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Item 7. Management’s Discussion and Analysis

2025-11-17 compared with 2024-11-13 · 185 added, 165 removed, 330 unchanged (51% of the section changed)

24 unchanged sentences

In July 2012, the SEC granted us the Co-Investment Order that expanded our ability to co-invest, under certain circumstances, with certain of our affiliates, including Gladstone Investment, a BDC also managed by the Adviser, Gladstone Alternative, an interval fund also managed by the Adviser, 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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From our initial public offering in August 2001 through September 30, 2025, we have made 705 different loans to, or investments in, 292 companies for a total of approximately $3.2 billion, before giving effect to principal repayments on investments and divestitures.

During the year ended September 30, 2024, we invested $53.3 million in four new portfolio companies and extended $124.4 million in investments to existing portfolio companies.

During the year ended September 30, 2025, we invested $310.7 million in 15 new portfolio companies and extended $86.1 million in investments to existing portfolio companies.

In addition, we received a total of $352.3 million in combined net proceeds and principal repayments from portfolio company exits and principal repayments by existing portfolio companies during the year ended September 30, 2025.

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Proprietary Investments

• In November 2023, we invested $ 11.0 million in Quality Environmental Midco, Inc.

(“Quality”) through secured first lien debt and preferred equity.

We also extended Quality a $ 2.0 million secured first lien line of credit commitment, which was unfunded at close.

In February 2024, we invested an additional $ 5.0 million in Quality

through new secured first lien debt and preferred equity and increased the secured first lien line of credit commitment to $ 3.0 million.

• In November 2023, we extended Cafe Zupas, an existing portfolio company, a new $ 10.5 million secured first lien delayed draw term loan commitment, which was unfunded at close.

We funded $ 1.4 million on the delayed draw term loan in December 2023.

In addition, our existing term loan was paid down by $ 7.3 million.

• In November 2023, our remaining investment in PIC 360, LLC was sold resulting in a net realized gain of $ 0.3 million.

• In December 2023, we invested an additional $ 14.3 million in ALS Education, LLC, an existing portfolio company, through secured first lien debt.

• In December 2023, we invested an additional $ 12.0 million in Leadpoint Business Services, LLC, an existing portfolio company, through secured first lien debt.

• In December 2023, we invested an additional $ 7.0 million in Salt & Straw, LLC, an existing portfolio company, through preferred equity.

We also increased our delayed draw term loan commitment to Salt & Straw, LLC by $ 2.9 million.

• In February and March 2024, we invested a total of an additional $ 13.5 million in SpaceCo Holdings, LLC (“SpaceCo”), an existing portfolio company, through secured first lien debt.

• In February 2024, we invested $ 15.0 million in Perimeter Solutions Group through secured second lien debt.

• In March 2024, we received net cash proceeds of $ 8.4 million from the sale of Trowbridge Chicago, LLC (“Trowbridge”), an existing portfolio company.

In conjunction with the sale, we received $ 0.2 million in prepayment fees and recorded a net realized gain of $ 0.2 million on our equity.

In September 2024, our remaining debt investment in Trowbridge paid off at par for net cash proceeds of $ 0.3 million.

• In April 2024, we invested $ 7.3 million in Total Access Elevator, LLC (“Total Access”) through secured first lien debt and common equity.

We also extended Total Access a $ 3.0 million line of credit commitment and a $ 2.5 million delayed draw term loan commitment, both of which were unfunded at close.

• In April 2024, our debt investment in Giving Home Healthcare, LLC (“Giving Home”) paid off at par for net cash proceeds of $ 29.7 million including a $ 0.9 million prepayment penalty.

We also exercised our warrant position for common equity in Giving Home, which we continue to hold, and received a $ 2.5 million distribution associated with this investment.

• In May 2024, our debt investment in Gray Matter Systems, LLC paid off at par for net cash proceeds of $ 14.0 million including a $ 0.2 million prepayment penalty.

• In May 2024, our debt investment in Pansophic Learning, Ltd.

(“Pansophic”) paid off at par for net cash proceeds of $ 33.0 million.

• In May 2024, we invested $ 20.0 million in RPM Freight Systems, LLC (“RPM”) through secured second lien debt.

We also extended RPM a $ 5.0 million delayed draw term loan commitment, which was unfunded at close.

• In May 2024, our remaining shares in Funko were sold representing an exit of our investment and a return of our equity cost basis of $ 21 thousand and a realized gain of $ 2 thousand.

• In June 2024, we invested an additional $ 7.4 million in Workforce QA, LLC, an existing portfolio company, through secured first lien debt.

• In July 2024, we invested an additional $ 6.5 million in Turn Key Health Clinics, LLC (“Turn Key”), an existing portfolio company, through secured first lien debt.

We also extended Turn Key an additional $ 2.0 million line of credit commitment which was funded in July 2024.

• In September 2024, we invested an additional $ 13.5 million in Arc Drilling Holdings LLC, an existing portfolio company, through secured first lien debt and common equity.

We also extended Arc Drilling an additional $ 4.0 million line of credit commitment and funded $0.9 million under the line of credit at close.

• In October 2024, our $15.0 million debt investment in Perimeter Solutions Group paid off at par.

We also received a $0.5 million prepayment penalty in conjunction with the payoff.

• In October 2024, our investment in Antenna Research Associates, Inc.

was sold, which resulted in a net realized gain on our common equity of approximately $59.3 million and the repayment of our debt investment of $31.3 million at par.

• In November 2024, we invested an additional $28.9 million in Giving Home Healthcare, LLC (“Giving Home”), an existing portfolio company, through secured first lien debt.

In June 2025, we invested an additional $7.0 million in Giving Home through secured first lien debt.

• In November 2024, we invested $10.5 million in Wings ‘N More Restaurants, LLC (“Wings”) through secured first lien debt.

