What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-11-15 compared with 2020-11-10 · 482 added, 703 removed, 454 unchanged (72% of the section changed)

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Our common stock is traded on Nasdaq under the symbol GLAD. The following table reflects, by quarter, the

high and low intraday sales prices per share of our common stock on the Nasdaq, the intraday sales prices as a percentage of NAV per share and quarterly distributions declared per common share for each fiscal quarter during the last two completed

fiscal years and the current fiscal year through November 9, 2020.

high and low intraday sales prices per share of our common stock on the Nasdaq, the high and low intraday sales prices as a percentage of NAV per share and quarterly distributions declared per common share for each fiscal quarter during the last two

completed fiscal years and the current fiscal year through November 12, 2021.

(Discount) of

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did not sell any unregistered shares of stock during the fiscal year ended September 30, 2021.

See Recent Developments below for information regarding the unregistered sale of the 2027 Notes in November 2021.

Purchases of Equity Securities

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total stockholder return on an investment of $100 in cash on September 30, 2016 for (i) our common stock, (ii) the Nasdaqs 100 total return index (Nasdaq 100 TR), (iii) the Standard & Poors 500 total

return index (the S&P 500 TR), and (iv) the Wells Fargo BDC Total Return index (WF BDC TR).

The graph and other information furnished under the heading Stock Performance Graph shall not be deemed to be

incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference and shall not be deemed to be soliciting material or to be filed

with the SEC or subject to Regulation 14A or 14C under, or to the liabilities of Section 18 of, the Exchange Act.

The returns on each investment

assume reinvestment of dividends.

This stock performance graph and the related textual information are not necessarily indicative of future performance.

return index (the S&P 500 TR) and (iv) the Standard and Poors BDC index (S&P BDC).

For the fiscal year ended September 30, 2020, we included a comparison to the Wells Fargo BDC Total Return Index

(WF BDC TR).

For the fiscal year ended September 30, 2021, we switched to a comparison to the S&P BDC Index, due to the termination of the Wells Fargo BDC Total Return Index on July 30, 2021.

The graph and other information

furnished under the heading Stock Performance Graph shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference

and shall not be deemed to be soliciting material or to be filed with the SEC or subject to Regulation 14A or 14C under, or to the liabilities of Section 18 of, the Exchange Act.

The returns on each investment assume reinvestment of dividends.

This stock performance graph and the related textual information are not

necessarily indicative of future performance.

S&P BDC Index

Fees and Expenses

The following table is intended to assist you in understanding the costs and expenses that an investor in the Company will bear directly or

We caution you that some of the percentages indicated in the table below are estimates and may vary.

Except where the context suggests otherwise, whenever this Annual Report

contains a reference to fees or expenses paid by us or the Company, or that we will pay fees or expenses, stockholders will indirectly bear such fees or

expenses as investors in the Company.

The following annualized percentages were calculated based on actual expenses incurred in the quarter ended September 30, 2020 and average net assets for the quarter ended September 30, 2020.

The following table is intended to assist you in understanding the costs and expenses that an investor in the Company will bear directly or indirectly.

caution you that some of the percentages indicated in the table below are estimates and may vary.

Except where the context suggests otherwise, whenever this Annual Report contains a reference to fees or expenses paid by us or the

Company, or that we will pay fees or expenses, stockholders will indirectly bear such fees or expenses.

The following annualized percentages were calculated based on actual expenses incurred in the quarter ended

September 30, 2021 and average net assets for the quarter ended September 30, 2021.

Stockholder Transaction Expenses:

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Dividend reinvestment plan

Up to a $25.00 Transaction Fee

Total stockholder transaction

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supplement will also disclose the applicable sales load.

The expenses of the dividend reinvestment plan are included in stock record expenses, a component of

other expenses. The participants in the dividend reinvestment plan will bear a pro rata share of brokerage commissions incurred with respect to open market purchases, if any.

The expenses of the dividend reinvestment plan, if any, are included in stock record expenses, a component of

other expenses. If a participant elects by written notice to the plan agent prior to termination of his or her account to have the plan agent sell part or all of the shares held by the plan agent in the participants account and

remit the proceeds to the participant, the plan agent is authorized to deduct a transaction fee, plus per share brokerage commissions, from the proceeds.

The participants in the dividend reinvestment plan will bear a pro rata share of brokerage

commissions incurred with respect to open market purchases, if any.

See Item 7.

Management s

Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital ResourcesDistributions and Dividends to StockholdersDividend Reinvestment Plan for information on the dividend reinvestment

The numbers presented in this table are before credits to any fees.

Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital ResourcesDistributions and Dividends

to StockholdersDividend Reinvestment Plan for information on the dividend reinvestment plan.

The percentages presented in this table are gross of credits to any fees.

In accordance with our Advisory Agreement, our annual base management fee is 1.75% (0.4375% quarterly) of our

average gross assets, which are defined as total assets of the Company, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings.

In accordance with the requirements of the SEC,

the table above shows the Companys management fee as a percentage of average net assets attributable to common shareholders.

For purposes of the table, the gross base management fee has been converted to 3.47% of the average net assets as of

September 30, 2020 by dividing the total dollar amount of the management fee by Gladstone Capitals average net assets.

The base management fee for the quarter ended September 30, 2020 before application of any credits was

$2.0 million.

Under the Advisory Agreement, the Adviser has provided and continues to provide managerial assistance

to our portfolio companies.

It may also provide services other than managerial assistance to our portfolio companies and receive fees therefor.

average gross assets, which are defined as total assets of the Company, 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 repurchases.

In accordance with the requirements of the SEC, the table above shows the Companys management fee as a percentage of average net assets attributable to common shareholders.

For purposes of the table, the gross base

management fee has been converted to 3.13% of the average net assets as of September 30, 2021 by dividing the total dollar amount of the management fee by our average net assets.

The base management fee for the quarter ended September 30,

2021 before application of any credits was $2.4 million.

From time to time, the Adviser has non-contractually, unconditionally and irrevocably agreed to reduce the 1.75% 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 the quarter ended September 30, 2021, this credit to the base management fee was $66 thousand.

Under the Advisory Agreement, the Adviser has provided and continues to provide managerial assistance to our portfolio companies.

provide services other than managerial assistance to our portfolio companies and receive fees therefor.

Such services may include:

(i) assistance obtaining, sourcing or structuring credit facilities, long

term loans or additional equity from unaffiliated third parties;

(i) assistance obtaining, sourcing or structuring credit facilities, long term loans or additional equity from

unaffiliated third parties;

(ii) negotiating important contractual financial relationships;

(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;

and (iv) primary role in interviewing, vetting and negotiating employment contracts with candidates in connection with adding and retaining key portfolio

company management team members.

Generally, at the end of each quarter, 100.0% of these fees are non-contractually, unconditionally

and irrevocably credited against the base management fee that we would otherwise be required to pay to the Adviser;

however, a small percentage of certain of such fees, primarily for valuation of

the portfolio company, is retained by the Adviser in the form of reimbursement at cost for certain tasks completed by personnel of the Adviser.

(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;

and (iv) primary role in interviewing, vetting and negotiating employment contracts with candidates in connection with adding and retaining key portfolio company management team members.

Generally, at the end of each quarter, 100.0% of the fees for such services are non-contractually, unconditionally and irrevocably credited against the base management fee that we would otherwise be required

to pay to the Adviser;

however, a small percentage of certain of such fees, primarily for valuation of the portfolio company, is retained by the Adviser in the form of reimbursement at cost for certain tasks completed by personnel of the Adviser.

For the quarter ended September 30, 2021, the base management fee credit was $0.4 million.

Business Transactions with Related Parties Investment Advisory and Management Agreement for additional information.

