Item 7. Management’s Discussion and Analysis
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following analysis of our financial condition and results of operations should be read in conjunction with our accompanying Consolidated Financial Statements and the notes thereto contained elsewhere in this Annual Report. Historical financial condition and results of operations and percentage relationships among any amounts in the financial statements are not necessarily indicative of financial condition, results of operations or percentage relationships for any future periods. Except per share amounts, dollar amounts in the tables included herein are in thousands unless otherwise indicated.
OVERVIEW
General
We were incorporated under the Maryland General Corporation Law on May 30, 2001. We operate as an externally managed, closed-end, non-diversified management investment company, and have elected to be treated as a BDC under the 1940 Act. In addition, for federal income tax purposes we have elected to be treated as a RIC under the Code. To continue to qualify as a RIC for federal income tax purposes and obtain favorable RIC tax treatment, we must meet certain requirements, including certain minimum distribution requirements.
We were established for the purpose of investing in debt and equity securities of established private businesses operating in the U.S. Our investment objectives are to: (1) achieve and grow current income by investing in debt securities of established lower middle market companies in the U.S. that we believe will provide stable earnings and cash flow to pay expenses, make principal and interest payments on our outstanding indebtedness and make distributions to stockholders that grow over time; and (2) provide our stockholders with long-term capital appreciation in the value of our assets by investing in equity securities, in connection with our debt investments, that we believe can grow over time to permit us to sell our equity investments for capital gains. To achieve our investment objectives, our primary investment strategy is to invest in several categories of debt and equity securities, with each investment generally ranging from $8 million to $40
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million, although investment size may vary, depending upon our total assets or available capital at the time of investment. We expect that our investment portfolio over time will consist of approximately 90.0% debt investments and 10.0% equity investments, at cost. As of September 30, 2025, our investment portfolio was made up of approximately 90.9% debt investments and 9.1% equity investments, at cost.
We focus on investing in lower middle market companies (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization of $3 million to $25 million) in the U.S. that meet certain criteria, including the following: the sustainability of the business’ free cash flow and its ability to grow it over time, adequate assets for loan collateral, experienced management teams with a significant ownership interest in the borrower, reasonable capitalization of the borrower, including an ample equity contribution or cushion based on prevailing enterprise valuation multiples and, to a lesser extent, the potential to realize appreciation and gain liquidity in our equity position, if any. We lend to borrowers that need funds for growth capital or to finance acquisitions or recapitalize or refinance their existing debt facilities. We seek to avoid investing in high-risk, early-stage enterprises. Our targeted portfolio companies are generally considered too small for the larger capital marketplace.
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 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. If we are participating in an investment with one or more co-investors, whether or not an affiliate of ours, our investment is likely to be smaller than if we were investing alone.
Business
Portfolio and Investment Activity
In general, our investments in debt securities have a term of no more than seven years, accrue interest at variable rates (generally based on one-month Term SOFR), and, to a lesser extent, at fixed rates. We seek debt instruments that pay interest monthly or, at a minimum, quarterly, may have a success fee or deferred interest provision and are primarily interest only, with all principal and any accrued but unpaid interest due at maturity. Generally, success fees accrue at a set rate and are contractually due upon a change of control of a portfolio company, typically from an exit or sale. Some debt securities have deferred interest whereby some portion of the interest payment is added to the principal balance so that the interest is paid, together with the principal, at maturity. This form of deferred interest is often called PIK interest.
Typically, our equity investments consist of common stock, preferred stock, limited liability company interests, or warrants to purchase the foregoing. Often, these equity investments occur in connection with our original investment, recapitalizing a business, or refinancing existing debt.
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, 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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During the year ended September 30, 2025, the following significant transactions occurred:
Proprietary Investments
• 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.
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• 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 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 and preferred 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. 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 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 .
Regulatory Compliance
Our ability to seek external debt financing, to the extent that it is available under current market conditions, is further subject to the asset coverage limitations of the 1940 Act, which require us to have an asset coverage (as defined in Sections 18 and 61 of the 1940 Act) of at least 150% on our “senior securities representing indebtedness” and our “senior securities that are stock.”
On April 10, 2018, our Board of Directors, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) thereof, approved the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, the Company’s asset coverage requirements for senior securities changed from 200% to 150%, effective April 10, 2019.
As of September 30, 2025, our asset coverage on our “senior securities representing indebtedness” was 219.8 % and our asset coverage on our “senior securities that are stock” was 208.8%.