We also extended Wings a $1.5 million secured first lien line of credit commitment and a $5.0 million secured first lien delayed draw term loan commitment, both of which were unfunded at close.

• In November 2024, our $22.3 million debt investment in ENET Holdings, LLC paid off at par.

• In December 2024, we invested $42.8 million in Vet’s Choice Radiology, LLC through secured first lien debt.

• In December 2024, we invested $28.9 million in Pan-Am Dental, LLC through secured second lien debt and preferred equity.

• In December 2024, we invested $15.0 million in Freedom Dental Management, Inc.

through secured first lien debt.

• In December 2024, we invested $5.0 million in Tube Bending Technology, LLC through secured second lien debt.

• In December 2024, we invested $5.0 million in Gladstone Alternative, one of our affiliated funds, through common equity.

• In December 2024, our investment in Salt and Straw, LLC, paid off which resulted in a realized gain of approximately $2.5 million on our preferred equity and the repayment of our debt investment of $10.9 million at par.

We also received a $0.1 million prepayment penalty in conjunction with the payoff.

We continue to hold warrants for common equity in Salt and Straw, LLC.

• In December 2024, we sold our debt investments in DKI Ventures, LLC, which resulted in a net realized loss on our debt of approximately $4.1 million.

• In January 2025, our $20.6 million debt investment in Fix-It Group, LLC paid off at par.

We also received a $0.1 million prepayment penalty.

• In January 2025, our $5.4 million debt investment in Sokol and Company, LLC (“Sokol”) paid off at par.

Additionally, in February 2025, a portion of our common equity investment in Sokol was sold, representing a return of our equity cost basis of $1.1 million and a realized gain of $4.7 million.

• In February 2025, we invested $18.9 million in Dutch Gold Honey, Inc.

through secured second lien debt and common equity.

• In February 2025, we invested $19.4 million in Viron International, LLC through secured first lien debt and common equity.

• In March 2025, we received a $6.0 million partial repayment on our debt investment in Viva Railings, LLC.

• In March 2025, we exited our investment in MCG Energy Solutions, LLC, which resulted in a realized gain on our preferred equity investment of approximately $3.0 million and the repayment of our debt investment of $20.4 million at par.

• In April 2025, our $42.2 million debt investment in SpaceCo Holdings, LLC paid off at par.

• In April 2025, our investment in Eegees, LLC was restructured as part of the bankruptcy process resulting in a new $12.8 million first lien debt investment and a new $8.5 million common equity investment in Eegee Acquisition Corporation.

In conjunction with the restructuring, we recorded a net realized loss of approximately $4.4 million.

• In May 2025, we invested $46.0 million in Altior Healthcare, LLC through secured first lien debt.

• In June 2025, our $36.1 million debt investment in Cafe Zupas paid off at par.

We also received a $0.4 million prepayment penalty in conjunction with the payoff.

• In June 2025, we invested $12.6 million in RF Technologies, LLC through secured first lien debt.

We also extended RF Technologies, LLC a $3.5 million secured first lien line of credit commitment.

• In July 2025, we invested $25.0 million in MASSiv Brands, LLC through secured first lien debt.

• In July 2025, we invested $15.0 million in Alsay Incorporated through secured second lien debt and preferred equity.

• In July 2025, we invested $23.7 million in Snif-Snax, LLC through secured first lien debt and preferred equity.

• In July 2025, we invested $13.0 million in Zero Case Holding Inc.

through secured first lien debt and common equity.

We also extended this business a $4.0 million secured first lien line of credit commitment, which was unfunded at close.

• In August 2025, we invested an additional $16.6 million in OCI, LLC, an existing portfolio company, through secured first lien debt and common equity.

• In August 2025, we invested $30.0 million in Foodservices Brand Group (“FBG”) through secured first lien debt.

We also extended FBG a $10.0 million secured first lien line of credit commitment, which was unfunded at close.

• In September 2025, we recognized a realized loss of $6.4 million on our equity investment in FES Resources Holdings, LLC.

• In September 2025, our $15.4 million debt investment in Ohio Armor Holdings, LLC paid off at par.

We continue to hold a common equity investment in Ohio Armor Holdings, LLC.

Syndicated Investments

• In January 2024, our investment in CHA Holdings, Inc.

paid off at par for net proceeds of $ 3.0 million.

• In July 2024, our investment in Tailwind Smith Cooper Immediate Corporation paid off at par for net proceeds of $ 5.0 million.

• In July 2025, our $3.7 million debt investment in 8th Avenue Food & Provisions, Inc.

paid off at par.

Refer to Note 14 — Subsequent Events in the accompanying Consolidated Financial Statements included elsewhere in this Annual Report for portfolio activity occurring subsequent to September 30, 2025.

Capital Raising

We have been able to meet our capital needs through extensions of and increases to our line of credit under the Credit Facility and by accessing the capital markets in the form of public equity offerings of common stock and public and private debt offerings.

We have successfully extended the Credit Facility’s revolving period multiple times, most recently to October 2027, and currently have a total commitment amount of $ 320.0 million.

We sold 476,138 and 8,774,101 common shares under our at-the-market program during the years ended September 30, 2024 and 2023, respectively.

In August 2023, we completed an offering of $57.0 million aggregate principal amount of the 2028 Notes.

In November 2021, we completed a private placement of $50.0 million aggregate principal amount of the 2027 Notes.

During the year ended September 30, 2025, we sold 362,482 common shares under our at-the-market program for gross proceeds of $ 9.6 million.

Additionally, we sold 518,321 shares of Series A Preferred Stock for gross proceeds of $ 13.0 million during the year ended September 30, 2025.

In September 2025, we completed an offering of $149.5 million aggregate principal amount of 2030 Convertible Notes.

Refer to “Liquidity and Capital Resources — Revolving Line of Credit,” “Liquidity and Capital Resources — Equity — Common Stock,” and “Liquidity and Capital Resources — Notes Payable” for further discussion.

