common Stock ATM Program for gross proceeds of approximately $2.0 million.

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Although we have been able to access the capital markets historically, market conditions may continue to affect the trading price of our common stock and thus our ability to finance new investments through the issuance of common equity.

On June 30, 2025, the closing market price of our common stock was $ 14.27 per share, representing a 9.9 % premium to our net asset value (“NAV”) of $ 12.99 per share as of June 30, 2025.

On September 30, 2025, the closing market price of our common stock was $ 13.82 per share, representing a 2.1 % premium to our net asset value (“NAV”) of $ 13.53 per share as of September 30, 2025.

When our common stock trades below NAV, our ability to issue additional equity is constrained by provisions of the 1940 Act, which generally prohibits the issuance and sale of our common stock at an issuance price below the then-current NAV per share without stockholder approval, other than through sales to our then-existing stockholders pursuant to a rights offering.

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As a result, our asset coverage requirements for senior securities changed from 200% to 150%, effective as of April 10, 2019, one year after the date of the Board of Directors’ approval.

As of June 30, 2025, our asset coverage ratio on our senior securities representing indebtedness was 189.8%.

As of September 30, 2025, our asset coverage ratio on our senior securities representing indebtedness was 193.2%.

Investment Highlights

Investment Activity

During the three months ended June 30, 2025, the following significant transactions occurred:

During the six months ended September 30, 2025, the following significant transactions occurred:

• In May 2025, we invested $49.5 million in a new portfolio company, Smart Chemical Solutions, LLC, ("Smart Chemical"), in the form of $35.7 million of secured first lien debt and $13.8 million of preferred equity.

Smart Chemical, headquartered in Midland, Texas, is a leading provider of production chemicals for onshore oil and gas operators throughout the United States.

Smart Chemical, headquartered in Midland, Texas, is a provider of production chemicals for onshore oil and gas operators throughout the United States.

• In May 2025, we invested $12.8 million in a new portfolio company, Sun State Nursery and Landscaping, LLC, ("Sun State"), in the form of $9.8 million of secured first lien debt and $3.1 million of preferred equity.

Sun State, headquartered in Jacksonville, Florida, is a leading commercial landscaping installation and maintenance provider in the Jacksonville area.

Sun State, headquartered in Jacksonville, Florida, is a commercial landscaping installation and maintenance provider in the Jacksonville area.

• In June 2025, we restructured our investment in PSI Molded Plastics, Inc.

As a result of the restructuring, we converted debt with a cost basis of $10.6 million into preferred equity.

• In July 2025, we invested $67.6 million in a new portfolio company, Global GRAB Technologies, Inc.

("Global GRAB"), in the form of $46.5 million of secured first lien debt and $21.1 million of preferred equity.

Global GRAB, headquartered in Franklin, Tennessee, is a provider of turnkey perimeter security and hostile vehicle mitigation systems, serving various government and commercial organizations.

• In September 2025, we entered into a new $20.0 million secured first lien term loan with J.R.

– Atlanta, LLC ("J.R.

Hobbs"), restructuring our previously outstanding first lien term loans and line of credit with an aggregate total cost basis of $49.9 million, which resulted in a realized loss of $29.9 million.

Distributions and Dividends

• In July 2025, our Board of Directors declared the following monthly cash distributions to common stockholders:

• In October 2025, our Board of Directors declared the following monthly cash distributions to common stockholders:

Payment Date Distribution per Common Share

July 21, 2025 July 31, 2025 $ 0.08

August 20, 2025 August 29, 2025 0.08

September 22, 2025 September 30, 2025 0.08

October 24, 2025 October 31, 2025 $ 0.08

November 17, 2025 November 26, 2025 0.08

December 22, 2025 December 31, 2025 0.08

Total for the Quarter:

RESULTS OF OPERATIONS

Comparison of the Three Months Ended June 30, 2025 to the Three Months Ended June 30, 2024

For the Three Months Ended June 30,

Comparison of the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2024

For the Three Months Ended September 30,

2025 2024 Change % Change

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REALIZED AND UNREALIZED GAIN (LOSS)

Net realized gain on investments — 2 (2) (100.0) %

Net unrealized depreciation (1,316) (18,942) 17,626 (93.1) %

Net realized and unrealized loss (1,316) (18,940) 17,624 (93.1) %

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,772 $ (6,526) $ 14,298 NM

Net realized (loss) gain on investments (29,938) 42,303 (72,241) NM

Net unrealized appreciation (depreciation) 54,368 (34,112) 88,480 NM

Net realized and unrealized gain 24,430 8,191 16,239 NM

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 28,709 $ 15,482 $ 13,227 85.4 %

WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING

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Net investment income $ 0.11 $ 0.20 $ (0.09) (45.0) %

Net increase (decrease) in net assets resulting from operations $ 0.21 $ (0.18) $ 0.39 NM

Net increase in net assets resulting from operations $ 0.75 $ 0.42 $ 0.33 78.6 %

NM - Not meaningful

Investment Income

Total investment income increased $1.4 million, or 6.2%, for the three months ended June 30, 2025, as compared to the prior year period, primarily due to an increase in interest income and dividend and success fee income.

Interest income from our investments in debt securities increased $1.0 million, or 5.0%, for the three months ended June 30, 2025, as compared to the prior year period.

Total investment income increased $2.7 million, or 12.0%, for the three months ended September 30, 2025, as compared to the prior year period, primarily due to an increase in interest income and dividend and success fee income.

Interest income from our investments in debt securities increased $1.7 million, or 8.0%, for the three months ended September 30, 2025, as compared to the prior year period.

Generally, the level of interest income from investments is directly related to the weighted-average principal balance of our interest-bearing investment portfolio outstanding during the period, multiplied by the weighted-average yield.