Recent Developments
Debt Redemption
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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
On October 14, 2025, our Board of Directors declared the following distributions to common and preferred stockholders:
Record Date Payment Date Distribution per Common Share
October 24, 2025 October 31, 2025 $ 0.15
November 17, 2025 November 26, 2025 0.15
December 22, 2025 December 31, 2025 0.15
Total for the Quarter $ 0.45
Record Date Payment Date Distribution per Series A Preferred Stock
October 27, 2025 November 5, 2025 $ 0.130208
November 25, 2025 December 5, 2025 0.130208
December 29, 2025 January 5, 2026 0.130208
Total for the Quarter $ 0.390624
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RESULTS OF OPERATIONS
Comparison of the Year Ended September 30, 2025 to the Year Ended September 30, 2024
For the Year Ended September 30,
2025 2024 $ Change % Change
INVESTMENT INCOME
Interest income
$ 87,281 $ 93,294 $ (6,013) (6.4) %
Other income
1,841 3,327 (1,486) (44.7)
Total investment income
89,122 96,621 (7,499) (7.8)
EXPENSES
Base management fee
13,910 13,609 301 2.2
Loan servicing fee
8,888 8,862 26 0.3
Incentive fee
10,486 11,410 (924) (8.1)
Administration fee
2,012 1,970 42 2.1
Interest expense
19,986 21,715 (1,729) (8.0)
Amortization of deferred financing costs
2,293 1,864 429 23.0
Other expenses
3,202 3,165 37 1.2
Expenses, before credits from Adviser
60,777 62,595 (1,818) (2.9)
Credit to base management fee – loan servicing fee
(8,888) (8,862) (26) 0.3
Credit to fees from Adviser – other
(7,974) (3,171) (4,803) NM
Total expenses, net of credits
43,915 50,562 (6,647) (13.1)
NET INVESTMENT INCOME 45,207 46,059 (852) (1.8)
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on investments
55,368 2,008 53,360 NM
Net realized gain (loss) on other
274 3,951 (3,677) (93.1)
Net unrealized appreciation (depreciation) of investments
(42,739) 42,703 (85,442) NM
Net gain (loss) from investments and other
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
$ 57,191 $ 94,506 $ (37,315) (39.5) %
PER BASIC AND DILUTED COMMON SHARE
Net investment income (A)
$ 2.02 $ 2.11 $ (0.09) (4.3) %
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
(A) Per share amounts have been adjusted on a retroactive basis to reflect the Reverse Stock Split effected on April 4, 2024. Refer to Note 2— Summary of Significant Accounting Policies in the accompanying Notes to Consolidated Financial Statements for additional information.
Investment Income
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 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
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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.
Expenses
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 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.
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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,
2025 2024
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 (C)
13,910 13,609
Portfolio company fee credit ( 5,593 ) ( 2,866 )
Syndicated loan fee credit ( 37 ) ( 101 )
Net Base Management Fee $ 8,280 $ 10,642
Loan servicing fee (C)
$ 8,888 $ 8,862
Credit to base management fee - loan servicing fee (C)
( 8,888 ) ( 8,862 )
Net Loan Servicing Fee $ — $ —
Incentive fee (C)
$ 10,486 $ 11,410
Incentive fee credit ( 2,344 ) ( 204 )
Net Incentive Fee $ 8,142 $ 11,206
Portfolio company fee credit $ ( 5,593 ) $ ( 2,866 )
Syndicated loan fee credit ( 37 ) ( 101 )
Incentive fee credit ( 2,344 ) ( 204 )
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) 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.
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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
(Loss)
Unrealized
Appreciation
(Depreciation) Reversal of
Unrealized
Depreciation
(Appreciation) Net Gain
(Loss)
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. — 440 — 440
Pansophic Learning Ltd. — 397 — 397
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
Total: $ 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.