Although we were able to access the capital markets historically and in recent years, market conditions may affect the trading price of our capital stock and thus may inhibit our ability to finance new investments through the issuance of equity in the future.

When our common stock trades below NAV per common share, our ability to issue equity is constrained by provisions of the 1940 Act, which generally prohibits the issuance and sale of our common stock below NAV per common share without first obtaining approval from our stockholders and our independent directors, other than through sales to our then-existing stockholders pursuant to a rights offering.

Although we were able to access the capital markets historically and in recent years, market conditions may affect the trading price of our common stock and thus may inhibit our ability to finance new investments through the issuance of common stock in the future.

When our common stock trades below NAV per common share, our ability to issue common stock is constrained by provisions of the 1940 Act, which generally prohibits the issuance and sale of our common stock below NAV per common share without first obtaining approval from our stockholders and our independent directors, other than through sales to our then-existing stockholders pursuant to a rights offering.

On September 30, 2025, the closing market price of our common stock was $ 21.87 per share, a 2.5 % premium to our September 30, 2025 NAV per share of $ 21.34 .

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Recent Developments

Debt Redemption

On October 15, 2025, we voluntarily redeemed the 2028 Notes with an aggregate principal amount outstanding of $57.0 million.

On October 31, 2025, we voluntarily redeemed the 2026 Notes with an aggregate principal outstanding of $150.0 million.

Distributions

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Total for the Quarter $ 0.390624

In November 2024, our Board of Directors declared the following supplemental distribution to common stockholders:

Record Date Payment Date Distribution per Common Share

December 4, 2024 December 18, 2024 $ 0.4000

RESULTS OF OPERATIONS

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Credit to fees from Adviser – other

(3,171) (3,389) 218 (6.4)

(7,974) (3,171) (4,803) NM

Total expenses, net of credits

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Net realized gain (loss) on other

3,951 319 3,632 NM

274 3,951 (3,677) (93.1)

Net unrealized appreciation (depreciation) of investments

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Net gain (loss) from investments and other

48,662 1,648 47,014 NM

PREFERRED STOCK DIVIDENDS 215 — 215 NM

12,903 48,662 (35,759) (73.5)

PREFERRED STOCK DIVIDENDS 919 215 704 327.4 %

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

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$ 2.02 $ 2.11 $ (0.09) (4.3) %

Net increase (decrease) in net assets resulting from operations (A)

Net increase (decrease) in net assets resulting from operations - basic (A)

$ 2.56 $ 4.34 $ (1.78) (41.0) %

Net increase (decrease) in net assets resulting from operations - diluted (A)

$ 2.55 $ 4.34 $ (1.79) (41.2) %

NM N ot Meaningful

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Investment Income

Interest income increased by 12.4% for the year ended September 30, 2024, as compared to the prior year.

Interest income decreased by 6.4% for the year ended September 30, 2025, as compared to the prior year.

Generally, the level of interest income from investments is directly related to the 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 for the year ended September 30, 2025 was $681.1 million, compared to $665.5 million for the year ended September 30, 2024, an increase of $15.6 million, or 2.3%.

The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which increased to 13.9% for the year ended September 30, 2024, compared to 13.3% for the year ended September 30, 2023, inclusive of any allowances on interest receivables made during those periods.

The increase in the weighted average yield was driven mainly by increases in interest rates.

As of September 30, 2024, our loans to B+T Group, Edge Adhesives, and WB Xcel were on non-accrual status with a cost basis of $ 28.3 million, or 4.1 % of the cost basis of all debt investments in our portfolio, and a fair value of $ 12.8 million, or 1.9 % of the fair value of all debt investments in our portfolio.

As of September 30, 2023, our loan to Edge Adhesives was on non-accrual status with a cost basis of $ 6.1 million, or 0.9 % of the cost basis of all debt investments in our portfolio, and a fair value of $ 2.9 million, or 0.5 % of the fair value of all debt investments in our portfolio.

Other income decreased by 2.3% during the year ended September 30, 2024, as compared to the prior year period primarily due to a $0.6 million decrease in success fees received and a $0.1 million decrease in dividend income year over year, partially offset by a $0.7 million increase in prepayment fees received year over year.

The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which decreased to 12.7% for the year ended September 30, 2025, compared to 13.9% for the year ended September 30, 2024, inclusive of any

allowances on interest receivables made during those periods.

The decrease in the weighted average yield was driven mainly by decreases in interest rates.

As of September 30, 2025, our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC were on non-accrual status with a cost basis of $ 28.8 million, or 3.6 % of the cost basis of all debt investments in our portfolio, and a fair value of $ 13.0 million, or 1.7 % of the fair value of all debt investments in our portfolio.

As of September 30, 2024, our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC were on non-accrual status with a cost basis of $ 28.3 million, or 4.1 % of the cost basis of all debt investments in our portfolio, and a fair value of $ 12.8 million, or 1.9 % of the fair value of all debt investments in our portfolio.

Other income decreased by 44.7% during the year ended September 30, 2025, as compared to the prior year period primarily due to a $0.9 million decrease in dividend income and a $0.4 million decrease in success fees received year over year.

As of September 30, 2025, no single investment represented greater than 10% of the total investment portfolio at fair value.

As of September 30, 2024, our investment in Antenna Research Associates, Inc.

represented 11.4% of the total investment portfolio at fair value.

As of September 30, 2023, no single investment represented greater than 10% of the total investment portfolio at fair value.

Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, increased $5.1 million, or 11.3%, for the year ended September 30, 2024 as compared to the prior year.

This increase was primarily due to a $2.0 million increase in the net base management fee, a $1.0 million increase in the net incentive fee, and a $0.9 million increase in interest expense.

Total interest expense on borrowings and notes payable increased by $0.9 million, or 4.2%, during the year ended September 30, 2024 as compared to the prior year.