Business Transactions with Related Parties Investment Advisory and Management Agreement for additional

The Adviser services, administers and collects on the loans held by Business Loan in return for which the

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The income-based fee is payable quarterly in arrears, and equals 20.0% of the excess, if any, of our pre-incentive fee net investment income that exceeds a 1.75% quarterly (7.0%

annualized) hurdle rate of our net assets (2.0% quarterly and 8.0% annualized during the one year period from April 1, 2020 through March 31, 2021), subject to a catch-up provision

measured as of the end of each calendar quarter.

The catch-up provision requires us to pay 100.0% of our pre-incentive fee net investment income with respect

to that portion of such income, if any, that exceeds the hurdle rate but is less than 125.0% of the quarterly hurdle rate (or 2.1875%, 2.4375% during the one year period from April 1, 2020 through March 31, 2021) in any calendar quarter

(8.75% annualized, 9.75% annualized during the one year period from April 1, 2020 through March 31, 2021).

The catch-up provision is meant to provide the Adviser with 20.0% of our pre-incentive fee net investment income as if a hurdle rate did not apply when our pre-incentive fee net investment income exceeds 125.0% of the quarterly hurdle rate in any

calendar quarter (8.75% annualized, 9.75% annualized during the one year period from April 1, 2020 through March 31, 2021).

annualized) hurdle rate of our net assets (2.0% quarterly and 8.0% annualized during the period from April 1, 2020 through March 31, 2022), subject to a catch-up provision measured as of

the end of each calendar quarter.

The catch-up provision requires us to pay 100.0% of our pre-incentive fee net investment income with respect to that

portion of such income, if any, that exceeds the hurdle rate but is less than 125.0% of the quarterly hurdle rate (or 2.1875%, 2.4375% during the period from April 1, 2020 through March 31, 2022) in any calendar quarter (8.75% annualized,

9.75% annualized during the period from April 1, 2020 through March 31, 2022).

The catch-up provision is meant to provide the Adviser with 20.0% of our

pre-incentive fee net investment income as if a hurdle rate did not apply when our pre-incentive fee net investment income exceeds 125.0% of the quarterly hurdle rate in

any calendar quarter (8.75% annualized, 9.75% annualized during the period from April 1, 2020 through March 31, 2022).

The income-based incentive fee is computed and paid on income that may include interest that is accrued but not yet

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From time to time, the Adviser has

non-contractually, unconditionally and irrevocably agreed to waive a portion of the incentive fees, to the extent net investment income did not cover 100.0% of the distributions to common stockholders during

For the quarter ended September 30, 2020, the incentive fee credit was $0.1 million.

There can be no guarantee that the Adviser will continue to credit any portion of the fees under the Advisory Agreement in the future.

Examples of how the incentive fee would be calculated are as follows:

non-contractually, unconditionally and irrevocably agreed to waive a portion of the incentive fees, to the extent net investment income did not cover 100.0% of the distributions

to common stockholders during the period.

There was no incentive fee credit for the quarter ended September 30, 2021.

There can be no guarantee that the Adviser will continue to credit any

portion of the fees under the Advisory Agreement in the future.

Examples of how the incentive fee would be calculated during the period

from April 1, 2020 through March 31, 2022) are as follows:

Assuming pre-incentive fee net investment income of 0.55%, there would be

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= (100% ×

0.4375%) + (20% ×

= 0.4375% + 0.0125%

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As of September 30, 2021, we had $50.5 million in

borrowings outstanding on our Credit Facility and $93.9 million in notes payable, net.

borrowings outstanding under our Credit Facility and $186.6 million in notes payable, net.

See Item 7.

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ResourcesRevolving Line of Credit for additional information regarding the Credit Facility and Item 7.

Management s Discussion and Analysis of Financial Condition and Results of OperationsLiquidity

and Capital ResourcesNotes Payable for additional information regarding our notes payable.

Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital

ResourcesNotes Payable for additional information regarding our notes payable.

Includes our overhead expenses, including payments under the Administration Agreement based on our projected

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base management fee, the loan servicing fee, and the incentive fee, total annualized expenses, based on actual amounts incurred for the quarter ended September 30, 2021, would be $30.1 million or 9.97% as a percentage of net assets.

following examples demonstrate the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock.

In calculating the following expense amounts, we have

assumed we would have no additional leverage and that our quarterly operating expenses would remain at the levels set forth in the table above and are gross of credits to any fees.

The amounts set forth below do not reflect the impact of sales load

or offering expenses to be borne by the Company or its stockholders.

In the prospectus supplement relating to an offering of securities pursuant to the applicable prospectus, the examples below will be restated to reflect the impact of the estimated

offering expenses borne by the Company and its stockholders and, if applicable, the impact of the applicable sales load.

The examples below and the expenses in the table above should not be considered a representation of our future

expenses, and actual expenses (including the cost of debt, incentive fees, if any, and other expenses) may be greater or less than those shown.

While the example assumes, as required by the

SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%.

The following examples demonstrate the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a

hypothetical investment in our common stock.

In calculating the following expense amounts, we have assumed we would have no additional leverage and that our quarterly operating expenses would remain at the levels set forth in the table above and are

gross of credits to any fees.

The amounts set forth below do not reflect the impact of sales load or offering expenses to be borne by the Company or its stockholders.

In the prospectus supplement relating to an offering of securities pursuant to the

applicable prospectus, the examples below will be restated to reflect the impact of the estimated offering expenses borne by the Company and its stockholders and, if applicable, the impact of the applicable sales load.

The examples below and the

expenses in the table above should not be considered a representation of our future expenses, and actual expenses (including the cost of debt, incentive fees, if any, and other expenses) may be greater or less than those shown.

While the example

assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%.

You would pay the following expenses on a $1,000 investment:

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losses) on our investments.

Because the assumed 5% annual return is significantly below the hurdle rate of 7% (annualized, 8% annualized during the one year period from April 1, 2020 through March 31, 2021) that we must achieve under the

Advisory Agreement to trigger the payment of an income-based incentive fee, we have assumed, for purposes of this example, that no income-based incentive fee would be payable if we realized a 5% annual return on our investments.

Because the assumed 5% annual return is significantly below the hurdle rate of 7% (annualized, 8% annualized during the period from April 1, 2020 through March 31, 2022) that we must achieve under the Advisory

Agreement to trigger the payment of an income-based incentive fee, we have assumed, for purposes of this example, that no income-based incentive fee would be payable if we realized a 5% annual return on our investments.

While the example assumes reinvestment of all dividends and distributions at NAV, participants in our dividend

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derived from our audited financial statements for each respective period, which have been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm.

PricewaterhouseCoopers LLPs report on the senior securities

table as of September 30, 2020 is attached as an exhibit to this Annual Report.

The report of our independent registered public accounting firm,

PricewaterhouseCoopers LLP, on the senior securities table as of September 30, 2021, is included elsewhere in this Annual Report.

Class and Year

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September 30, 2020

September 30, 2019

5.375% Notes due 2024 (9)

September 30, 2021

September 30, 2020

5.125% Notes due 2026

September 30, 2021

Total amount of each class of senior securities outstanding at the end of the period presented.

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issuer in preference to any security junior to it.

Only applicable to our Term Preferred Stock, 2023 Notes and 2024 Notes because the other senior securities are

not registered for public trading.

Average market value per unit is the average of the closing prices of the

securities on the Nasdaq during the last 10 trading days of the period.

Average market value per unit for our Series 2024 Term Preferred Stock for September 30, 2017 is the average of the

closing prices of the shares on the Nasdaq during the last seven trading days of the period as the stock started trading on September 21, 2017.

Only applicable to our Term Preferred Stock, 6.125% notes due 2023 (the 2023 Notes) and the 2024

Notes because the other senior securities are not registered for public trading.

Average market value per unit is the average of the closing prices of the securities on the Nasdaq during the last 10 trading days of the period.

Average market value

per unit for our Series 2024 Term Preferred Stock for September 30, 2017 is the average of the closing prices of the shares on the Nasdaq during the last seven trading days of the period as the stock started trading on September 21, 2017.

In November 2011, we issued 1,539,882 shares of 7.125% Series 2016 Term Preferred Stock (the Series 2016

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In October 2019, we voluntarily redeemed all outstanding shares of our Series 2024 Term Preferred Stock.

