14 unchanged sentences
Notes to Consolidated Financial Statements
−Removed: Managements Annual Report on Internal Control over Financial
+Added: Managements Annual Report on Internal
+Added: Control over Financial Reporting
To the Stockholders and Board of Directors of Gladstone Capital Corporation:
−Removed: Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the
−Removed: Securities Exchange Act of 1934.
−Removed: Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
−Removed: accordance with generally accepted accounting principles and include those policies and procedures that:
−Removed: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of
−Removed: (2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are
−Removed: being made only in accordance with appropriate authorizations;
−Removed: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our
−Removed: financial statements.
−Removed: Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
−Removed: even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
+Added: Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.
+Added: Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
+Added: financial statements for external purposes in accordance with generally accepted accounting principles and include those policies and procedures that:
+Added: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly
+Added: reflect our transactions and the dispositions of our assets;
+Added: (2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
+Added: principles, and that our receipts and expenditures are being made only in accordance with appropriate authorizations;
+Added: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
+Added: of our assets that could have a material effect on our financial statements.
+Added: Because of its inherent limitations, internal control over financial
+Added: reporting may not prevent or detect misstatements.
+Added: Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Under the supervision and with the participation of our management, we assessed the effectiveness of our internal control over financial reporting as of
2 unchanged sentences
our internal control over financial reporting was effective as of September 30, 2020.
−Removed: The effectiveness of the Companys internal control over
−Removed: financial reporting as of September 30, 2019 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
November 10, 2020
Report of Independent Registered Public Accounting Firm
−Removed: To the Board of Directors and the Stockholders of Gladstone Capital Corporation:
−Removed: Opinions on the Financial Statements and Internal Control over Financial Reporting
−Removed: We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Gladstone Capital
−Removed: Corporation and its subsidiaries (the Company) as of September 30, 2019 and 2018, and the related consolidated statements of operations, changes in net assets and cash flows for each of the three years in the period ended
−Removed: September 30, 2019, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the consolidated financial statements).
−Removed: We also have audited the
−Removed: Companys internal control over financial reporting as of September 30, 2019, based on criteria established in Internal ControlIntegrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
−Removed: Treadway Commission (COSO).
−Removed: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
−Removed: financial position of the Company as of September 30, 2019 and 2018, and the results of its operations, changes in its net assets and its cash flows for each of the three years in the period ended September 30, 2019 in conformity with
−Removed: accounting principles generally accepted in the United States of America.
−Removed: Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2019, based on criteria
−Removed: established in Internal ControlIntegrated Framework (2013) issued by the COSO.
−Removed: Basis for Opinions
−Removed: The Companys management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,
−Removed: and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Annual Report on Internal Control over Financial Reporting.
−Removed: Our responsibility is to express opinions on the
−Removed: Companys consolidated financial statements and on the Companys internal control over financial reporting based on our audits.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
−Removed: (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
+Added: To the Board of Directors and Stockholders of Gladstone Capital Corporation:
+Added: Opinion on the Financial Statements
+Added: audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Gladstone Capital Corporation and its subsidiaries (the Company) as of September 30,
+Added: 2020 and 2019, and the related consolidated statements of operations, changes in net assets and cash flows for each of the three years in the period ended September 30, 2020, including the related notes and financial
+Added: statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the consolidated financial statements).
+Added: In our opinion, the consolidated financial statements present fairly, in all
+Added: material respects, the financial position of the Company as of September 30, 2020 and 2019, and the results of its operations, changes in its net assets and its cash flows for each of the three years in the period ended
+Added: September 30, 2020 in conformity with accounting principles generally accepted in the United States of America.
+Added: Basis for Opinion
+Added: These consolidated financial statements are the responsibility of the Companys management.
+Added: Our responsibility is to express an opinion on
+Added: the Companys consolidated financial statements based on our audits.
+Added: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
+Added: Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audits in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audits to obtain reasonable
−Removed: assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
−Removed: Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial
−Removed: statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
−Removed: Our procedures included confirmation of securities
−Removed: owned as of September 30, 2019 and 2018 by correspondence with the custodian and portfolio company investees.
−Removed: Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
−Removed: reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
−Removed: Our audits also included performing such other procedures as we
−Removed: considered necessary in the circumstances.
−Removed: We believe that our audits provide a reasonable basis for our opinions.
−Removed: Definition and Limitations of Internal Control over Financial Reporting
−Removed: A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
−Removed: reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
−Removed: A companys internal control over financial reporting includes those policies and procedures that
−Removed: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (ii) provide reasonable assurance that transactions are recorded as
−Removed: necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors
−Removed: of the company;
−Removed: and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.
−Removed: Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
−Removed: Also, projections of any evaluation of
−Removed: effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
+Added: We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.
+Added: Those standards require that we plan and
+Added: perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
+Added: The Company is not required to have, nor were we engaged to perform, an audit of
+Added: its internal control over financial reporting.
+Added: As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys
+Added: internal control over financial reporting.
+Added: Accordingly, we express no such opinion.
+Added: Our audits included performing procedures to assess the risks of
+Added: material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
+Added: in the consolidated financial statements.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
+Added: procedures included confirmation of securities owned as of September 30, 2020 and 2019 by correspondence with the custodian, agent banks and portfolio company investees;
+Added: when replies were not received, we performed other auditing
+Added: We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
8 unchanged sentences
Investments, at fair value:
−Removed: Non-Control/Non-Affiliate investments (Cost of $361,272 and $359,304, respectively)
+Added: Non-Control/Non-Affiliate
+Added: investments (Cost of $427,798 and $361,272 respectively)
Affiliate investments (Cost of $38,322 and $38,921, respectively)
7 unchanged sentences
Borrowings, at fair value (Cost of $128,000 and $66,900, respectively)
−Removed: Notes payable, net (Cost of $57,500 as of September 30, 2019)
+Added: Notes payable, net of unamortized deferred financing costs of $2,428 and $1,750,
Mandatorily redeemable preferred stock, $0.001 par value per share, $25 liquidation preference per
27 unchanged sentences
Interest income
−Removed: Non-Control/Non-Affiliate investments
+Added: Non-Control/Non-Affiliate
Affiliate investments
3 unchanged sentences
PIK interest income
−Removed: Non-Control/Non-Affiliate investments
+Added: Non-Control/Non-Affiliate
Affiliate investments
3 unchanged sentences
Success fee income
−Removed: Non-Control/Non-Affiliate investments
−Removed: Affiliate investments
+Added: Non-Control/Non-Affiliate
Total success fee income
+Added: Dividend income
+Added: Non-Control/Non-Affiliate
+Added: Control investments
+Added: Total dividend income
Total investment income
5 unchanged sentences
Dividend expense on mandatorily redeemable preferred stock
−Removed: Amortization of deferred financing fees
+Added: Amortization of deferred financing costs
Professional fees
1 unchanged sentence
Expenses, before credits from Adviser
−Removed: Credit to base management feeloan servicing fee (A)
−Removed: Credit to fees from
−Removed: Adviserother (A)
+Added: Credit to base management fee - loan servicing
+Added: Credit to fees from Adviser -
Total expenses, net of credits
NET INVESTMENT INCOME
−Removed: NET REALIZED AND UNREALIZED (LOSS) GAIN
+Added: NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss):
−Removed: Non-Control/Non-Affiliate investments
+Added: Non-Control/Non-Affiliate
Affiliate investments
2 unchanged sentences
Net unrealized appreciation (depreciation):
−Removed: Non-Control/Non-Affiliate investments
+Added: Non-Control/Non-Affiliate
Affiliate investments
2 unchanged sentences
Net realized and unrealized gain (loss)
−Removed: NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
+Added: NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
BASIC AND DILUTED PER COMMON SHARE:
Net investment income
−Removed: Net increase in net assets resulting from operations
+Added: Net increase (decrease) in net assets resulting from operations
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
11 unchanged sentences
Net unrealized appreciation (depreciation) of other
−Removed: Net increase in net assets from operations
+Added: Net increase (decrease) in net assets from operations
DISTRIBUTIONS
7 unchanged sentences
Offering costs for issuance of common stock
−Removed: Net increase in net assets from capital transactions
−Removed: NET INCREASE IN NET ASSETS
+Added: Net increase (decrease) in net assets from capital transactions
+Added: NET INCREASE (DECREASE) IN NET ASSETS
NET ASSETS, BEGINNING OF YEAR
9 unchanged sentences
CASH FLOWS FROM OPERATING ACTIVITIES
−Removed: Net increase in net assets resulting from operations
+Added: Net increase (decrease) in net assets resulting from operations
Adjustments to reconcile net increase in net assets resulting from operations to net cash
3 unchanged sentences
Net proceeds from sale of investments
−Removed: Increase in investments due to paid-in-kind interest or other
+Added: Increase in investments due to
+Added: paid-in-kind interest or other
Net change in premiums, discounts and amortization
3 unchanged sentences
Net unrealized appreciation (depreciation) of other
+Added: Amortization of deferred financing costs
Changes in assets and liabilities:
−Removed: Amortization of deferred financing fees
Decrease (increase) in interest receivable, net
11 unchanged sentences
Repayments on borrowings
−Removed: Proceeds from issuance of mandatorily redeemable preferred stock
Redemption of mandatorily redeemable preferred stock
−Removed: Proceeds from issuance of long-term debt
−Removed: Deferred financing fees
−Removed: Proceeds from issuance of common stock
+Added: Proceeds from issuance of notes payable
+Added: Deferred financing costs
+Added: Proceeds from issuance of notes payable
Offering costs for issuance of common stock
17 unchanged sentences
Aerospace and Defense14.3%
−Removed: Antenna Research Associates, Inc.Term Debt (L + 10.0%, 12.0% Cash, 4.0% PIK, Due 11/2023) (C)
−Removed: Automobile0.0%
−Removed: Meridian Rack & Pinion, Inc.
−Removed: (S) Term Debt (L + 11.5%, 13.5% Cash, Due 12/2019) (E)(H)
+Added: Aerospace Engineering, LLCLine of Credit, $2,350 available (L + 7.3%, 8.3% Cash, Due 8/2025) (C)
+Added: Aerospace Engineering, LLCTerm Debt (L + 7.3%, 8.3% Cash, Due 8/2025) (C)
+Added: Antenna Research Associates, Inc.Term Debt (L + 10.0%, 12.0% Cash, 4.0% PIK, Due 11/2023) (E)
+Added: Beverage, Food, and Tobacco10.9%
+Added: ZupasLine of Credit, $4,000 available (L + 7.4%, 8.9% Cash, Due 12/2024) (C)
+Added: ZupasDelayed Draw Term Loan, $3,030 available (L + 7.4%, 8.9% Cash, Due 12/2024) (C)
+Added: ZupasTerm Debt (L + 7.4%, 8.9% Cash, Due 12/2024) (C)
Buildings and Real Estate0.7%
2 unchanged sentences
Diversified/Conglomerate Service24.9%
−Removed: DKI Ventures, LLCLine of Credit, $2,500 available (L + 8.3%, 10.3% Cash, Due 12/2021) (C)
−Removed: DKI Ventures, LLCDelayed Draw Term Loan, $5,000 available (L + 8.3%, 10.3% Cash, Due 12/2023) (C)
−Removed: DKI Ventures, LLCTerm Debt (L + 8.3%, 10.3% Cash, Due 12/2023) (C)
−Removed: ENET Holdings, LLCLine of Credit, $1,000 available (L + 7.3%, 9.3% Cash, Due 4/2022) (C)
−Removed: ENET Holdings, LLCTerm Debt (L + 7.3%, 9.3% Cash, Due 4/2025) (C)
−Removed: R2i Holdings, LLCLine of Credit, $2,000 available (L + 8.0%, 10.0% Cash, Due 12/2021) (C)
−Removed: R2i Holdings, LLCTerm Debt (L + 8.0%, 10.0% Cash, Due 12/2023) (C)
−Removed: Travel Sentry, Inc.Term Debt (L + 8.0%, 10.1% Cash, Due 12/2021) (C)(U)
+Added: DKI Ventures, LLCLine of Credit, $2,500 available (L + 8.3%, 9.3% Cash, 2.0% PIK, Due
+Added: DKI Ventures, LLCTerm Debt (L + 8.3%, 9.3% Cash, 2.0% PIK, Due 12/2023) (C)
+Added: ENET Holdings, LLCTerm Debt (10.2% Cash, Due 12/2022) (C)(F)
+Added: ENET Holdings, LLCTerm Debt (10.2% Cash, Due 4/2025) (C)(F)
+Added: R2i Holdings, LLCLine of Credit, $1,171 available (8.0% Cash, Due 12/2021) (C)(F)
+Added: R2i Holdings, LLCTerm Debt (8.0% Cash, Due 12/2023) (C)(F)
Vision Government Solutions, Inc.Line of Credit, $2,500 available (L + 8.8%, 9.8% Cash, Due
1 unchanged sentence
Healthcare, Education, and Childcare20.9%
−Removed: EL Academies, Inc.Line of Credit, $2,000 available (L + 8.8%, 10.8% Cash, Due 8/2020) (C)
+Added: ALS Education, LLCLine of Credit, $4,000 available (L + 7.5%, 9.0% Cash, Due 5/2025) (C)
+Added: ALS Education, LLCTerm Debt (L + 7.5%, 9.0% Cash, Due 5/2025) (C)
EL Academies, Inc.Delayed Draw Term Loan, $0 available (L + 8.0%, 9.0% Cash, Due 8/2022) (C)
10 unchanged sentences
B+T Group Acquisition, Inc.
−Removed: Credit, $435 available (L + 11.0%, 13.0% Cash, Due 12/2021) (C)
+Added: Credit, $0 available (L + 11.0%, 13.0% Cash, Due 12/2021) (C)(H)
B+T Group Acquisition, Inc.
(S) Term Debt
−Removed: (L + 11.0%, 13.0% Cash, Due 12/2021) (C)
+Added: (L + 11.0%, 13.0% Cash, Due 12/2021) (C)(H)
NetFortris Corp.Term Debt (L + 9.0%, 9.5% Cash, Due 2/2021) (C)
−Removed: XMedius America, Inc.Term Debt (L + 9.3%, 11.3% Cash, Due 10/2022) (Q)
−Removed: XMedius Solutions Inc.Term Debt (L + 9.3%, 11.3% Cash, Due 10/2022) (Q)
Total Secured First Lien Debt
7 unchanged sentences
Automobile4.1%
−Removed: Sea Link International IRB, Inc.Term Debt (11.3% Cash, Due 3/2023) (C)(F)
+Added: Sea Link International IRB, Inc.Term Debt (13.3% PIK, Due 3/2023) (C)(F)
Beverage, Food, and Tobacco 1.6%
1 unchanged sentence
Inc.Term Debt (L + 7.8%, 7.9% Cash, Due 10/2026) (D)
−Removed: The Mochi Ice Cream CompanyTerm Debt (L + 10.5%, 12.5% Cash, Due 12/2023) (C)
Cargo Transportation13.1%
AG Transportation Holdings, LLCTerm Debt (L + 10.0%, 13.3% Cash, Due 12/2021) (C)
+Added: American Trailer Rental Group LLCTerm Debt (L + 8.9%, 10.4% Cash, Due 8/2025) (C)
Chemicals, Plastics, and Rubber4.7%
2 unchanged sentences
Diversified/Conglomerate Manufacturing13.7%
+Added: Magpul Industries Corp.Term Debt (L + 11.5%, 12.5% Cash, Due 5/2026) (C)
Tailwind Smith Cooper Intermediate CorporationTerm Debt (L + 9.0%, 9.1% Cash, Due 5/2027) (D)
1 unchanged sentence
CHA Holdings, Inc.Term Debt (L + 8.8%, 9.8% Cash, Due 4/2026) (D)(U)
−Removed: DigiCert Holdings, Inc.Term Debt (L + 8.0%, 10.0% Cash, Due 10/2025) (D)(AA)
−Removed: DiscoverOrg, LLCTerm Debt (L + 8.5%, 10.5% Cash, Due 2/2027) (D)
−Removed: Drive Chassis Holdco, LLCTerm Debt (L + 8.3%, 10.3% Cash, Due 4/2026) (D)
+Added: Drive Chassis Holdco, LLCTerm Debt (L + 8.3%, 8.5% Cash, Due 4/2026) (D((U)
Gray Matter Systems, LLCTerm Debt (12.0% Cash, Due 11/2023) (C)(F)
Keystone Acquisition Corp.Term Debt (L + 9.3%, 10.3% Cash, Due 5/2025) (D)(U)
−Removed: LDiscovery, LLCTerm Debt (L + 10.0%, 12.0% Cash, Due 12/2023) (D)
Prophet Brand StrategyDelayed Draw Term Loan, $5,000 available (L + 8.5%, 10.5% Cash, Due
2 unchanged sentences
Medical Solutions Holdings, Inc.Term Debt (L + 8.4%, 9.4% Cash, Due 6/2025) (D)
−Removed: New Trident Holdcorp, Inc.Term Debt (L + 10.0%, 12.1% Cash, Due 7/2020) (E)(H)(K)(U)
+Added: Medical Solutions Holdings, Inc.Term Debt (L + 8.8%, 9.8% Cash, Due 6/2025) (D)
Home and Office Furnishings, Housewares and Durable Consumer Products4.1%
6 unchanged sentences
Oil and Gas 9.9%
−Removed: Imperative Holdings CorporationTerm Debt (L + 10.3%, 12.3% Cash, Due 9/2022) (C)
−Removed: Retail Stores1.2%
−Removed: United PF Holdings, LLCTerm Debt (L + 8.5%, 10.5% Cash, Due 6/2027) (D)
+Added: Imperative Holdings CorporationTerm Debt (L + 10.3%, 12.3% Cash, 1.8% PIK, Due 9/2022) (C)
Total Secured Second Lien Debt
6 unchanged sentences
Unsecured Debt1.8%
+Added: Diversified/Conglomerate Service0.0%
+Added: Frontier Financial Group Inc.Convertible Debt (6.0%, Due 6/2022) (E)(F)
Healthcare, education, and childcare1.8%
Edmentum Ultimate Holdings, LLCTerm Debt (10.0% PIK, Due 12/2021) (C)(F)
+Added: Total Unsecured Debt
Preferred Equity2.0%
−Removed: Automobile0.0%
−Removed: Meridian Rack & Pinion, Inc.(S)Preferred Stock (E)(G)
+Added: Beverage, Food, and Tobacco0.0%
+Added: Triple H Food Processors, LLCPreferred
Buildings and Real Estate0.6%
17 unchanged sentences
Beverage, Food, and Tobacco0.0%
−Removed: The Mochi Ice Cream CompanyCommon
Triple H Food Processors, LLCCommon
5 unchanged sentences
AG Transportation Holdings, LLCProfit Participation Warrants (E)(G)
+Added: American Trailer Rental Group LLCCommon
Chemicals, Plastics, and Rubber1.2%
Vertellus Holdings LLCCommon Stock
+Added: Units ((E)(G)
Healthcare, Education, and Childcare2.3%
5 unchanged sentences
Precision International, LLCMembership Unit Warrant (E)(G)
−Removed: Oil and Gas0.1%
−Removed: FES Resources Holdings LLCCommon Equity
−Removed: Total Safety Holdings, LLCCommon
−Removed: Equity (E)(G)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
4 unchanged sentences
Investment (A)(B)(W)(Y)
−Removed: Personal and Non-Durable Consumer Products (Manufacturing Only)0.1%
+Added: Oil and Gas0.1%
+Added: FES Resources Holdings LLCCommon Equity
+Added: Total Safety Holdings, LLCCommon
+Added: Equity (E)(G)
+Added: Personal and Non-Durable Consumer Products
+Added: (Manufacturing Only)0.0%
Funko Acquisition Holdings, LLC (S) Common
7 unchanged sentences
Total Common Equity
−Removed: Total Non-Control/Non-Affiliate Investments
+Added: Non-Control/Non-Affiliate Investments
AFFILIATE INVESTMENTS (N)
2 unchanged sentences
Edge Adhesives Holdings, Inc.
+Added: Credit, $0 available (L + 8.0%, 10.0% Cash, Due 12/2020) (C)
+Added: Edge Adhesives Holdings, Inc.
Debt (L + 10.5%, 12.5% Cash, Due 2/2022) (C)
8 unchanged sentences
Lignetics, Inc.Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025) (C)
−Removed: Personal and Non-Durable Consumer Products (Manufacturing Only)1.5%
−Removed: Canopy Safety Brands, LLCTerm Debt (L + 10.5%, 12.5% Cash, Due 7/2022) (C)
Total Secured Second Lien Debt
5 unchanged sentences
Lignetics, Inc.Preferred
−Removed: Personal and Non-Durable Consumer Products (Manufacturing Only)0.3%
+Added: Personal and Non-Durable Consumer Products
+Added: (Manufacturing Only)0.2%
Canopy Safety Brands, LLCPreferred
3 unchanged sentences
Lignetics, Inc.Common
−Removed: Personal and Non-Durable Consumer Products (Manufacturing Only)0.1%
+Added: Personal and Non-Durable Consumer Products
+Added: (Manufacturing Only)0.0%
Canopy Safety Brands, LLCCommon
21 unchanged sentences
LWO Acquisitions Company LLCTerm Debt (Due 6/2023) (E)(P)
+Added: Preferred Equity0.1%
+Added: Automobile0.1%
+Added: Defiance Integrated Technologies, Inc.Preferred Stock (E)(G)
Common Equity1.2%
11 unchanged sentences
Certain of the securities listed in this schedule are issued by affiliate(s) of the indicated portfolio
−Removed: The majority of the securities listed, totaling $369.0 million at fair value, are pledged as collateral to our revolving line of credit, as described further in Note 5 Borrowings in the accompanying Notes to Consolidated
−Removed: Financial Statements.