This increase was driven primarily by a shift in the composition of our debt outstanding.

Interest expense on notes payable increased by $3.9 million period over period with the issuance of our 2028 Notes in August 2023.

Interest expense on our Credit Facility decreased by $3.0 million period over period, driven primarily by a decrease in the weighted average balance outstanding on our Credit Facility, partially offset by an increase in the effective interest rate on our Credit Facility and an increase in unused commitment fees, period over period.

Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, decreased $6.6 million, or 13.1%, for the year ended September 30, 2025 as compared to the prior year.

This decrease was primarily due to a $3.1 million decrease in the net incentive fee, a $2.4 million decrease in the net base management fee, and a $1.7 million decrease in interest expense.

Total interest expense decreased by $1.7 million, or 8.0%, during the year ended September 30, 2025 as compared to the prior year due primarily to a decrease in the weighted average balance outstanding on our Credit Facility, partially offset by an increase in the effective interest rate and the issuance of the 2030 Convertible Notes in September 2025.

Interest expense on our Credit Facility decreased by $2.2 million period over period due primarily to a decrease in the weighted average balance outstanding which was $40.2 million during the year ended September 30, 2025, as compared to $70.6 million in the prior year, a decrease of 43.1%.

The effective interest rate on our Credit Facility, including unused commitment fees incurred, but excluding the impact of deferred financing costs, was 13.8% during the year ended September 30, 2025, compared to 11.0% during the prior year.

The increase in the effective interest rate was driven primarily by an increase in unused commitment fees.

The weighted average balance outstanding on our Credit Facility was $70.6 million during the year ended September 30, 2024, as compared to $133.7 million in the prior year, a decrease of 47.2%.

The net base management fee earned by the Adviser increased by $2.0 million, or 23.6%, during the year ended September 30, 2024, as compared to the prior year, resulting from an increase in average total assets subject to the base management fee and a decrease in credits to the base management fee from the Adviser for new deal origination fees, year over year.

The income-based incentive fee increased by $1.2 million, or 11.3%, for the year ended September 30, 2024, as compared to the prior year, primarily due to an increase in pre-incentive fee net investment income, coupled with an increase in net assets, which drives the hurdle rate.

The increase in the effective interest rate was driven primarily by a $0.9 million increase in unused commitment fees on the undrawn portion of the Credit Facility, partially offset by a decrease in interest rates on the drawn portion of the Credit Facility during the year ended September 30, 2025.

Interest expense on our notes payable increased by $0.5 million period over period due to the issuance of the 2030 Convertible Notes in September 2025.

The net base management fee earned by the Adviser decreased by $2.4 million, or 22.2%, during the year ended September 30, 2025, as compared to the prior year, resulting from an increase in credits to the base management fee from the Adviser for new deal origination fees year over year, partially offset by.an increase in average total assets subject to the base management fee year over year.

The income-based incentive fee decreased by $0.9 million, or 8.1%, for the year ended September 30, 2025, as compared to the prior year, primarily due to a decrease in pre-incentive fee net investment income, partially offset by an increase in net assets, which drives the hurdle rate.

During the years ended September 30, 2025 and 2024, our Board of Directors accepted non-contractual, unconditional and irrevocable credits from the Adviser of $ 2.3 million and $ 0.2 million, respectively, to reduce the income-based incentive fee to the extent net investment income did not cover 100.0% of distributions to common stockholders.

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

Year Ended September 30,

Average total assets subject to base management fee (A)

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

$ 794,857 $ 777,657

Multiplied by annual base management fee of 1.75% 1.75 % 1.75 %

Base management fee (B)

Base management fee (C)

13,910 13,609

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Net Base Management Fee $ 8,280 $ 10,642

Loan servicing fee (B)

Loan servicing fee (C)

$ 8,888 $ 8,862

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

Credit to base management fee - loan servicing fee (C)

( 8,888 ) ( 8,862 )

Net Loan Servicing Fee $ — $ —

Incentive fee (B)

Incentive fee (C)

$ 10,486 $ 11,410

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Incentive fee credit ( 2,344 ) ( 204 )

Credit to Fees from Adviser—Other (B)

Credit to Fees from Adviser—Other (C)

$ ( 7,974 ) $ ( 3,171 )

(A) Average total assets subject to the base management fee is defined 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 two most recently completed quarters within the respective years and adjusted appropriately for any share issuances or repurchases during the period.

(B) Reflected, on a gross basis, as a line item on our accompanying Consolidated Statement of Operations located elsewhere in this Annual Report.

(B) Excludes our investment in Gladstone Alternative valued at the end of the applicable periods.

(C) Reflected, on a gross basis, as a line item on our accompanying Consolidated Statement of Operations located elsewhere in this Annual Report.

Net Realized Gain (Loss) on Investments

For the year ended September 30, 2025, we recorded a net realized gain on investments of $55.4 million, which resulted primarily from a $59.3 million realized gain recognized on the sale of our investment in Antenna Research Associates, Inc., a $4.7 million realized gain recognized on the partial sale of our common equity investment in Sokol & Company Holdings, LLC, a $3.0 million realized gain recognized on our investment in MCG Energy Solutions, LLC, and a $2.5 million realized gain recognized on our investment in Salt & Straw, LLC.

These gains were partially offset by a $6.4 million realized loss recognized on our equity investment in FES Resources Holdings LLC, a $4.4 million realized loss recognized on the restructure of our investment in Eegee’s LLC, and a $4.1 million realized loss recognized on the sale of our investment in DKI Ventures, LLC.

For the year ended September 30, 2024, we recorded a net realized gain on investments of $2.0 million, which resulted primarily from a $1.5 million realized gain recognized on our investment in Giving Home.

For the year ended September 30, 2023, we recorded a net realized gain on investments of $12.3 million, which resulted primarily from a $5.9 million realized gain recognized on the sale of our investment in Targus Cayman HoldCo, Ltd.