SELECTED FINANCIAL DATA

The following consolidated selected financial data for the fiscal years ended September 30, 2020, 2019, 2018, 2017 and 2016 are derived from our audited

Consolidated Financial Statements .

The other data included in the second table below is unaudited.

The data should be read in conjunction with our accompanying Notes to Consolidated Financial Statements and notes thereto and

Managements Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Annual Report.

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SELECTED FINANCIAL AND OTHER DATA

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE)

Year Ended September 30,

Statement of Operations Data:

Total Investment Income

Total Expenses, Net of Credits from Adviser

Net Investment Income

Net Realized and Unrealized Gain (Loss)

Net Increase in Net Assets Resulting from Operations

Per Share Data:

Net Investment Income per Common ShareBasic and Diluted (A)

Net Increase (Decrease) in Net Assets Resulting from Operations per Common ShareBasic and

Distributions Declared and Paid Per Common

Statement of Assets and Liabilities Data:

Net Asset Value Per Common Share

Common Shares Outstanding

Weighted Common Shares OutstandingBasic and Diluted

Senior Securities Data:

Total borrowings, at cost (C)

Mandatorily redeemable preferred

Notes payable

Per share data is based on the weighted average common stock outstanding for both basic and diluted.

The tax character of distributions is determined on an annual basis.

For further information on the estimated

character of our distributions to common stockholders, please refer to Note 9 Distributions to Common Stockholders in the accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report.

See Managements Discussion and Analysis of Financial Condition and Results of

Operations for more information regarding our level of indebtedness.

Represents the total liquidation preference of our mandatorily redeemable term preferred stock.

Year Ended September 30,

Other Unaudited Data:

Number of Portfolio Companies

Average Size of Portfolio Company Investment at Cost

Principal Amount of New Investments

Disbursements to Existing Portfolio Companies

Proceeds from Loan Repayments, Investments Sold and Exits (A)

Weighted Average Yield on Investments, excluding loans on

non-accrual status (B)

Weighted Average Yield on Investments, including loans on

non-accrual status (C)

Total Return (D)

Includes non-cash reductions in cost basis.

Weighted average yield on investments, excluding loans on non-accrual

status, equals interest income on investments divided by the weighted average interest-bearing principal balance throughout the fiscal year.

Weighted average yield on investments, including loans on non-accrual

status, equals interest income on investments divided by the weighted average total principal balance throughout the fiscal year.

Total return equals the change in the ending market value of our common stock from the beginning of the fiscal

year, assuming reinvestment of dividends on our common stock.

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

For further information on the estimated character of our distributions to common

stockholders, refer to Note 9 Distributions to Common Stockholders elsewhere in this Annual Report.

In November 2018, we completed a public debt offering of $57.5 million aggregate principal amount of the

2023 Notes, inclusive of the overallotment option.

In January 2021, we voluntarily redeemed all of the 2023 Notes.

In October 2019, we completed a public debt offering of $38.8 million aggregate principal amount of the

2024 Notes, inclusive of the overallotment option.

In November 2021, we voluntarily redeemed all of the 2024 Notes.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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the Co-Investment Order that expanded our ability to co-invest, under certain circumstances, with certain of our affiliates, including Gladstone Investment, a BDC also

managed by the Adviser, and any future BDC or closed-end management investment company that is advised (or sub-advised if it controls the fund) by the Adviser, or any

combination of the foregoing, subject to the conditions in the Co-Investment Order.

Since 2012, we have opportunistically made several co-investments with Gladstone

Investment Corporation pursuant to the Co-Investment Order.

We believe the Co-Investment Order has enhanced

and will continue to enhance our ability to further our investment objectives and strategies.

If we are participating in an investment with one or more

co-investors, whether or not an affiliate of ours, our investment is likely to be smaller than if we were investing alone.

managed by the Adviser, and any future BDC or registered closed-end management investment company that is advised (or sub-advised if it controls the fund) by the

Adviser, or any combination of the foregoing, subject to the conditions in the Co-Investment Order.

We believe the Co-Investment Order has enhanced and will continue to

enhance our ability to further our investment objectives and strategies.

If we are participating in an investment with one or more co-investors, whether or

not an affiliate of ours, our investment is likely to be smaller than if we were investing alone.

Portfolio and Investment Activity

In general, our investments in debt securities have a term of no more than seven years, accrue interest at variable rates (generally based on the 30-day LIBOR) and, to a lesser extent, at fixed rates.

We seek debt instruments that pay interest monthly or, at a minimum, quarterly, may have a success fee or deferred interest provision and are primarily interest

only, with all principal and any accrued but unpaid interest due at maturity.

Generally, success fees accrue at a set rate and are contractually due upon a change of control of a portfolio company, typically from an exit or sale.

securities have deferred interest whereby some portion of the interest payment is added to the principal balance so that the interest is paid, together with the principal, at maturity.

In general, our

investments in debt securities have a term of no more than seven years, accrue interest at variable rates (generally based on the 30-day LIBOR) and, to a lesser extent, at fixed rates.

We seek debt instruments

that pay interest monthly or, at a minimum, quarterly, may have a success fee or deferred interest provision and are primarily interest only, with all principal and any accrued but unpaid interest due at maturity.

Generally, success fees accrue at a

set rate and are contractually due upon a change of control of a portfolio company, typically from an exit or sale.

Some debt securities have deferred interest whereby some portion of the interest payment is added to the principal balance so that

the interest is paid, together with the principal, at maturity.

This form of deferred interest is often called PIK interest.

Typically, our equity investments consist of common stock, preferred stock, limited liability company interests, or warrants to purchase the foregoing.

Often, these equity investments occur in connection with our original investment, recapitalizing a business, or refinancing existing debt.

year ended September 30, 2020, we invested $131.2 million in six new portfolio companies and extended $18.8 million in investments to existing portfolio companies.

In addition, during the year ended September 30, 2020, we exited

eleven portfolio companies through early payoffs or a restructure.

We received a total of $78.8 million in combined net proceeds and principal repayments from the aforementioned portfolio company exits as well as principal repayments by

existing portfolio companies during the year ended September 30, 2020.

This activity resulted in a net decrease in our overall portfolio by five portfolio companies to 48 and a net increase of $66.2 million in our portfolio at cost since

September 30, 2019.

From our initial public offering in August 2001 through September 30, 2020, we have made 553 different loans to, or investments in, 246 companies for a total of approximately $2.1 billion, before giving effect to

principal repayments on investments and divestitures.

Typically, our equity

investments consist of common stock, preferred stock, limited liability company interests, or warrants to purchase the foregoing.

Often, these equity investments occur in connection with our original investment, recapitalizing a business, or

refinancing existing debt.

During the year ended September 30, 2021, we invested $139.0 million in eight new portfolio companies and extended

$42.8 million in investments to existing portfolio companies.

In addition, during the year ended September 30, 2021, we exited ten portfolio companies through early payoffs or a restructure.

We received a total of $139.3 million in

combined net proceeds and principal repayments from the aforementioned portfolio company exits as well as principal repayments by existing portfolio companies during the year ended September 30, 2021.

This activity resulted in a net decrease in

our overall portfolio by two portfolio companies to 46 and a net increase of $51.9 million in our portfolio at cost since September 30, 2020.

From our initial public offering in August 2001 through September 30, 2021, we have made 574

different loans to, or investments in, 254 companies for a total of approximately $2.2 billion, before giving effect to principal repayments on investments and divestitures.

During the year ended September 30, 2021, the following significant transactions occurred:

Proprietary Investments

In October 2019, we invested $14.0 million in Universal Survey Center, Inc.

In December 2020, we invested $19.0 million in Effective School Solutions LLC through secured first lien

In December 2020, we invested $10.0 million in Encore Dredging Holdings, LLC through a combination of

secured first lien debt and equity.