−Removed: Under the Investment Company Act of 1940, as amended, (the 1940 Act), we may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of our
−Removed: total assets.
+Added: The majority of the securities listed, totaling $412.5 million at fair value, are pledged as collateral under our revolving line of credit, as described further in Note 5 Borrowings in the accompanying Notes to
+Added: Consolidated Financial Statements.
+Added: Under the Investment Company Act of 1940, as amended, (the 1940 Act), we may not acquire any non-qualifying assets unless, at the time such acquisition is
+Added: made, qualifying assets represent at least 70% of our total assets.
As of September 30, 2020, our investments in Leeds Novamark Capital I, L.P.
−Removed: (Leeds), Funko Acquisition Holdings, LLC (Funko), and XMedius Solutions Inc.
−Removed: (XMedius) are considered non-qualifying
−Removed: assets under Section 55 of the 1940 Act.
+Added: (Leeds) and Funko Acquisition Holdings, LLC (Funko) are considered non-qualifying assets under Section 55 of the 1940 Act.
Such non-qualifying assets represent 1.1% of total investments, at fair value, as of September 30, 2020.
−Removed: Unless indicated otherwise, all cash interest rates are indexed to 30-day London Interbank Offered Rate
−Removed: (LIBOR or L), which was 2.02% as of September 30, 2019.
−Removed: If applicable, paid-in-kind (PIK) interest rates are noted separately from the cash interest rate.
−Removed: Certain securities are subject to an interest rate
−Removed: The cash interest rate is the greater of the floor or LIBOR plus a spread.
+Added: Unless indicated otherwise, all cash interest rates are indexed to
+Added: 30-day London Interbank Offered Rate (LIBOR or L), which was 0.15% as of September 30, 2020.
+Added: If applicable,
+Added: paid-in-kind (PIK) interest rates are noted separately from the cash interest rate.
+Added: Certain securities are subject to an interest rate floor.
+Added: interest rate is the greater of the floor or LIBOR plus a spread.
Due dates represent the contractual maturity date.
10 unchanged sentences
within such class (some series of which may or may not be voting shares) or aggregates all warrants to purchase shares of a class of stock owned without regard to specific series of such class of stock such warrants allow us to purchase.
−Removed: In February 2019, New Trident Holdcorp, Inc.
−Removed: filed for Chapter 11 bankruptcy protection.
There are certain limitations on our ability to withdraw our partnership interest prior to dissolution of the
entity, which must occur no later than May 9, 2024 or two years after all outstanding leverage has matured.
−Removed: Non-Control/Non-Affiliate investments, as defined by the 1940 Act, are those that are neither Control nor
−Removed: Affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.
+Added: Non-Control/Non-Affiliate
+Added: investments, as defined by the 1940 Act, are those that are neither Control nor Affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.
Affiliate investments, as defined by the 1940 Act, are those in which we own, with the power to vote, between
3 unchanged sentences
Debt security does not have a stated interest rate that is payable thereon.
−Removed: Fair value was based on the expected exit or payoff amount, where such event has occurred or is expected to
−Removed: occur imminently.
Fair value was based on net asset value provided by the fund as a practical expedient.
−Removed: One of our affiliated funds, Gladstone Investment Corporation, co-invested with us in this portfolio company
−Removed: pursuant to an exemptive order granted by the U.S.
+Added: One of our affiliated funds, Gladstone Investment Corporation,
+Added: co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S.
Securities and Exchange Commission.
5 unchanged sentences
as of the reporting date, less a discount for lack of marketability.
−Removed: is traded on the Nasdaq Stock Market under the
−Removed: trading symbol FNKO. Refer to Note 3 Investments in the accompanying Notes to Consolidated Financial Statements for additional information.
−Removed: The cash interest rate on this investment was indexed to 90-day LIBOR, which was 2.09% as of
−Removed: September 30, 2019.
+Added: is traded on the Nasdaq Global Select Market
+Added: under the trading symbol FNKO. Refer to Note 3 Investments in the accompanying Notes to Consolidated Financial Statements for additional information.
+Added: The cash interest rate on this investment was indexed to 90-day LIBOR,
+Added: which was 0.23% as of September 30, 2020.
The cash interest rate on this investment was indexed to the U.S.
1 unchanged sentence
3.25% as of September 30, 2020.
−Removed: Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the ASC 820 fair
−Removed: value hierarchy.
+Added: Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the ASC 820
+Added: fair value hierarchy.
Refer to Note 3 Investments in the accompanying Notes to Consolidated Financial Statements for additional information.
4 unchanged sentences
Cumulative gross unrealized depreciation for federal income tax purposes is $68.3 million;
−Removed: cumulative gross
−Removed: unrealized appreciation for federal income tax purposes is $19.8 million.
+Added: gross unrealized appreciation for federal income tax purposes is $13.9 million.
Cumulative net unrealized depreciation is $54.5 million, based on a tax cost of $504.9 million.
−Removed: Investment was exited subsequent to September 30, 2019.
−Removed: Refer to Note 15 Subsequent Events in
−Removed: the accompanying Notes to Consolidated Financial Statements for additional information.
−Removed: THE ACCOMPANYING NOTES
−Removed: ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
+Added: THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
GLADSTONE CAPITAL CORPORATION
6 unchanged sentences
Secured First Lien Debt65.6%
+Added: Aerospace and Defense4.8%
+Added: Antenna Research Associates, Inc.Term Debt (L + 10.0%, 12.0% Cash, 4.0% PIK, Due 11/2023) (C)
Automobile0.0%
Meridian Rack & Pinion, Inc.
−Removed: (S) Term Debt (L + 11.5%, 13.8% Cash, Due 6/2019) (C)
−Removed: Beverage, Food, and Tobacco2.6%
−Removed: Triple H Food Processors, LLCLine of Credit, $750 available (L + 6.8%, 9.0% Cash, Due 8/2020) (C)
−Removed: Triple H Food Processors, LLCTerm Debt (L + 8.3%, 10.5% Cash, Due 8/2020) (C)
+Added: (S) Term Debt (L + 11.5%, 13.5% Cash, Due 12/2019) (E)(H)
Buildings and Real Estate0.9%
−Removed: GFRC Holdings, LLCLine of Credit, $0 available (L + 8.0%, 10.3% Cash, Due 9/2018) (E)
−Removed: GFRC Holdings, LLCTerm Debt (L + 8.0%, 10.3% Cash, Due 9/2018) (E)
+Added: GFRC 360, LLCLine of Credit, $50 available (L + 8.0%, 10.0% Cash, Due 9/2020) (C)
+Added: GFRC 360, LLCTerm Debt (L + 8.0%, 10.0% Cash, Due 9/2020) (C)
Diversified/Conglomerate Service28.4%
−Removed: IA Tech, LLCTerm Debt (L + 11.0%, 13.3% Cash, Due 6/2023) (C)
+Added: DKI Ventures, LLCLine of Credit, $2,500 available (L + 8.3%, 10.3% Cash, Due 12/2021) (C)
+Added: DKI Ventures, LLCDelayed Draw Term Loan, $5,000 available (L + 8.3%, 10.3% Cash, Due 12/2023) (C)
+Added: DKI Ventures, LLCTerm Debt (L + 8.3%, 10.3% Cash, Due 12/2023) (C)
+Added: ENET Holdings, LLCLine of Credit, $1,000 available (L + 7.3%, 9.3% Cash, Due 4/2022) (C)
+Added: ENET Holdings, LLCTerm Debt (L + 7.3%, 9.3% Cash, Due 4/2025) (C)
+Added: R2i Holdings, LLCLine of Credit, $2,000 available (L + 8.0%, 10.0% Cash, Due 12/2021) (C)
+Added: R2i Holdings, LLCTerm Debt (L + 8.0%, 10.0% Cash, Due 12/2023) (C)
Travel Sentry, Inc.Term Debt (L + 8.0%, 10.1% Cash, Due 12/2021) (C)(U)
Vision Government Solutions, Inc.Line of Credit, $2,500 available (L + 8.8%, 10.8% Cash, Due
−Removed: Vision Government Solutions, Inc.Delayed Draw Term Loan, $900 available (10.0% Cash, Due
−Removed: 6/2021) (C)(F)
Vision Government Solutions, Inc.Term Debt (L + 8.8%, 10.8% Cash, Due 12/2022) (C)
3 unchanged sentences
EL Academies, Inc.Term Debt (L + 8.8%, 10.8% Cash, Due 8/2022) (C)
−Removed: TWS Acquisition CorporationTerm Debt (L + 8.0%, 10.3% Cash, Due 7/2020) (Q)(AA)
Machinery2.5%
1 unchanged sentence
Arc Drilling Holdings LLCTerm Debt (L + 9.5%, 11.5% Cash, 3.0% PIK, Due 11/2022) (C)
−Removed: Precision International, LLCTerm Debt (10.0%, Due 9/2021) (C)(F)
−Removed: Oil and Gas17.0%
−Removed: Chemical Technologies, Inc.Line of Credit, $0 available (L + 8.8%, 11.0% Cash, Due
−Removed: Chemical Technologies, Inc.Term Debt (L + 8.8%, 11.0% Cash, Due 12/2020) (C)
−Removed: WadeCo Specialties, Inc.Line of Credit, $1,100 available (L + 7.0%, 9.3% Cash, Due 3/2019) (C)
−Removed: WadeCo Specialties, Inc.Term Debt (L + 7.0%, 9.3% Cash, Due 3/2019) (C)
−Removed: WadeCo Specialties, Inc.Term Debt (L + 9.0%, 12.0% Cash, Due 3/2019) (C)
+Added: Precision International, LLCLine of Credit, $500 available (L + 7.5%, 9.5% Cash, Due 9/2021) (C)
+Added: Precision International, LLCTerm Debt (10.0% Cash, Due 9/2021) (C)(F)
Printing and Publishing0.0%
2 unchanged sentences
Telecommunications17.8%
−Removed: Applied Voice & Speech Technologies, Inc.Term Debt (L + 9.3%, 11.5% Cash, Due
B+T Group Acquisition, Inc.
+Added: Credit, $435 available (L + 11.0%, 13.0% Cash, Due 12/2021) (C)
+Added: B+T Group Acquisition, Inc.
(S) Term Debt
1 unchanged sentence
NetFortris Corp.Term Debt (L + 9.0%, 11.0% Cash, Due 2/2021) (C)
−Removed: XMedius Solutions Inc.Term Debt (L + 9.3%, 11.5% Cash, Due 10/2022) (C)
+Added: XMedius America, Inc.Term Debt (L + 9.3%, 11.3% Cash, Due 10/2022) (Q)
+Added: XMedius Solutions Inc.Term Debt (L + 9.3%, 11.3% Cash, Due 10/2022) (Q)
Total Secured First Lien Debt
9 unchanged sentences
Beverage, Food, and Tobacco4.2%
+Added: 8 th Avenue Food & Provisions,
+Added: Inc.Term Debt (L + 7.8%, 9.8% Cash, Due 10/2026) (D)
The Mochi Ice Cream CompanyTerm Debt (L + 10.5%, 12.5% Cash, Due 12/2023) (C)
2 unchanged sentences
Chemicals, Plastics, and Rubber4.4%
+Added: Phoenix Aromas & Essential Oils, LLCTerm Debt (L + 9.5%, 11.5% Cash, Due
Vertellus Holdings LLCTerm Debt (L + 12.0%, 14.0% Cash, Due 10/2021) (C)
Diversified/Conglomerate Manufacturing1.9%
−Removed: Alloy Die Casting Co.
−Removed: (S) Term Debt (L +
−Removed: 4.0%, 6.3% Cash, Due 4/2021) (C)
−Removed: Alloy Die Casting Co.
−Removed: (S) Term Debt (L +
−Removed: 4.0%, 6.3% Cash, Due 4/2021) (C)
−Removed: Alloy Die Casting Co.
−Removed: (S) Term Debt (L +
−Removed: 4.0%, 6.3% Cash, Due 4/2021) (C)
−Removed: United Flexible, Inc.Term Debt (L + 9.3%, 11.5% Cash, Due 2/2022) (C)
+Added: Tailwind Smith Cooper Intermediate CorporationTerm Debt (L + 9.0%, 11.0% Cash, Due
Diversified/Conglomerate Service18.5%
CHA Holdings, Inc.Term Debt (L + 8.8%, 10.8% Cash, Due 4/2026) (D)(U)
−Removed: DigiCert Holdings, Inc.Term Debt (L + 8.0%, 10.3% Cash, Due 10/2025) (D)
−Removed: Gray Matter Systems, LLCDelayed Draw Term Loan, $2,000 available (12.0% Cash, Due 11/2023) (C)(F)
+Added: DigiCert Holdings, Inc.Term Debt (L + 8.0%, 10.0% Cash, Due 10/2025) (D)(AA)
+Added: DiscoverOrg, LLCTerm Debt (L + 8.5%, 10.5% Cash, Due 2/2027) (D)
+Added: Drive Chassis Holdco, LLCTerm Debt (L + 8.3%, 10.3% Cash, Due 4/2026) (D)
Gray Matter Systems, LLCTerm Debt (12.0% Cash, Due 11/2023) (C)(F)
1 unchanged sentence
LDiscovery, LLCTerm Debt (L + 10.0%, 12.0% Cash, Due 12/2023) (D)
−Removed: Red Ventures, LLCTerm Debt (L + 8.0%, 10.3% Cash, Due 11/2025) (D)(AA)
+Added: Prophet Brand StrategyDelayed Draw Term Loan, $5,000 available (L + 9.5%, 11.5% Cash,
+Added: Due 2/2025) (C)
+Added: Prophet Brand StrategyTerm Debt (L + 9.5%, 11.5% Cash, Due 2/2025) (C)
Healthcare, Education, and Childcare1.1%
Medical Solutions Holdings, Inc.Term Debt (L + 8.3%, 10.3% Cash, Due 6/2025) (D)
−Removed: Merlin International, Inc.Term Debt (L + 10.0%, 12.3% Cash, Due 10/2022) (C)
−Removed: New Trident Holdcorp, Inc.Term Debt (L + 10.0%, 5.5% Cash, 6.8% PIK, Due 7/2020) (E)
+Added: New Trident Holdcorp, Inc.Term Debt (L + 10.0%, 12.1% Cash, Due 7/2020) (E)(H)(K)(U)
Home and Office Furnishings, Housewares and Durable Consumer Products3.9%
3 unchanged sentences
Due 6/2023) (C)
+Added: Machinery0.4%
+Added: CPM Holdings, Inc.Term Debt (L + 8.3%, 10.3% Cash, Due 11/2026) (D)
Oil and Gas11.9%
−Removed: Francis Drilling Fluids, Ltd.Term Debt (L + 10.4%, 12.6% Cash, Due 4/2020) (E)(H)(I)
−Removed: Francis Drilling Fluids, Ltd.Term Debt (L + 9.3%, 11.5% Cash, Due 4/2020) (E)(H)(I)
−Removed: Personal and Non-Durable Consumer Products (Manufacturing Only)1.6%
−Removed: Canopy Safety Brands, LLCTerm Debt (L + 10.5%, 12.8% Cash, Due 7/2022) (C)
+Added: Imperative Holdings CorporationTerm Debt (L + 10.3%, 12.3% Cash, Due 9/2022) (C)
+Added: Retail Stores1.2%
+Added: United PF Holdings, LLCTerm Debt (L + 8.5%, 10.5% Cash, Due 6/2027) (D)
Total Secured Second Lien Debt
+Added: THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
+Added: GLADSTONE CAPITAL CORPORATION
+Added: CONSOLIDATED SCHEDULE OF INVESTMENTS
+Added: SEPTEMBER 30, 2019
+Added: (DOLLAR AMOUNTS IN THOUSANDS)
+Added: Investment (A)(B)(W)(Y)
Unsecured Debt1.6%
3 unchanged sentences
Automobile0.0%
−Removed: Meridian Rack & Pinion, Inc.
+Added: Meridian Rack & Pinion,
(S) Preferred Stock (E)(G)
Buildings and Real Estate0.5%
−Removed: GFRC Holdings, LLCPreferred
−Removed: THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
−Removed: GLADSTONE CAPITAL CORPORATION
−Removed: CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
−Removed: SEPTEMBER 30, 2018
−Removed: (DOLLAR AMOUNTS IN THOUSANDS)
−Removed: Investment (A)(B)(W)(Y)
−Removed: Diversified/Conglomerate Manufacturing0.5%
−Removed: Alloy Die Casting Co.(S)Preferred
−Removed: United Flexible, Inc.Preferred
+Added: GFRC 360, LLCPreferred
Diversified/Conglomerate Service0.0%
2 unchanged sentences
Oil and Gas2.1%
−Removed: Chemical & Injection Holdings Company, LLCPreferred Equity Units (E)(G)
−Removed: Francis Drilling Fluids, Ltd.Preferred Equity Units (E)(G)(I)
+Added: FES Resources Holdings LLCPreferred Equity Units (E)(G)
+Added: Imperative Holdings CorporationPreferred Equity Units (E)(G)
Telecommunications0.7%
5 unchanged sentences
Aerospace and Defense1.3%
−Removed: FedCap Partners, LLCClass A Membership Units ($0 Uncalled Commitment) (G)(K)(R)
+Added: Antenna Research Associates, Inc.Common Equity Units (E)(G)
Automobile0.5%
4 unchanged sentences
Buildings and Real Estate0.0%
−Removed: GFRC Holdings, LLCCommon Stock
+Added: GFRC 360, LLCCommon Stock
Warrants (E)(G)
4 unchanged sentences
Vertellus Holdings LLCCommon Stock
−Removed: Diversified/Conglomerate Manufacturing0.9%
−Removed: Alloy Die Casting Co.
−Removed: (S) Common Stock (E)(G)
−Removed: United Flexible, Inc.Common
Healthcare, Education, and Childcare1.8%
Edmentum Ultimate Holdings, LLCCommon
−Removed: EL Academies, Inc.Common
+Added: GSM MidCo LLCCommon
Leeds Novamark Capital I, L.P.Limited Partnership Interest ($843 uncalled capital
4 unchanged sentences
Oil and Gas0.1%
−Removed: Francis Drilling Fluids, Ltd.Common Equity Units (E)(G)(I)
−Removed: W3, Co.Common Equity (E)(G)
−Removed: Personal and Non-Durable Consumer Products (Manufacturing Only)0.5%
−Removed: Canopy Safety Brands, LLCParticipation
−Removed: Warrant (E)(G)
−Removed: Funko Acquisition Holdings,
−Removed: LLC (S) Common Units (G)(T)
+Added: FES Resources Holdings LLCCommon Equity
+Added: Total Safety Holdings, LLCCommon
+Added: Equity (E)(G)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
GLADSTONE CAPITAL CORPORATION
−Removed: CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
+Added: CONSOLIDATED SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2019
1 unchanged sentence
Investment (A)(B)(W)(Y)
+Added: Personal and Non-Durable Consumer Products
+Added: (Manufacturing Only)0.1%
+Added: Funko Acquisition Holdings,
+Added: LLC (S) Common Units (G)(T)
Telecommunications0.0%
+Added: B+T Group Acquisition,
+Added: (S) Common Stock Warrant (E)(G)
NetFortris Corp.Common Stock
Warrant (E)(G)
+Added: Textiles and Leather2.4%
+Added: Targus Cayman HoldCo, Ltd.Common
Total Common Equity
−Removed: Total Non-Control/Non-Affiliate Investments
−Removed: AFFILIATE INVESTMENTS(N)20.6%
+Added: Non-Control/Non-Affiliate Investments
+Added: INVESTMENTS (N) 14.2%
Secured First Lien Debt3.2%
1 unchanged sentence
Edge Adhesives Holdings, Inc.
−Removed: Debt (L + 10.5%, 12.8% Cash, Due 2/2019) (C)
+Added: (S) Term Debt (L + 10.5%, 12.5% Cash, Due 2/2022) (C)
Edge Adhesives Holdings, Inc.