(“Targus”), a $4.1 million realized gain recognized on our investment in Leeds Novamark Capital I, L.P.

(“Leeds”), and a $3.7 million realized gain recognized on our investment in PIC 360, LLC.

Net Unrealized Appreciation (Depreciation) of Investments

During the year ended September 30, 2025, we recorded net unrealized depreciation of investments in the aggregate amount of $42.7 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the year ended September 30, 2025 were as follows:

Year Ended September 30, 2025

Portfolio Company Realized Gain

(Depreciation) Reversal of

(Appreciation) Net Gain

Sokol & Company Holdings, LLC $ 4,748 $ 5,433 $ (4,870) $ 5,311

Arc Drilling Holdings LLC — 4,440 — 4,440

Antenna Research Associates, Inc.

59,348 — (55,140) 4,208

Encore Dredging Holdings, LLC — 3,746 — 3,746

Dutch Gold Honey, Inc.

— 2,617 — 2,617

Giving Home Health Care, LLC 731 1,731 — 2,462

Torrent Photonics Holdco LLC — 1,809 — 1,809

TNCP Intermediate HoldCo, LLC — 1,497 — 1,497

NeoGraf Solutions, LLC — 1,382 — 1,382

Eegee's LLC (4,439) (737) 6,205 1,029

Altior Healthcare, LLC — 920 — 920

Triple H Food Processors, LLC — 831 — 831

Canopy Safety Brands, LLC — 819 — 819

Pan-Am Dental, LLC — 505 — 505

8th Avenue Food & Provisions, Inc.

— 146 296 442

B+T Group Acquisition Inc.

Pansophic Learning Ltd.

Vet's Choice Radiology LLC — 348 — 348

ENET Holdings, LLC — — 316 316

Salt & Straw, LLC 2,450 139 (2,607) (18)

MCG Energy Solutions, LLC 2,954 (4) (2,976) (26)

FES Resources Holdings LLC (6,350) (163) 6,350 (163)

Café Zupas — (371) (153) (524)

DKI Ventures, LLC (4,074) — 3,422 (652)

Axios Industrial Group, LLC — (802) — (802)

WB Xcel Holdings, LLC — (939) — (939)

Quality Environmental Midco, Inc.

— (991) — (991)

Engineering Manufacturing Technologies, LLC — (2,921) — (2,921)

Defiance Integrated Technologies, Inc.

— (2,949) — (2,949)

Technical Resource Management, LLC — (3,509) — (3,509)

Eegee Acquisition Corp.

— (3,642) — (3,642)

Lonestar EMS, LLC — (4,012) — (4,012)

Other, net (<$500) — 258 — 258

$ 55,368 $ 6,418 $ (49,157) $ 12,629

The primary driver of net unrealized depreciation of $42.7 million for the year ended September 30, 2025 was the reversal of unrealized appreciation from the exit of our investment in Antenna Research Associates, Inc., partially offset by the improvement in the financial and operational performance of certain of our portfolio companies.

During the year ended September 30, 2024, we recorded net unrealized appreciation of investments in the aggregate amount of $42.7 million.

47 unchanged sentences

$ 2,008 $ 42,927 $ (224) $ 44,711

decrease in comparable transaction multiples used to estimate the fair value of certain of our other portfolio companies, and the decline in the financial and operational performance of certain of our other portfolio companies.

During the year ended September 30, 2023, we recorded net unrealized depreciation of investments in the aggregate amount of $11.0 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the year ended September 30, 2023 were as follows:

Year Ended September 30, 2023

Portfolio Company Realized Gain

(Depreciation) Reversal of

(Appreciation) Net Gain

Antenna Research Associates, Inc.

$ — $ 4,702 $ — $ 4,702

FES Resources Holdings LLC — 4,508 — 4,508

Defiance Integrated Technologies, Inc.

— 2,801 — 2,801

Giving Home Health Care, LLC — 2,775 — 2,775

Encore Dredging Holdings, LLC — 1,495 840 2,335

Imperative Holdings Corporation 510 1,094 — 1,604

Canopy Safety Brands, LLC — 1,316 — 1,316

HH-Inspire Acquisition, Inc.

— 1,496 (200) 1,296

Triple H Food Processors, LLC — 990 — 990

TNCP Intermediate HoldCo, LLC — 736 — 736

PIC 360, LLC 3,700 1,092 (4,262) 530

Targus Cayman HoldCo, Ltd.

5,916 — (5,916) —

Circuitronics EMS Holdings LLC (921) — 921 —

NetFortris Holdings LLC (789) (206) 526 (469)

8th Avenue Food & Provisions, Inc.

— (510) — (510)

MCG Energy Solutions, LLC — (685) — (685)

Leeds Novamark Capital I, L.P.

4,118 75 (5,018) (825)

Technical Resource Management, LLC — (960) — (960)

DKI Ventures, LLC — (1,393) — (1,393)

Salvo Technologies, Inc.

— (1,959) — (1,959)

NeoGraf Solutions, LLC — (3,154) — (3,154)

Engineering Manufacturing Technologies, LLC — (3,181) — (3,181)

B+T Group Acquisition Inc.

— (3,751) — (3,751)

WB Xcel Holdings, LLC — (5,687) — (5,687)

Other, net (<$500) (189) 108 391 310

$ 12,345 $ 1,702 $ (12,718) $ 1,329

The primary driver of net unrealized depreciation of $11.0 million for the year ended September 30, 2023 was the reversal of unrealized appreciation associated with the exit of our investment in Targus, the reversal of unrealized appreciation associated with our investment in PIC 360, and the sale of underlying assets within Leeds, as well as the decrease in comparable transaction multiples used to estimate the fair value of certain of our other portfolio companies, and the decline in the financial and operational performance of certain of our other portfolio companies.