In April 2021, we invested an additional $12.5 million in Encore Dredging Holdings, LLC, through a combination of secured first lien debt and equity.

In August 2021, we invested an additional

$5.0 million in Encore Dredging Holdings, LLC through secured first lien debt.

In December 2020, our investment in Aerospace Engineering, LLC paid off at par for net proceeds of

$20.2 million.

In conjunction with the payoff, we received a prepayment fee of $0.2 million.

In February 2021, we invested $20.5 million in SpaceCo Holdings, LLC through secured first lien debt.

September 2021, we invested an additional $13.0 million in SpaceCo Holdings, LLC through secured first lien debt.

In February 2021, we invested $24.5 million in Ohio Armor Holdings, LLC through a combination of secured

first lien debt and equity.

In February 2021, our investment in Vacation Rental Pros Property Management, LLC paid off at par for net

proceeds of $8.2 million.

In March 2021, we invested $27.0 million in MCG Energy Solutions, LLC through a combination of secured first

lien debt and equity.

In March 2021, our investment in Magpul Industries Corp.

paid off at par for net proceeds of $28.7 million.

In conjunction with the payoff, we received a prepayment fee of $0.7 million.

In March 2021, our investment in Vision Government Solutions, Inc.

paid off at par for net proceeds of

$9.9 million.

In May 2021, AG Transportation Holdings, LLC was sold, which resulted in success fee income of $0.2 million

and a net realized gain on our investment of approximately $5.3 million.

In connection with the sale, we received net cash proceeds of approximately $19.5 million, including the repayment of our debt investment of $13.0 million at

In June 2021, we invested $17.0 million in Eegees LLC through secured first lien debt.

In June 2021, we invested $11.0 million in Turn Key Health Clinics, LLC through secured first lien debt.

In June 2021, we invested $10.0 million in Unirac, Inc.

through secured first lien debt.

In December 2019, we invested $24.0 million in Café

Zupas through secured first lien debt.

In January 2020, we invested an additional $5.5 million in Lignetics, Inc., an existing portfolio company,

through a combination of secured second lien debt and preferred equity.

In July 2020, we sold $6.0 million of our debt investment in Lignetics, Inc.

In January 2020, we sold our investment in The Mochi Ice Cream Company (Mochi), which resulted in a

realized gain of approximately $2.5 million.

In September 2021,

we invested an additional $2.0 million in Unirac, Inc.

through secured first lien debt.

In June 2021, American Trailer Rental Group LLC was sold, which resulted in a realized gain on our investment of

approximately $0.6 million.

In connection with the sale, we received net cash proceeds of approximately $19.6 million, including the repayment of our debt investment of $18.0 million at par.

In January 2020, we exited our investment in Meridian Rack & Pinion, Inc.

(Meridian), with a

fair value of $0 as of December 31, 2019 and recorded a realized loss of $5.6 million.

In February 2020, we invested $19.0 million in American Trailer Rental Group LLC through a combination of

secured second lien debt and common equity.

In March 2020, our investments in XMedius America, Inc.

and XMedius Solutions Inc.

paid off at par for combined

net proceeds of $14.9 million.

In May 2020, we invested $30.0 million in Magpul Industries Corp.

In July 2021, we invested an additional $6.2 million in Lignetics, Inc., an existing portfolio company,

through secured second lien debt.

In May 2020, we invested $23.5 million in ALS Education, LLC through secured first lien debt.

In May 2020, we sold our investment in Travel Sentry, Inc.

for net proceeds of $6.1 million, which resulted

in a $0.1 million realized loss.

In May 2020, our debt investment in Canopy Safety Brands, LLC paid off at par for net proceeds of

$3.8 million.

In July 2020, our investment in Universal Survey Center, Inc.

paid off at par for net proceeds of

In September 2021, Precision International, LLC was sold, which resulted in a realized gain on our investment of

approximately $0.4 million.

In connection with the sale, we received net cash proceeds of approximately $1.0 million, including the repayment of our debt investment of $0.3 million at par and a consent fee of approximately

$0.3 million.

In conjunction with the payoff, we received a prepayment fee of $0.3 million.

In August 2020, we invested $20.7 million in Aerospace Engineering, LLC through secured first lien debt.

Syndicated Investments

In October 2019, we invested an additional $3.0 million in Medical Solutions Holdings, Inc., an existing

portfolio company, through secured second lien debt.

In October 2019, our investment in DigiCert Holdings, Inc.

paid off at par for net proceeds of $2.4 million.

In December 2019, our investment in LDiscovery, LLC paid off at par for net proceeds of $5.0 million.

In December 2019, our investment in United PF Holdings, LLC paid off at par for net proceeds of

$3.1 million.

In conjunction with the payoff, we received a prepayment fee of $0.1 million.

In December 2019, we recorded a net realized loss of $4.4 million related to our investment in New Trident

Holdcorp, Inc.

(New Trident) which filed for bankruptcy protection in February 2019.

In June 2020, our investment in DiscoverOrg, LLC paid off at par for net proceeds of $3.3 million.

conjunction with the payoff, we received a prepayment fee of $33 thousand.

Refer to Note 15 Subsequent Events in the

accompanying Consolidated Financial Statements included elsewhere in this Annual Report for portfolio activity occurring subsequent to September 30, 2020.

In December 2020, our investment in Edmentum Ultimate Holdings, LLC was sold, which resulted in a realized loss

of approximately $2.4 million on our equity investment.

In connection with the sale, we received net cash proceeds of approximately $4.9 million, including the repayment of our debt investment of $4.6 million at par.

In December 2020, our investment in Vertellus Holdings LLC was sold, which resulted in a realized loss of

approximately $41 thousand.

In connection with the sale, we received net cash proceeds of approximately $4.1 million, including the repayment of our debt investment of $1.1 million at par.

In May 2021, our investment in Drive Chassis Holdco, LLC paid off at par for net proceeds of $5.1 million.

In conjunction with the payoff, we received a prepayment fee of $50 thousand.

Refer to Note 15 Subsequent Events in

the accompanying Consolidated Financial Statements included elsewhere in this Annual Report for portfolio activity occurring subsequent to September 30, 2021.

Capital Raising

We have been able to meet our

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

We have successfully extended

the Credit Facilitys revolving period multiple times, most recently to July 2021, and currently have a total commitment amount of $180.0 million.

We sold 1,220,927 and 1,843,943 common shares under our at-the-market program during the years ended September 30, 2020 and 2019, respectively.

In October 2019, we completed a public debt offering of $38.8 million aggregate principal amount of the 2024

Notes, inclusive of the overallotment.

Additionally, we completed a public debt offering of $57.5 million aggregate principal amount of our 2023 Notes, inclusive of the overallotment in November 2018.

Refer to Liquidity and Capital

Resources Revolving Credit Facility, Liquidity and Capital Resources Equity Common Stock, and Liquidity and Capital Resources Notes Payable for further discussion.

Although we were able to access the capital markets historically and in recent years, market conditions, including the impact of COVID-19 and the results of the election, may continue to affect the trading price of our capital stock and thus may inhibit our ability to finance new investments through the issuance of equity.

common stock trades below NAV per common share, as it has done periodically since March 2020, our ability to issue equity is constrained by provisions of the 1940 Act, which generally prohibits

the issuance and sale of our common stock below NAV per common share without first obtaining approval from our stockholders and our independent directors, other than through sales to our then-existing stockholders pursuant to a rights offering.

On September 30, 2020, the closing market price of our common stock was $7.41 per share, a 0.1% premium to our September 30, 2020 NAV per share of

capital needs through extensions of and increases to our line of credit under the Credit Facility and by accessing the capital markets in the form of public equity offerings of common stock and

public and private debt offerings.

We have successfully extended the Credit Facilitys revolving period multiple times, most recently to October 2023, and currently have a total commitment

amount of $175.0 million.

We sold 2,737,521 and 1,220,927 common shares under our at-the-market program during the years ended September 30, 2021 and 2020,

respectively.