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During the year ended September 30, 2024, we recorded net unrealized appreciation 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, 2024 were as follows:
Year Ended September 30, 2024
Portfolio Company Realized Gain
(Loss)
Unrealized
Appreciation
(Depreciation) Reversal of
Unrealized
Depreciation
(Appreciation) Net Gain
(Loss)
Antenna Research Associates, Inc. $ — $ 40,987 $ — $ 40,987
Lonestar EMS, LLC — 8,284 — 8,284
MCG Energy Solutions, LLC — 3,555 — 3,555
Salt & Straw, LLC — 3,041 — 3,041
Giving Home Health Care, LLC 1,465 1,220 — 2,685
Sokol & Company Holdings, LLC — 1,520 — 1,520
TNCP Intermediate HoldCo, LLC — 1,239 — 1,239
Café Zupas — 996 — 996
Quality Environmental Midco, Inc. — 972 — 972
Ohio Armor Holdings, LLC — 850 — 850
NeoGraf Solutions, LLC — 839 — 839
Arc Drilling Holdings LLC — 784 — 784
8th Avenue Food & Provisions, Inc. — 746 — 746
Total Access Elevator, LLC — 679 — 679
Leadpoint Business Services, LLC — 636 — 636
Canopy Safety Brands, LLC — 629 — 629
ENET Holdings, LLC — 576 — 576
Tailwind Smith Cooper Intermediate Corporation — 683 (121) 562
OCI, LLC — 549 — 549
Trowbridge Chicago, LLC 332 (23) 109 418
SpaceCo Holdings, LLC — 414 — 414
Axios Industrial Group, LLC — 367 — 367
ALS Education, LLC — 317 — 317
Viva Railings, L.L.C. — 311 — 311
Sea Link International IRB, Inc. — 252 — 252
DKI Ventures, LLC — (668) — (668)
Technical Resource Management, LLC — (829) — (829)
Defiance Integrated Technologies, Inc. — (1,000) — (1,000)
Encore Dredging Holdings, LLC — (1,097) — (1,097)
Engineering Manufacturing Technologies, LLC — (1,173) — (1,173)
Edge Adhesives Holdings, Inc. — (2,515) — (2,515)
HH-Inspire Acquisition, Inc. — (2,817) — (2,817)
B+T Group Acquisition Inc. — (3,586) — (3,586)
Eegee's LLC — (4,568) — (4,568)
FES Resources Holdings LLC — (4,670) — (4,670)
WB Xcel Holdings, LLC — (4,830) — (4,830)
Other, net (<$500) 211 257 (212) 256
Total: $ 2,008 $ 42,927 $ (224) $ 44,711
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.
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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
The comparison of the fiscal year ended September 30, 2024 to the fiscal year ended September 30, 2023 can be found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, as filed with the SEC on November 13, 2024, located within Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
Our cash flows from operating activities are primarily generated from the interest payments on debt securities that we receive from our portfolio companies, as well as net proceeds received through repayments or sales of our investments. 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 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, 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:
Year Ended September 30,
2025 2024
Beginning investment portfolio, at fair value $ 796,260 $ 704,815
New investments 310,724 53,250
Disbursements to existing portfolio companies 86,072 124,399
Scheduled principal repayments (10,057) (9,288)
Unscheduled principal repayments (252,696) (124,183)
Net proceeds from sales of investments (89,564) (2,799)
Net unrealized appreciation (depreciation) of investments
6,418 42,927
Reversal of prior period net depreciation (appreciation) of investments
(49,157) (224)
Net realized gain (loss) on investments (A)
55,368 2,008
Increase in investment balance due to PIK interest (B)
4,910 5,525
Net change in premiums, discounts and amortization 846 (170)
Ending Investment Portfolio, at Fair Value
$ 859,124 $ 796,260
(A) Excludes net realized gain (loss) on other.
(B) PIK interest is a non-cash source of income and is calculated at the contractual rate stated in a loan agreement and added to the principal balance of a loan.
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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.
Year Ending September 30, Amount
2026 (A)
$ 58,434
2027 157,554
2028 222,265
2029 139,336
2030 209,608
Thereafter 10,000
Total contractual repayments $ 797,197
Adjustments to cost basis of debt investments (574)
Investments in equity securities 79,991
Investments held as of September 30, 2025 at cost: $ 876,614
(A) Includes debt investments with contractual principal amounts totaling $0.5 million for which the maturity date has passed as of September 30, 2025.
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 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
Common Stock Distributions
To qualify to be taxed as a RIC and thus avoid corporate level federal income tax on the income we distribute to our stockholders, we are required to distribute to our stockholders on an annual basis at least 90.0% of our Investment Company Taxable Income. 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, 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. 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, 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
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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 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. Dividend payments to our preferred stockholders are included in preferred stock dividends on our Consolidated Statements of Operations. For federal income tax purposes, the dividends paid by us to preferred stockholders generally constitute ordinary income to the extent of our current and accumulated earnings and profits and is reported after the end of the calendar year based on tax information for the full fiscal year.