−Removed: Debt (L + 11.8%, 14.0% Cash, Due 2/2019) (C)
−Removed: LWO Acquisitions Company LLCLine of Credit, $0 available (L + 5.5%, 7.8% Cash, 2.0% PIK,
−Removed: Due 12/2019) (C)
−Removed: LWO Acquisitions Company LLCTerm Debt (L + 8.5%, 10.8% Cash, 2.0% PIK, Due 12/2019) (C)
+Added: (S) Term Debt (L + 11.8%, 13.8% Cash, Due 2/2022) (C)
Total Secured First Lien Debt
5 unchanged sentences
Lignetics, Inc.Term Debt (L + 9.0%, 12.0% Cash, Due 11/2022) (C)
+Added: Personal and Non-Durable Consumer Products
+Added: (Manufacturing Only)1.5%
+Added: Canopy Safety Brands, LLCTerm Debt (L + 10.5%, 12.5% Cash, Due 7/2022) (C)
Total Secured Second Lien Debt
−Removed: Unsecured Debt0.0%
−Removed: Diversified/Conglomerate Manufacturing0.0%
−Removed: LWO Acquisitions Company LLCTerm Debt (Due 6/2020) (C)(P)
Preferred Equity0.6%
4 unchanged sentences
Lignetics, Inc.Preferred
+Added: Personal and Non-Durable Consumer Products
+Added: (Manufacturing Only)0.3%
+Added: Canopy Safety Brands, LLCPreferred
Total Preferred Equity
Common Equity0.4%
−Removed: Diversified/Conglomerate Manufacturing0.0%
−Removed: LWO Acquisitions Company LLCCommon
Diversified Natural Resources, Precious Metals and Minerals0.3%
Lignetics, Inc.Common
−Removed: Textiles and Leather2.8%
−Removed: Targus Cayman HoldCo, Ltd.Common
+Added: Personal and Non-Durable Consumer Products
+Added: (Manufacturing Only)0.1%
+Added: Canopy Safety Brands, LLCCommon
Total Common Equity
2 unchanged sentences
GLADSTONE CAPITAL CORPORATION
−Removed: CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)
+Added: CONSOLIDATED SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2019
3 unchanged sentences
Secured First Lien Debt2.8%
−Removed: Machinery1.2%
−Removed: PIC 360, LLCTerm Debt (14.0% Cash, Due 9/2019) (E)(F)
+Added: Diversified/Conglomerate Manufacturing2.2%
+Added: LWO Acquisitions Company LLCTerm Debt (L + 7.5%, 10.0% Cash, Due 6/2021) (E)
+Added: LWO Acquisitions Company LLCTerm Debt (Due 6/2021) (E)(P)
Printing and Publishing0.6%
4 unchanged sentences
Defiance Integrated Technologies, Inc.Term Debt (L + 9.5%, 11.5% Cash, Due 8/2023) (E)
+Added: Unsecured Debt0.0%
+Added: Diversified/Conglomerate Manufacturing0.0%
+Added: LWO Acquisitions Company LLCTerm Debt (Due 6/2020) (E)(P)
Common Equity2.7%
1 unchanged sentence
Defiance Integrated Technologies, Inc.Common Stock (E)(G)
+Added: Diversified/Conglomerate Manufacturing0.0%
+Added: LWO Acquisitions Company LLCCommon
Machinery0.9%
6 unchanged sentences
Certain of the securities listed in this schedule are issued by affiliate(s) of the indicated portfolio
−Removed: The majority of the securities listed, totaling $332.3 million at fair value, are pledged as collateral to our revolving line of credit, as described further in Note 5 Borrowings in the accompanying Notes to Consolidated
−Removed: Financial Statements.
−Removed: Under the 1940 Act, we may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets.
−Removed: As of September 30, 2018, our investments in
−Removed: FedCap Partners, LLC (FedCap), Leeds, Funko, and XMedius are considered non-qualifying assets under Section 55 of the 1940 Act.
−Removed: Such non-qualifying assets represent 2.9% of total investments, at fair value, as of September 30,
−Removed: Unless indicated otherwise, all cash interest rates are indexed to 30-day LIBOR, which was 2.27% as of
−Removed: September 30, 2018.
−Removed: If applicable, PIK interest rates are noted separately from the cash interest rate.
+Added: The majority of the securities listed, totaling $369.0 million at fair value, are pledged as collateral under our revolving line of credit, as described further in Note 5 Borrowings in the accompanying Notes to
+Added: Consolidated Financial Statements.
+Added: Under the Investment Company Act of 1940, as amended, (the 1940 Act), we may not acquire any non-qualifying assets unless, at the time such acquisition is
+Added: made, qualifying assets represent at least 70% of our total assets.
+Added: As of September 30, 2019, our investments in Leeds Novamark Capital I, L.P.
+Added: (Leeds), Funko Acquisition Holdings, LLC (Funko), and XMedius Solutions Inc.
+Added: (XMedius) are considered non-qualifying assets under Section 55 of the 1940 Act.
+Added: Such non-qualifying assets represent 2.7% of total investments, at fair
+Added: value, as of September 30, 2019.
+Added: Unless indicated otherwise, all cash interest rates are indexed to
+Added: 30-day London Interbank Offered Rate (LIBOR or L), which was 2.02% as of September 30, 2019.
+Added: If applicable,
+Added: paid-in-kind (PIK) interest rates are noted separately from the cash interest rate.
Certain securities are subject to an interest rate floor.
−Removed: The cash interest rate is the greater of the floor or LIBOR plus a spread.
−Removed: dates represent the contractual maturity date.
−Removed: Fair value was based on an internal yield analysis or on estimates of value submitted by ICE.
+Added: interest rate is the greater of the floor or LIBOR plus a spread.
+Added: Due dates represent the contractual maturity date.
+Added: Fair value was based on an internal yield analysis or on estimates of value submitted by ICE Data Pricing and
+Added: Reference Data, LLC (ICE).
Fair value was based on the indicative bid price on or near September 30, 2019, offered by the respective
5 unchanged sentences
Debt security is on non-accrual status.
−Removed: On September 29, 2018, Francis Drilling Fluids, Ltd.
−Removed: filed for Chapter 11 bankruptcy protection.
Where applicable, aggregates all shares of a class of stock owned without regard to specific series owned
within such class (some series of which may or may not be voting shares) or aggregates all warrants to purchase shares of a class of stock owned without regard to specific series of such class of stock such warrants allow us to purchase.
−Removed: There are certain limitations on our ability to transfer our units owned, withdraw or resign prior to
−Removed: dissolution of the entity, which must occur no later than May 3, 2020.
+Added: In February 2019, New Trident Holdcorp, Inc.
+Added: filed for Chapter 11 bankruptcy protection.
There are certain limitations on our ability to withdraw our partnership interest prior to dissolution of the
entity, which must occur no later than May 9, 2024 or two years after all outstanding leverage has matured.
−Removed: Non-Control/Non-Affiliate investments, as defined by the 1940 Act, are those that are neither Control nor
−Removed: Affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.
+Added: Non-Control/Non-Affiliate
+Added: investments, as defined by the 1940 Act, are those that are neither Control nor Affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.
Affiliate investments, as defined by the 1940 Act, are those in which we own, with the power to vote, between
6 unchanged sentences
Fair value was based on net asset value provided by the fund as a practical expedient.
−Removed: One of our affiliated funds, Gladstone Investment Corporation, co-invested with us in this portfolio company
−Removed: pursuant to an exemptive order granted by the U.S.
+Added: One of our affiliated funds, Gladstone Investment Corporation,
+Added: co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S.
Securities and Exchange Commission.
−Removed: Our investment in Funko was valued using Level 2 inputs within the FASB ASC 820 fair value hierarchy.
−Removed: common units in Funko are convertible to class A common stock in Funko, Inc.
+Added: Our investment in Funko was valued using Level 2 inputs within the Financial Accounting Standards Board
+Added: (FASB) Accounting Standard Codification (ASC) Topic 820, Fair Value Measurements and Disclosures (ASC 820) fair value hierarchy.
+Added: Our common units in Funko are convertible to class A common stock in
upon meeting certain requirements.
Fair value was based on the closing market price of shares of Funko, Inc.
−Removed: as of the reporting date, less a discount for lack of
−Removed: marketability.
−Removed: is traded on the Nasdaq Stock Market under the trading symbol FNKO. Refer to Note 3 Investments in the accompanying Notes to Consolidated Financial Statements for additional information.
−Removed: The cash interest rate on this investment was indexed to 90-day LIBOR, which was 2.40% as of
−Removed: September 30, 2018.
−Removed: The cash interest rate on this investment was indexed to PRIME, which was 5.25% as of September 30, 2018.
−Removed: Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the ASC 820 fair
−Removed: value hierarchy.
+Added: as of the reporting date, less a discount for lack of marketability.
+Added: is traded on the Nasdaq Stock Market under the
+Added: trading symbol FNKO. Refer to Note 3 Investments in the accompanying Notes to Consolidated Financial Statements for additional information.
+Added: The cash interest rate on this investment was indexed to 90-day LIBOR,
+Added: which was 2.09% as of September 30, 2019.
+Added: The cash interest rate on this investment was indexed to the U.S.
+Added: Prime Rate (PRIME), which was
+Added: 5.00% as of September 30, 2019.
+Added: Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the ASC 820
+Added: fair value hierarchy.
Refer to Note 3 Investments in the accompanying Notes to Consolidated Financial Statements for additional information.
4 unchanged sentences
Cumulative gross unrealized depreciation for federal income tax purposes is $55.6 million;
−Removed: cumulative gross
−Removed: unrealized appreciation for federal income tax purposes is $15.4 million.
+Added: gross unrealized appreciation for federal income tax purposes is $19.8 million.
Cumulative net unrealized depreciation is $35.8 million, based on a tax cost of $438.6 million.
Investment was exited subsequent to September 30, 2019.
−Removed: THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
+Added: Refer to Note 15 Subsequent Events in
+Added: the accompanying Notes to Consolidated Financial Statements for additional information.
+Added: THE ACCOMPANYING NOTES
+Added: ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
GLADSTONE CAPITAL CORPORATION
6 unchanged sentences
Gladstone Capital Corporation and its consolidated subsidiaries.
−Removed: We are an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company (BDC) under the
−Removed: Investment Company Act of 1940, as amended (the 1940 Act), and are applying the guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946 Financial
−Removed: Services-Investment Companies (ASC 946).
+Added: We are an externally managed, closed-end, non-diversified management investment company that has elected
+Added: to be treated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the 1940 Act), and are applying the guidance of the Financial Accounting Standards Board (FASB)
+Added: Accounting Standards Codification (ASC) Topic 946 Financial Services-Investment Companies (ASC 946).
In addition, we have elected to be treated for U.S.
−Removed: federal income tax purposes as a regulated investment company (RIC) under the Internal Revenue Code of 1986, as amended (the
−Removed: We were established for the purpose of investing in debt and equity securities of established private businesses operating in the United States (U.S.).
+Added: federal income tax purposes as a regulated investment
+Added: company (RIC) under the Internal Revenue Code of 1986, as amended (the Code).
+Added: We were established for the purpose of investing in debt and equity securities of established private businesses operating in the United States
Our investment objectives are to:
−Removed: (1) achieve and grow
−Removed: current income by investing in debt securities of established lower middle market companies (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization (EBITDA) of $3 million to $15
−Removed: million) in the U.S.
−Removed: 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;
−Removed: and (2) provide
−Removed: our stockholders with long-term capital appreciation in the value of our assets by investing in equity securities of established businesses that we believe can grow over time to permit us to sell our equity investments for capital gains.
−Removed: Gladstone Business Loan, LLC (Business Loan), a wholly-owned subsidiary of ours, was established on February 3, 2003, for the sole purpose of
−Removed: holding certain investments pledged as collateral to our line of credit.
−Removed: The financial statements of Business Loan are consolidated with those of Gladstone Capital Corporation.
−Removed: We also have significant subsidiaries (as defined under Rule 1-02(w) of
+Added: (1) achieve and grow current income by investing in debt securities of established lower middle market companies (which we generally define as companies with annual earnings before interest,
+Added: taxes, depreciation and amortization (EBITDA) of $3 million to $15 million) in the U.S.
+Added: that we believe will provide stable earnings and cash flow to pay expenses, make principal and interest payments on our outstanding indebtedness
+Added: and make distributions to stockholders that grow over time;
+Added: 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
+Added: believe can grow over time to permit us to sell our equity investments for capital gains.
+Added: Gladstone Business Loan, LLC (Business Loan), a
+Added: wholly-owned subsidiary of ours, was established on February 3, 2003, for the sole purpose of holding certain investments pledged as collateral under our line of credit.
+Added: The financial statements of Business Loan are consolidated with those of
+Added: Gladstone Capital Corporation.
+Added: We also have significant subsidiaries (as defined under Rule 1-02(w) of the U.S.
Securities and Exchange Commissions (SEC) Regulation S-X) whose financial statements are not consolidated with ours.
−Removed: Refer to Note 14 Unconsolidated Significant Subsidiaries for additional information regarding
−Removed: our unconsolidated significant subsidiaries.
−Removed: We are externally managed by Gladstone Management Corporation (the Adviser), an affiliate of
−Removed: ours and an SEC registered investment adviser, pursuant to an investment advisory and management agreement (the Advisory Agreement).
−Removed: Administrative services are provided by our affiliate, Gladstone Administration, LLC (the
+Added: Refer to Note 14 Unconsolidated Significant Subsidiaries for additional information regarding our unconsolidated significant
+Added: subsidiaries.
+Added: We are externally managed by Gladstone Management Corporation (the Adviser), an affiliate of ours and an SEC registered
+Added: investment adviser, pursuant to an investment advisory and management agreement (as amended and/or restated from time to time, the Advisory Agreement).
+Added: Administrative services are provided by Gladstone Administration, LLC (the
Administrator), an affiliate of ours and the Adviser, pursuant to an administration agreement (the Administration Agreement).
5 unchanged sentences
Financial Statements and the accompanying notes in accordance with accounting principles generally accepted in the U.S.
−Removed: (GAAP) and conform to Regulation S-X under the Securities Exchange Act of 1934, as amended (the Exchange
−Removed: Management believes it has made all necessary adjustments so that our accompanying Consolidated Financial Statements are presented fairly and that all such adjustments are of a normal recurring nature.
−Removed: Our accompanying
−Removed: Consolidated Financial Statements include our accounts and the accounts of our wholly-owned subsidiaries.
−Removed: All significant intercompany balances and transactions have been eliminated.
+Added: (GAAP) and conform to Regulation S-X.
+Added: Management believes it has made all
+Added: necessary adjustments so that our accompanying Consolidated Financial Statements are presented fairly and that all such adjustments are of a normal recurring nature.
+Added: Our accompanying Consolidated Financial Statements include our
+Added: accounts and the accounts of our wholly-owned subsidiaries.
+Added: All significant intercompany balances and transactions have been eliminated in consolidation.
Consolidation
−Removed: In accordance with Article 6 of Regulation S-X under the Securities Act of 1933, as amended, we do not consolidate portfolio company investments.
+Added: In accordance with Article 6 of Regulation S-X, we do not consolidate portfolio company investments.
investment company rules and regulations pursuant to the American Institute of Certified Public Accountants Audit and Accounting Guide for Investment Companies, codified in ASC 946, we are precluded from consolidating any entity other than another
16 unchanged sentences
between 5.0% and 25.0% of the issued and outstanding voting securities that are not classified as Control Investments;
−Removed: Non-Control/Non-Affiliate Investments Non-Control/Non-Affiliate investments are those that are
−Removed: neither control nor affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.
−Removed: and cash equivalents
−Removed: We consider all short-term, highly liquid investments that are both readily convertible to cash and have a maturity of three
−Removed: months or less at the time of purchase to be cash equivalents.
+Added: Non-Control/Non-Affiliate
+Added: Investments Non-Control/Non-Affiliate investments are those that are neither control nor affiliate investments and in which we own less than 5.0% of the issued
+Added: and outstanding voting securities.
+Added: Cash and cash equivalents
+Added: We consider all short-term, highly liquid investments that are both readily convertible to cash and have a maturity of three months or less at the time of
+Added: purchase to be cash equivalents.
Cash is carried at cost, which approximates fair value.
−Removed: We place our cash with financial institutions, and at times, cash held in checking accounts may exceed the Federal Deposit
−Removed: Insurance Corporation insured limit.
+Added: We place our cash with financial institutions, and at times, cash held in checking accounts may exceed the Federal Deposit Insurance Corporation insured limit.
We seek to mitigate this concentration of credit risk by depositing funds with major financial institutions.
Restricted Cash and Cash Equivalents
−Removed: Restricted cash is
−Removed: cash held in escrow that was generally received as part of an investment exit.
−Removed: Restricted cash is carried at cost, which approximates fair value.
+Added: Restricted cash is cash held in escrow that was generally received as part of an investment exit.
+Added: Restricted cash is carried at cost, which
+Added: approximates fair value.
Investment Valuation Policy
64 unchanged sentences
remaining life, current market yield, current leverage, and interest rate spreads.
−Removed: This technique develops a modified discount rate that incorporates risk premiums including, among other things, increased probability of default, increased loss upon
−Removed: default and increased liquidity risk.
+Added: This technique develops a modified discount rate that incorporates risk premiums including increased probability of default, increased loss upon default and increased
+Added: liquidity risk.
Generally, the Valuation Team uses the yield analysis to corroborate both estimates of value provided by ICE and market quotes.
3 unchanged sentences
variances in quotations and other market insights to determine if any available quoted prices are reliable.
−Removed: Typically, the Valuation Team uses the lower indicative bid price (IBP) in the bid-to-ask price range obtained from the
−Removed: respective originating syndication agents trading desk on or near the valuation date.
−Removed: The Valuation Team may take further steps to consider additional information to validate that price in accordance with the Policy.
−Removed: For securities that are
−Removed: publicly traded, we generally base fair value on the closing market price of the securities we hold as of the reporting date.
−Removed: For restricted securities that are publicly traded, we generally base fair value on the closing market price of the
−Removed: securities we hold as of the reporting date less a discount for the restriction, which includes consideration of the nature and term to expiration of the restriction.
+Added: Typically, the Valuation Team uses the lower indicative bid price (IBP) in the bid-to-ask price range obtained from the respective originating syndication agents trading desk on or near the valuation date.
+Added: The Valuation Team may take further steps to consider additional
+Added: information to validate that price in accordance with the Policy.
+Added: For securities that are publicly traded, we generally base fair value on the closing market price of the securities we hold as of the reporting date.
+Added: For restricted securities that
+Added: are publicly traded, we generally base fair value on the closing market price of the securities we hold as of the reporting date less a discount for the restriction, which includes consideration of the nature and term to expiration of the
Investments in Funds For equity investments in other funds for which we cannot effectuate a sale of
19 unchanged sentences
(OID), and paid-in-kind (PIK) interest, is recorded on the accrual basis to the extent that such amounts are expected to be collected.
−Removed: Generally, when a loan becomes 90 days or more past due or if our qualitative assessment
−Removed: indicates that the debtor is unable to service its debt or other obligations, we will place the loan on non-accrual status and cease recognizing interest income on that loan for financial reporting purposes until the borrower has demonstrated the
−Removed: ability and intent to pay contractual amounts due.
+Added: when a loan becomes 90 days or more past due or if our qualitative assessment indicates that the debtor is unable to service its debt or other obligations, we will place the loan on non-accrual status and
+Added: cease recognizing interest income on that loan for financial reporting purposes until the borrower has demonstrated the ability and intent to pay contractual amounts due.
However, we remain contractually entitled to this interest.
−Removed: Interest payments received on non-accrual loans may be recognized as income or applied to the cost basis depending upon managements
−Removed: Generally, non-accrual loans are restored to accrual status when past due principal and interest are paid and, in managements judgment, are likely to remain current, or due to a restructuring such that the interest income is deemed
−Removed: to be collectible.
−Removed: At September 30, 2019, loans to two portfolio companies were on non-accrual status with an aggregate debt cost basis of approximately $8.5 million, or 2.2% of the cost basis of all debt investments in our portfolio, and an
−Removed: aggregate fair value of approximately $0.1 million, or 0.0% of the fair value of all debt investments in our portfolio.
−Removed: At September 30, 2018, loans to one portfolio company were on non-accrual status with an aggregate debt cost basis of
−Removed: approximately $26.9 million, or 6.9% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of approximately $7.7 million, or 2.1% of the fair value of all debt investments in our portfolio.
−Removed: We currently hold, and we expect to hold in the future, some loans in our portfolio that contain OID or PIK provisions.
−Removed: We recognize OID for loans originally
−Removed: issued at discounts and recognize the income over the life of the obligation based on an effective yield calculation.
−Removed: PIK interest, computed at the contractual rate specified in a loan agreement, is added to the principal balance of a loan and
−Removed: recorded as income over the life of the obligation.
−Removed: Thus, the actual collection of PIK income may be deferred until the time of debt principal repayment.
−Removed: To maintain our ability to be taxed as a RIC, we may need to pay out both OID and PIK non-cash
−Removed: income amounts in the form of distributions, even though we have not yet collected the cash on either.
−Removed: As of September 30, 2019 and 2018, we had ten and six OID loans, respectively, primarily from the syndicated
−Removed: loans in our portfolio.