The weighted-average principal balance of our interest-bearing investment portfolio during the three months ended June 30, 2025 was $610.0 million, compared to $571.0 million for the prior year period.

This increase was primarily due to the origination of $176.4 million of new debt investments and $38.8 million of follow-on debt investments in existing portfolio companies, partially offset by $128.0 million of pay-offs, restructurings, or write-offs of debt investments and $30.8 million of existing loans placed on non-accrual status after March 31, 2024, and their respective impact on the weighted-average principal balance when considering the timing of new investments, pay-offs, restructurings, write-offs, and accrual status changes, as applicable.

During the three months ended June 30, 2025, we collected $1.5 million in past due interest from SFEG Holdings, Inc.

("SFEG") that was previously on non-accrual status.

We had no collections of past due interest during the three months ended June 30, 2024.

The weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend and success fee income, was 14.1% for the three months ended June 30, 2025, compared to 14.5% for the prior year period.

The weighted-average principal balance of our interest-bearing investment portfolio during the three months ended September 30, 2025 was $668.9 million, compared to $572.8 million for the prior year period.

This increase was primarily due to the origination of $222.9 million of new debt investments and $41.7 million of follow-on debt investments in existing portfolio companies, partially offset by $126.4 million of pay-offs, restructurings, or write-offs of debt investments and $3.8 million of existing loans placed on non-accrual status after June 30, 2024, and their respective impact on the weighted-average principal balance when considering the timing of new investments, pay-offs, restructurings, write-offs, and accrual status changes, as applicable.

During the three months ended September 30, 2025, we collected $0.3 million in past due interest from J.R.

Hobbs that was previously on non-accrual status.

We had no collections of past due interest during the three months ended September 30, 2024.

The weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend and success fee income, was 13.4% for the three months ended September 30, 2025, compared to 14.5% for the prior year period.

The weighted-average yield may vary from period to period, based on the current stated interest rate on interest-bearing investments, coupled with any collection of past due interest during the period.

As of June 30, 2025, our loans to B+T Group Acquisition, Inc.

("B+T"), Diligent Delivery Systems ("Diligent"), Edge Adhesives Holdings, Inc.

("Edge"), and J.R.

– Atlanta, LLC ("J.R.

Hobbs") were on non-accrual status, with an aggregate debt cost basis of $90.3 million.

As of June 30, 2024, certain of our loans to B+T, Diligent, Edge and J.R.

As of September 30, 2025, our loans to B+T Group Acquisition, Inc.

("B+T"), Diligent Delivery Systems ("Diligent") and Edge Adhesives Holdings, Inc.

("Edge") were on non-accrual status, with an aggregate debt cost basis of $40.3 million.

As of September 30, 2024, certain of our loans to B+T, Diligent, Edge and J.R.

Hobbs were on non-accrual status, with an aggregate debt cost basis of $90.0 million.

As of June 30, 2025 and March 31, 2025, SFEG represented 10.6% and 10.8% of the total investment portfolio at fair value, respectively.

Dividend and success fee income for the three months ended June 30, 2025 increased $0.3 million, or 22.1%, from the prior year period.

During the three months ended June 30, 2025, dividend and success fee income consisted of $1.1 million of dividend income and $0.8 million of success fee income.

During the three months ended June 30, 2024, dividend and success fee income consisted of $1.6 million of success fee income.

Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, increased $4.7 million, or 48.1%, during the three months ended June 30, 2025, as compared to the prior year period, primarily due to a decrease in the reversal of previously accrued capital gains-based incentive fees and an increase in interest expense, partially offset by an increase in fee credits from the Adviser and a decrease in other expense.

In accordance with GAAP, during the three months ended June 30, 2025, we recorded a $0.2 million reversal of previously accrued capital gains-based incentive fee compared to a $3.8 million reversal during the three months ended June 30, 2024.

As of September 30, 2025 and March 31, 2025, SFEG Holdings, Inc.

("SFEG") represented 11.5% and 10.8% of the total investment portfolio at fair value, respectively.

Dividend and success fee income for the three months ended September 30, 2025 increased $1.0 million, or 66.3%, from the prior year period.

During the three months ended September 30, 2025, dividend and success fee income consisted of $2.6 million of dividend income.

During the three months ended September 30, 2024, dividend and success fee income consisted of $1.4 million of dividend income and $0.2 million of success fee income.

Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, increased $5.7 million, or 37.5%, during the three months ended September 30, 2025, as compared to the prior year period, primarily due to an increase in incentive fees, interest expense and base management fees, partially offset by an increase in fee credits from the Adviser.

In accordance with GAAP, during the three months ended September 30, 2025, we recorded a $4.9 million capital gains-based incentive fee compared to a $1.6 million capital gains-based incentive fee during the three months ended September 30, 2024.

The capital gains-based incentive fee is a result of the net impact of net realized gains and net unrealized appreciation (depreciation) on investments during the respective periods.

The base management fee, loan servicing fee, incentive fee, and their related non-contractual, unconditional, and irrevocable credits are computed quarterly, as described under “Transactions with the Adviser” in Note 4 — Related Party Transactions in the accompanying Notes to Consolidated Financial Statements and are summarized in the following table:

Three Months Ended June 30,

Three Months Ended September 30,

Average total assets subject to base management fee (A)(B)

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Incentive fee – capital gains-based (D)

(209) (3,788)

Total incentive fee (C)

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(D) The capital gains-based incentive fees are recorded in accordance with GAAP and do not necessarily reflect amounts contractually due under the terms of the Advisory Agreement.

Interest expense increased $2.0 million, or 31.2%, during the three months ended June 30, 2025, as compared to the prior year period, primarily due to the issuance of the 7.785% 2030 Notes in December 2024 and an increase in the effective interest rate, partially offset by decreased borrowings on our Credit Facility.