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

In December 2020, we completed an offering of $100.0 million aggregate principal amount of the 2026 Notes.

March 2021, we completed an offering of an additional $50.0 million aggregate principal amount of the 2026 Notes.

In October 2019, we completed an offering of $38.8 million aggregate principal amount of the 2024 Notes, inclusive of the

overallotment.

Additionally, we completed an offering of $57.5 million aggregate principal amount of our 2023 Notes, inclusive of the overallotment in November 2018.

Refer to Liquidity and Capital Resources Revolving Credit

Facility, Liquidity and Capital Resources Equity Common Stock, and Liquidity and Capital Resources Notes Payable for further discussion.

Although we were able to access the capital markets historically and in recent years, market conditions may affect the trading price of our capital stock and

thus may inhibit our ability to finance new investments through the issuance of equity in the future.

When our common stock trades below NAV per common share, our ability to issue equity is constrained by provisions of the 1940 Act, which generally

prohibits the issuance and sale of our common stock below NAV per common share without first obtaining approval from our stockholders and our independent directors, other than through sales to our then-existing stockholders pursuant to a rights

On September 30, 2021, the closing market price of our common stock was $11.30 per share, a 21.8% premium to our September 30, 2021

NAV per share of $9.28.

Regulatory Compliance

Our ability to

seek external debt financing, to the extent that it is available under current market conditions, is further subject to the asset coverage limitations of the 1940 Act, which require us to have an asset coverage (as defined in Sections 18 and 61 of

the 1940 Act) of at least 150% on our senior securities representing indebtedness and our senior securities that are stock.

April 10, 2018, our Board of Directors, including a required majority (as such term is defined in Section 57(o) of the 1940 Act) thereof, approved the modified asset coverage requirements set forth in Section 61(a)(2) of

the 1940 Act.

As a result, the Companys asset coverage requirements for senior securities changed from 200% to 150%, effective April 10, 2019.

Our ability to seek external debt financing, to the extent that it is available under current market conditions, is further subject to the asset coverage

limitations of the 1940 Act, which require us to have an asset coverage (as defined in Sections 18 and 61 of the 1940 Act) of at least 150% on our senior securities representing indebtedness and our senior securities that are

On April 10, 2018, our Board of Directors, including a required majority (as such term is defined in Section 57(o) of

the 1940 Act) thereof, approved the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act.

As a result, the Companys asset coverage requirements for senior securities changed from 200% to 150%, effective

April 10, 2019.

As of September 30, 2021, our asset coverage on our senior securities representing indebtedness was 230.7%.

Recent Developments

Debt Offering

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

approximately $48.5 million after adding discounts and deducting underwriting costs, commissions and offering expenses borne by us.

The 2027 Notes will mature on May 1, 2027 and may be redeemed in whole or in part at any time or from time

to time at the Companys option prior to maturity at par plus a make-whole premium, if applicable.

The 2027 Notes bear interest at a rate of 3.75% per year.

Interest is payable semi-annually on May 1 and November 1 of each

year (which equates to approximately $1.9 million per year).

Debt Redemption

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

Distributions

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In general, our investments in debt securities have a term of five years, accrue interest at variable rates (based on the

30-day LIBOR) and, to a lesser extent, at fixed rates.

LIBOR is currently anticipated to be phased out during late 2021.

LIBOR may transition to a new standard rate, the SOFR, which will incorporate certain

overnight repo market data collected from multiple data sets.

To attain an equivalent 30-day rate, we currently intend to adjust the SOFR to minimize the difference between the interest that a borrower would

be paying using LIBOR versus what it will be paying using SOFR.

one-month LIBOR) and, to a lesser extent, at fixed rates.

dollar LIBOR are currently anticipated to be phased out in June 2023.

LIBOR is currently expected to transition to a new standard rate, the

SOFR, which will incorporate certain overnight repo market data collected from multiple data sets.

To attain an equivalent one-month rate, we currently intend to adjust the SOFR to minimize the difference

between the interest that a borrower would be paying using LIBOR versus what it will be paying using SOFR.

We are currently monitoring the transition and cannot assure you whether SOFR will become a standard rate for variable rate debt.

However, we expect we will need to renegotiate certain

loan documents with our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established and may also need to renegotiate certain provisions of the Credit Facility.

Assuming that SOFR replaces LIBOR and is appropriately adjusted to equate to 30-day LIBOR, we expect that there should be minimal impact on our operations.

We continue to monitor and work with the management teams and shareholders of our portfolio companies to navigate the significant market, operational and

economic challenges created by the COVID-19 pandemic.

The Companys investment portfolio continues to be focused on a diversified mix of industries and sectors that are generally expected to be more

durable than industries or sectors that are more prone to economic cycles including consumer or retail industries.

We believe our portfolio companies have taken immediate actions to effectively and efficiently respond to the challenges posed by COVID-19 and related orders imposed by state and local governments including paused or reversed reopening orders, including developing liquidity plans supported by internal cash reserves, shareholder support, and as

appropriate accessing the government Paycheck Protection Program.

We believe we have sufficient levels of liquidity to support our existing portfolio companies, as necessary, and selectively deploy capital in new investment opportunities.

expect we will need to renegotiate certain loan documents with our portfolio companies that utilize LIBOR as a factor in determining the interest rate to include LIBOR replacement language.

Assuming that SOFR replaces LIBOR and is appropriately

adjusted to equate to one-month LIBOR, we expect that there should be minimal impact on our operations.

We continue to monitor and work with the management teams and shareholders of our portfolio companies

to navigate the significant market, operational and economic challenges created by the continuing COVID-19 pandemic.

The Companys investment portfolio continues to be focused on a diversified mix of

industries and sectors that have proven to be more durable than industries or sectors that are more prone to economic cycles including consumer or retail industries.

We believe our portfolio companies effectively and efficiently responded to the

challenges posed by COVID-19 and related orders imposed by state and local governments including paused or reversed reopening orders, including developing liquidity plans supported by internal cash reserves,

shareholder support, and, as appropriate, accessing the government Paycheck Protection Program.

We believe we have sufficient levels of liquidity to support our existing portfolio companies, as necessary, and selectively deploy capital in new

investment opportunities.

RESULTS OF OPERATIONS

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Interest expense on borrowings

Dividend expense on mandatorily redeemable preferred stock

Amortization of deferred financing costs

5 unchanged sentences

NET INVESTMENT INCOME

NET REALIZED AND UNREALIZED (LOSS) GAIN

Net realized loss on investments

Net realized loss on other

Net unrealized appreciation of investments

NET REALIZED AND UNREALIZED GAIN (LOSS)

Net realized gain (loss) on investments

Net realized gain (loss) on other

Net unrealized appreciation (depreciation) of investments

Net unrealized appreciation (depreciation) of other

Net loss from investments and other

Net gain (loss) from investments and other

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

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Net increase (decrease) in net assets resulting from operations

NM not meaningful

not meaningful

Investment Income

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average yield on our interest-bearing portfolio.

The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which decreased to 11.0% for the year ended

September 30, 2020, compared to 12.3% for

the year ended September 30, 2019, inclusive of any allowances on interest receivables made during those periods.

The decrease was driven mainly by a decrease in LIBOR over the two

respective years.

The weighted average principal balance of our interest-bearing investment portfolio for the year ended September 30, 2020, was $418.0 million, compared to $373.7 million for the year ended September 30, 2019, an

increase of $44.3 million, or 11.9%.

weighted average principal balance of our interest-bearing investment portfolio for the year ended September 30, 2021, was $462.8 million, compared to $418.0 million for the year

ended September 30, 2020, an increase of $44.8 million, or 10.7%.

The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which decreased to 10.6% for the

year ended September 30, 2021, compared to 11.0% for the year ended September 30, 2020, inclusive of any allowances on interest receivables made during those periods.

The decrease was driven mainly by a decrease in the interest rate spread

on new deals over the two respective years.