−Removed: We recorded OID income of $0.1 million, $0.2 million, and $0.3 million for the years ended September 30, 2019, 2018, and 2017, respectively.
−Removed: The unamortized balance of OID investments as of September 30, 2019 and
−Removed: 2018 totaled $0.8 million and $0.4 million, respectively.
−Removed: As of September 30, 2019 and 2018, we had four and five investments which had a PIK interest component, respectively.
−Removed: We recorded PIK interest income of $1.4 million, $3.8 million and
−Removed: $5.0 million for the years ended September 30, 2019, 2018, and 2017, respectively.
−Removed: We collected $0, $0.8 million, and $2.0 million of PIK interest in cash during the years ended September 30, 2019, 2018, and 2017, respectively.
+Added: Interest payments
+Added: received on non-accrual loans may be recognized as income or applied to the cost basis depending upon managements judgment.
+Added: Generally, non-accrual loans are
+Added: restored to accrual status when past due principal and interest are paid and, in managements judgment, are likely to remain current, or due to a restructuring such that the interest income is deemed to be collectible.
+Added: As of September 30,
+Added: 2020, loans to B+T Group Acquisition Inc.
+Added: (B+T) were on non-accrual status with an aggregate debt cost basis of $7.2 million, or 1.6% of the cost basis of all debt investments in our
+Added: portfolio, and an aggregate fair value of approximately $6.5 million, or 1.6% of the fair value of all debt investments in our portfolio.
+Added: As of September 30, 2019, loans to Meridian Rack & Pinion Inc.
+Added: and New Trident Holdcorp,
+Added: were on non-accrual status with an aggregate debt cost basis of approximately $8.5 million, or 2.2% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of
+Added: approximately $0.1 million, or 0.0% of the fair value of all debt investments in our portfolio.
+Added: We currently hold, and we expect to hold in the
+Added: future, some loans in our portfolio that contain OID or PIK provisions.
+Added: We recognize OID for loans originally issued at discounts and recognize the income over the life of the obligation based on an effective yield calculation.
+Added: PIK interest,
+Added: computed at the contractual rate specified in a loan agreement, is added to the principal balance of a loan and recorded as income over the life of the obligation.
+Added: Thus, the actual collection of PIK income may be deferred until the time of debt
+Added: principal repayment.
+Added: maintain our ability to be taxed as a RIC, we may need to pay out both OID and PIK non-cash income amounts in the form of distributions, even though we
+Added: have not yet collected the cash on either.
+Added: As of September 30, 2020 and 2019, we held five and ten OID loans, respectively, primarily from the
+Added: syndicated loans in our portfolio.
+Added: We recorded OID income of $0.3 million, $0.1 million, and $0.2 million during the years ended September 30, 2020, 2019, and 2018, respectively.
+Added: The unamortized balance of OID investments as of
+Added: September 30, 2020 and 2019 totaled $0.6 million and $0.8 million, respectively.
+Added: As of September 30, 2020 and 2019, we had seven and four investments which had a PIK interest component, respectively.
+Added: We recorded PIK interest
+Added: income of $2.6 million, $1.4 million, and $3.8 million during the years ended September 30, 2020, 2019, and 2018, respectively.
+Added: We collected $0.1 million, $0, and $0.8 million of PIK interest in cash during the years ended
+Added: September 30, 2020, 2019, and 2018, respectively.
Success Fee Income Recognition
−Removed: We record success fees as
−Removed: income when earned, which often occurs upon receipt of cash.
−Removed: Success fees are generally contractually due upon a change of control in a portfolio company, typically resulting from an exit or sale, and are non-recurring.
−Removed: Dividend Income Recognition
−Removed: We accrue dividend income on
−Removed: preferred and common equity securities to the extent that such amounts are expected to be collected and if we have the option to collect such amounts in cash or other consideration.
+Added: We record success fees as income when earned, which often occurs upon receipt of cash.
+Added: Success fees are generally contractually due upon a change of control in
+Added: a portfolio company, typically resulting from an exit or sale, and are non-recurring.
+Added: Dividend Income
+Added: We accrue dividend income on preferred and common equity securities to the extent that such amounts are expected to be collected and if we
+Added: have the option to collect such amounts in cash or other consideration.
Deferred Financing and Offering Costs
−Removed: Deferred financing
−Removed: and offering costs consist of costs incurred to obtain financing, including lender fees and legal fees.
−Removed: Certain costs associated with our revolving line of credit are deferred and amortized using the straight-line method, which approximates the
−Removed: effective interest method, over the term of the revolving line of credit.
−Removed: Costs associated with the issuance of our notes payable are presented as discounts to the principal amount of the notes payable and are amortized using the straight-line
−Removed: method, which approximates the effective interest method, over the term of the notes.
−Removed: Costs associated with the issuance of our mandatorily redeemable preferred stock are presented as discounts to the liquidation value of the mandatorily redeemable
−Removed: preferred stock and are amortized using the straight-line method, which approximates the effective interest method, over the term of the respective series of preferred stock.
−Removed: Refer to Note 5 Borrowings and Note 6 Mandatorily
−Removed: Redeemable Preferred Stock for further discussion.
+Added: Deferred financing and offering costs consist of costs incurred to obtain financing, including lender fees and legal fees.
+Added: Certain costs associated with our
+Added: revolving line of credit are deferred and amortized using the straight-line method, which approximates the effective interest method, over the term of the revolving line of credit.
+Added: Costs associated with the issuance of our notes payable are
+Added: presented as discounts to the principal amount of the notes payable and are amortized using the straight-line method, which approximates the effective interest method, over the term of the notes.
+Added: Costs associated with the issuance of our mandatorily
+Added: redeemable preferred stock are presented as discounts to the liquidation value of the mandatorily redeemable preferred stock and are amortized using the straight-line method, which approximates the effective interest method, over the term of the
+Added: respective series of preferred stock.
+Added: Refer to Note 5 Borrowings and Note 6 Mandatorily Redeemable Preferred Stock for further discussion.
Related Party Fees
−Removed: We are party to the Advisory Agreement with the Adviser, which is owned and controlled by our chairman and chief executive officer.
−Removed: In accordance with the
−Removed: Advisory Agreement, we pay the Adviser fees as compensation for its services, consisting of a base management fee and an incentive fee.
−Removed: Additionally, we pay the Adviser a loan servicing fee as compensation for its services as servicer under the
−Removed: terms of our Fifth Amended and Restated Credit Agreement with KeyBank, as administrative agent, lead arranger and lender (our Credit Facility).
−Removed: These fees are accrued at the end of the quarter when the services are performed and
−Removed: generally paid the following quarter.
−Removed: We are also party to the Administration Agreement with the Administrator, which is owned and controlled by our
−Removed: chairman and chief executive officer, whereby we pay separately for administrative services.
+Added: We are party to the Advisory
+Added: Agreement with the Adviser, which is owned and controlled by our chairman and chief executive officer.
+Added: In accordance with the Advisory Agreement, we pay the Adviser fees as compensation for its services, consisting of a base management fee and an
+Added: incentive fee.
+Added: Additionally, we pay the Adviser a loan servicing fee as compensation for its services as servicer under the terms of our Fifth Amended and Restated Credit Agreement with KeyBank National Association (KeyBank), as
+Added: administrative agent, lead arranger and lender (our Credit Facility).
+Added: These fees are accrued at the end of the quarter when the services are performed and generally paid the following quarter.
+Added: We are also party to the Administration Agreement with the Administrator, which is owned and controlled by our chairman and chief executive officer, whereby
+Added: we pay separately for administrative services.
Refer to Note 4 Related Party Transactions for additional information regarding these related party fees and agreements.
1 unchanged sentence
treatment as a RIC under subchapter M of the Code, which generally allows us to avoid paying corporate income taxes on any income or gains that we distribute to our stockholders.
−Removed: We intend to continue to distribute sufficient dividends to eliminate
−Removed: taxable income.
−Removed: Refer to Note 10 Federal and State Income Taxes for additional information regarding our RIC requirements.
−Removed: ASC 740, Income Taxes requires the evaluation of tax positions taken or expected to be taken
−Removed: in the course of preparing our tax returns to determine whether the tax positions are more-likely-than-not of being sustained by the applicable tax authorities.
−Removed: Tax positions not deemed to satisfy the more-likely-than-not
−Removed: threshold would be recorded as a tax benefit or expense in the current fiscal year.
−Removed: We have evaluated the implications of ASC 740, for all open tax years and in all major tax jurisdictions, and determined that there is no material impact on our
−Removed: accompanying Consolidated Financial Statements .
−Removed: Our federal tax returns for fiscal years 20162018 remain subject to examination by the Internal Revenue Service (IRS).
+Added: intend to continue to distribute sufficient dividends to eliminate taxable income.
+Added: Refer to Note 10 Federal and State Income Taxes for additional information regarding our RIC
+Added: requirements.
+Added: ASC 740, Income Taxes requires the evaluation of tax positions taken or expected to be taken in the course of preparing
+Added: our tax returns to determine whether the tax positions are more-likely-than-not of being sustained by the applicable tax authorities.
+Added: Tax positions not deemed to satisfy the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current fiscal year.
+Added: We have evaluated the implications of ASC 740, for all open tax years and in all major tax
+Added: jurisdictions, and determined that there is no material impact on our accompanying Consolidated Financial Statements .
+Added: Our federal tax returns for fiscal years 2017 to 2019 remain subject to examination by the Internal Revenue Service
Distributions
−Removed: Distributions to stockholders are recorded
−Removed: on the ex-dividend date.
−Removed: We are required to pay out at least 90.0% of our Investment Company Taxable Income (as defined below), which is generally our net ordinary income plus the excess of our net short-term capital gains over net long-term capital
−Removed: losses for each taxable year as a distribution to our stockholders in order to maintain our ability to be taxed as a RIC under Subchapter M of the Code.
−Removed: It is our policy to pay out as a distribution up to 100.0% of those amounts.
−Removed: The amount to be
−Removed: paid is determined by our Board of Directors each quarter and is based on the annual earnings estimated by our management.
−Removed: Based on that estimate, a distribution is declared each quarter and is paid out monthly over the course of the respective
+Added: Distributions to
+Added: stockholders are recorded on the ex-dividend date.
+Added: We are required to pay out at least 90.0% of our Investment Company Taxable Income (as defined below), which is generally our net ordinary income plus the
+Added: excess of our net short-term capital gains over net long-term capital losses for each taxable year as a distribution to our stockholders in order to maintain our ability to be taxed as a RIC under Subchapter M of the Code.
+Added: It is our policy to pay
+Added: out as a distribution up to 100.0% of those amounts.
+Added: The amount to be paid is determined by our Board of Directors each quarter and is based on the annual earnings estimated by our management.
+Added: Based on that estimate, a distribution is declared each
+Added: quarter and is paid out monthly over the course of the respective quarter.
Refer to Note 9 Distributions to Common Stockholders for further information.
−Removed: Our transfer agent, Computershare, Inc., offers a
−Removed: dividend reinvestment plan for our common stockholders.
−Removed: 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
+Added: Our transfer agent, Computershare, Inc., offers a dividend reinvestment plan for our common stockholders.
+Added: This is an opt in dividend reinvestment
+Added: 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 not make such election will receive their distributions in cash.
−Removed: Common stockholders who receive distributions in the form of stock will be subject to the same federal, state and local tax consequences as
−Removed: stockholders who elect to receive their distributions in cash.
+Added: 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.
As plan agent, Computershare, Inc.
−Removed: purchases shares in the open market in connection with the obligations under the plan.
+Added: purchases shares
+Added: in the open market in connection with the obligations under the plan.
Recent Accounting Pronouncements
−Removed: In July 2019, the FASB
−Removed: issued Accounting Standards Update 2019-07, Codification Updates to SEC SectionsAmendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No.
−Removed: 33-10532, Disclosure Update and Simplification, and Nos.
−Removed: 33-10231 and 33-10442,
−Removed: Investment Company Reporting Modernization and Miscellaneous Updates (SEC Update) (ASU 2019-07).
−Removed: ASU 2019-07 aligns the guidance in various SEC sections of the Codification with the requirements of certain SEC final
−Removed: ASU 2019-07 was effective immediately.
+Added: In March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848):
+Added: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04).
+Added: ASU 2020-04 provides optional expedients and exceptions
+Added: for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.
+Added: ASU 2020-04 was effective
The adoption of ASU 2020-04 did not have a material impact on our financial position, results of operations or cash flows.
In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820):
−Removed: Disclosure FrameworkChanges to the
−Removed: Disclosure Requirements for Fair Value (ASU 2018-13), which modifies the disclosure requirements in ASC 820.
−Removed: We are currently assessing the impact of ASU 2018-13 and do not anticipate a material impact on our
−Removed: ASU 2018-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted.
−Removed: In November 2016, the FASB issued Accounting Standards Update 2016-18, Restricted Cash (a consensus of the Emerging Issues Task Force)
−Removed: (ASU 2016-18), which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.
−Removed: 2016-18 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years and we adopted ASU 2016-18 effective October 1, 2018.
−Removed: The adoption of ASU 2016-18 did not have a
−Removed: material impact on our financial position, results of operations or cash flows.
−Removed: In August 2016, the FASB issued Accounting Standards Update 2016-15, Classification of Certain Cash
−Removed: Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) (ASU 2016-15), which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows.
−Removed: assessed the impact of ASU 2016-15 and do not anticipate a material impact on our cash flows.
−Removed: ASU 2016-15 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years and
−Removed: we adopted ASU 2016-15 effective October 1, 2018.
−Removed: The adoption of ASU 2016-15 did not have a material impact on our financial position, results of operations or cash flows.
−Removed: In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial InstrumentsOverall:
−Removed: Recognition and Measurement of Financial
−Removed: Assets and Financial Liabilities (ASU 2016-01), which changes how entities measure certain equity investments and how entities present changes in the fair value of financial liabilities measured under the fair value option that
−Removed: are attributable to instrument-specific credit risk.
−Removed: ASU 2016-01 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years and we adopted ASU 2016-01 effective
−Removed: October 1, 2018.
−Removed: The adoption of ASU 2016-01 did not have a material impact on our financial position, results of operations or cash flows.
−Removed: 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which was amended in March 2016 by FASB Accounting Standards Update 2016-08, Principal versus
−Removed: Agent Considerations (ASU 2016-08), in April 2016 by FASB Accounting Standards Update 2016-10, Identifying Performance Obligations and Licensing (ASU 2016-10), in May 2016 by FASB Accounting
−Removed: Standards Update 2016-12, Narrow-Scope Improvements and Practical Expedients (ASU 2016-12), and in December 2016 by FASB Accounting Standards Update 2016-20, Technical Corrections and Improvements to Topic
−Removed: 606 (ASU 2016-20).
−Removed: ASU 2014-09, as amended, supersedes or replaces nearly all GAAP revenue recognition guidance.
−Removed: The new guidance establishes a new control-based revenue recognition model, changes the basis for deciding when
−Removed: revenue is recognized over time or at a point in time and will expand disclosures about revenue.
−Removed: In July 2015, the FASB issued Accounting Standards Update 2015-14, Deferral of the Effective Date, which deferred the effective date
−Removed: of ASU 2014-09.
−Removed: ASU 2014-09, as amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20, is effective for annual reporting periods beginning after December 15, 2017 and interim periods within those years and we adopted
−Removed: ASU 2014-09, as amended, effective October 1, 2018.
−Removed: The adoption of ASU 2014-09, as amended, did not result in a material change in the timing of revenue recognition or a material impact on our financial position, results of operations, or cash
−Removed: flows from adopting this standard.
+Added: Disclosure FrameworkChanges to the Disclosure Requirements for Fair Value (ASU 2018-13), which modifies the disclosure requirements in ASC 820.
+Added: We are currently assessing the
+Added: impact of ASU 2018-13 and do not anticipate a material impact on our disclosures.
+Added: ASU 2018-13 is effective for annual reporting periods beginning after
+Added: December 15, 2019, including interim periods within those fiscal years, with early adoption permitted.
In accordance with ASC 820, the fair value of each investment is determined to be the price that would be received for an investment in a current sale, which
1 unchanged sentence
This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use
−Removed: of market-based inputs over entity-specific inputs.
−Removed: ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument as of the measurement date.
−Removed: Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical financial
−Removed: instruments in active markets;
−Removed: Level 2 inputs to the valuation methodology include quoted prices for similar financial instruments
−Removed: in active or inactive markets, and inputs that are observable for the financial instrument, either directly or indirectly, for substantially the full term of the financial instrument.
−Removed: Level 2 inputs are in those markets for which there are few
−Removed: transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers;
−Removed: Level 3 inputs to the valuation methodology are unobservable and significant to the fair value
−Removed: Unobservable inputs are those inputs that reflect assumptions that market participants
−Removed: would use when pricing the financial instrument and can include the Valuation Teams assumptions based upon the best available information.
−Removed: When a determination is made to classify our investments within Level 3 of the valuation hierarchy, such determination is based upon the significance of the
−Removed: unobservable factors to the overall fair value measurement.
−Removed: However, Level 3 financial instruments typically include, in addition to the unobservable, or Level 3, inputs, observable inputs (or components that are actively quoted and can be validated
−Removed: to external sources).
−Removed: The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.
−Removed: Investments in funds measured using NAV as a
−Removed: practical expedient are not categorized within the fair value hierarchy.
−Removed: As of September 30, 2019, all of our investments were valued using Level 3
−Removed: inputs within the ASC 820 fair value hierarchy, except for our investment in Funko, which was valued using Level 2 inputs, and our investment in Leeds, which was valued using NAV as a practical expedient.
−Removed: As of September 30, 2018, all of our
−Removed: investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in Funko, which was valued using Level 2 inputs, and our investments in FedCap and Leeds, which were valued using NAV as a practical
−Removed: We transfer investments in and out of Level 1, 2, and 3 of the valuation hierarchy as of the beginning balance sheet date, based on changes in
−Removed: the use of observable and unobservable inputs utilized to perform the valuation for the period.
−Removed: There were no transfers in or out of Level 1, 2, and 3 during the year ended September 30, 2019.
−Removed: During the year ended September 30, 2018, we
−Removed: transferred our investment in Funko from Level 3 to Level 2 as a result of the initial public offering of Funko, Inc.
−Removed: in November 2017 as our units in Funko can be converted into common shares of Funko, Inc.
−Removed: upon meeting certain requirements.
+Added: of market-based inputs over
+Added: entity-specific inputs.
+Added: ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument
+Added: as of the measurement date.
+Added: Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for
+Added: identical financial instruments in active markets;
+Added: Level 2 inputs to the valuation methodology include quoted prices for similar
+Added: financial instruments in active or inactive markets, and inputs that are observable for the financial instrument, either directly or indirectly, for substantially the full term of the financial instrument.
+Added: Level 2 inputs are those in markets
+Added: for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers;
+Added: Level 3 inputs to the valuation methodology are unobservable and significant to
+Added: the fair value measurement.
+Added: Unobservable inputs are those inputs that reflect assumptions that market participants would use when pricing the financial instrument and can include the Valuation Teams assumptions based upon the best available
+Added: When a determination is made to classify our investments within Level 3 of the valuation hierarchy, such
+Added: determination is based upon the significance of the unobservable factors to the overall fair value measurement.
+Added: However, Level 3 financial instruments typically include, in addition to the unobservable, or Level 3, inputs, observable
+Added: inputs (or components that are actively quoted and can be validated to external sources).
+Added: The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the
+Added: fair value measurement.
+Added: Investments in funds measured using NAV as a practical expedient are not categorized within the fair value hierarchy.
+Added: September 30, 2020, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in Funko Acquisition Holdings, LLC (Funko), which was valued using Level 2
+Added: inputs, and our investment in Leeds Novamark Capital I, L.P.
+Added: (Leeds), which was valued using NAV as a practical expedient.
+Added: As of September 30, 2019, all of our investments were valued using Level 3 inputs within the ASC 820
+Added: fair value hierarchy, except for our investment in Funko, which was valued using Level 2 inputs, and our investment in Leeds, which was valued using NAV as a practical expedient.
+Added: We transfer investments in and out of Level 1, 2, and 3 of the valuation hierarchy as of the beginning balance sheet date, based on changes in the use of
+Added: observable and unobservable inputs utilized to perform the valuation for the period.
+Added: During the years ended September 30, 2020 and 2019, there were no investments transferred into or out of Levels 1, 2 or 3 of the valuation hierarchy.
As of September 30, 2020 and 2019, our investments, by security type, at fair value were categorized as follows within the ASC 820 fair value hierarchy:
Fair Value Measurements
−Removed: Quoted Prices
As of September 30, 2020:
4 unchanged sentences
Common equity/equivalents
−Removed: Total Investments at September 30, 2019
+Added: Total Investments as of September 30, 2020
Fair Value Measurements
−Removed: Quoted Prices in
−Removed: Active Markets
−Removed: for Identical
+Added: Quoted Prices
As of September 30, 2019:
4 unchanged sentences
Common equity/equivalents
−Removed: Total Investments at September 30, 2018
−Removed: Excludes our investment in Leeds with fair value of $4.1 million as of September 30, 2019.