The weighted-average balance outstanding under our Credit Facility during the three months ended June 30, 2025 was $36.3 million, compared to $64.7 million in the prior year period.

The effective interest rate on our Credit Facility, excluding the impact of deferred financing costs, during the three months ended June 30, 2025 was 14.0%, as compared to 10.8% in the prior year period.

The increase in the effective interest rate on the Credit Facility was primarily a result of an increase in unused commitment fees on the undrawn portion of the Credit Facility, partially offset by lower interest rates on the drawn portion of our Credit Facility during the three months ended June 30, 2025.

Other expenses decreased $0.8 million, or 41.3%, during the three months ended June 30, 2025, as compared to the prior year period, due to a decrease in bad debt expense, partially offset by an increase in professional fees and tax expense.

Interest expense increased $3.2 million, or 50.5%, during the three months ended September 30, 2025, as compared to the prior year period, primarily due to the issuance of the 7.785% 2030 Notes in December 2024 and increased borrowings on our Credit Facility, partially offset by a decrease in the effective interest rate.

The weighted-average balance outstanding under our Credit Facility during the three months ended September 30, 2025 was $107.6 million, compared to $60.8 million in the prior year period.

The effective interest rate on our Credit Facility, excluding the impact of deferred financing costs, during the three months ended September 30, 2025 was 8.9%, as compared to 11.0% in the prior year period.

The decrease in the effective interest rate on the Credit Facility was primarily a result of lower interest rates on the drawn portion of our Credit Facility, partially offset by an increase in unused commitment fees on the undrawn portion of the Credit Facility during the three months ended September 30, 2025.

Other expenses decreased $0.8 million, or 45.3%, during the three months ended September 30, 2025, as compared to the prior year period, due to a decrease in tax expense and bad debt expense.

Realized and Unrealized Gain (Loss)

The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the three months ended June 30, 2025 and 2024 were as follows:

Three Months Ended June 30, 2025

The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the three months ended September 30, 2025 and 2024 were as follows:

Three Months Ended September 30, 2025

Portfolio Company Realized Gain (Loss) on Investments Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss)

SFEG Holdings, Inc.

$ — $ 20,553 $ — $ 20,553

The E3 Company, LLC — 10,769 — 10,769

Schylling, Inc.

— 5,683 — 5,683

Dema/Mai Holding, Inc.

— 4,417 — 4,417

Brunswick Bowling Products, Inc.

— 3,378 — 3,378

- Atlanta, LLC (29,938) 12,362 19,104 1,528

Ginsey Home Solutions, Inc.

— 1,208 — 1,208

Horizon Facilities Services, Inc.

Phoenix Door Systems, Inc.

— (1,026) — (1,026)

Pyrotek Special Effects, Inc.

— (1,169) — (1,169)

Home Concepts Acquisition, Inc.

— (1,286) — (1,286)

The Maids International, LLC — (1,288) — (1,288)

Smart Chemical Solutions, LLC — (1,694) — (1,694)

PSI Molded Plastics, Inc.

— (2,104) — (2,104)

Educators Resource, Inc.

— (2,429) — (2,429)

Detroit Defense, Inc.

— (2,578) — (2,578)

Old World Christmas, Inc.

— (2,669) — (2,669)

Diligent Delivery Systems — (2,707) — (2,707)

UPB Acquisition, Inc.

— (5,201) — (5,201)

Other, net (<$1.0 million, net) — 151 — 151

Total $ (29,938) $ 35,348 $ 19,104 $ 24,514

Three Months Ended September 30, 2024

Portfolio Company Realized Gain (Loss) on Investments Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss)

Nocturne Luxury Villas, Inc.

$ — $ 6,707 $ — $ 6,707

Nth Degree Investment Group, LLC 42,284 — (38,028) 4,256

ImageWorks Display and Marketing Group, Inc.

— 3,269 — 3,269

SFEG Holdings, Inc.

Old World Christmas, Inc.

— 3,203 — 3,203

Galaxy Technologies Holding, Inc.

— 2,754 — 2,754

Schylling, Inc.

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The E3 Company, LLC — 2,561 — 2,561

Mason West, LLC — 2,517 — 2,517

The Maids International, LLC — 1,434 — 1,434

- Atlanta, LLC — 1,150 — 1,150

Phoenix Doors Systems, Inc.

— 1,095 — 1,095

Edge Adhesives Holdings, Inc.

— (892) — (892)

UPB Acquisition, Inc.

— (981) — (981)

Old World Christmas, Inc.

Ginsey Home Solutions, Inc.

— (1,090) — (1,090)

Home Concepts Acquisition, Inc.

Brunswick Bowling Products, Inc.

— (2,321) — (2,321)

B+T Group Acquisition, Inc — (2,839) — (2,839)

Horizon Facilities Service, Inc.

— (11,752) — (11,752)

Other, net (<$1.0 million, net) 19 (948) — (929)

Total $ 42,303 $ 3,916 $ (38,028) $ 8,191

Net Realized Gain (Loss) on Investments

During the three months ended September 30, 2025, we recorded net realized losses on investments of $29.9 million, due to the realized loss from the restructuring of J.R.

During the three months ended September 30, 2024, we recorded net realized gains on investments of $42.3 million, due to the realized gain from the exit of Nth Degree Investment Group, LLC ("Nth Degree").

Net Unrealized Appreciation (Depreciation) of Investments

Net unrealized appreciation of investments of $54.5 million for the three months ended September 30, 2025 was primarily due to increased performance of certain of our portfolio companies and the reversal of previously recorded unrealized depreciation related to our investment in J.R.

Hobbs upon its restructure.

These increases were partially offset by decreased performance of certain of our portfolio companies and a decrease in transaction multiples used to estimate the fair value of certain of our portfolio companies.