As of September 30, 2021, there were no loans on non-accrual

As of September 30, 2020, loans to one portfolio company, B+T Group Acquisition Inc.

were on non-accrual status, with an aggregate debt cost basis of approximately $7.2 million, or 1.6% of the cost basis of all debt investments in our portfolio.

As of September 30, 2019, loans to two

portfolio companies, Meridian and New Trident, 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

Other income decreased by 54.6% during the year ended September 30, 2020, as compared to the prior year period primarily due to a

$1.6 million decrease in success fees received year over year and a $0.7 million decrease in prepayment fees received year over year.

of September 30, 2020 and 2019, no single investment represented greater than 10% of the total investment portfolio at fair value.

Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, decreased $2.7 million, or 10.4%, for the year ended September 30, 2020 as compared to the prior year.

This decrease was

primarily due to a $3.1 million decrease in preferred dividend expense due to the redemption of our Series 2024 Term Preferred Stock in October 2019 and a $1.6 million increase in credits to fees from the Adviser, partially offset by a

$2.0 million increase in interest expense on borrowings and notes payable.

Interest expense increased by 24.3% during the year ended

September 30, 2020, as compared to the prior year, due primarily to the issuance of $38.8 million aggregate principal amount of the 2024 Notes in October 2019.

We incurred $2.0 million in interest expense related to the 2024 Notes

issuance during the year ended September 30, 2020 versus no such amounts in the prior year period.

The weighted average balance outstanding on our

Credit Facility during the year ended September 30, 2020 was $103.5 million, as compared to $71.5 million in the prior year, an increase of 44.7%.

The effective interest rate on our Credit Facility, including unused commitment fees

incurred but excluding the impact of deferred financing costs, was 4.3% during the year ended September 30, 2020, compared to 6.8% during the prior year.

The decrease in the effective interest rate was driven primarily by a decrease in LIBOR

and a decrease in unused commitment fees as compared to the prior year period.

Interest expense on our Credit Facility decreased by $0.4 million period over period as the decrease in the effective interest rate more than offset the increase in

the weighted average balance outstanding on our Credit Facility.

The net base management fee earned by the Adviser increased by $0.2 million, or

4.5%, during the year ended September 30, 2020, as compared to the prior year, resulting from an increase in average total assets subject to the base management fee period over period.

The income-based incentive fee decreased by $0.5 million, or 9.1%, for the year ended September 30, 2020, as compared to the prior year, due to

lower pre-incentive fee net investment income over the respective periods and the change to the incentive fee hurdles effective April 1, 2020 as described under Transactions with the

Adviser in Note 4 Related Party Transactions of the Notes to Consolidated Financial Statements .

Our Board of Directors accepted non-contractual, unconditional and irrevocable

credits from the Adviser of $3.0 million and $1.5 million, to reduce the income-based incentive fee to the extent net investment income did not cover 100.0% of our distributions to common stockholders during the years ended

September 30, 2020 and 2019, respectively.

(B+T), were on non-accrual status, with an aggregate debt cost basis of approximately

$7.2 million, or 1.6% of the cost basis of all debt investments in our portfolio.

Other income increased by 97.9% during the year ended

September 30, 2021, as compared to the prior year period primarily due to a $1.5 million increase in dividend income and a $0.5 million increase in prepayment fees received year over year.

As of September 30, 2021 and 2020, no single investment represented greater than 10% of the total investment portfolio at fair value.

Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, increased $4.9 million, or 21.4%, for the year ended September 30, 2021 as compared to the prior year.

This increase was

primarily due to a $2.1 million decrease in credits to fees from the Adviser, a $1.5 million increase in interest expense on borrowings, and a $1.1 million increase in the gross base management fee.

Total interest expense on borrowings and notes payable increased by $1.5 million, or 15.2%, during the year ended September 30, 2021 compared to the

This increase was driven by an increase in our overall funding needs and a change in the composition of our overall debt financing.

Interest expense on our notes payable increased by $3.0 million year over year with the issuance of

the 2026 Notes in December 2020 and March 2021, partially offset by the redemption of the 2023 Notes in January 2021.

Interest expense on our Credit Facility decreased by $1.4 million period over period, driven primarily by a decrease in the

weighted average balance outstanding on our Credit Facility and a decrease in LIBOR, period over period, partially offset by an increase in unused commitment fees.

The weighted average balance outstanding on our Credit Facility was

$59.4 million during the year ended September 30, 2021, as compared to $103.5 million in the prior year, a decrease of 42.6%.

The effective interest rate on our Credit Facility, including unused commitment fees incurred, but excluding

the impact of deferred financing costs, was 5.0% during the year ended September 30, 2021, compared to 4.3% during the prior year.

The increase in the effective interest rate was driven primarily by a $0.7 million increase in unused

commitment fees paid during the year ended September 30, 2021 as compared to the prior year.

The gross base management fee earned by the Adviser

increased by $1.1 million, or 14.6%, during the year ended September 30, 2021, as compared to the prior year, resulting from an increase in average total assets subject to the base management fee year over year.

The income-based incentive fee increased by $0.5 million, or 9.4%, for the year ended September 30, 2021, as compared to the prior year, due to

higher pre-incentive fee net investment income over the respective periods.

Our Board of Directors accepted non-contractual, unconditional and irrevocable credits from

the Adviser of $0.5 million and $3.0 million, to reduce the income-based incentive fee to the extent net investment income did not cover 100.0% of our distributions to common stockholders during the years ended September 30, 2021 and

2020, respectively.

The base management, loan servicing and incentive fees, and associated

non-contractual, unconditional and irrevocable credits, are computed quarterly, as described under Transactions with the Adviser in Note

Related Party Transactions of the Notes to Consolidated Financial Statements and are summarized in the following table:

non-contractual, unconditional and irrevocable credits, are computed quarterly, as described under Transactions with the Adviser in Note 4 Related Party Transactions of the

Notes to Consolidated Financial Statements and are summarized in the following table:

Year Ended September 30,

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Loan servicing fee (B)

Credit to base management feeloan servicing

Credit to base management fee loan servicing fee (B)

Net Loan Servicing Fee

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Realized Loss and Unrealized Appreciation

Net Realized Loss on Investments

For the year ended

September 30, 2020, we recorded a net realized loss on investments of $7.5 million, which resulted primarily from the sale of our investment in Meridian in January 2020 for a $5.6 million realized loss and the loss recognized on our

investment in New Trident of $4.4 million in December 2019, partially offset by a realized gain of $2.5 million from the sale of our investment in Mochi in January 2020.

For the year ended September 30, 2019, we recorded a net realized loss on investments of $16.4 million, which resulted primarily from the

restructuring of our investment in Francis Drilling Fluids, Ltd.

(FDF) in December 2018 and the associated recognition of a $26.9 million net realized loss, partially offset by the sale of our investment in Alloy Die Casting Co

(ADC) in August 2019 for an $8.7 million realized gain.

Net Realized Gain (Loss) on Investments

ended September 30, 2021, we recorded a net realized gain on investments of $4.2 million, which was primarily a result of a $5.3 million net realized gain recognized from the exit of AG Transportation Holdings, LLC, a

$0.6 million net realized gain from the exit of American Trailer Rental Group LLC and gains from previous exits of certain other investments, partially offset by a $2.4 million net realized loss on our investment in Edmentum Ultimate

Holdings, LLC.

For the year ended September 30, 2020, we recorded a net realized loss on investments of $7.5 million, which was primarily a

result of the sale of our investment in Meridian Rack & Pinion, Inc.

(Meridian) in January 2020 for a $5.6 million realized loss and the loss recognized on our investment in New Trident Holdcorp, Inc.

Trident) of $4.4 million in December 2019, partially offset by a realized gain of $2.5 million from the sale of our investment in The Mochi Ice Cream Company (Mochi) in January 2020.

Net Unrealized Appreciation of Investments

During the year ended September 30, 2021, we recorded net unrealized appreciation of investments in the aggregate amount of $55.3 million.

realized gain (loss) and unrealized appreciation (depreciation) across our investments for the year ended September 30, 2021 were as follows:

Year Ended September 30, 2021

Portfolio Company

Realized Gain

(Depreciation)

(Appreciation)

Lignetics, Inc.