−Removed: investments in FedCap and Leeds with fair values of $0.6 million and $2.7 million, respectively, as of September 30, 2018.
−Removed: FedCap and Leeds were valued using NAV as a practical expedient.
+Added: Total Investments as of September 30, 2019
+Added: Excludes our investment in Leeds with a fair value of $4.7 million and $4.1 million as of
+Added: September 30, 2020 and 2019, respectively.
+Added: Leeds was valued using NAV as a practical expedient.
Fair value was determined based on the closing market price of shares of Funko, Inc.
1 unchanged sentence
converted into common shares of Funko, Inc.) at the reporting date less a discount for lack of marketability as our investment was subject to certain restrictions.
−Removed: The following table presents our portfolio investments, valued using Level 3 inputs within the ASC 820 fair value
−Removed: hierarchy and carried at fair value as of September 30, 2019 and September 30, 2018, by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type:
+Added: The following table presents our portfolio investments, valued using Level 3 inputs within the ASC 820 fair value hierarchy and carried at fair value as
+Added: of September 30, 2020 and 2019 by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type:
Total Recurring Fair Value
3 unchanged sentences
Using Significant
−Removed: Unobservable Inputs
+Added: Inputs (Level 3)
September 30,
September 30,
−Removed: Non-Control/Non-Affiliate Investments
+Added: Non-Control/Non-Affiliate
Secured first lien debt
3 unchanged sentences
Common equity/equivalents
−Removed: Total Non-Control/Non-Affiliate Investments
+Added: Non-Control/Non-Affiliate Investments
Affiliate Investments
1 unchanged sentence
Secured second lien debt
−Removed: Unsecured debt
Preferred equity
4 unchanged sentences
Secured second lien debt
+Added: Preferred equity
Common equity/equivalents
1 unchanged sentence
Total Investments at Fair Value Using Level 3 Inputs
−Removed: Excludes our investments in Leeds and Funko with fair values of $4.1 million and $0.2 million, respectively, as
−Removed: of September 30, 2019.
+Added: Excludes our investments in Leeds and Funko with fair values of $4.7 million and $48 thousand,
+Added: respectively, as of September 30, 2020.
Leeds was valued using NAV as a practical expedient, and Funko was valued using Level 2 inputs.
−Removed: Excludes our investments in FedCap, Leeds, and Funko with fair values of $0.6 million, $2.7 million, and $0.7
−Removed: million, respectively, as of September 30, 2018.
−Removed: FedCap and Leeds were valued using NAV as a practical expedient, and Funko was valued using Level 2 inputs.
−Removed: In accordance with ASC 820, the following table provides quantitative information about our Level 3 fair value
−Removed: measurements of our investments as of September 30, 2019 and September 30, 2018.
+Added: Excludes our investments in Leeds and Funko with fair values of $4.1 million and $0.2 million,
+Added: respectively, as of September 30, 2019.
+Added: Leeds was valued using NAV as a practical expedient, and Funko was valued using Level 2 inputs.
+Added: In accordance with ASC 820, the following table provides quantitative information about our Level 3 fair value measurements of our investments as of
+Added: September 30, 2020 and 2019.
The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements.
−Removed: The weighted average calculations in the table below are based on the principal balances for all debt related calculations and on the cost basis for all equity related calculations for the particular input.
+Added: weighted average calculations in the table below are based on the principal balances for all debt related calculations and on the cost basis for all equity related calculations for the particular input.
Quantitative Information about Level 3 Fair Value Measurements
37 unchanged sentences
12.2%12.2% / 12.2%
+Added: Revenue multiple
+Added: 0.3x 1.4x / 1.0x
+Added: $883$11,500 /$4,325
Preferred and common equity /
11 unchanged sentences
Total Level 3 Investments, at Fair Value
−Removed: Fair value as of September 30, 2019 includes two proprietary debt investments totaling $15.5 million, which
−Removed: were valued using the expected payoff amount as the unobservable input.
−Removed: Fair value as of September 30, 2018 includes one proprietary debt investment totaling $2.0 million, which was valued using the expected payoff amount as the unobservable
+Added: Fair value as of September 30, 2019 includes two proprietary debt investments totaling $15.5 million,
+Added: which were valued using the expected payoff amount as the unobservable input.
Fair value as of September 30, 2020 excludes our investments in Leeds and Funko with fair values of
−Removed: million and $0.2 million, respectively, as of September 30, 2019.
−Removed: Fair value as of September 30, 2018 excludes our investments in FedCap, Leeds and Funko with fair values of $0.6 million, $2.7 million, and $0.7 million, respectively, as of
−Removed: September 30, 2018.
−Removed: Leeds was valued using NAV as a practical expedient and Funko was valued using Level 2 inputs as of both September 30, 2019 and September 30, 2018.
−Removed: FedCap was valued using NAV as a practical expedient as of
−Removed: September 30, 2018.
+Added: $4.7 million and $48 thousand, respectively, as of September 30, 2020.
+Added: Fair value as of September 30, 2019 excludes our investments in Leeds and Funko with fair values of $4.1 million and $0.2 million, respectively, as
+Added: of September 30, 2019.
+Added: Leeds was valued using NAV as a practical expedient and Funko was valued using Level 2 inputs as of both September 30, 2020 and 2019.
Fair value measurements can be sensitive to changes in one or more of the valuation inputs.
−Removed: discount rates, EBITDA or EBITDA multiples (or revenue or revenue multiples), each in isolation, may change the fair value of certain of our investments.
−Removed: Generally, an increase/(decrease) in market yields, discount rates, or an increase/(decrease)
−Removed: in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a corresponding increase/(decrease), respectively, in the fair value of certain of our investments.
+Added: Changes in discount rates, EBITDA or EBITDA multiples (or revenue
+Added: or revenue multiples), each in isolation, may change the fair value of certain of our investments.
+Added: Generally, an increase/(decrease) in market yields, discount rates, or an (decrease)/increase in EBITDA or EBITDA multiples (or revenue or revenue
+Added: multiples) may result in a (decrease)/increase, respectively, in the fair value of certain of our investments.
Changes in Level 3 Fair Value Measurements of Investments
7 unchanged sentences
Total gains (losses):
−Removed: Net realized (loss) gain (A)
−Removed: Net unrealized (depreciation)
−Removed: appreciation (B)
+Added: Net realized gain (loss) (A)
+Added: Net unrealized appreciation
+Added: (depreciation) (B)
Reversal of prior period net depreciation (appreciation) on realization (B)
2 unchanged sentences
Settlements/repayments
+Added: Net proceeds from sales
Fair Value as of September 30, 2020
5 unchanged sentences
Total gains (losses):
−Removed: Net realized (loss) gain (A)
−Removed: Net unrealized (depreciation)
−Removed: appreciation (B)
+Added: Net realized gain (loss) (A)
+Added: Net unrealized appreciation
+Added: (depreciation) (B)
Reversal of prior period net depreciation (appreciation) on realization (B)
2 unchanged sentences
Settlements/repayments
+Added: Net proceeds from sales
Fair Value as of September 30, 2019
4 unchanged sentences
Includes increases in the cost basis of investments resulting from new portfolio investments, accretion of
−Removed: discounts, PIK, and other non-cash disbursements to portfolio companies, as well as decreases in the cost basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs and other cost-basis
+Added: discounts, PIK, and other non-cash disbursements to portfolio companies, as well as decreases in the cost basis of investments resulting from principal repayments or sales, the amortization of premiums and
+Added: acquisition costs and other cost-basis adjustments.
Investment Activity
1 unchanged sentence
As of September 30, 2020 and
−Removed: September 30, 2018, we held 37 and 39 proprietary investments with an aggregate fair value of $353.7 million and $357.6 million, or 87.8% and 91.7% of the total portfolio at fair value, respectively.
−Removed: The following significant proprietary
−Removed: investment transactions occurred during the year ended September 30, 2019:
−Removed: In October 2018, our investment in TWS Acquisition Corporation paid off at par for net proceeds of $2.0 million.
−Removed: In November 2018, we invested $16.7 million in Antenna Research Associates, Inc.
−Removed: through a combination of secured
−Removed: first lien debt and equity.
−Removed: In December 2018, we invested $20.0 million in R2i Holdings, LLC through secured first lien debt.
−Removed: In December 2018, we invested $6.5 million in DKI Ventures, LLC through secured first lien debt.
−Removed: In December 2018, our investment in Francis Drilling Fluids, Ltd.
−Removed: (FDF) was restructured upon its
−Removed: emergence from Chapter 11 bankruptcy protection.
−Removed: As part of the restructure, our existing $27.0 million debt investment in FDF was converted to $1.35 million of preferred equity and common equity units in a new entity, FES Resources Holdings,
−Removed: LLC (FES Resources).
−Removed: We also invested an additional $5.0 million in FES Resources through a combination of preferred equity and common equity units.
−Removed: In conjunction with the restructure, we recorded a net realized loss of $26.9 million
−Removed: associated with our investment in FDF.
−Removed: In January 2019, our investment in Merlin International, Inc.
−Removed: paid off, which resulted in success fee income of
−Removed: $0.6 million and a prepayment fee of $0.3 million.
−Removed: In connection with the payoff, we received net cash proceeds of $20.9 million, including the repayment of our debt investment of $20.0 million at par.
−Removed: In February 2019, our investment in United Flexible, Inc.
−Removed: paid off, which resulted in a realized gain of $2.1
−Removed: In connection with the payoff, we received net cash proceeds of $18.1 million, including the repayment of our debt investment of $15.3 million at par.
−Removed: In March 2019, two of our portfolio companies, Impact!
−Removed: Chemical Technologies, Inc.
−Removed: (Impact) and
−Removed: WadeCo Specialties, Inc.
−Removed: (WadeCo), merged to form Imperative Holdings Corporation (Imperative).
−Removed: In connection with the merger, we received a principal repayment of $10.9 million and our first lien loans to Impact and WadeCo
−Removed: were restructured into one $30.0 million second lien debt investment in Imperative.
−Removed: In April 2019, we invested $35.0 million in ENET Holdings, LLC through secured first lien debt.
−Removed: In May 2019, we
−Removed: sold $6.0 million of our investment in ENET Holdings, LLC.
−Removed: In May 2019, we invested $10.0 million in Phoenix Aromas Holdings, LLC through secured second lien debt.
−Removed: In May 2019, one of our fund investments, FedCap Partners, LLC, sold its final investment.
−Removed: We received net cash
−Removed: proceeds of $0.6 million and recognized a realized loss of $0.8 million.
−Removed: In May 2019, our investment in IA Tech, LLC paid off, which resulted in a prepayment fee of $0.9 million.
−Removed: connection with the payoff, we received net cash proceeds of $30.9 million, including the repayment of our debt investment of $30.0 million at par.
−Removed: In July 2019, our debt investment in PIC 360, LLC was paid off at par for net proceeds of $2.6 million.
−Removed: In August 2019, we invested $13.0 million in Prophet Brand Strategy through secured second lien debt.
−Removed: In August 2019, we invested an additional $5.0 million in Sea Link International IRB, Inc, an existing portfolio
−Removed: company, through secured second lien debt.
−Removed: In August 2019, we sold our investment in Alloy Die Casting Co, which resulted in success fee income of $0.8
−Removed: million and a realized gain of approximately $8.7 million.
−Removed: In connection with the sale, we received net cash proceeds of approximately $18.3 million, including the repayment of our debt investment of $5.7 million at par.
−Removed: In September 2019, we invested an additional $6.2 million in EL Academies Inc., an existing portfolio company,
+Added: 2019, we held 37 and 37 proprietary investments with an aggregate fair value of $411.5 million and $353.7 million, or 91.4% and 87.8% of the total portfolio at fair value, respectively.
+Added: The following significant proprietary investment
+Added: transactions occurred during the year ended September 30, 2020:
+Added: In October 2019, we invested $14.0 million in Universal Survey Center, Inc.
through secured first lien debt.
−Removed: Syndicated Investments
−Removed: As of September 30, 2019 and September 30, 2018, we held 16 and 11 syndicated investments with an aggregate fair value of $49.2 million and $32.4
−Removed: million, or 12.2% and 8.3% of the total portfolio at fair value, respectively.
−Removed: The following significant syndicated investment transactions occurred during the year ended September 30, 2019:
−Removed: In October, November and December 2018, we invested a total of $3.7 million in 8 th Avenue Food & Provisions, Inc.
−Removed: through secured second lien debt.
−Removed: In November 2018, we invested $2.0 million in GOBP Holdings, Inc.
−Removed: through secured second lien debt.
−Removed: In November 2018, our investment in Red Ventures, LLC paid off at par for net proceeds of $3.1 million.
−Removed: In December 2018, we invested $1.0 million in CPM Holdings, Inc.
+Added: In December 2019, we invested $24.0 million in Café
+Added: Zupas through secured first lien debt.
+Added: In January 2020, we invested an additional $5.5 million in Lignetics, Inc., an existing portfolio company,
+Added: through a combination of secured second lien debt and preferred equity.
+Added: In July 2020, we sold $6.0 million of our debt investment in Lignetics, Inc.
+Added: In January 2020, we sold our investment in The Mochi Ice Cream Company (Mochi), which resulted in a
+Added: realized gain of approximately $2.5 million.
+Added: In connection with the sale, we received net cash proceeds of approximately $9.7 million, including the repayment of our debt investment of $6.8 million at par.
+Added: In January 2020, we exited our investment in Meridian Rack & Pinion, Inc.
+Added: (Meridian), with a
+Added: fair value of $0 as of December 31, 2019 and recorded a realized loss of $5.6 million.
+Added: In February 2020, we invested $19.0 million in American Trailer Rental Group LLC through a combination of
+Added: secured second lien debt and common equity.
+Added: In March 2020, our investments in XMedius America, Inc.
+Added: and XMedius Solutions Inc.
+Added: paid off at par for combined
+Added: net proceeds of $14.9 million.
+Added: In May 2020, we invested $30.0 million in Magpul Industries Corp.
through secured second lien debt.
−Removed: In February 2019, we invested $3.3 million in DiscoverOrg, LLC through secured second lien debt.
−Removed: In April 2019, we invested $5.0 million in Drive Chassis Holdco, LLC through secured second lien debt.
−Removed: In June 2019, we invested $5.0 million in Tailwind Smith Cooper Intermediate Corporation through secured second
−Removed: In June 2019, we invested $3.0 million in United PF Holdings, LLC through secured second lien debt.
−Removed: In June 2019, our investment in GOBP Holdings, Inc.
+Added: In May 2020, we invested $23.5 million in ALS Education, LLC through secured first lien debt.
+Added: In May 2020, we sold our investment in Travel Sentry, Inc.
+Added: for net proceeds of $6.1 million, which resulted
+Added: in a $0.1 million realized loss.
+Added: In May 2020, our debt investment in Canopy Safety Brands, LLC paid off at par for net proceeds of
+Added: $3.8 million.
+Added: In July 2020, our investment in Universal Survey Center, Inc.
+Added: paid off at par for net proceeds of
+Added: $14.1 million.
+Added: In conjunction with the payoff, we received a prepayment fee of $0.3 million.
+Added: In August 2020, we invested $20.7 million in Aerospace Engineering, LLC through secured first lien debt.
+Added: Syndicated Investments
+Added: September 30, 2020 and 2019, we held 11 and 16 syndicated investments with an aggregate fair value of $38.9 million and $49.2 million, or 8.6% and 12.2% of the total portfolio at fair value, respectively.
+Added: The following significant
+Added: syndicated investment transactions occurred during the year ended September 30, 2020:
+Added: In October 2019, we invested an additional $3.0 million in Medical Solutions Holdings, Inc., an existing
+Added: portfolio company, through secured second lien debt.
+Added: In October 2019, our investment in DigiCert Holdings, Inc.
paid off at par for net proceeds of $2.4 million.
+Added: In December 2019, our investment in LDiscovery, LLC paid off at par for net proceeds of $5.0 million.
+Added: In December 2019, our investment in United PF Holdings, LLC paid off at par for net proceeds of
+Added: $3.1 million.
+Added: In conjunction with the payoff, we received a prepayment fee of $0.1 million.
+Added: In December 2019, we recorded a net realized loss of $4.4 million related to our investment in New Trident
+Added: Holdcorp, Inc.
+Added: (New Trident) which filed for bankruptcy protection in February 2019.
+Added: In June 2020, our investment in DiscoverOrg, LLC paid off at par for net proceeds of $3.3 million.
+Added: conjunction with the payoff, we received a prepayment fee of $33 thousand.
Investment Concentrations
−Removed: September 30, 2019, our investment portfolio consisted of investments in 53 portfolio companies located in 25 states in 19 different industries, with an aggregate fair value of $402.9 million.
−Removed: The five largest investments at fair value as of
−Removed: September 30, 2019 totaled $135.5 million, or 33.6% of our total investment portfolio, as compared to the five largest investments at fair value as of September 30, 2018 totaling $122.8 million, or 31.5% of our total investment portfolio.
−Removed: As of September 30, 2019 and September 30, 2018, our average investment by obligor was $8.1 million and $8.5 million at cost, respectively.
+Added: As of September 30, 2020, our investment portfolio consisted of investments in 48 portfolio companies located in 25 states in 18 different industries,
+Added: with an aggregate fair value of $450.4 million.
+Added: The five largest investments at fair value as of September 30, 2020 totaled $130.3 million, or 28.9% of our total investment portfolio, as compared to the five largest investments at
+Added: fair value as of September 30, 2019 totaling $135.5 million, or 33.6% of our total investment portfolio.
+Added: As of September 30, 2020 and 2019, our average investment by obligor was $10.3 million and $8.1 million at cost,
+Added: respectively.
The following table outlines our investments by security type as of September 30, 2020 and 2019:
1 unchanged sentence
September 30, 2019
−Removed: September 30, 2018
Secured first lien debt
6 unchanged sentences
Total Investments
−Removed: Our investments at fair value consisted of the following industry classifications as of September 30, 2019 and 2018:
+Added: Our investments at fair value consisted of the following industry classifications as of September 30, 2020
September 30, 2020
2 unchanged sentences
Percentage of
+Added: Percentage of
Diversified/Conglomerate Service
−Removed: Telecommunications
Healthcare, Education, and Childcare
−Removed: Diversified natural resources, precious metals and minerals
Diversified/Conglomerate Manufacturing
−Removed: Cargo Transportation
Aerospace and Defense
+Added: Cargo Transportation
Beverage, Food, and Tobacco
+Added: Telecommunications
+Added: Diversified Natural Resources, Precious Metals, and Minerals
Chemicals, Plastics, and Rubber
2 unchanged sentences
Textiles and Leather
−Removed: Personal and non-durable consumer products
Buildings and Real Estate
+Added: Personal and Non-Durable Consumer Products
Other, < 2.0%
1 unchanged sentence
Our investments at fair value were included in the following U.S.
−Removed: geographic regions and Canada as of
−Removed: September 30, 2019 and 2018:
+Added: geographic regions and Canada as of September 30, 2020
September 30, 2020
15 unchanged sentences
Receivables from Portfolio Companies
−Removed: Receivables from portfolio companies represent non-recurring costs incurred on behalf of such portfolio companies and are included in other assets on our
−Removed: accompanying Consolidated Statements of Assets and Liabilities.
−Removed: We generally maintain an allowance for uncollectible receivables from portfolio companies when the receivable balance becomes 90 days or more past due or if it is determined, based upon
−Removed: managements judgment, that the portfolio company is unable to pay its obligations.
−Removed: We write-off accounts receivable when we have exhausted collection efforts and have deemed the receivables uncollectible.
−Removed: As of September 30, 2019 and
−Removed: 2018, we had gross receivables from portfolio companies of $0.7 million and $0.3 million, respectively.
−Removed: The allowance for uncollectible receivables was $16 thousand and $32 thousand as of September 30, 2019 and 2018, respectively.
+Added: Receivables from portfolio companies represent non-recurring costs incurred on behalf of such portfolio companies and
+Added: are included in other assets on our accompanying Consolidated Statements of Assets and Liabilities.
+Added: We generally maintain an allowance for uncollectible receivables from portfolio companies when the receivable balance becomes 90 days or more past
+Added: due or if it is determined, based upon managements judgment, that the portfolio company is unable to pay its obligations.
+Added: We write-off accounts receivable when we have exhausted collection efforts and
+Added: have deemed the receivables uncollectible.
+Added: As of September 30, 2020 and 2019, we had gross receivables from portfolio companies of $0.4 million and $0.7 million, respectively.
+Added: The allowance for uncollectible receivables was
+Added: $11 thousand and $16 thousand as of September 30, 2020 and 2019, respectively.
RELATED PARTY TRANSACTIONS
−Removed: with the Adviser
−Removed: We have been externally managed by the Adviser pursuant to the Advisory Agreement since October 1, 2004 pursuant to which we pay
−Removed: the Adviser a base management fee and an incentive fee for its services.
−Removed: 2019, our Board of Directors, including a majority of the directors who are not parties to the Advisory Agreement or interested persons of such party, unanimously approved the renewal of the
−Removed: Advisory Agreement through August 31, 2020.