Net unrealized depreciation of investments of $34.1 million for the three months ended September 30, 2024 was primarily due to the reversal of unrealized appreciation of Nth Degree upon our exit, and a decrease in the performance of certain of our portfolio companies.

These decreases were partially offset by an increase in transaction multiples used to estimate the fair value of certain of our portfolio companies and increased performance of certain of our other portfolio companies.

Across our entire investment portfolio, we recorded net unrealized appreciation of $38.8 million on our equity positions and net unrealized appreciation of $15.7 million on our debt investments for the three months ended September 30, 2025 .

As of September 30, 2025 , the fair value of our investment portfolio was more than our cost basis by $93.7 million, compared to June 30, 2025, when the fair value of our investment portfolio was more than our cost basis by $39.2 million.

This resulted in net unrealized appreciation of $54.5 million for the three months ended September 30, 2025 .

Our entire portfolio was fair valued at 109.0% of cost as of September 30, 2025 .

Comparison of the Six Months Ended September 30, 2025 to the Six Months Ended September 30, 2024

For the Six Months Ended September 30,

2025 2024 Change % Change

INVESTMENT INCOME

Interest income $ 44,317 $ 41,621 $ 2,696 6.5 %

Dividend and success fee income 4,506 3,122 1,384 44.3 %

Total investment income 48,823 44,743 4,080 9.1 %

Base management fee 10,537 9,065 1,472 16.2 %

Loan servicing fee 5,604 4,416 1,188 26.9 %

Incentive fee 4,998 (1,556) 6,554 NM

Administration fee 953 1,073 (120) (11.2) %

Interest expense 18,130 12,879 5,251 40.8 %

Amortization of deferred financing costs and discounts 1,820 1,260 560 44.4 %

Other 2,055 3,613 (1,558) (43.1) %

Expenses before credits from Adviser 44,097 30,750 13,347 43.4 %

Credits to fees from Adviser (8,641) (5,712) (2,929) 51.3 %

Total expenses, net of credits to fees 35,456 25,038 10,418 41.6 %

NET INVESTMENT INCOME 13,367 19,705 (6,338) (32.2) %

REALIZED AND UNREALIZED GAIN (LOSS)

Net realized (loss) gain on investments (29,938) 42,305 (72,243) NM

Net unrealized appreciation (depreciation) of investments 53,052 (53,054) 106,106 NM

Net realized and unrealized gain (loss) 23,114 (10,749) 33,863 NM

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 36,481 $ 8,956 $ 27,525 307.3 %

WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING

Basic and diluted 37,681,491 36,688,667 992,824 2.7 %

BASIC AND DILUTED PER COMMON SHARE:

Net investment income $ 0.35 $ 0.54 $ (0.19) (35.2) %

Net increase in net assets resulting from operations $ 0.97 $ 0.24 $ 0.73 304.2 %

NM = Not Meaningful

Investment Income

Total investment income increased $4.1 million, or 9.1%, for the six months ended September 30, 2025, as compared to the prior year period, primarily due to an increase in interest income and dividend and success fee income.

Interest income from our investments in debt securities increased $2.7 million, or 6.5%, for the six months ended September 30, 2025, as compared to the prior year period.

The weighted-average principal balance of our interest-bearing investment portfolio during the six months ended September 30, 2025 was $639.6 million, compared to $578.1 million for the prior year period.

This increase was primarily due to the origination of $222.9 million of new debt investments and $42.2 million of follow-on debt investments in existing portfolio companies, partially offset by $129.4 million of pay-offs, restructurings, or write-offs of debt investments and $30.8 million of existing loans placed on non-accrual status after March 31, 2024, and their respective impact on the weighted-average principal balance when considering the timing of new investments, pay-offs, restructurings, write-offs, and accrual status changes, as applicable.

During the six months ended September 30, 2025, we collected $1.8 million in past due interest from portfolio companies that were previously on non-accrual status, including $1.5 million from SFEG and $0.3 million from J.R.

We had no collections of past due interest during the six months ended September 30, 2024.

The weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend and success fee income, was 13.7% for the six months ended September 30, 2025, compared to 14.4% for the prior year period.

As of September 30, 2025, our loans to B+T, Diligent and Edge were on non-accrual status, with an aggregate debt cost basis of $40.3 million.

As of September 30, 2024, our loans to B+T, Diligent, Edge, and J.R.

Hobbs were also on non-accrual status, with an aggregate debt cost basis of $90.0 million.

As of September 30, 2025 and March 31, 2025, SFEG represented 11.5% and 10.8% of the total investment portfolio at fair value, respectively.

Dividend and success fee income for the six months ended September 30, 2025 increased $1.4 million, or 44.3% from the prior year period.

During the six months ended September 30, 2025, dividend and success fee income consisted of $3.7 million of dividend income and $0.8 million of success fee income.

During the six months ended September 30, 2024, dividend and success fee income consisted of $1.7 million of success fee income and $1.4 million of dividend income.

Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, increased $10.4 million, or 41.6%, during the six months ended September 30, 2025, as compared to the prior year period, primarily due to an increase in incentive fees, interest expense and base management fee, partially offset by a decrease in other expense and an increase in fee credits from the Adviser.

In accordance with GAAP, we recorded a $4.7 million capital gains-based incentive fee during the six months ended September 30, 2025, compared to a $2.2 million reversal of previously accrued capital gains-based incentive fee recorded during the six months ended September 30, 2024.

The capital gains-based incentive fee was a result of the net impact of net realized gains and net unrealized appreciation (depreciation) on investments during the respective periods.

The income-based incentive fee decreased by $0.3 million for the six months ended September 30, 2025, as compared to the prior year period, primarily due to an increase in net assets, which drives the hurdle rate.