Dividend Reinvestment Plan
Our common stockholders who hold their shares through our transfer agent, Computershare, Inc. (“Computershare”), have the option to participate in a dividend reinvestment plan offered by Computershare, as the plan agent. This is an “opt in” dividend reinvestment plan, meaning that common stockholders may elect to have their cash distributions automatically reinvested in additional shares of our common stock. Common stockholders who do make such election will receive their distributions in cash. Common stockholders who receive distributions in the form of stock will be subject to the same federal, state and local tax consequences as stockholders who elect to receive their distributions in cash. The common stockholder will have an adjusted basis in the additional common shares purchased through the plan equal to the amount of the reinvested distribution. The additional shares will have a new holding period commencing on the day following the date on which the shares are credited to the common stockholder’s account. Computershare purchases shares in the open market in connection with the obligations under the plan.
Equity
Registration Statement
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.
Common Stock
In August 2024, we entered into an equity distribution agreement with Jefferies LLC and Huntington Securities, Inc, (the “2024 Sales Agreement”) under which we have the ability to issue and sell, from time to time, shares of our common stock with an aggregate offering price of up to $150.0 million in an “at the market offering” (the “2024 ATM Program”). During the year ended September 30, 2025, we sold 362,482 shares of our common stock under the 2024 Sales Agreement, at a weighted-average price of $26.44 per share and raised $9.6 million of gross proceeds. Net proceeds, after deducting commissions and offering costs borne by us, were approximately $9.4 million. As of September 30, 2025, we had a remaining capacity to sell up to an additional $129.4 million of our common stock under the 2024 ATM Program.
We anticipate issuing equity securities to obtain additional capital in the future. However, we cannot determine the timing or terms of any future equity issuances or whether we will be able to issue equity on terms favorable to us, or at all. To the extent that our common stock trades at a market price below our NAV per share, we will generally be precluded from raising equity capital through public offerings of our common stock, other than pursuant to stockholder and independent director approval or a rights offering to existing common stockholders.
Revolving Line of Credit
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.
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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 2.60 % during the revolving period and 3.10 % thereafter.
Interest is payable monthly during the term of our Credit Facility. Available borrowings are subject to various constraints imposed under our Credit Facility, based on the aggregate loan balance pledged by Business Loan, which varies as loans are added and repaid, regardless of whether such repayments are prepayments or made as contractually required. Our Credit Facility also requires that any interest or principal payments on pledged loans be remitted directly by the borrower into a lockbox account with KeyBank and with The Bank of New York Mellon Trust Company, N.A. as custodian. KeyBank, which also serves as the trustee of the account, generally remits the collected funds to us once a month.
Our Credit Facility contains covenants that require Business Loan to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions), and restrict material changes to our credit and collection policies without the lenders’ consents. Our Credit Facility generally limits distributions to our stockholders on a fiscal year basis to the sum of our 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. Business Loan is also subject to certain limitations on the type of loan investments it can apply as collateral towards the borrowing base to receive additional borrowing availability under our Credit Facility, including restrictions on geographic concentrations, sector concentrations, loan size, payment frequency and status, average life, portfolio company leverage and lien property. 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 $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. In addition, as of September 30, 2025, we had 34 obligors in our Credit Facility’s borrowing base and we were in compliance with all of our Credit Facility covenants. Refer to Note 5— Borrowings of the notes to our Consolidated Financial Statements included elsewhere in this Annual Report for additional information regarding our Credit Facility.
Notes Payable
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.
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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. The 2027 Notes bear interest at a rate of 3.75% per year. Interest is payable semi-annually on May 1 and November 1 of each year (which equates to approximately $1.9 million per year).
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. 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
We generally recognize success fee income when the payment has been received. As of September 30, 2025 and 2024, we had off-balance sheet success fee receivables on our accruing debt investments of $6.0 million and $5.8 million (or approximately $0.27 per common share and $0.26 per common share), respectively, that would be owed to us, generally upon a change of control of the portfolio companies. Consistent with GAAP, we generally have not recognized our success fee receivables and related income in our Consolidated Financial Statements until earned. Due to the contingent nature of our success fees, there are no guarantees that we will be able to collect all of these success fees or know the timing of such collections.