+Added: Transactions with the Adviser
+Added: We have been externally
+Added: managed by the Adviser pursuant to the Advisory Agreement since October 1, 2004 pursuant to which we pay the Adviser a base management fee and an incentive fee for its services.
+Added: On July 14, 2020, our Board of Directors, including a
+Added: majority of the directors who are not parties to the Advisory Agreement or interested persons of such party, unanimously approved the renewal of the Advisory Agreement through August 31, 2021.
We also pay the Adviser a loan servicing fee for its role of servicer pursuant to our Credit Facility.
−Removed: The entire loan servicing fee paid to the Adviser by Business Loan is non-contractually, unconditionally and irrevocably credited against the base management fee otherwise payable to the Adviser, since Business Loan is a consolidated subsidiary of
−Removed: ours, and overall, the base management fee (including any loan servicing fee) cannot exceed 1.75% of total assets (as reduced by cash and cash equivalents pledged to creditors) during any given fiscal year pursuant to the Advisory Agreement.
−Removed: Two of our executive officers, David Gladstone (our chairman and chief executive officer) and Terry Lee Brubaker (our vice chairman and chief operating
−Removed: officer), serve as directors and executive officers of the Adviser, which is 100% indirectly owned and controlled by Mr.
−Removed: Robert Marcotte (our president) also serves as an executive managing director of the Adviser.
−Removed: The following table summarizes the base management fee, incentive fee, and loan servicing fee and associated non-contractual, unconditional and irrevocable
−Removed: credits reflected in our accompanying Consolidated Statements of Operations :
+Added: The entire loan servicing fee paid to the Adviser by
+Added: Business Loan is non-contractually, unconditionally and irrevocably credited against the base management fee otherwise payable to the Adviser, since Business Loan is a consolidated subsidiary of ours, and
+Added: overall, the base management fee (including any loan servicing fee) cannot exceed 1.75% of total assets (including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings) during any given
+Added: fiscal year pursuant to the Advisory Agreement.
+Added: Two of our executive officers, David Gladstone (our chairman and chief executive officer) and Terry Lee
+Added: Brubaker (our vice chairman and chief operating officer), serve as directors and executive officers of the Adviser, which is 100% indirectly owned and controlled by Mr.
+Added: Robert Marcotte (our president) also serves as executive vice
+Added: president of private equity (debt) of the Adviser.
+Added: Michael LiCalsi, our general counsel and secretary (who also serves as the Administrators president, general counsel and secretary), is also the executive vice president of administration of
+Added: The following table summarizes the base management fee, incentive fee, and loan servicing fee and associated non-contractual, unconditional and irrevocable credits reflected in our accompanying Consolidated Statements of Operations :
Year Ended September 30,
6 unchanged sentences
Loan servicing fee (B)
−Removed: Credit to base management feeloan servicing fee (B)
+Added: Credit to base management fee - loan servicing
Net Loan Servicing Fee
10 unchanged sentences
any share issuances or repurchases during the period.
−Removed: Reflected, on a gross basis, as a line item on our accompanying Consolidated Statements of Operations .
+Added: Reflected as a line item on our accompanying Consolidated Statements of Operations .
Base Management Fee
−Removed: The base management fee is payable quarterly to the Adviser pursuant to our Advisory Agreement and is assessed at an annual rate of 1.75%, computed on the
−Removed: basis of the value of our average total assets at the end of the two most recently-completed quarters (inclusive of the current quarter), which are total assets, including investments made with proceeds of borrowings, less any uninvested cash or
−Removed: cash equivalents resulting from borrowings and adjusted appropriately for any share issuances or repurchases during the period.
−Removed: Additionally, pursuant to
−Removed: the requirements of the 1940 Act, the Adviser makes available significant managerial assistance to our portfolio companies.
−Removed: The Adviser may also provide other services to our portfolio companies under certain agreements and may receive fees for
−Removed: services other than managerial assistance.
+Added: management fee is payable quarterly to the Adviser pursuant to our Advisory Agreement and is assessed at an annual rate of 1.75%, computed on the basis of the value of our average total assets at the end of the two most recently-completed quarters
+Added: (inclusive of the current quarter), which are total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings and adjusted appropriately for any share issuances or
+Added: repurchases during the period.
+Added: Additionally, pursuant to the requirements of the 1940 Act, the Adviser makes available significant managerial assistance
+Added: to our portfolio companies.
+Added: The Adviser may also provide other services to our portfolio companies under certain agreements and may receive fees for services other than managerial assistance.
Such services may include:
−Removed: (i) assistance obtaining, sourcing or structuring credit facilities, long term loans or additional equity from unaffiliated third parties;
−Removed: (ii) negotiating important
−Removed: contractual financial relationships;
−Removed: (iii) consulting services regarding restructuring of the portfolio company and financial modeling as it relates to raising additional debt and equity capital from unaffiliated third parties;
−Removed: (iv) taking a primary role in interviewing, vetting and negotiating employment contracts with candidates in connection with adding and retaining key portfolio company management team members.
−Removed: The Adviser non-contractually, unconditionally, and
−Removed: irrevocably credits 100% of any fees for such services against the base management fee that we would otherwise be required to pay to the Adviser;
−Removed: however, pursuant to the terms of the Advisory Agreement, a small percentage of certain of such fees,
−Removed: totaling $0.1 million for the years ended September 30, 2019, 2018, and 2017, was retained by the Adviser in the form of reimbursement, at cost, for tasks completed by personnel of the Adviser primarily for the valuation of portfolio companies.
−Removed: Our Board of Directors accepted a non-contractual, unconditional and irrevocable credit from the Adviser to reduce the annual base management fee on
−Removed: syndicated loan participations to 0.5%, to the extent that proceeds resulting from borrowings were used to purchase such syndicated loan participations, for each of the years ended September 30, 2019 and 2018.
+Added: (i) assistance obtaining,
+Added: sourcing or structuring credit facilities, long term loans or additional equity from unaffiliated third parties;
+Added: (ii) negotiating important contractual financial relationships;
+Added: (iii) consulting services regarding restructuring of the
+Added: portfolio company and financial modeling as it relates to raising additional
+Added: debt and equity capital from unaffiliated third parties;
+Added: and (iv) taking a primary role in interviewing, vetting and negotiating employment contracts with candidates in connection with
+Added: adding and retaining key portfolio company management team members.
+Added: The Adviser non-contractually, unconditionally, and irrevocably credits 100% of any fees for such services against the base management fee
+Added: that we would otherwise be required to pay to the Adviser;
+Added: however, pursuant to the terms of the Advisory Agreement, a small percentage of certain of such fees, totaling $0.1 million for the years ended September 30, 2020, 2019, and 2018,
+Added: was retained by the Adviser in the form of reimbursement, at cost, for tasks completed by personnel of the Adviser primarily for the valuation of portfolio companies.
+Added: Our Board of Directors accepted a non-contractual, unconditional, and irrevocable credit from the Adviser to reduce
+Added: the annual base management fee on syndicated loan participations to 0.5%, to the extent that proceeds resulting from borrowings were used to purchase such syndicated loan participations, for each of the years ended September 30, 2020 and 2019.
Loan Servicing Fee
−Removed: The Adviser also services the loans
−Removed: held by Business Loan (the borrower under the Credit Facility), in return for which the Adviser receives a 1.5% annual fee payable monthly based on the aggregate outstanding balance of loans pledged under our Credit Facility.
−Removed: As discussed in the
−Removed: notes to the table above, we treat payment of the loan servicing fee pursuant to our line of credit as a pre-payment of the base management fee under the Advisory Agreement.
−Removed: Accordingly, these loan servicing fees are 100% non-contractually,
−Removed: unconditionally and irrevocably credited back to us by the Adviser.
+Added: The Adviser also services the
+Added: loans held by Business Loan (the borrower under the Credit Facility), in return for which the Adviser receives a 1.5% annual fee payable monthly based on the aggregate outstanding balance of loans pledged under our Credit Facility.
+Added: As discussed in
+Added: the notes to the table above, we treat payment of the loan servicing fee pursuant to the Credit Facility as a pre-payment of the base management fee under the Advisory Agreement.
+Added: Accordingly, these loan
+Added: servicing fees are 100% non-contractually, unconditionally and irrevocably credited back to us by the Adviser.
Incentive Fee
1 unchanged sentence
an income-based incentive fee and a capital gains-based incentive fee.
−Removed: The income-based incentive fee rewards the
−Removed: Adviser if our quarterly net investment income (before giving effect to any incentive fee) exceeds 1.75% of our net assets, which we define as total assets less indebtedness and before taking into account any incentive fees payable or contractually
−Removed: due but not payable during the period, at the end of the immediately preceding calendar quarter, adjusted appropriately for any share issuances or repurchases during the period (the hurdle rate).
−Removed: The income-based incentive fee with
−Removed: respect to our pre-incentive fee net investment income is generally payable quarterly to the Adviser and is computed as follows:
−Removed: no incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed
−Removed: the hurdle rate;
−Removed: 100.0% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee
−Removed: net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter;
−Removed: 20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% of our net
−Removed: assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter.
−Removed: The second part of
−Removed: the incentive fee is a capital gains-based incentive fee that will be determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination date) and equals 20.0% of our net
−Removed: realized capital gains (as defined herein) as of the end of the fiscal year.
−Removed: In determining the capital gains-based incentive fee payable to the Adviser, we calculate net realized capital gains at the end of each applicable year by
−Removed: subtracting the sum of our cumulative aggregate realized capital losses and our entire portfolios aggregate unrealized capital depreciation from our cumulative aggregate realized capital gains.
−Removed: For this purpose, cumulative aggregate realized
−Removed: capital gains, if any, equals the sum of the differences between the net sales price of each investment, when sold, and the original cost of such investment since inception.
−Removed: Cumulative aggregate realized capital losses equals the sum of the amounts
−Removed: by which the net sales price of each investment, when sold, is less than the original cost of such investment since inception.
−Removed: The entire portfolios aggregate unrealized capital depreciation, if any, equals the sum of the difference between
−Removed: the valuation of each investment as of the applicable calculation date and the original cost of such investment.
−Removed: At the end of the applicable fiscal year, the amount of capital gains that serves as the basis for our calculation of the capital
−Removed: gains-based incentive fee equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less the entire portfolios aggregate unrealized capital depreciation, if any.
−Removed: If this number is positive at the
−Removed: end of such fiscal year, then the capital gains-based incentive fee for such year equals 20.0% of such amount, less the aggregate amount of any capital gains-based incentive fees paid in respect of our portfolio in all prior years.
−Removed: gains-based incentive fee has been recorded or paid since our inception through September 30, 2019, as cumulative unrealized capital depreciation has exceeded cumulative realized capital gains net of cumulative realized capital losses.
−Removed: In accordance with GAAP, a capital gains-based incentive fee accrual is calculated using the aggregate cumulative realized capital gains and losses and
−Removed: aggregate cumulative unrealized capital depreciation included in the calculation of the capital gains-based incentive fee.
−Removed: If such amount is positive at the end of a period, then GAAP requires us to record a capital gains-based incentive fee equal
−Removed: to 20.0% of such amount, less the aggregate amount of actual capital gains-based incentive fees paid in all prior years.
+Added: The income-based incentive fee rewards the Adviser if our quarterly net investment income (before giving effect to any incentive fee) exceeds 1.75% (2.0% during the one year
+Added: period from April 1, 2020 through March 31, 2021) of our net assets, which we define as total assets less indebtedness and before taking into account any incentive fees payable or contractually due but not payable during the period, at the
+Added: end of the immediately preceding calendar quarter, adjusted appropriately for any share issuances or repurchases during the period (the hurdle rate).
+Added: The income-based incentive fee with respect to our
+Added: pre-incentive fee net investment income is generally payable quarterly to the Adviser and is computed as follows:
+Added: no incentive fee in any calendar quarter in which our pre-incentive fee
+Added: net investment income does not exceed the hurdle rate;
+Added: 100.0% of our pre-incentive fee net investment income with respect to
+Added: that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% (2.4375% during the one year period from April 1, 2020 through March 31,
+Added: 2021) of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter;
+Added: 20.0% of the amount of our pre-incentive fee net investment income, if
+Added: any, that exceeds 2.1875% (2.4375% during the one year period from April 1, 2020 through March 31, 2021) of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter.
+Added: As reflected above, on April 14, 2020, our Board of Directors approved the amendment of the Advisory Agreement, which temporarily
+Added: revised the hurdle rate, for the period beginning April 1, 2020 and ending March 31, 2021, increasing the hurdle rate from 1.75% per quarter (7% annualized) to 2.00% per quarter (8% annualized) and increasing the excess incentive fee
+Added: hurdle rate from 2.1875% per quarter (8.75% annualized) to 2.4375% per quarter (9.75% annualized).
+Added: The second part of the incentive fee is a capital
+Added: gains-based incentive fee that is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination
+Added: date) and equals 20.0% of our net realized capital gains (as defined herein) as of the end of the fiscal year.
+Added: In determining the capital gains-based incentive fee payable to the
+Added: Adviser, we calculate net realized capital gains at the end of each applicable year by subtracting the sum of our cumulative aggregate realized capital losses and our entire portfolios aggregate unrealized capital depreciation from
+Added: our cumulative aggregate realized capital gains.
+Added: For this purpose, cumulative aggregate realized capital gains, if any, equals the sum of the differences between the net sales price of each investment, when sold, and the original cost of such
+Added: investment since inception.
+Added: Cumulative aggregate realized capital losses equals the sum of the amounts by which the net sales price of each investment, when sold, is less than the original cost of such investment since inception.
+Added: portfolios aggregate unrealized capital depreciation, if any, equals the sum of the difference between the valuation of each investment as of the applicable calculation date and the original cost of such investment.
+Added: At the end of the
+Added: applicable fiscal year, the amount of capital gains that serves as the basis for our calculation of the capital gains-based incentive fee equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less
+Added: the entire portfolios aggregate unrealized capital depreciation, if any.
+Added: If this number is positive at the end of such fiscal year, then the capital gains-based incentive fee for such year equals 20.0% of such amount, less the aggregate amount
+Added: of any capital gains-based incentive fees paid in respect of our portfolio in all prior years.
+Added: No capital gains-based incentive fee has been recorded or paid since our inception through September 30, 2020, as cumulative unrealized capital
+Added: depreciation has exceeded cumulative realized capital gains net of cumulative realized capital losses.
+Added: In accordance with GAAP, a capital gains-based
+Added: incentive fee accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital appreciation and depreciation.
+Added: If such amount is positive at the end of a period, then GAAP requires us
+Added: to record a capital gains-based incentive fee equal to 20.0% of such amount, less the aggregate amount of actual capital gains-based incentive fees paid in all prior years.
If such amount is negative, then there is no accrual for such period.
−Removed: GAAP requires that the capital gains-based incentive fee
−Removed: accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains-based incentive fee would be payable if such unrealized capital appreciation were realized.
−Removed: There can be no assurance that such
−Removed: unrealized capital appreciation will be realized in the future.
+Added: requires that the capital gains-based incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains-based incentive fee would be payable if such unrealized capital appreciation were
+Added: There can be no assurance that such unrealized capital appreciation will be realized in the future.
No GAAP accrual for a capital gains-based incentive fee has been recorded from our inception through September 30, 2020.
−Removed: Our Board of Directors accepted non-contractual, unconditional and irrevocable credits from the Adviser to reduce the income-based incentive fee to the extent
−Removed: net investment income did not 100.0% cover distributions to common stockholders for the years ended September 30, 2019, 2018, and 2017.
+Added: Our Board of Directors accepted non-contractual, unconditional and irrevocable credits from the Adviser to reduce the
+Added: income-based incentive fee to the extent net investment income did not 100.0% cover distributions to common stockholders for the years ended September 30, 2020, 2019, and 2018.
Transactions with the Administrator
7 unchanged sentences
Brubaker (our vice chairman and chief operating officer) serve as members of the board of managers and executive officers of the Administrator, which is 100% indirectly owned and controlled by Mr.
−Removed: Our allocable portion of the Administrators expenses is generally derived by multiplying the
−Removed: Administrators total expenses by the approximate percentage of time during the current quarter the Administrators employees performed services for us in relation to their time spent performing services for all companies serviced by the
−Removed: Administrator.
−Removed: On July 9, 2019, our Board of Directors, including a majority of the directors who are not parties to the Administration Agreement or interested persons of either party, approved the renewal of the Administration Agreement
−Removed: through August 31, 2020.
+Added: Another of our officers, Michael
+Added: LiCalsi (our general counsel and secretary), serves as the Administrators president as well as the executive vice president of administration for the Adviser.
+Added: Our allocable portion of the Administrators expenses is generally derived by multiplying the Administrators total expenses by the approximate
+Added: percentage of time during the current quarter the Administrators employees performed services for us in relation to their time spent performing services for all companies serviced by the Administrator.
+Added: On July 14, 2020, our Board of
+Added: Directors, including a majority of the directors who are not parties
+Added: to the Administration Agreement or interested persons of either party, approved the renewal of the Administration Agreement through August 31, 2021.
Other Transactions
−Removed: Gladstone Securities, LLC (Gladstone Securities), a privately-held broker-dealer registered with the Financial Industry Regulatory Authority and
−Removed: insured by the Securities Investor Protection Corporation, which is 100% indirectly owned and controlled by Mr.
−Removed: Gladstone, our chairman and chief executive officer, has provided other services, such as investment banking and due diligence
−Removed: services, to certain of our portfolio companies, for which Gladstone Securities receives a fee.
−Removed: Any such fees paid by portfolio companies to Gladstone Securities do not impact the fees we pay to the Adviser or the non-contractual, unconditional and
−Removed: irrevocable credits against the base management fee or incentive fee.
−Removed: Gladstone Securities received fees from portfolio companies totaling $1.3 million, $0.8 million, and $1.0 million during the years ended September 30, 2019, 2018, and
−Removed: 2017, respectively.
+Added: Gladstone Securities, LLC
+Added: (Gladstone Securities), a privately-held broker-dealer registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation, which is 100% indirectly owned and controlled by
+Added: Gladstone, our chairman and chief executive officer, has provided other services, such as investment banking and due diligence services, to certain of our portfolio companies, for which Gladstone Securities receives a fee.
+Added: Any such fees
+Added: paid by portfolio companies to Gladstone Securities do not impact the fees we pay to the Adviser or the non-contractual, unconditional and irrevocable credits against the base management fee or incentive fee.
+Added: Gladstone Securities received fees from portfolio companies totaling $0.9 million, $1.3 million, and $0.8 million during the years ended September 30, 2020, 2019, and 2018, respectively.
Related Party Fees Due
−Removed: due to related parties on our accompanying Consolidated Statements of Assets and Liabilities were as follows:
+Added: Amounts due to related parties on
+Added: our accompanying Consolidated Statements of Assets and Liabilities were as follows:
September 30, 2020
September 30, 2019
−Removed: Base management fee due to Adviser
+Added: Base management fee due to (from) Adviser
Loan servicing fee due to Adviser
−Removed: Incentive fee due to Adviser
−Removed: Total fees due to Adviser
+Added: Incentive fee due to (from) Adviser
+Added: Total fees due to (from) Adviser
Fee due to Administrator
Total Related Party Fees Due
−Removed: In addition to the above fees, other operating expenses due to the Adviser as of September 30, 2019 and
−Removed: September 30, 2018, totaled $32 thousand and $19 thousand, respectively.
−Removed: In addition, net expenses payable to Gladstone Investment Corporation (for reimbursement purposes), which includes certain co-investment expenses, totaled $0 as of each of
−Removed: September 30, 2019 and September 30, 2018.
−Removed: These amounts are generally settled in the quarter subsequent to being incurred and are included in other liabilities on the accompanying Consolidated Statements of Assets and Liabilities
−Removed: as of September 30, 2019 and 2018.
+Added: In addition to the above fees, other operating expenses due to the Adviser as of September 30, 2020 and 2019, totaled
+Added: $31 thousand and $32 thousand, respectively.
+Added: In addition, net expenses payable to Gladstone Investment Corporation (for reimbursement purposes), which includes certain co-investment expenses, totaled
+Added: $0 as of each of September 30, 2020 and 2019.
+Added: These amounts are generally settled in the quarter subsequent to being incurred and are included in other liabilities on the accompanying Consolidated Statements of Assets and Liabilities as
+Added: of September 30, 2020 and 2019.
Revolving Credit Facility
+Added: On April 29, 2020, we,
+Added: through Business Loan, entered into Amendment No.
+Added: 6 to our Credit Facility with KeyBank, which extended the revolving period end date to July 15, 2021, included certain LIBOR transition provisions and decreased the commitment amount from
+Added: $190 million to $180 million.
+Added: All principal and interest will continue to be due and payable on April 15, 2022.