Six Months Ended September 30,

Average total assets subject to base management fee (A)

$ 1,053,700 $ 906,500

Multiplied by prorated annual base management fee of 2.0% 1.0 % 1.0 %

Base management fee (B)

$ 10,537 $ 9,065

Credits to fees from Adviser - other (B)

(3,037) (1,296)

Net base management fee $ 7,500 $ 7,769

Loan servicing fee (B)

$ 5,604 $ 4,416

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

(5,604) (4,416)

Net loan servicing fee $ — $ —

Incentive fee – income-based $ 310 $ 594

Incentive fee – capital gains-based (C)

4,688 (2,150)

Total incentive fee (B)

$ 4,998 $ (1,556)

Credits to fees from Adviser - other (B)

Net total incentive fee $ 4,998 $ (1,556)

(A) Average total assets subject to the base management fee is defined in the Advisory Agreement as total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings, valued at the end of the applicable quarters within the respective periods and adjusted appropriately for any share issuances or repurchases during the periods.

(B) Reflected as a line item on our Consolidated Statements of Operations .

(C) The capital gains-based incentive fees are recorded in accordance with GAAP and do not necessarily reflect amounts contractually due under the terms of the Advisory Agreement.

Interest expense increased $5.3 million, or 40.8%, during the six months ended September 30, 2025, as compared to the prior year period, primarily due to interest expense related to the issuance of the 7.785% 2030 Notes in December 2024 and increased borrowings on the Credit Facility, partially offset by a decrease in the effective interest rate.

The weighted-average balance outstanding on the Credit Facility during the six months ended September 30, 2025 was $72.2 million as compared to $62.8 million in the prior year period.

The effective interest rate on the Credit Facility, excluding the impact of deferred financing costs, during the six months ended September 30, 2025 was 10.2%, as compared to 10.9% in the prior year period.

Other expenses decreased $1.6 million, or 43.1%, during the six months ended September 30, 2025, as compared to the prior year period, due to an decrease in bad debt expense and tax expense, partially offset by an increase in professional fees.

Realized and Unrealized Gain (Loss)

The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the six months ended September 30, 2025 and 2024 were as follows:

Six Months Ended September 30, 2025

Portfolio Company Realized Gain (Loss) on Investments Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss)

SFEG Holdings, Inc.

$ — $ 25,106 $ — $ 25,106

The E3 Company, LLC — 13,465 — 13,465

- Atlanta, LLC (29,938) 12,873 19,104 2,039

Schylling, Inc.

— 8,665 — 8,665

ImageWorks Display and Marketing Group, Inc.

— 4,904 — 4,904

Dema/Mai Holding, Inc.

— 4,172 — 4,172

Horizon Facilities Services, Inc.

— 2,078 — 2,078

Mason West, LLC — 1,834 — 1,834

Nielsen-Kellerman Acquisition Corp.

— 1,371 — 1,371

Old World Christmas, Inc.

— (1,296) — (1,296)

Smart Chemical Solutions, LLC — (1,694) — (1,694)

Detroit Defense, Inc.

Pyrotek Special Effects, Inc.

— (1,797) — (1,797)

Ginsey Home Solutions, Inc.

— (2,260) — (2,260)

Diligent Delivery Systems — (2,332) — (2,332)

Phoenix Door Systems, Inc.

— (2,626) — (2,626)

Educators Resource, Inc.

UPB Acquisition, Inc.

— (2,706) — (2,706)

Ginsey Home Solutions, Inc.

Brunswick Bowling Products, Inc.

— (3,014) — (3,014)

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The Maids International, LLC — (5,016) — (5,016)

PSI Molded Plastics, Inc.

Educators Resource, Inc.

— (5,734) — (5,734)

Brunswick Bowling Products, Inc.

PSI Molded Plastics, Inc.

— (8,238) — (8,238)

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Total $ (29,938) $ 34,301 $ 19,104 $ 23,467

Three Months Ended June 30, 2024

Portfolio Company Realized Gain (Loss) on Investments Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss)

Six Months Ended September 30, 2024

Portfolio Company Realized Gain (Loss) Unrealized Appreciation (Depreciation) Reversal of Unrealized (Appreciation) Depreciation Net Gain (Loss)

The E3 Company, LLC $ — $ 5,208 $ — $ 5,208

Nocturne Luxury Villas, Inc.

— 4,988 — 4,988

Old World Christmas, Inc.

— 4,734 — 4,734

Schylling, Inc.

— 3,031 — 3,031

UPB Acquisition, Inc — 2,987 — 2,987

Galaxy Technologies Holdings, Inc.

— 2,757 — 2,757

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— 2,385 — 2,385

The E3 Company, LLC — 2,646 — 2,646

Old World Christmas, Inc.

— 1,531 — 1,531

- Atlanta, LLC — 1,349 — 1,349

Dema/Mai Holdings, Inc.

— 1,318 — 1,318

The Maids International, LLC — 1,251 — 1,251

Diligent Delivery Systems — (1,092) — (1,092)

Home Concepts Acquisition, Inc.

— (1,238) — (1,238)

PSI Molded Plastics, Inc.

— (1,767) — (1,767)

Edge Adhesives Holdings, Inc.

Brunswick Bowling Products, Inc.

— (2,165) — (2,165)

Phoenix Doors Systems, Inc.

Edge Adhesives Holdings, Inc.

— (2,335) — (2,335)

Nocturne Luxury Villas, Inc.

B+T Group Acquisition, Inc.

— (2,742) — (2,742)

ImageWorks Display and Marketing Group, Inc.

Nth Degree Investment Group, LLC 42,284 (7,195) (38,028) (2,939)

Horizon Facilities Services, Inc.

(8,614) (8,614)

Horizon Facilities Service, Inc.

Phoenix Door Systems, Inc.