Contractual Obligations
We have lines of credit, delayed draw term loans, and an uncalled capital commitment with certain of our portfolio companies that have not been fully drawn. Since these commitments have expiration dates and we expect many will never be fully drawn, the total commitment amounts do not necessarily represent future cash requirements. We estimate the fair value of the combined unused lines of credit, the unused delayed draw term loans, and the uncalled capital commitment as of September 30, 2025 and 2024 to be immaterial.
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The following table shows our contractual obligations as of September 30, 2025, at cost:
Contractual Obligations (A)
Payments Due by Period
Less than
1 Year
1-3 Years 3-5 Years More than
5 Years
Total
Credit Facility (B)
$ — $ — $ — $ — $ —
Notes Payable 150,000 107,000 — 149,500 406,500
Interest expense on debt obligations (C)
20,891 33,634 21,091 — 75,616
Total
$ 170,891 $ 140,634 $ 21,091 $ 149,500 $ 482,116
(A) Excludes our unused line of credit commitments, unused delayed draw term loans, and uncalled capital commitments to our portfolio companies in an aggregate amount of $66.4 million, at cost, as of September 30, 2025.
(B) Principal balance of borrowings outstanding under our Credit Facility, based on the maturity date following the current contractual revolver period end date.
(C) Includes estimated interest payments on our Credit Facility, 2030 Notes, 2028 Notes, 2027 Notes, and 2026 Notes. The amount of interest expense calculated for purposes of this table was based upon rates and balances as of September 30, 2025.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported consolidated amounts of assets and liabilities, including disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period reported. Actual results could differ materially from those estimates under different assumptions or conditions. We have identified our investment valuation policy (which has been approved by our Board of Directors) as our most critical accounting policy, which is described in Note 2— Summary of Significant Accounting Policies in the accompanying notes to our Consolidated Financial Statements included elsewhere in this Annual Report. Additionally, refer to Note 3— Investments in our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information regarding fair value measurements and our application of Financial Accounting Standards Board Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures.” We have also identified our revenue recognition policy as a critical accounting policy, which is described in Note 2— Summary of Significant Accounting Policies in our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
Investment Valuation
Credit Monitoring and Risk Rating
The Adviser monitors a wide variety of key credit statistics that provide information regarding our portfolio companies to help us assess credit quality and portfolio performance and, in some instances, used as inputs in our valuation techniques. Generally, we, through the Adviser, participate in periodic board meetings of our portfolio companies in which we hold board seats and also require them to provide annual audited and monthly unaudited financial statements. Using these statements or comparable information and board discussions, the Adviser calculates and evaluates certain credit statistics.
The Adviser risk rates all of our investments in debt securities. The Adviser does not risk rate our equity securities. For syndicated loans that have been rated by an SEC registered Nationally Recognized Statistical Rating Organization (“NRSRO”), the Adviser generally uses the average of two corporate level NRSRO’s risk ratings for such security. For all other debt securities, the Adviser uses a proprietary risk rating system. While the Adviser seeks to mirror the NRSRO systems, we cannot provide any assurance that the Adviser’s risk rating system will provide the same risk rating as an NRSRO would for these securities. The Adviser’s risk rating system is used to estimate the probability of default on debt securities and the expected loss if there is a default. The Adviser’s risk rating system uses a scale of 0 to >10, with >10 being the lowest probability of default. It is the Adviser’s understanding that most debt securities of medium-sized companies do not exceed the grade of BBB on an NRSRO scale, so there would be no debt securities in the middle market that would meet the definition of AAA, AA or A. Therefore, the Adviser’s scale begins with the designation >10 as the best risk rating which may be equivalent to a BBB from an NRSRO; however, no assurance can be given that a >10 on the Adviser’s scale is equal to a BBB or Baa2 on an NRSRO scale. The Adviser’s risk rating system covers both qualitative and quantitative aspects of the business and the securities we hold.
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The following table reflects risk ratings for all proprietary loans in our portfolio as of September 30, 2025 and 2024, representing approximately 100.0% and 99.5%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:
As of September 30,
Rating 2025 2024
Highest 10.0 10.0
Average 7.4 7.8
Weighted Average 8.0 8.1
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, 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
Highest 3.0
Average 3.0
Weighted Average 3.0
Lowest 3.0
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.
Tax Status
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. Refer to Note 10— Federal and State Income Taxes in our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information regarding our tax status.
Recent Accounting Pronouncements
Refer to Note 2— Summary of Significant Accounting Policies in the notes to our accompanying Consolidated Financial Statements included elsewhere in this Annual Report for a description of recent accounting pronouncements.