On July 10, 2019, we,
1 unchanged sentence
5 to our Credit Facility with KeyBank, which (i) modified the covenants to reduce our minimum asset coverage with respect to senior securities representing indebtedness from 200% to 150%
−Removed: (or such percentage as may be set forth in Section 18 of the 1940 Act, as modified by Section 61 of the 1940 Act), (ii) amended the excess concentration limits definition to decrease the limit for non-first lien loans from 60% to 50%
−Removed: under certain circumstances and (iii) amended the distributions covenant to allow a distribution to be applied towards the redemption of our 6.00% Series 2024 Term Preferred Stock, par value $0.001 per share (Series 2024 Term Preferred
−Removed: The Credit Facility continues to include customary terms, covenants, events of default and constraints on borrowing availability based on collateral tests for a credit facility of its size and nature.
+Added: (or such percentage as may be set forth in Section 18 of the 1940 Act, as modified by Section 61 of the 1940 Act), (ii) amended the excess concentration limits definition to decrease the limit for
+Added: non-first lien loans from 60% to 50% under certain circumstances and (iii) amended the
+Added: distributions covenant to allow a distribution to be applied towards the redemption of our 6.00% Series 2024 Term Preferred Stock, par value $0.001 per share (Series 2024 Term Preferred
On March 9, 2018, we, through Business Loan, entered into Amendment No.
−Removed: 4 to our Credit Facility with
−Removed: KeyBank, which increased the commitment amount from $170.0 million to $190.0 million, extended the revolving period end date by approximately two years to January 15, 2021, decreased the marginal interest rate added to 30-day LIBOR from 3.25%
−Removed: to 2.85% per annum, and changed the unused commitment fee from 0.50% of the total unused commitment amount to 0.50% when the average unused commitment amount for the reporting period is less than or equal to 50%, 0.75% when the average unused
−Removed: commitment amount for the reporting period is greater than 50% but less than or equal to 65%, and 1.00% when the average unused commitment amount for the reporting period is greater than 65%.
−Removed: If our Credit Facility is not renewed or extended by
−Removed: January 15, 2021, all principal and interest will be due and payable on April 15, 2022 (15 months after the revolving period end date).
−Removed: Subject to certain terms and conditions, our Credit Facility may be expanded up to a total of $265.0
−Removed: million through additional commitments of new or existing lenders.
−Removed: We incurred fees of approximately $1.2 million in connection with this amendment, which are being amortized through our Credit Facilitys revolving period end date of
−Removed: January 15, 2021.
+Added: 4 to our Credit Facility with KeyBank, which increased
+Added: the commitment amount from $170.0 million to $190.0 million, extended the revolving period end date by approximately two years to January 15, 2021, decreased the marginal interest rate added to
+Added: 30-day LIBOR from 3.25% to 2.85% per annum, and changed the unused commitment fee from 0.50% of the total unused commitment amount to 0.50% when the average unused commitment amount for the reporting period is
+Added: less than or equal to 50%, 0.75% when the average unused commitment amount for the reporting period is greater than 50% but less than or equal to 65%, and 1.00% when the average unused commitment amount for the reporting period is greater than 65%.
+Added: All principal and interest will be due and payable on April 15, 2022.
+Added: Subject to certain terms and conditions, our Credit Facility may be expanded up to a total of $265.0 million through additional commitments of new or existing lenders.
+Added: We incurred fees of approximately $1.2 million in connection with this amendment, which are being amortized through our Credit Facilitys revolving period end date of July 15, 2021.
The following tables summarize noteworthy information related to our Credit Facility:
9 unchanged sentences
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.
−Removed: Includes unused commitment fees and excludes the impact of deferred financing fees.
+Added: Includes unused commitment fees and excludes the impact of deferred financing costs.
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
11 unchanged sentences
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.
−Removed: Additionally, we are subject to a performance guaranty that requires us to maintain (i) a minimum net worth
−Removed: (defined in our Credit Facility to include our mandatorily redeemable preferred stock) of $205.0 million plus 50.0% of all equity and subordinated debt raised after May 1, 2015 less 50% of any equity and subordinated debt retired or redeemed
−Removed: after May 1, 2015, which equates to $270.1 million as of September 30, 2019, (ii) asset coverage with respect to senior securities representing indebtedness of at least 150% (or such percentage as may be set forth in
−Removed: 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.
−Removed: As of September 30, 2019, and as defined in the performance guaranty of our Credit Facility, we had a net worth of $354.6 million, asset coverage on our
−Removed: senior securities representing indebtedness of 336.9%, calculated in accordance with the requirements of Section 18 and 61 of the 1940 Act, and an active status as a BDC and RIC.
−Removed: In addition, we had 37 obligors in our Credit
−Removed: Facilitys borrowing base as of September 30, 2019.
−Removed: As of September 30, 2019, we were in compliance with all of our Credit Facility covenants.
−Removed: We elected to apply the fair value option of
−Removed: ASC 825, Financial Instruments , specifically for the Credit Facility, which was consistent with our application of ASC 820 to our investments.
−Removed: Generally, the fair value of our Credit Facility is determined using a yield analysis
−Removed: which includes a DCF calculation and the assumptions that the Valuation Team believes market participants would use, including the estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of similar
−Removed: securities as of the measurement date.
−Removed: As of September 30, 2019, the discount rate used to determine the fair value of our Credit Facility was 30-day LIBOR, plus 2.65% per annum, plus a 0.75% unused commitment fee.
+Added: Additionally, we are required to maintain (i) a minimum net worth (defined in our Credit Facility to include
+Added: our mandatorily redeemable preferred stock) of $205.0 million plus 50.0% of all equity and subordinated debt raised after May 1, 2015 less 50% of any equity and subordinated debt retired or redeemed after May 1, 2015, which equates to
+Added: $269.5 million as of September 30, 2020, (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
+Added: 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,
−Removed: 2018, the discount rate used to determine the fair value of our Credit Facility was 30-day LIBOR, plus 2.85% per annum, plus a 0.50% unused commitment fee.
−Removed: Generally, an increase or decrease in the discount rate used in the DCF calculation may
−Removed: result in a corresponding increase or decrease, respectively, in the fair value of our Credit Facility.
−Removed: As of September 30, 2019 and 2018, our Credit Facility was valued using Level 3 inputs and any changes in its fair value are recorded in net
−Removed: unrealized depreciation (appreciation) of other on our accompanying Consolidated Statements of Operations .
−Removed: The following tables present our Credit
−Removed: Facility carried at fair value as of September 30, 2019 and 2018, on our accompanying Consolidated Statements of Assets and Liabilities for Level 3 of the hierarchy established by ASC 820 and the changes in fair value of our Credit
−Removed: Facility during the years ended September 30, 2019 and 2018:
+Added: 2020, and as defined in our Credit Facility, we had a net worth of $327.3 million, asset coverage on our senior securities representing indebtedness of 202.6%, calculated in accordance with the requirements of Section 18 and 61
+Added: of the 1940 Act, and an active status as a BDC and RIC.
+Added: In addition, we had 31 obligors in our Credit Facilitys borrowing base as of September 30, 2020.
+Added: As of September 30, 2020, we were in compliance with all of our Credit Facility
+Added: We elected to apply the fair
+Added: value option of ASC 825, Financial Instruments , specifically for the Credit Facility, which was consistent with our application of ASC 820 to our investments.
+Added: Generally, the fair value of our Credit Facility is determined using a
+Added: yield analysis which includes a DCF calculation and the assumptions that the Valuation Team believes market participants would use, including the estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of
+Added: similar securities as of the measurement date.
+Added: As of September 30, 2020, the discount rate used to determine the fair value of our Credit Facility was 30-day LIBOR, plus 3.20% per annum, plus a 0.50%
+Added: unused commitment fee.
+Added: As of September 30, 2019, the discount rate used to determine the fair value of our Credit Facility was 30-day LIBOR, plus 2.65% per annum, plus a 0.75% unused commitment fee.
+Added: Generally, an increase or decrease in the discount rate used in the DCF calculation may result in a corresponding decrease or increase, respectively, in the fair value of our Credit Facility.
+Added: As of September 30, 2020 and 2019, our Credit
+Added: Facility was valued using Level 3 inputs and any changes in its fair value are recorded in net unrealized depreciation (appreciation) of other on our accompanying Consolidated Statements of Operations .
+Added: The following tables present our Credit Facility carried at fair value as of September 30, 2020 and 2019, on
+Added: our accompanying Consolidated Statements of Assets and Liabilities for Level 3 of the hierarchy established by ASC 820 and the changes in fair value of our Credit Facility during the years ended September 30, 2020 and 2019:
Total Recurring Fair Value
16 unchanged sentences
Notes Payable
−Removed: In November 2018, we completed a public debt offering of $57.5 million aggregate principal amount of 6.125% Notes due 2023 (the 2023
−Removed: Notes), inclusive of the overallotment option exercised by the underwriters, for net proceeds of $55.4 million after deducting underwriting discounts, commissions and offering expenses borne by us.
−Removed: We incurred approximately
−Removed: $2.1 million in total underwriting discounts and offering costs related to the issuance of the 2023 Notes, which have been recorded as discounts to the principal amount on our accompanying Consolidated Statements of Assets and
−Removed: Liabilities and are being amortized from issuance through November 1, 2023, the maturity date.
−Removed: The offering proceeds were used to pay down borrowings under our Credit Facility.
−Removed: The 2023 Notes are traded under the ticker symbol GLADD on the Nasdaq Global Select Market (Nasdaq).
−Removed: The 2023 Notes will mature on
−Removed: November 1, 2023, and may be redeemed in whole or in part at any time or from time to time at the Companys option on or after November 1, 2020.
−Removed: The 2023 Notes bear interest at a rate of 6.125% per year payable quarterly on
−Removed: February 1, May 1, August 1, and November 1 of each year, commencing February 1, 2019 (which equates to approximately $3.5 million per year).
−Removed: The 2023 Notes are recorded at the principal amount, less discounts, on our
−Removed: accompanying Consolidated Statements of Assets and Liabilities as of September 30, 2019.
−Removed: The indenture relating to the 2023 Notes
−Removed: contains certain covenants, including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Companys asset coverage meets the threshold specified in the 1940 Act after such borrowing,
−Removed: (ii) an inability to declare any dividend or distribution unless the Companys asset coverage meets the threshold specified in the 1940 Act at the time of such declaration, and (iii) if, at any time, we are not subject to the
−Removed: reporting requirements of the Exchange Act, we will provide the holders of the 2023 Notes and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.
−Removed: The fair value, based on the last quoted closing price, of the 2023 Notes as of September 30, 2019 was $60.1 million.
−Removed: We consider the trading price
−Removed: of the 2023 Notes to be a Level 1 input within the ASC 820 hierarchy.
+Added: In October 2019, we completed a public debt offering of $38.8 million aggregate principal amount of 5.375% Notes due 2024 (the 2024 Notes),
+Added: 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.
+Added: In November 2018, we completed a public debt offering of $57.5 million aggregate principal amount of 6.125% Notes due 2023 (the 2023 Notes),
+Added: inclusive of the overallotment option exercised by the underwriters, for net proceeds of $55.4 million after deducting underwriting discounts, commissions and offering expenses borne by us.
+Added: The 2024 and 2023 Notes are traded under the ticker symbols GLADL and GLADD, respectively, on the Nasdaq Global Select Market
+Added: The 2024 Notes and 2023 Notes will mature on November 1, 2024 and November 1, 2023, respectively, and may be redeemed in whole or in part at any time or from time to time at the Companys option on or after
+Added: November 1, 2021 and November 1, 2020, respectively.
+Added: The 2024 Notes and 2023 Notes bear interest at a rate of 5.375% and 6.125% per year, respectively, payable quarterly on February 1, May 1, August 1, and November 1 of
+Added: each year (which equates to approximately $5.6 million per year).
+Added: The 2024 Notes and 2023 Notes are recorded at the principal amount, less discounts and offering costs, on our Consolidated Statements of Assets and Liabilities .
+Added: The indenture relating to the 2024 Notes and 2023 Notes contains certain covenants, including (i) an
+Added: inability to incur additional debt or issue additional debt or preferred securities unless the Companys asset coverage meets the threshold specified in the 1940 Act after such borrowing, (ii) an inability to declare any dividend or
+Added: 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 Companys asset coverage meets the threshold specified in the 1940 Act at the time of (and giving effect
+Added: to) such declaration or purchase, and (iii) if, at any time, we are not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, we will provide the holders of the 2024 Notes and 2023 Notes and the trustee with
+Added: audited annual consolidated financial statements and unaudited interim consolidated financial statements.
+Added: The fair value, based on the last quoted
+Added: closing price, of the 2023 Notes as of September 30, 2020 and 2019 was $57.8 million and $60.1 million, respectively.
+Added: The fair value, based on the last quoted closing price, of the 2024 Notes as of September 30, 2020 was
+Added: $38.7 million.
+Added: We consider the trading price of the 2024 Notes and 2023 Notes to be a Level 1 input within the ASC 820 hierarchy.
MANDATORILY REDEEMABLE PREFERRED STOCK
−Removed: In September 2017, we completed a public offering of approximately 2.1 million shares of our Series 2024 Term Preferred Stock at a public offering price
−Removed: of $25.00 per share.
−Removed: Gross proceeds totaled $51.8 million and net proceeds, after deducting underwriting discounts, commissions and offering expenses borne by us, were approximately $49.8 million.
−Removed: We incurred approximately $1.9 million in total
−Removed: underwriting discounts and offering costs related to the issuance of the Series 2024 Term Preferred Stock, which have been recorded as discounts to the liquidation value on our accompanying Consolidated Statements of Assets and Liabilities
−Removed: and are being amortized from issuance through September 30, 2024, the mandatory redemption date.
−Removed: The offering proceeds plus borrowings under our Credit Facility were used to voluntarily redeem all 2.4 million outstanding shares of our then
−Removed: existing 6.75% Series 2021 Term Preferred Stock, par value $0.001 per share (Series 2021 Term Preferred Stock).
−Removed: In connection with the voluntary redemption of our Series 2021 Term Preferred Stock, we incurred a loss on extinguishment of
−Removed: debt of $1.3 million during the three months ended September 30, 2017, which is primarily comprised of the unamortized deferred issuance costs at the time of redemption.
+Added: In September 2017, we completed a public offering of approximately 2.1 million shares of our Series 2024
+Added: Term Preferred Stock at a public offering price of $25.00 per share.
+Added: Gross proceeds totaled $51.8 million and net proceeds, after deducting underwriting discounts, commissions and offering expenses borne by us, were approximately
+Added: $49.8 million.
+Added: We incurred approximately $1.9 million in total underwriting discounts and offering costs related to the issuance of the Series 2024 Term Preferred Stock, which were recorded as discounts to the liquidation value on our
+Added: accompanying Consolidated Statements of Assets and Liabilities and were previously amortized from issuance through September 30, 2024, the mandatory redemption date.
The shares of our Series 2024 Term Preferred Stock were traded under the ticker symbol GLADN on Nasdaq as of September 30, 2019.
−Removed: 2024 Term Preferred Stock was not convertible into our common stock or any other security and provided for a fixed dividend equal to 6.00% per year, payable monthly (which equated in total to approximately $3.1 million per year).
−Removed: We would have
−Removed: been required to redeem all of the outstanding Series 2024 Term Preferred Stock on September 30, 2024 for cash at a redemption price equal to $25.00 per share plus an amount equal to all unpaid dividends and distributions per share accumulated
−Removed: to (but excluding) the date of redemption (the Redemption Price).
−Removed: We may additionally have been required to mandatorily redeem some or all of the shares of our Series 2024 Term Preferred Stock early, at the Redemption Price, in the event
−Removed: of the following:
−Removed: (1) upon the occurrence of certain events that would constitute a change in control, or (2) if we failed to maintain an asset coverage of at least 200% on our senior securities that are stock (which was only
−Removed: our Series 2024 Term Preferred Stock as of September 30, 2019) and the failure remained for a period of 30 days following the filing date of our next quarterly or annual report filed with the SEC.
−Removed: The asset coverage on our senior
−Removed: securities that are stock as of September 30, 2019 was 238.5%, calculated in accordance with Sections 18 and 61 of the 1940 Act.
−Removed: October 2, 2019, we voluntarily redeemed all 2,070,000 outstanding shares of our Series 2024 Term Preferred Stock at a redemption price of $25.00 per share which represents the liquidation preference per share, plus accrued and unpaid dividends
−Removed: through October 1, 2019 in the amount of $0.004166 per share, for a payment per share of $25.004166 and an aggregate redemption price of approximately $51.8 million.
−Removed: We paid the following monthly dividends on our Series 2024 Term Preferred Stock for the year ended September 30, 2019:
−Removed: Declaration Date
−Removed: Preferred Stock
−Removed: October 9, 2018
−Removed: October 19, 2018
−Removed: October 31, 2018
−Removed: October 9, 2018
−Removed: November 20, 2018
−Removed: November 30, 2018
−Removed: October 9, 2018
−Removed: December 20, 2018
−Removed: December 31, 2018
−Removed: January 8, 2019
−Removed: January 18, 2019
−Removed: January 31, 2019
−Removed: January 8, 2019
−Removed: February 20, 2019
−Removed: February 28, 2019
−Removed: January 8, 2019
−Removed: March 20, 2019
−Removed: March 29, 2019
−Removed: April 9, 2019
−Removed: April 22, 2019
−Removed: April 30, 2019
−Removed: April 9, 2019
−Removed: April 9, 2019
−Removed: June 19, 2019
−Removed: June 28, 2019
−Removed: July 22, 2019
−Removed: July 31, 2019
−Removed: August 20, 2019
−Removed: August 30, 2019
−Removed: September 17, 2019
−Removed: September 30, 2019
−Removed: Year Ended September 30, 2019:
+Added: coverage on our senior securities that are stock as of September 30, 2019 was 238.5%, calculated in accordance with Sections 18 and 61 of the 1940 Act.
+Added: On October 2, 2019, we voluntarily redeemed all 2,070,000 outstanding shares of our Series 2024 Term Preferred Stock at a redemption price of $25.00 per
+Added: share which represents the liquidation preference per share, plus accrued and unpaid dividends through October 1, 2019 in the amount of $0.004166 per share, for a total payment per share of $25.004166 and an aggregate redemption price of
+Added: approximately $51.8 million.
+Added: In connection with the voluntary redemption of our Series 2024 Term Preferred Stock, we incurred a loss on extinguishment of debt of $1.4 million, which has been reflected in Realized loss on other in our
+Added: accompanying Consolidated Statement of Operations and which is primarily comprised of the unamortized deferred issuance costs at the time of redemption.
We paid the following monthly dividends on our Series 2024 Term Preferred Stock for the year ended
1 unchanged sentence
Declaration Date
−Removed: Distribution per
−Removed: Series 2024 Term
−Removed: Preferred Share (A)
+Added: Preferred Stock
October 9, 2018
25 unchanged sentences
July 31, 2019
−Removed: July 31, 2018
−Removed: July 10, 2018
August 20, 2019
August 30, 2019
−Removed: July 10, 2018
September 17, 2019
1 unchanged sentence
Year Ended September 30, 2019:
−Removed: The dividend paid on October 31, 2017 included the pro-rated period from and including the issuance date
−Removed: of September 27, 2017 to and including September 30, 2017, and the full month of October 2017.
−Removed: The federal income tax
−Removed: characteristics of dividends paid to our 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
−Removed: the full fiscal year.
−Removed: Estimates of tax characterization made on a quarterly basis may not be representative of the actual tax characterization of dividends for the full year.
−Removed: Estimates made on a quarterly basis are updated as of each interim
−Removed: reporting date.
−Removed: The tax characterization of dividends paid to our preferred stockholders during the calendar years ended December 31, 2018 and 2017 was 100% from ordinary income.
−Removed: In accordance with ASC 480, Distinguishing Liabilities from Equity , mandatorily redeemable financial instruments should be classified as
−Removed: liabilities in the balance sheet.
−Removed: Our mandatorily redeemable preferred stock is recorded at the liquidation preference, less discounts, on our accompanying Consolidated Statements of Assets and Liabilities as of September 30, 2019 and
−Removed: The related dividend payments to our mandatorily redeemable preferred stockholders are treated as dividend expense on our Consolidated Statements of Operations as of the ex-dividend date.
−Removed: The fair value, based on the last quoted closing price, for our Series 2024 Term Preferred Stock as of September 30, 2019 and 2018 was $51.8 million and
−Removed: $52.7 million, respectively.
+Added: The federal income tax characteristics of dividends paid to our preferred stockholders generally constitute ordinary income to
+Added: 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.
+Added: Estimates of tax characterization made on a quarterly basis may not be
+Added: representative of the actual tax characterization of dividends for the full year.
+Added: Estimates made on a quarterly basis are updated as of each interim reporting date.
+Added: The tax characterization of dividends paid to our preferred stockholders during the
+Added: calendar years ended December 31, 2019 and 2018 was 100% from ordinary income.
+Added: In accordance with ASC 480, Distinguishing Liabilities from
+Added: Equity , mandatorily redeemable financial instruments should be classified as liabilities in the balance sheet.