(18,163) (18,163)

Nth Degree Investment Group, LLC — (7,195) — (7,195)

Mason West, LLC — (9,201) — (9,201)

Other, net (<$1.0 million, net) 21 273 4 298

Total $ 42,305 $ (15,030) $ (38,024) $ (10,749)

Net Realized Gain (Loss) on Investments

During the three months ended June 30, 2025, we did not record any net realized gains or losses on investments.

During the three months ended June 30, 2024, we recorded net realized gains on investments of $2 thousand, due to the realized gain from the exit of Funko Acquisition Holdings, LLC.

Net Unrealized Appreciation (Depreciation) of Investments

Net unrealized depreciation of investments of $1.0 million for the three months ended June 30, 2025 was primarily due to a decrease in the performance of certain of our portfolio companies.

These decreases were partially offset by increased performance of certain of our other portfolio companies and an increase in transaction multiples used to estimate the fair value of certain of our portfolio companies.

Net unrealized depreciation of investments of $18.9 million for the three months ended June 30, 2024 was primarily due to a decrease in transaction multiples used to estimate the fair value of certain of our portfolio companies and a decrease in performance of certain of our portfolio companies.

These decreases were partially offset by increased performance of certain of our other portfolio companies.

Across our entire investment portfolio, we recorded net unrealized depreciation of $2.6 million on our equity positions and net unrealized appreciation of $1.6 million on our debt investments for the three months ended June 30, 2025 .

As of June 30, 2025 , the fair value of our investment portfolio was more than our cost basis by $39.2 million, compared to March 31, 2025, when the fair value of our investment portfolio was more than our cost basis by $40.3 million.

This resulted in net unrealized depreciation of $1.0 million for the three months ended June 30, 2025 .

Our entire portfolio was fair valued at 103.9% of cost as of June 30, 2025 .

Net Realized Gain (Loss)

During the six months ended September 30, 2025, we recorded net realized losses on investments of $29.9 million, due to the realized loss from the restructuring of J.R.

During the six months ended September 30, 2024, we recorded net realized gains on investments of $42.3 million, due to the realized gain from the exit of Nth Degree.

Net Unrealized Appreciation (Depreciation) on Investments

Net unrealized appreciation of investments of $53.4 million for the six months ended September 30, 2025 was primarily due to the increased performance of certain of our portfolio companies and the reversal of previously recorded unrealized depreciation related to our investment in J.R.

Hobbs upon its restructure.

Net unrealized depreciation of investments of $53.1 million for the six months ended September 30, 2024 was primarily due to the reversal of unrealized appreciation of Nth Degree upon our exit and decreased performance of certain of our portfolio companies.

Across our entire investment portfolio, we recorded net unrealized appreciation of $36.2 million on our equity positions and appreciation of $17.2 million on our debt positions , for the six months ended September 30, 2025 .

As of September 30, 2025 , the fair value of our investment portfolio was more than the cost basis by $93.7 million , as compared to March 31, 2025, when the fair value of our investment portfolio was more than the cost basis by $40.3 million , representing net unrealized appreciation of $53.4 million for the six months ended September 30, 2025 .

Our entire portfolio had a fair value of 109.0% of cost as of September 30, 2025 .

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Net cash used in operating activities for the three months ended June 30, 2025 was $50.2 million compared to net cash provided by operating activities of $12.3 million for the three months ended June 30, 2024.

This change was primarily due to an increase in purchases of investments.

Purchases of investments totaled $62.8 million during the three months ended June 30, 2025, compared to $0.6 million during the three months ended June 30, 2024.

Aggregate net proceeds from the principal repayments of investments totaled $4.4 million during the three months ended June 30, 2025, compared to $3.0 million during the three months ended June 30, 2024.

As of June 30, 2025, we had equity investments in and/or loans to 27 portfolio companies with an aggregate cost basis of $1.0 billion.

As of June 30, 2024, we had equity investments in and/or loans to 23 portfolio companies with an aggregate cost basis of $851.9 million.

The following table summarizes our total portfolio investment activity during the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Net cash used in operating activities for the six months ended September 30, 2025 was $110.8 million compared to net cash provided by operating activities of $75.5 million for the six months ended September 30, 2024.

This change was primarily due to an increase in purchases of investments and decrease in net proceeds from the sale and recapitalization of investments and principal repayments of investments.

Purchases of investments totaled $133.9 million during the six months ended September 30, 2025, compared to $20.1 million during the six months ended September 30, 2024.

Aggregate net proceeds from the sale and recapitalization of investments and principal repayments of investments totaled $5.8 million during the six months ended September 30, 2025, compared to $76.5 million during the six months ended September 30, 2024.

As of September 30, 2025, we had equity investments in and/or loans to 28 portfolio companies with an aggregate cost basis of $1.0 billion.

As of September 30, 2024, we had equity investments in and/or loans to 22 portfolio companies with an aggregate cost basis of $840.1 million.

The following table summarizes our total portfolio investment activity during the six months ended September 30, 2025 and 2024:

Six Months Ended September 30,

Beginning investment portfolio, at fair value $ 979,320 $ 920,504

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Net proceeds from sale and recapitalization of investments — (48,546)

Net realized gain on investments — 2

Net unrealized depreciation of investments (1,047) (18,946)

Reversal of net unrealized depreciation of investments — 4

Net realized (loss) gain on investments (29,938) 42,305

Net unrealized appreciation (depreciation) of investments 34,301 (15,030)

Reversal of net unrealized depreciation (appreciation) of investments 19,104 (38,024)

Ending investment portfolio, at fair value $ 1,130,859 $ 853,307

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, 2025:

For the remaining nine months ending March 31, 2026

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, 2025:

For the remaining six months ending March 31, 2026

For the fiscal years ending March 31:

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Investments in equity securities 299,702

Total cost basis of investments held as of June 30, 2025:

Total cost basis of investments held as of September 30, 2025:

Financing Activities

Net cash provided by financing activities for the three months ended June 30, 2025 was $40.4 million, which consisted primarily of $62.0 million of net borrowings under our Credit Facility and $7.3 million of proceeds from issuance of common stock, net of expenses and shelf offering registration costs, partially offset by $28.8 million in distributions to common stockholders and $0.1 million of deferred financing and offering costs.