Antenna Research Associates, Inc.

B+T Group Acquistion Inc.

AG Transportation Holdings, LLC

Targus Cayman HoldCo, Ltd.

Defiance Integrated Technologies, Inc.

Imperative Holdings Corporation

Leeds Novamark Capital I, L.P.

MCG Energy Solutions, LLC

Triple H Food Processors, LLC

Encore Dredging Holdings, LLC

TNCP Intermediate HoldCo, LLC

Iten Defense, LLC

Tailwind Smith Cooper Intermediate Corporation

American Trailer Rental Group LLC

EL Academies, Inc.

DKI Ventures, LLC

Sea Link International IRB, Inc.

Canopy Safety Brands, LLC

SpaceCo Holdings, LLC

Keystone Acquisition Corp.

Edmentum Ultimate Holdings, LLC

Medical Solutions Holdings, Inc.

R2i Holdings, LLC

Belnick, Inc.

Vertellus Holdings LLC

Gray Matter Systems, LLC

ALS Education, LLC

Magpul Industries Corp.

Drive Chassis Holdco, LLC

Precision International, LLC

GFRC Holdings, LLC

LWO Acquisitions Company LLC

ENET Holdings, LLC

NetFortris Corp.

Other, net (<$500)

The primary driver of net unrealized appreciation of $55.3 million for the year ended September 30,

2021 was the improvement in the financial and operational performance across a number of our portfolio companies and an increase in comparable transaction multiples used to estimate the fair value of several of our portfolio companies, partially

offset by the reversal of unrealized depreciation associated with the exit of our investment in AG Transportation Holdings, LLC and a decrease in performance of certain of our other portfolio companies.

During the year ended September 30, 2020, we recorded net unrealized depreciation of investments in the aggregate amount of $18.7 million.

37 unchanged sentences

Since March 2020, the U.S.

loan market has exhibited a heightened level of volatility and wider credit spreads associated with

the uncertainty and potentially adverse economic ramifications of the spread of COVID-19.

The combination of the marked increase in market spreads for comparable loan investments and discounts applied to any

portfolio company whose markets, or operations have been impacted by the COVID-19 pandemic, were the primary drivers of net unrealized depreciation of investments of $18.7 million for year ended

September 30, 2020.

The decreased performance of certain of our portfolio companies, a decrease in comparable multiples used to estimate the fair value of certain of our portfolio companies, and the reversal of previously recorded unrealized

appreciation of Mochi upon exit, partially offset by the reversal of previously recorded unrealized depreciation upon the exit of Meridian and New Trident also impacted the total net unrealized depreciation.

During the year ended September 30, 2019, we recorded net unrealized appreciation of investments in the

aggregate amount of $11.8 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the year ended September 30, 2019 were as follows:

Year Ended September 30, 2019

Portfolio Company

Realized Gain

(Depreciation)

(Appreciation)

Alloy Die Casting Co.

Defiance Integrated Technologies, Inc.

Targus Cayman HoldCo, Ltd.

Leeds Novamark Capital I, L.P.

The Mochi Ice Cream Company

Vision Government Solutions, Inc.

GFRC Holdings, LLC

Arc Drilling Holding LLC

Vacation Rental Pros Property Management, LLC

LDiscovery, LLC

Precision International, LLC

Canopy Safety Brands, LLC

Funko Acquisition Holdings, LLC

Chemical Technologies, Inc

FedCap Partners, LLC

Triple H Food Processors, LLC

Red Ventures, LLC

WadeCo Specialties, Inc.

Phoenix Aromas & Essential Oils, LLC

United Flexible, Inc.

Lignetics, Inc.

Sea Link International IRB, Inc.

DKI Ventures, LLC

Travel Sentry, Inc.

TNCP Intermediate HoldCo, LLC

Belnick, Inc.

EL Academies, Inc.

NetFortris Corp.

Imperative Holdings Corporation

Merlin International, Inc.

R2i Holdings, LLC

ENET Holdings, LLC

Antenna Research Associates, Inc.

Edge Adhesives Holdings, Inc.

Meridian Rack & Pinion, Inc.

FES Resources Holdings LLC

LWO Acquisitions Company LLC

Francis Drilling Fluids, Ltd.

Other, net (<$250)

The largest driver of our net unrealized appreciation of $11.8 million for the year ended September 30, 2019 was the

reversal of previously recorded unrealized depreciation upon the restructure of FDF.

This appreciation was

partially offset by the decline in the valuation of LWO Acquisitions Company LLC due to its financial and operational performance.

As of September 30, 2020, the fair value of our investment portfolio was less than its cost basis by approximately $44.3 million and our entire

investment portfolio was valued at 91.1% of cost, as compared to cumulative net unrealized depreciation of $25.6 million and a valuation of our entire portfolio at 94.0% of cost as of September 30, 2019.

This year over year increase in the

cumulative unrealized depreciation on investments represents net unrealized depreciation of $18.7 million for the year ended September 30, 2020.

The cumulative net unrealized depreciation of our investments does not have an impact on our current ability to pay distributions to stockholders;

may be an indication of future realized losses, which could ultimately reduce our income available for distribution to stockholders.

Net Unrealized

(Appreciation) Depreciation of Other

During the year ended September 30, 2020, we recorded $0.5 million of unrealized appreciation on our

Credit Facility at fair value as compared to $0.2 million of unrealized depreciation during the year ended September 30, 2019.

of the Year Ended September 30, 2019 to the Year Ended September 30, 2018

For the Year Ended September 30,

INVESTMENT INCOME

Interest income

Total investment income

Base management fee

Loan servicing fee

Incentive fee

Administration fee

Interest expense on borrowings

Dividend expense on mandatorily redeemable preferred stock

Amortization of deferred financing costs

Other expenses

Expenses, before credits from Adviser

Credit to base management feeloan servicing fee

Credit to fees from Adviserother

Total expenses, net of credits

NET INVESTMENT INCOME

NET REALIZED AND UNREALIZED (LOSS) GAIN

Net realized loss on investments

Net realized loss on other

Net unrealized appreciation of investments

loan market exhibited a heightened level of volatility and wider credit spreads associated with the

uncertainty and potentially adverse economic ramifications of the spread of COVID-19.

combination of the marked increase in market spreads for comparable loan investments and discounts applied to any portfolio company whose markets, or operations have been impacted by the COVID-19 pandemic, were the primary drivers of net unrealized depreciation of investments of $18.7 million for year ended September 30, 2020.

The decreased performance of certain of our portfolio

companies, a decrease in comparable multiples used to estimate the fair value of certain of our portfolio companies, and the reversal of previously recorded unrealized appreciation of Mochi upon exit, partially offset by the reversal of previously

recorded unrealized depreciation upon the exit of Meridian and New Trident also impacted the total net unrealized depreciation.

As of September 30,

2021, the fair value of our investment portfolio was greater than its cost basis by approximately $11.1 million and our entire investment portfolio was valued at 102.0% of cost, as compared to cumulative net unrealized depreciation of

$44.2 million and a valuation of our entire portfolio at 91.1% of cost as of September 30, 2020.

This year over year increase in the cumulative unrealized appreciation on investments represents net unrealized appreciation of

$55.3 million for the year ended September 30, 2021.

Net Unrealized (Appreciation) Depreciation of Other

Net loss from investments and other

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

PER BASIC AND DILUTED COMMON SHARE

Net investment income

Net increase in net assets resulting from operations

Investment Income

Interest income increased by 4.1% for the year ended September 30, 2019, as compared to the prior year.

This increase was primarily due to an increase in

the weighted average yield on our interest-bearing portfolio.

The weighted average yield on our interest-bearing investments is based on the current stated interest rates on interest-bearing investments which increased to 12.3% for the year ended

September 30, 2019 compared to 11.8% for the year ended September 30, 2018, inclusive of any allowances on interest receivables made during those periods.