+Added: Our mandatorily redeemable preferred stock was recorded at the liquidation preference, less discounts, on our accompanying
+Added: Consolidated Statements of Assets and Liabilities as of September 30, 2019.
+Added: The related dividend payments to our mandatorily redeemable preferred stockholders are treated as dividend expense on our Consolidated Statements of
+Added: Operations as of the ex-dividend date.
+Added: The fair value, based on the last quoted closing price, for our Series
+Added: 2024 Term Preferred Stock as of September 30, 2019 was $51.8 million.
We consider the trading price of our mandatorily redeemable preferred stock to be a Level 1 input within the fair value hierarchy.
5 unchanged sentences
Common Stock Offerings
−Removed: In February 2015, we entered into an equity distribution agreement with Cantor Fitzgerald & Co.
−Removed: (the Cantor Sales Agreement) under which
−Removed: we had the ability to issue and sell, from time to time, up to an aggregate offering price of $50.0 million shares of our common stock in what is commonly referred to as an ATM program.
−Removed: During the three months ended December 31, 2018, we sold
−Removed: 2,765 shares of our common stock under the Cantor Sales Agreement, at a weighted-average price of $9.60 per share and raised approximately $28 thousand of gross and net proceeds.
−Removed: In February 2019, we terminated the Cantor Sales Agreement and entered into a new equity distribution agreement with Jefferies LLC (the Jefferies Sales
−Removed: Agreement) under which we have the ability to issue and sell, from time to time, up to an aggregate offering price of $50.0 million shares of our common stock.
−Removed: During the year ended September 30, 2019, we sold 1,841,178 shares of our
−Removed: common stock under the Jefferies Sales Agreement, at a weighted-average price of $9.35 per share and raised $17.2 million of gross proceeds.
−Removed: Net proceeds, after deducting commissions and offering costs borne by us, were approximately $17.0
−Removed: As of September 30, 2019, we had a remaining capacity to sell up to an additional $32.8 million of our common stock under the Jefferies Sales Agreement.
+Added: February 2019, we entered into an equity distribution agreement with Jefferies LLC (the Jefferies Sales Agreement) under which we have the ability to issue and sell, from time to time, up to an aggregate offering price of
+Added: $50.0 million shares of our common stock.
+Added: During the year ended September 30, 2020, we sold 1,220,927 shares of our common stock under the Jefferies Sales Agreement, at a weighted-average price of $9.55
+Added: per share and raised $11.7 million of gross proceeds.
+Added: Net proceeds, after deducting commissions and offering costs borne by us, were approximately $11.4 million.
+Added: September 30, 2020, we had a remaining capacity to sell up to an additional $21.1 million of our common stock under the Jefferies Sales Agreement.
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE
−Removed: The following table sets forth the computation of basic and diluted net increase in net assets resulting from operations per weighted average common share for
−Removed: the years ended September 30, 2019, 2018, and 2017:
+Added: The following table sets forth the computation of basic and diluted net increase (decrease) in net assets resulting from operations per weighted average common
+Added: share for the years ended September 30, 2020, 2019, and 2018:
Year Ended September 30,
−Removed: Numerator for basic and diluted net increase in net assets resulting from operations per common
+Added: Numerator for basic and diluted net increase (decrease) in net assets resulting from operations
+Added: per common share
Denominator for basic and diluted weighted average common shares
−Removed: Basic and diluted net increase in net assets resulting from operations per common
+Added: Basic and diluted net increase (decrease) in net assets resulting from operations per common
DISTRIBUTIONS TO COMMON STOCKHOLDERS
5 unchanged sentences
The federal income tax characteristics of all distributions will be reported to stockholders on the IRS Form 1099 after the end of each calendar year.
−Removed: calendar years ended December 31, 2018 and 2017, 100% of distributions to common stockholders during these periods were deemed to be paid from ordinary income for 1099 stockholder reporting purposes.
−Removed: We paid the following monthly distributions to common stockholders for the fiscal years ended September 30,
−Removed: 2019 and 2018:
+Added: calendar year ended December 31, 2019, 97.4% of distributions to common stockholders were deemed to be paid from ordinary income and 2.6% of distributions to common stockholders were deemed to be a return of capital for 1099 stockholder
+Added: reporting purposes.
+Added: For the calendar year ended December 31, 2018, 100% of distributions to common stockholders were deemed to be paid from ordinary income for 1099 stockholder reporting purposes.
+Added: We paid the following monthly distributions to common stockholders for the years ended September 30, 2020
Declaration Date
27 unchanged sentences
July 24, 2020
+Added: July 31, 2020
+Added: July 14, 2020
August 24, 2020
August 31, 2020
+Added: July 14, 2020
September 23, 2020
28 unchanged sentences
July 31, 2019
−Removed: July 31, 2018
−Removed: July 10, 2018
August 20, 2019
August 30, 2019
−Removed: July 10, 2018
September 17, 2019
1 unchanged sentence
Year Ended September 30, 2019:
−Removed: Aggregate distributions declared and paid to our common stockholders were approximately $24.6 million and $22.8 million for
−Removed: the years ended September 30, 2019 and 2018, respectively, and were declared based on estimates of Investment Company Taxable Income.
−Removed: For the fiscal year ended September 30, 2019, distributions declared and paid exceeded taxable income
−Removed: available for common distributions resulting in a partial return of capital of approximately $0.7 million.
−Removed: For each of the fiscal years ended September 30, 2018, and 2017, our current and accumulated earnings and profits (after taking into
−Removed: account our mandatorily redeemable preferred stock dividends), exceeded common stock distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $0.3 million of the first common distributions paid to
−Removed: stockholders in the respective subsequent fiscal year as having been paid in the respective prior year.
−Removed: The components of our net assets on a tax basis were as follows:
+Added: Aggregate distributions declared and paid to our common stockholders were approximately $25.2 million and
+Added: $24.6 million for the years ended September 30, 2020 and 2019, respectively, and were declared based on estimates of Investment Company Taxable Income.
+Added: For the fiscal years ended September 30, 2020 and 2019, distributions declared and
+Added: paid exceeded taxable income available for common distributions resulting in a partial return of capital of approximately $0.4 million and $0.7 million, respectively.
+Added: For the fiscal year ended September 30, 2018, our current and
+Added: accumulated earnings and profits (after taking into account our mandatorily redeemable preferred stock dividends), exceeded common stock distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat
+Added: $0.3 million of the first common distributions paid to common stockholders in the subsequent fiscal year as having been paid in the prior year.
September 30,
2 unchanged sentences
Cumulative net unrealized appreciation of other
−Removed: Undistributed Ordinary Income
Capital loss carryforward
1 unchanged sentence
Other temporary differences
−Removed: We intend to retain some or all of our realized capital gains first to the extent we have available capital loss carryforwards
−Removed: and second, through treating the retained amount as a deemed distribution. As of September 30, 2019, $0.9 million of our capital loss carryforwards expired.
−Removed: As of September 30, 2019, we had $57.1 million of capital loss
−Removed: carryforwards that do not expire.
+Added: We intend to retain some or all of our realized capital gains first to the extent we have available capital loss
+Added: carryforwards and second, through treating the retained amount as a deemed distribution. As of September 30, 2020, we had $72.4 million of capital loss carryforwards that do not expire.
For the years ended September 30, 2020 and 2019, we recorded the following adjustments for permanent book-tax
9 unchanged sentences
the portion of our taxable income and gains that we distribute to stockholders.
−Removed: To maintain our qualification as a RIC, we must meet certain source-of-income and asset diversification requirements.
−Removed: In addition, to qualify to be taxed as a RIC, we
−Removed: must also meet certain annual stockholder distribution requirements.
−Removed: To satisfy the RIC annual distribution requirement, we must distribute to stockholders at least 90.0% of our Investment Company Taxable Income.
−Removed: Our policy generally is to make
−Removed: distributions to our stockholders in an amount up to 100.0% of our Investment Company Taxable Income.
−Removed: Because we have distributed more than 90.0% of our Investment Company Taxable Income, no income tax provisions have been recorded for the years
−Removed: ended September 30, 2019, 2018, and 2017.
−Removed: In an effort to limit certain federal excise taxes imposed on RICs, a RIC has to distribute to
−Removed: stockholders, during each calendar year, an amount close to the sum of (1) 98.0% of our ordinary income for the calendar year, (2) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of
−Removed: the calendar year and (3) any ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years.
−Removed: No excise tax provisions have been recorded for the years ended September 30,
−Removed: 2019, 2018, and 2017.
−Removed: Under the RIC Modernization Act, we are permitted to carry forward capital losses that we may incur in taxable
−Removed: years beginning after September 30, 2011 for an unlimited period, and such capital loss carryforwards will retain their character as either short-term or long-term capital losses.
−Removed: However, any losses incurred during post-enactment taxable years
−Removed: will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date.
−Removed: As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
−Removed: Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses.
+Added: To maintain our qualification as a RIC, we must meet certain source-of-income and asset
+Added: diversification requirements.
+Added: In addition, to qualify to be taxed as a RIC, we must also meet certain annual stockholder distribution requirements.
+Added: To satisfy the RIC annual distribution requirement, we must distribute to stockholders at least 90.0%
+Added: of our Investment Company Taxable Income.
+Added: Our policy generally is to make distributions to our stockholders in an amount up to 100.0% of our Investment Company Taxable Income.
+Added: Because we have distributed more than 90.0% of our Investment Company
+Added: Taxable Income, no income tax provisions have been recorded for the years ended September 30, 2020, 2019, and 2018.
+Added: In an effort to limit certain
+Added: federal excise taxes imposed on RICs, a RIC has to distribute to stockholders, during each calendar year, an amount close to the sum of (1) 98.0% of our ordinary income for the calendar year, (2) 98.2% of our capital gains in excess of capital
+Added: losses for the one-year period ending on October 31 of the calendar year and (3) any ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during
+Added: No excise tax provisions have been recorded for the years ended September 30, 2020, 2019, and 2018.
+Added: Under the RIC Modernization Act, we
+Added: are permitted to carry forward capital losses that we may incur in taxable years beginning after September 30, 2011 for an unlimited period, and such capital loss carryforwards will retain their character as either short-term or long-term
+Added: capital losses.
+Added: However, any losses incurred during post-enactment taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date.
+Added: a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
+Added: Additionally, post-enactment capital loss carryforwards will retain their character as either
+Added: short-term or long-term capital losses.
COMMITMENTS AND CONTINGENCIES
Legal Proceedings
−Removed: We are party to certain legal proceedings incidental to the normal course of our business.
−Removed: We are required to establish reserves for litigation matters where
−Removed: those matters present loss contingencies that are both probable and estimable.
−Removed: When loss contingencies are not both probable and estimable, we do not establish reserves.
−Removed: Based on current knowledge, we do not believe that loss contingencies, if any,
−Removed: arising from pending investigations, litigation or regulatory matters will have a material adverse effect on our financial condition, results of operations or cash flows.
−Removed: Additionally, based on our current knowledge, we do not believe such loss
−Removed: contingencies are both probable and estimable and therefore, as of September 30, 2019 and 2018, we had no established reserves for such loss contingencies.
+Added: We are party to certain legal
+Added: proceedings incidental to the normal course of our business.
+Added: We are required to establish reserves for litigation matters where those matters present loss contingencies that are both probable and estimable.
+Added: When loss contingencies are not both
+Added: probable and estimable, we do not establish reserves.
+Added: Based on current knowledge, we do not believe that loss contingencies, if any, arising from pending investigations, litigation or regulatory matters will have a material adverse effect on our
+Added: financial condition, results of operations or cash flows.
+Added: Additionally, based on our current knowledge, we do not believe such loss contingencies are both probable and estimable and therefore, as of September 30, 2020 and 2019, we had no
+Added: established reserves for such loss contingencies.
Escrow Holdbacks
−Removed: From time to time, we enter into
−Removed: arrangements relating to exits of certain investments whereby specific amounts of the proceeds are held in escrow to be used to satisfy potential obligations, as stipulated in the sales agreements.
−Removed: We record escrow amounts in Restricted cash and
−Removed: cash equivalents, if received in cash but subject to potential obligations or other contractual restrictions, or as escrow receivables in Other assets, net, if not yet received in cash, on our accompanying Consolidated Statements of Assets and
−Removed: We establish reserves and holdbacks against escrow amounts if we determine that it is probable and estimable that a portion of the escrow amounts will not ultimately be released or received at the end of the escrow period.
−Removed: There were no
−Removed: aggregate reserves recorded against the escrow amounts as of September 30, 2019 and 2018.
+Added: From time to time, we enter into arrangements relating to exits of certain investments whereby specific amounts of the proceeds are held in escrow to be used
+Added: to satisfy potential obligations, as stipulated in the sales agreements.
+Added: We record escrow amounts in Restricted cash and cash equivalents, if received in cash but subject to potential obligations or other contractual restrictions, or as escrow
+Added: receivables in Other assets, net, if not yet received in cash, on our accompanying Consolidated Statements of Assets and Liabilities.
+Added: We establish reserves and holdbacks against escrow amounts if we determine that it is probable and estimable that a
+Added: portion of the escrow amounts will not ultimately be released or received at the end of the escrow period.
+Added: There were no aggregate reserves recorded against the escrow amounts as of September 30, 2020 and 2019.
Financial Commitments and Obligations
−Removed: 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.
−Removed: 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.
−Removed: We estimate the fair value of the combined unused lines of credit, the
−Removed: unused delayed draw term loans and the uncalled capital commitment as of September 30, 2019 and 2018 to be immaterial.
−Removed: The following table
−Removed: summarizes the amounts of our unused lines of credit, delayed draw term loans and uncalled capital commitment, at cost, as of September 30, 2019 and 2018, which are not reflected as liabilities in the accompanying Consolidated Statements of
−Removed: Assets and Liabilities :
+Added: We have lines of
+Added: credit, delayed draw term loans, and an uncalled capital commitment with certain of our portfolio companies that have not been fully drawn.
+Added: Since these commitments have expiration dates and we expect many will never be fully drawn, the total
+Added: commitment amounts do not necessarily represent future cash requirements.
+Added: 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, 2020 and
+Added: 2019 to be immaterial.
+Added: The following table summarizes the amounts of our unused lines of credit, delayed draw term loans and uncalled capital commitment,
+Added: at cost, as of September 30, 2020 and 2019, which are not reflected as liabilities in the accompanying Consolidated Statements of Assets and Liabilities :
As of September 30,
−Removed: Unused line of credit commitments
+Added: Unused line of credit
+Added: commitments (A)
Delayed draw term loans
Uncalled capital commitment
+Added: There may be specific covenant requirements that temporarily limit a portfolio companys availability to
+Added: draw on an unused line of credit commitment.
FINANCIAL HIGHLIGHTS
1 unchanged sentence
Per Common Share Data:
−Removed: Net asset value at beginning of
+Added: Net asset value at beginning of year
Income from operations (B)
25 unchanged sentences
Mandatorily redeemable preferred stock
−Removed: Long term debt
+Added: Notes Payable
Ratios/Supplemental Data:
6 unchanged sentences
tax regulations, which may differ from amounts determined under GAAP.
−Removed: During the fiscal years ended September 30, 2019 and 2018, the anti-dilution was a result of issuing
−Removed: common shares during the period at a price above the then-current NAV per share.
+Added: During the fiscal years ended September 30, 2020, 2019, and 2018, the anti-dilution was a result of
+Added: issuing common shares during the period at a price above the then-current NAV per share.
During the fiscal years ended September 30, 2017 and 2016, the net dilution was a result of issuing common shares during the period at a price below the
4 unchanged sentences
year, taking into account distributions reinvested in accordance with the terms of our dividend reinvestment plan.
−Removed: Total return does not take into account distributions that may be characterized as a return of capital.
−Removed: For further information on the
−Removed: estimated character of our distributions to common stockholders, refer to Note 9 Distributions to Common Stockholders .
+Added: Total return does not take into account distributions that may be characterized as a return of capital or any sales load paid by a
+Added: For further information on the estimated character of our distributions to common stockholders, refer to Note 9 Distributions to Common Stockholders .
Computed using the average of the balance of net assets at the end of each month of the fiscal year.
1 unchanged sentence
to the base management, loan servicing, and incentive fees.
−Removed: Had we not received any non-contractual, unconditional and irrevocable credits of the incentive fee due to the
−Removed: Adviser, the ratio of net expenses to average net assets would have been 11.24%, 10.34%, 9.38%, 10.90%, and 10.93% for the fiscal years ended September 30, 2019, 2018, 2017, 2016, and 2015, respectively.
−Removed: Had we not received any non-contractual, unconditional and irrevocable credits of the incentive fee due to the
−Removed: Adviser, the ratio of net investment income to average net assets would have been 9.63%, 9.14%, 8.85%, 9.35%, and 8.22% for the fiscal years ended September 30, 2019, 2018, 2017, 2016, and 2015, respectively.
+Added: Had we not received any non-contractual, unconditional and irrevocable
+Added: credits of fees from the Adviser, the ratio of net expenses to average net assets would have been 14.36%, 14.18%, 13.12%, 12.14%, and 13.40% for the fiscal years ended September 30, 2020, 2019, 2018, 2017, and 2016, respectively.
+Added: Had we not received any non-contractual, unconditional and irrevocable
+Added: credits of fees from the Adviser, the ratio of net investment income to average net assets would have been 6.11%, 6.74%, 6.41%, 6.13%, and 6.90% for the fiscal years ended September 30, 2020, 2019, 2018, 2017, and 2016, respectively.
SELECTED QUARTERLY DATA (UNAUDITED)
15 unchanged sentences
In accordance with the SECs Regulation S-X, we do not consolidate portfolio company investments.
−Removed: Further, in accordance with ASC 946, we are precluded
−Removed: from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated
−Removed: subsidiaries.
−Removed: We had certain unconsolidated subsidiaries which met at least one of the significance conditions under Rule 1-02(w) of the SECs
−Removed: Regulation S-X as of or during at least one of the years ended September 30, 2019, 2018, and 2017.
−Removed: Accordingly, pursuant to Rule 4-08 of Regulation S-X, summarized, comparative financial information is presented below for our unconsolidated
−Removed: significant subsidiaries as of September 30, 2019 and 2018 and for the years ended September 30, 2019, 2018, and 2017.
−Removed: Further, where applicable, audited financial statements have been included as exhibits to this Form 10-K pursuant to
+Added: accordance with ASC 946, we are precluded from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to
+Added: the investment company or its consolidated subsidiaries.
+Added: We did not have any unconsolidated subsidiaries that met any of the significance conditions
+Added: under Rule 1-02(w)(2) of the SECs Regulation S-X as of or during the year ended September 30, 2020.
+Added: We had certain unconsolidated subsidiaries which met at
+Added: least one of the significance conditions under Rule 1-02(w) of the SECs Regulation S-X as of or during at least one of the years ended September 30, 2019 and
+Added: Accordingly, pursuant to Rule 4-08 of Regulation S-X, summarized, comparative financial information is presented below for our unconsolidated significant
+Added: subsidiaries as of September 30, 2020 and 2019 and for the years ended September 30, 2020, 2019, and 2018.
As of September 30,
10 unchanged sentences
Noncurrent liabilities
−Removed: Sunshine Media Group, Inc.
+Added: LWO Acquisitions Company LLC
Current assets
4 unchanged sentences
SUBSEQUENT EVENTS
−Removed: Series 2024 Term Preferred Stock
−Removed: October 2, 2019, we voluntarily redeemed all 2,070,000 outstanding shares of our Series 2024 Term Preferred Stock at a redemption price of $25.00 per share which represents the liquidation preference per share, plus accrued and unpaid dividends
−Removed: through October 1, 2019 in the amount of $0.004166 per share, for a payment per share of $25.004166 and an aggregate redemption price of approximately $51.8 million.
−Removed: Debt Offering
−Removed: In October 2019, we completed a
−Removed: public debt offering of $38.8 million aggregate principal amount of 5.375% Notes due 2024 (the 2024 Notes), inclusive of the overallotment, for net proceeds of approximately $37.5 million after deducting underwriting discounts,
−Removed: commissions and offering expenses borne by us.
−Removed: The 2024 Notes will mature on November 1, 2024, and may be redeemed in whole or in part at any time or from time to time at the Companys option on or after November 1, 2021.
−Removed: Notes are traded under the ticker symbol GLADL on Nasdaq.
Distributions
−Removed: On October 8, 2019, our Board of Directors declared the following monthly cash distributions to common stockholders:
+Added: In October 2020, our Board of
+Added: Directors declared the following monthly cash distributions to common stockholders:
October 23, 2020
5 unchanged sentences
Total for the Quarter
−Removed: Portfolio and Investment Activity
−Removed: In October 2019, we invested $14.0 million in Universal Survey Center, Inc.
−Removed: through secured first lien debt.
−Removed: In October 2019, our debt investment in DigiCert Holdings, Inc.
−Removed: was repaid at par for net proceeds of $2.4 million.
−Removed: In October 2019, we invested an additional $3.0 million in Medical Solutions Holdings, Inc., an existing portfolio company, through secured second lien debt.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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.