Net cash used in financing activities for the three months ended June 30, 2024 was $12.4 million, which consisted primarily of $8.8 million in distributions to common stockholders, $3.3 million of net repayments under our Credit Facility and $0.2 million of deferred financing and offering costs.

Net cash provided by financing activities for the six months ended September 30, 2025 was $97.9 million, which consisted primarily of $97.7 million of net borrowings under our Credit Facility and $38.4 million of proceeds from issuance of common stock, net of expenses and shelf offering registration costs, partially offset by $38.1 million in distributions to common stockholders and $0.1 million of deferred financing and offering costs.

Net cash used in financing activities for the six months ended September 30, 2024 was $76.0 million, which consisted primarily of $58.1 million of net repayments under our Credit Facility, $17.6 million in distributions to common stockholders and $0.3 million of deferred financing and offering costs.

Distributions and Dividends to Stockholders

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Additionally, our Credit Facility generally restricts the amount of distributions to stockholders that we can pay out to be no greater than the sum of certain amounts, including our net investment income, plus net capital gains, plus amounts elected by the Company to be considered as having been paid during the prior fiscal year in accordance with Section 855(a) of the Code.

In accordance with these requirements, our Board of Directors declared, and we paid, monthly cash distributions of $0.08 per common share for each of the three months from April through June 2025, and a supplemental distribution of $0.54 per common share paid in June 2025.

See also “ Recent Developments - Distributions and Dividends ” for a discussion of cash distributions to common stockholders declared our Board of Directors in July 2025.

In accordance with these requirements, our Board of Directors declared, and we paid, monthly cash distributions of $0.08 per common share for each of the six months from April through September 2025, and a supplemental distribution of $0.54 per common share paid in June 2025.

See also “ Recent Developments - Distributions and Dividends ” for a discussion of cash distributions to common stockholders declared our Board of Directors in October 2025.

For the fiscal year ended March 31, 2025, Investment Company Taxable Income exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $36.7 million of the first distributions paid subsequent to fiscal year-end as having been paid in the prior year.

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For the year ended March 31, 2025, we recorded $1.2 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and Overdistributed net investment income.

For the three months ended June 30, 2025, we recorded $0.3 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Accumulated net realized (loss) gain in excess of distributions and Capital in excess of par value and increased Overdistributed net investment income.

For the six months ended September 30, 2025, we recorded $2.2 thousand of net adjustments for estimated permanent book-tax differences to reflect tax character, which increased Accumulated net realized (loss) gain in excess of distributions and increased Overdistributed net investment income and Capital in excess of par value.

Dividend Reinvestment Plan

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as a Sales Agent for the 2024 Common Stock ATM Program.

As of June 30, 2025, we had remaining capacity to sell up to an additional $65.6 million of common stock under the 2024 Common Stock ATM Program.

As of September 30, 2025, we had remaining capacity to sell up to an additional $34.1 million of common stock under the 2024 Common Stock ATM Program.

In August 2022, we entered into equity distribution agreements with Oppenheimer & Co.

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as a 2022 Sales Agent for the 2022 Common Stock ATM Program.

We did not sell any shares under the 2022 Common Stock ATM Program, which terminated in connection with our entry into the 2024 Common Stock ATM Program on May 14, 2024, during the three months ended June 30, 2024.

During the three months ended June 30, 2025, we sold 515,295 shares of our common stock under the 2024 Common Stock ATM Program, with a weighted-average gross price of $14.23 per share and a weighted-average net price of $14.04 per share after deducting commissions and offering costs borne by us, raising approximately $7.3 million and $7.2 million of gross and net proceeds, respectively.

All of these sales were above our then current NAV per share.

During the three months ended June 30, 2024, we did not sell any shares under the 2024 Common Stock ATM Program.

We did not sell any shares under the 2022 Common Stock ATM Program, which terminated in connection with our entry into the 2024 Common Stock ATM Program on May 14, 2024, during the six months ended September 30, 2024.

During the three months ended September 30, 2025, we sold 2,238,361 shares of our common stock under the 2024 Common Stock ATM Program, with a weighted-average gross price of $14.10 per share and a weighted-average net price of $13.90 per share after deducting commissions and offering costs borne by us, raising approximately $31.6 million and $31.1 million of gross and net proceeds, respectively.

These sales were above our then current NAV per share.

During the six months ended September 30, 2025, we sold 2,753,656 shares of our common stock under the 2024 Common Stock ATM Program, with a weighted-average gross price of $14.12 per share and a weighted-average net price of $13.93 per share after deducting commissions and offering costs borne by us, raising approximately $38.9 million and $38.4 million of gross and net proceeds, respectively.

These sales were above our then current NAV per share.

During the three and six months ended September 30, 2024, we did not sell any shares under the 2024 Common Stock ATM Program.

We anticipate issuing equity securities to obtain additional capital in the future.

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Generally, the 1940 Act provides that we may not issue and sell our common stock at a price below our NAV per common share, other than to our then-existing common stockholders pursuant to a rights offering, without first obtaining approval from our stockholders and our independent directors and meeting other stated requirements.

As of June 30, 2025, the closing market price of our common stock was $ 14.27 per share, representing a 9.9 % premium to our NAV per share of $ 12.99 as of June 30, 2025.