As of September 30, 2024, the fair value of our investment portfolio was greater than its cost basis by approximately $25.2 million and our entire investment portfolio was valued at 103.3% of cost, as compared to cumulative net unrealized depreciation of $17.5 million and a valuation of our entire portfolio at 97.6% of cost as of September 30, 2023.

The primary driver of net unrealized appreciation of $42.7 million for the year ended September 30, 2024 was improvement in the financial and operational performance of certain of our portfolio companies, partially offset by the decrease in comparable transaction multiples used to estimate the fair value of certain of our other portfolio companies, and the decline in the financial and operational performance of certain of our other portfolio companies.

As of September 30, 2025, the fair value of our investment portfolio was less than its cost basis by approximately $17.5 million and our entire investment portfolio was valued at 98.0% of cost, as compared to cumulative net unrealized appreciation of $25.2 million and a valuation of our entire portfolio at 103.3% of cost as of September 30, 2024.

Comparison of the Year Ended September 30, 2024 to the Year Ended September 30, 2023

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We utilize this cash primarily to fund new investments, make interest payments on our Credit Facility and notes payable, make distributions to our stockholders, pay management and administrative fees to the Adviser and Administrator, and for other operating expenses.

Net cash provided by operating activities for the year ended September 30, 2024 was $3.2 million as compared to net cash used in operating activities of $10.9 million for the year ended September 30, 2023.

The change was primarily due to an increase in repayments and net proceeds from sales year over year.

Net cash used in operating activities for the year ended September 30, 2025 was $5.5 million as compared to net cash provided by operating activities of $3.2 million for the year ended September 30, 2024.

The change was primarily due to an increase in purchases of investments year over year, partially offset by an increase in repayments and net proceeds from sales year over year.

Purchases of investments were $396.8 million during the year ended September 30, 2025 compared to $177.6 million during the year ended September 30, 2024.

Repayments and net proceeds from sales were $352.6 million during the year ended September 30, 2025 compared to $140.2 million during the year ended September 30, 2024.

As of September 30, 2024, we had loans to, syndicated participations in or equity investments in 49 companies, with an aggregate cost basis of approximately $771.0 million.

As of September 30, 2023, we had loans to, syndicated participations in or equity investments in 51 companies, with an aggregate cost basis of approximately $722.3 million.

As of September 30, 2025, we had loans to or equity investments in 55 companies, with an aggregate cost basis of approximately $876.6 million.

As of September 30, 2024, we had loans to or equity investments in 49 companies, with an aggregate cost basis of approximately $771.0 million.

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

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Financing Activities

Net cash provided by financing activities for the year ended September 30, 2025 was $35.6 million, which consisted primarily of $149.5 million in gross proceeds from the issuance of the 2030 Convertible Notes, $11.5 million in net proceeds from the issuance of preferred stock, and $9.6 million in gross proceeds from the issuance of common stock, partially offset by $70.6 million in net repayments on our Credit Facility and $55.5 million in distributions to common shareholders.

Net cash used in financing activities for the year ended September 30, 2024 was $2.3 million, which consisted primarily of $43.1 million in distributions to common shareholders, partially offset by $22.8 million in net borrowings on our Credit Facility, $11.0 million in gross proceeds from the issuance of common stock, and $7.8 million in net proceeds from the issuance of preferred stock.

Net cash provided by financing activities for the year ended September 30, 2023 was $10.2 million, which consisted primarily of $87.4 million in gross proceeds from the issuance of common stock and $57.0 million in gross proceeds from the issuance of notes payable, partially offset by $94.0 million in net repayments on our Credit Facility and $35.4 million in distributions to common shareholders.

Net cash provided by financing activities for the year ended September 30, 2022 was $77.7 million, which consisted primarily of $91.3 million in net borrowings on our Credit Facility and $50.0 million in gross proceeds from the issuance of notes payable, partially offset by $38.8 million used in the redemption of our 2024 Notes and $27.3 million in distributions to common shareholders.

Net cash provided by financing activities for the year ended September 30, 2023 was $10.2 million, which consisted primarily of $87.4 million in gross proceeds from the issuance of common stock and $57.0 million in gross proceeds from the issuance of the 2028 Notes, partially offset by $94.0 million in net repayments on our Credit Facility and $35.4 million in distributions to common shareholders.

Distributions to Stockholders

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Additionally, our Credit Facility has a covenant that generally restricts the amount of distributions to stockholders that we can pay out to be no greater than our aggregate net investment income, net capital gains and amounts elected to have been paid during the prior year in accordance with Section 855(a) of the Code.

In accordance with these requirements, during the year ended September 30, 2024, we paid monthly cash distributions of $0.165 per common share.

In accordance with these requirements, during the year ended September 30, 2025, we paid monthly cash distributions of $0.165 per common share, a supplemental distribution of $0.40 per common share in December 2024, and a supplemental distribution of $0.10 per common share in September 2025.

These distributions totaled an aggregate of $55.5 million.

In October 2025, our Board of Directors declared a monthly distribution of $0.15 per common share for each of October, November, and December 2025.

In November 2024, our Board of Directors declared a supplemental distribution of $0.40 per common share payable in December 2024.

Our Board of Directors declared these distributions to our stockholders based on our estimates of our Investment Company Taxable Income for the fiscal year ended September 30, 2026.

For the fiscal years ended September 30, 2024 and September 30, 2023, our current and accumulated earnings and profits exceeded common stock distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $6.6 million and $5.0 million, respectively, of the first common distributions paid to common stockholders in the subsequent fiscal year as having been paid in the prior year.

For the fiscal year ended September 30, 2022 distributions

declared and paid exceeded taxable income available for common distributions resulting in a partial return of capital of approximately $1.4 million.

For the fiscal years ended September 30, 2025, September 30, 2024, and September 30, 2023, our Investment Company Taxable Income exceeded common stock distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $5.5 million, $6.6 million, and $5.0 million, respectively, of the first common distributions paid to common stockholders in the subsequent fiscal year as having been paid in the prior year.