As of September 30, 2025, the closing market price of our common stock was $ 13.82 per share, representing a 2.1 % premium to our NAV per share of $ 13.53 as of September 30, 2025.

Revolving Line of Credit

As of June 30, 2025, our Credit Facility had a total commitment amount of $ 270.0 million with an "accordion" feature that permits us to increase the size of the facility to $ 300.0 million.

As of September 30, 2025, our Credit Facility had a total commitment amount of $ 270.0 million with an "accordion" feature that permits us to increase the size of the facility to $ 300.0 million.

The Credit Facility has a revolving period end date of October 30, 2026 and a final maturity date of October 30, 2028 (at which time all principal and interest will be due and payable if the Credit Facility is not extended by the revolving period end date) .

See " Overview - Revolving Line of Credit ".

As of June 30, 2025, advances under the Credit Facility generally bore interest at 30-day Term SOFR, subject to a floor of 0.35 %, with a SOFR credit spread adjustment of 10 basis points, plus a margin of 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.

As of September 30, 2025, advances under the Credit Facility generally bore interest at 30-day Term SOFR, subject to a floor of 0.35 %, with a SOFR credit spread adjustment of 10 basis points, plus a margin of 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.

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.

At June 30, 2025, we had $ 62.0 million of borrowings outstanding on the Credit Facility and as of the date of this report, we had $119.2 million outstanding under our Credit Facility.

At September 30, 2025, we had $ 97.7 million of borrowings outstanding on the Credit Facility and as of the date of this report, we had $95.9 million outstanding under our Credit Facility.

Interest is payable monthly during the term of our Credit Facility.

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Among other things, our Credit Facility contains covenants that require Business Investment to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions) and restrict certain material changes to our credit and collection policies without the lenders’ consent.

Credit Facility also generally seeks to restrict distributions to stockholders to the sum of (i) our net investment income, (ii) net capital gains, and (iii) amounts deemed by the Company to be considered as having been paid during the prior fiscal year in accordance with Section 855(a) of the Code.

Our Credit Facility also generally seeks to restrict distributions to stockholders to the sum of (i) our net investment income, (ii) net capital gains, and (iii) amounts deemed by the Company to be considered as having been paid during the prior fiscal year in accordance with Section 855(a) of the Code.

Loans eligible to be pledged as collateral are subject to certain limitations, including, among other things, restrictions on geographic concentrations, industry concentrations, loan size, payment frequency and status, average life, portfolio company leverage, and lien property.

Our Credit Facility also requires Business Investment to comply with other financial and operational covenants, which obligate Business Investment to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of obligors required in the borrowing base.

Additionally, our Credit Facility contains a performance guaranty that requires the Company 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 $ 416.6 million as of June 30, 2025, (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, 2025, and as defined in the performance guaranty of our Credit Facility, we had a net worth of $ 940.4 million, asset coverage on our senior securities representing indebtedness of 189.8 %, 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, 2025, we had availability, after adjustments for various constraints based on collateral quality, of $ 208.0 million under our Credit Facility and were in compliance with all covenants under our Credit Facility.

Additionally, our Credit Facility contains a performance guaranty that requires the Company 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 $ 432.4 million as of September 30, 2025, (ii) asset coverage with respect to senior securities representing indebtedness of at least 150 % (or such percentage as may be set forth in Section 18 of the 1940 Act, as modified by Section 61 of the 1940 Act), and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code.

As of September 30, 2025, and as defined in the performance guaranty of our Credit Facility, we had a net worth of $ 991.8 million, asset coverage on our senior securities representing indebtedness of 193.2 %, 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, 2025, we had availability, after adjustments for various constraints based on collateral quality, of $ 172.3 million under our Credit Facility and were in compliance with all covenants under our Credit Facility.

Notes Payable

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Due to the contingent nature of success fees, there are no guarantees that we will be able to collect any or all of these success fees or know the timing of any such collections.

As a result, as of June 30, 2025 and March 31, 2025, we had unrecognized, contractual off-balance sheet success fee receivables of $55.6 million and $52.5 million (or approximately $1.49 and $1.43 per common share), respectively, on our debt investments.

As a result, as of September 30, 2025 and March 31, 2025, we had unrecognized, contractual off-balance sheet success fee receivables of $59.3 million and $52.5 million (or approximately $1.50 and $1.43 per common share), respectively, on our debt investments.

Consistent with GAAP, we have not recognized success fee receivables and related income in our accompanying Consolidated Financial Statements until earned.

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Since these line 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 June 30, 2025 to be insignificant.

The following table shows our contractual obligations as of June 30, 2025, at cost:

We estimate the fair value of the combined unused line of credit commitments as of September 30, 2025 to be insignificant.

The following table shows our contractual obligations as of September 30, 2025, at cost:

Payments Due by Period

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The amount of interest payments calculated for purposes of this table was based upon rates and outstanding balances as of June 30, 2025.

The amount of interest payments calculated for purposes of this table was based upon rates and outstanding balances as of September 30, 2025.

Critical Accounting Estimates

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The Adviser’s risk rating system covers both qualitative and quantitative aspects of the business and the securities we hold.

The following table reflects risk ratings for all loans in our portfolio as of June 30, 2025 and March 31, 2025:

Rating June 30, 2025 March 31, 2025

The following table reflects risk ratings for all loans in our portfolio as of September 30, 2025 and March 31, 2025:

Rating September 30, 2025 March 31, 2025

Weighted-average

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Under the RIC Modernization Act, we are permitted to carryforward any capital losses that we may incur for an unlimited period, and such capital loss carryforwards will retain their character as either short-term or long-term capital losses.

Our capital loss carryforward balance was $0 as of both June 30, 2025 and March 31, 2025.

Recent Accounting Pronouncements

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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 2. Management’s Discussion and Analysis