In addition, for the fiscal year

ended September 30, 2025, net capital gains exceeded common stock distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $0.7 million of the first common distributions paid to common stockholders in the subsequent fiscal year as having been paid in the prior year.

There were no such amounts for the fiscal years ended September 30, 2024 and 2023.

Preferred Stock Dividends

We paid monthly cash dividends of $0.130208 per share to holders of our Series A Preferred Sock for each month from January through September during the year ended September 30, 2024, which totaled an aggregate of $0.2 million.

We paid monthly cash dividends of $0.130208 per share to holders of our Series A Preferred Stock for each month during the year ended September 30, 2025, which totaled an aggregate of $0.9 million.

In October 2025, our Board of Directors declared monthly cash dividends of $0.130208 per share to holders of our Series A Preferred Stock for each of October, November, and December 2025.

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Registration Statement

Our shelf registration statement on Form N-2 (File No.

333-275934) (the “2024 Registration Statement”), which was declared effective on January 17, 2024, permits us to issue, through one or more transactions, up to an aggregate of $700.0 million in securities, consisting of common stock, preferred stock, subscription rights, debt securities and warrants to purchase common stock or preferred stock.

Our shelf registration statement permits us to issue, through one or more transactions, up to an aggregate of $700.0 million in securities, consisting of common stock, preferred stock, subscription rights, debt securities and warrants to purchase common stock or preferred stock.

As of September 30, 2025, we had the ability to issue up to $519.3 million in securities under the registration statement.

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On May 13, 2021, we, through Business Loan, entered into a sixth amended and restated credit agreement with KeyBank as administrative agent, lead arranger, managing agent and lender, the Adviser, as servicer, and certain other lenders party thereto (the “Credit Facility”).

On June 23, 2025, we, through Business Loan, entered into Amendment No.

9 to the Credit Facility.

As of September 30, 2025, our Credit Facility had a total commitment amount of $ 320.0 million with an “accordion” feature that permits us to increase the size of the facility to $ 400.0 million.

The Credit Facility has a revolving period end date of October 31, 2027 and a final maturity date of October 31, 2029 (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).

The interest rate margin is 3.00% during the revolving period and 3.50% thereafter (in each case plus a 10 basis point SOFR credit spread adjustment).

The interest rate margin is 2.60 % during the revolving period and 3.10 % thereafter.

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

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Our Credit Facility further requires Business Loan to comply with other financial and operational covenants, which obligate Business Loan to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of 25 obligors required in the borrowing base.

Additionally, we are required to maintain (i) a minimum net worth (defined in our Credit Facility to include any outstanding mandatorily redeemable preferred stock) of $325.0 million plus 50.0% of all equity and subordinated debt raised after May 13, 2021 less 50% of any equity and subordinated debt retired or redeemed after May 13, 2021, which equates to $ 418.8 million as of September 30, 2024, (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.

Additionally, we are required to maintain (i) a minimum net worth (defined in our Credit Facility to include any outstanding mandatorily redeemable preferred stock) of $500.0 million plus 50.0% of all equity and subordinated debt raised after June 23, 2025 less 50% of any equity and subordinated debt retired or redeemed after June 23, 2025, which equates to $ 581.0 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 our Credit Facility, we had a net worth of $ 877.9 million, asset coverage on our “senior securities representing indebtedness” of 219.8 % and an active status as a BDC and RIC.

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Notes Payable

In August 2023, we completed an offering of $57.0 million aggregate principal amount of 7.75% Notes due 2028 (the “2028 Notes”) for net proceeds of approximately $55.1 million after deducting underwriting discounts, commissions and offering expenses borne by us.

The 2028 Notes are traded under the ticker symbol “GLADZ” on the Nasdaq Global Select Market.

The 2028 Notes will mature on September 1, 2028 and may be redeemed in whole or in part at any time or from time to time at our option on or after September 1, 2025.

The 2028 Notes bear interest at a rate of 7.75% per year.

Interest is payable quarterly on March 1, June 1, September 1, and December 1 of each year (which equates to approximately $4.4 million per year).

In November 2021, we completed a private placement of $50.0 million aggregate principal amount of 3.75% Notes due 2027 (the “2027 Notes”) for net proceeds of approximately $48.5 million after deducting initial purchasers’ costs, commissions and offering expenses borne by us.

In September 2025, we completed an offering of $149.5 million aggregate principal amount of 2030 Convertible Notes for net proceeds of approximately $142.8 million after deducting underwriting discounts, commissions and offering expenses borne by us.

The 2030 Convertible Notes will mature on October 1, 2030.

We may redeem for cash all or any portion of the 2030 Convertible Notes (subject to the “partial redemption limitation”), at our option, on a redemption date on or after October 6, 2028 and on or before the 45th scheduled trading day immediately prior to the maturity date if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the 2030 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The 2030 Convertible Notes bear interest at a rate of 5.875% per year.

Interest is payable semi-annually on April 1 and October 1 of each year beginning April 1, 2026 (which equates to approximately $8.8 million per year).

In August 2023, we completed an offering of $57.0 million aggregate principal amount of the 2028 Notes for net proceeds of approximately $55.1 million after deducting underwriting discounts, commissions and offering expenses borne by us.

On October 15, 2025, we voluntarily redeemed 100% of the issued and outstanding 2028 Notes, following which they were delisted from the Nasdaq Global Select Market.

The 2028 Notes would have otherwise matured on September 1, 2028.

The 2028 Notes bore interest at a rate of 7.75% per year.

Interest was payable quarterly on March 1, June 1, September 1, and December 1 of each year.

In November 2021, we completed an issuance of $50.0 million aggregate principal amount of 3.75% Notes due 2027 (the “2027 Notes”) for net proceeds of approximately $48.5 million after deducting initial purchasers’ costs, commissions and offering expenses borne by us.

The 2027 Notes will mature on May 1, 2027 and may be redeemed in whole or in part at any time or from time to time at the Company’s option prior to maturity at par plus a “make-whole” premium, if applicable.

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Interest is payable semi-annually on May 1 and November 1 of each year (which equates to approximately $1.9 million per year).

In April 2022, pursuant to the registration rights agreement we entered into in connection with the 2027 Notes, we conducted an exchange offer through which we offered to exchange all of our then outstanding 2027 Notes (the “Restricted Notes”) that were issued on November 4, 2021, for an equal aggregate principal amount of our new 3.75% Notes due 2027 (the “Exchange Notes”) that had been registered with the SEC under the Securities Act.

The terms of the Exchange Notes

are identical to those of the Restricted Notes, except that the transfer restrictions and registration rights relating to the Restricted Notes do not apply to the Exchange Notes, and the Exchange Notes do not provide for the payment of additional interest in the event of a registration default.

In December 2020, we completed an offering of $100.0 million aggregate principal amount of 5.125% Notes due 2026 (the “2026 Notes”) for net proceeds of approximately $97.7 million after deducting underwriting discounts, commissions and offering expenses borne by us.

In December 2020, we completed an offering of $100.0 million aggregate principal amount of the 2026 Notes for net proceeds of approximately $97.7 million after deducting underwriting discounts, commissions and offering expenses borne by us.

In March 2021, we completed an offering of an additional $50.0 million aggregate principal amount of the 2026 Notes for net proceeds of approximately $50.6 million after adding premiums and deducting underwriting costs, commissions and offering expenses borne by us.

The 2026 Notes will mature on January 31, 2026 and may be redeemed in whole or in part at any time or from time to time at the Company’s option prior to maturity at par plus a “make-whole” premium, if applicable.

The 2026 Notes bear interest at a rate of 5.125% per year.

Interest is payable semi-annually on January 31 and July 31 of each year (which equates to approximately $7.7 million per year).

In October 2019, we completed an offering of $38.8 million aggregate principal amount of 5.375% Notes due 2024 (the “2024 Notes”), inclusive of the overallotment option exercised by the underwriters, for net proceeds of approximately $37.5 million after deducting underwriting discounts, commissions and offering expenses borne by us.

On November 1, 2021, we voluntarily redeemed the 2024 Notes with an aggregate principal amount outstanding of $38.8 million.

The 2024 Notes would have otherwise matured on November 1, 2024.

The indenture relating to the 2028 Notes, the 2027 Notes and the 2026 Notes contains certain covenants, including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Company’s asset coverage meets the threshold specified in the 1940 Act after such borrowing, (ii) an inability to declare any dividend or distribution (except a dividend payable in our stock) on a class of our capital stock or to purchase shares of our capital stock unless the Company’s asset coverage meets the threshold specified in the 1940 Act at the time of (and giving effect to) such declaration or purchase, and (iii) if, at any time, we are not subject to the reporting requirements of the Exchange Act, we will provide the holders of the 2028 Notes, the 2027 Notes and the 2026 Notes, as applicable, and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.

On October 31, 2025, we voluntarily redeemed 100% of the issued and outstanding 2026 Notes.

The 2026 Notes would have otherwise matured on January 31, 2026.

The 2026 Notes bore interest at a rate of 5.125% per year.

Interest was payable semi-annually on January 31 and July 31 of each year.

The indenture relating to the 2027 Notes contains certain covenants, including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Company’s asset coverage meets the threshold specified in the 1940 Act after such borrowing, (ii) an inability to declare any dividend or distribution (except a dividend payable in our stock) on a class of our capital stock or to purchase shares of our capital stock unless the Company’s asset coverage meets the threshold specified in the 1940 Act at the time of (and giving effect to) such declaration or purchase, and (iii) if, at any time, we are not subject to the reporting requirements of the Exchange Act, we will provide the holders of the 2027 Notes, as applicable, and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.

The indenture relating to the 2030 Convertible Notes similarly contains certain covenants including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Company’s asset coverage meets the threshold specified in the 1940 Act after such borrowing and (ii) that we will file with the trustee any documents or reports that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act within 15 days after the same are required to be filed with the SEC;

provided that any documents filed by us with the SEC via the EDGAR system will be deemed to be filed with the trustee.

Off-Balance Sheet Arrangements

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(B) Principal balance of borrowings outstanding under our Credit Facility, based on the maturity date following the current contractual revolver period end date.

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

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Lowest 3.0 3.0

The following table reflects the risk ratings for all syndicated loans in our portfolio that were rated by an NRSRO as of September 30, 2024 and 2023, representing approximately 0.5% and 1.3%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:

As of September 30,

Rating 2024 2023

Highest 3.0 5.0

Average 3.0 3.5

Weighted Average 3.0 4.2

Lowest 3.0 3.0

The following table reflects the risk ratings for all syndicated loans in our portfolio that were not rated by an NRSRO as of September 30, 2023 representing approximately 0.5% of the principal balance of all debt investments in our portfolio at the end of the period:

The following table reflects the risk ratings for all syndicated loans in our portfolio that were rated by an NRSRO as of September 30, 2024, representing approximately 0.5% of the principal balance of all debt investments in our portfolio at the end of the period:

Rating As of September 30, 2024

Weighted Average 3.0

There were no syndicated loans in our portfolio that were not rated by an NRSRO as of September 30, 2024.

There were no syndicated loans in our portfolio that were rated by an NRSRO as of September 30, 2025.

There were no syndicated loans in our portfolio that were not rated by an NRSRO as of September 30, 2025 and 2024.

We intend to continue to maintain our qualification as a RIC under Subchapter M of the Code for federal income tax purposes and also to limit certain federal excise taxes imposed on RICs.

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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-K

Item 7. Management’s Discussion and Analysis