The increase in the weighted average yield was partially driven by the receipt and

recognition of $0.9 million of past due interest upon the exit of our investment in ADC in August 2019.

The weighted average principal balance of

our interest-bearing investment portfolio remained relatively flat for the year ended September 30, 2019, compared to the prior year.

September 30, 2019, two portfolio companies, Meridian and Trident, 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.

As of September 30, 2018, one portfolio company, FDF was on non-accrual status, with an aggregate debt cost basis of approximately $26.9 million, or 6.9% of the cost

basis of all debt investments in our portfolio.

Other income increased by 162.9% during the year ended September 30, 2019, as compared to the prior

year, primarily due to an increase in success fees and prepayment penalties received.

For the year ended September 30, 2019, other income consisted primarily of $1.9 million in success fees recognized, $1.2 million in prepayment fees

received, and $1.1 million in dividend income.

For the year ended September 30, 2018, other income consisted primarily of $0.6 million in prepayment fees received, $0.5 million in dividend income, and $0.4 million in success

fees recognized.

As of September 30, 2019 and 2018, no single investment represented greater than 10% of the total investment portfolio at fair

Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, increased $3.0 million, or 13.2%, for the year ended September 30, 2019 as compared to the prior year period.

This increase

was primarily due to a $2.2 million increase in interest expense on borrowings.

Interest expense increased by 37.2% during the year ended

September 30, 2019, as compared to the prior year, primarily due to the issuance of $57.5 million aggregate principal amount of the 2023 Notes in November 2018 and an increase in the effective interest rate on our Credit Facility.

incurred $3.2 million in interest expense related to the 2023 Notes during the year ended September 30, 2019 versus no such amounts in the prior year period.

The weighted average balance outstanding on our Credit Facility decreased during

the year ended September 30, 2019 compared to the prior year period with the issuance of the 2023 Notes.

The weighted average balance outstanding during the year ended September 30, 2019, was $71.5 million, as compared to

$114.7 million in the prior year, a decrease of 37.7%.

The effective interest rate on our Credit Facility, including unused commitment fees incurred but excluding the impact of deferred financing costs, was 6.8% during the year ended

September 30, 2019, compared to 5.1% during the prior year.

The increase in the effective interest rate was driven by an increase in LIBOR as compared to the prior year period and an increase in unused commitment fees paid in the current year

period, partially offset by a decrease in the marginal interest rate on our Credit Facility effective March 9, 2018.

The net base management fee

earned by the Adviser decreased by $0.3 million, or 5.6%, during the year ended September 30, 2019, as compared to the prior year, resulting primarily from an increase in credits from the Adviser year over year, which are driven mainly by

origination fees on new deals closed during the year.

The net income-based incentive fee increased by $0.6 million, or 17.4%, for the year ended

September 30, 2019, as compared to the prior year, due to higher pre-incentive fee net investment income, partially offset by an increase in net assets, which drives the hurdle rate, over the prior year.

Our Board of Directors accepted a non-contractual, unconditional and irrevocable credit from the Adviser of $1.5 million to reduce the income-based incentive fee to the extent net investment income did

not cover 100.0% of our distributions to common stockholders during the year ended September 30, 2019.

The credit granted during the year ended September 30, 2018, totaled $1.7 million.

The base management, loan servicing and incentive fees, and associated non-contractual, unconditional and irrevocable

credits, are computed quarterly, as described under Transactions with the Adviser in Note 4 Related Party Transactions of the accompanying Notes to Consolidated Financial Statements and are summarized in the following

Year Ended September 30,

Average total assets subject to base management

Multiplied by annual base management fee of 1.75%

Base management fee (B)

Portfolio company fee credit

Syndicated loan fee credit

Net Base Management Fee

Loan servicing fee (B)

Credit to base management feeloan servicing

Net Loan Servicing Fee

Incentive fee (B)

Incentive fee credit

Net Incentive Fee

Portfolio company fee credit

Syndicated loan fee credit

Incentive fee credit

Credit to Fees from

AdviserOther (B)

Average total assets subject to the base management fee is defined as total assets, including investments made

with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings, valued at the end of the two most recently completed quarters within the respective years and adjusted appropriately for any share issuances or

repurchases during the period.

Reflected, on a gross basis, as a line item on our accompanying Consolidated Statement of Operations

located elsewhere in this Annual Report.

Realized Loss and Unrealized Appreciation

Net Realized Loss on Investments

For the year ended

September 30, 2019, we recorded a net realized loss on investments of $16.4 million, which resulted primarily from the restructuring of our investment in FDF in December 2018 and the associated recognition of a $26.9 million net

realized loss, partially offset by the sale of our investment in ADC in August 2019 for an $8.7 million realized gain.

For the year ended

September 30, 2018, we recorded a net realized loss on investments of $26.1 million, which resulted primarily from the restructure of our investment in Sunshine Media Holdings (Sunshine), previously

on non-accrual status, and the associated recognition of a $28.2 million realized loss.

This was partially offset by a $0.7 million realized gain

from the sale of a portion of our equity investment in Funko Acquisition Holdings, LLC and a $0.6 million realized gain associated with the sale of our investment in Flight Fit N Fun LLC.

Net Unrealized Appreciation of Investments

year ended September 30, 2019, we recorded net unrealized appreciation of investments in the aggregate amount of $11.8 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the year

ended September 30, 2019 were as follows:

Year Ended September 30, 2019

Portfolio Company

Realized Gain

(Depreciation)

(Appreciation)

Alloy Die Casting Co.

Defiance Integrated Technologies, Inc.

Targus Cayman HoldCo, Ltd.

Leeds Novamark Capital I, L.P.

The Mochi Ice Cream Company

Vision Government Solutions, Inc.

GFRC Holdings, LLC

Arc Drilling Holding LLC

Vacation Rental Pros Property Management, LLC

LDiscovery, LLC

Precision International, LLC

Canopy Safety Brands, LLC

Funko Acquisition Holdings, LLC

Chemical Technologies, Inc

FedCap Partners, LLC

Triple H Food Processors, LLC

Red Ventures, LLC

WadeCo Specialties, Inc.

Phoenix Aromas & Essential Oils, LLC

United Flexible, Inc.

Lignetics, Inc.

Sea Link International IRB, Inc.

DKI Ventures, LLC

Travel Sentry, Inc.

TNCP Intermediate HoldCo, LLC

Belnick, Inc.

EL Academies, Inc.

NetFortris Corp.

Imperative Holdings Corporation

Merlin International, Inc.

R2i Holdings, LLC

ENET Holdings, LLC

Antenna Research Associates, Inc.

Edge Adhesives Holdings, Inc.

Meridian Rack & Pinion, Inc.

FES Resources Holdings LLC

LWO Acquisitions Company LLC

Francis Drilling Fluids, Ltd.

Other, net (<$250)

The largest driver of our net unrealized appreciation of $11.8 million for the year ended September 30,

2019 was the reversal of previously recorded unrealized depreciation upon the restructure of FDF.

This appreciation was partially offset by the decline in the valuation of LWO Acquisitions Company LLC due to its financial and operational

During the year ended September 30, 2018, we recorded net unrealized appreciation of investments in the aggregate amount of

$21.6 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the year ended September 30, 2018 were as follows:

Year Ended September 30, 2018

Portfolio Company

Realized Gain

(Depreciation)

(Appreciation)

Edge Adhesives Holdings, Inc.

United Flexible, Inc.

Alloy Die Casting Co.

AG Transportation Holdings, LLC

Targus Cayman HoldCo, Ltd.

Funko Acquisition Holdings, LLC

Sea Link International IRB, Inc.

Leeds Novamark Capital I, L.P.

Merlin International, Inc.

WadeCo Specialties, Inc.

EL Academies, Inc.

Precision International, LLC

RBC Acquisition Corp.

Triple H Food Processors, LLC

Canopy Safety Brands, LLC

Flight Fit N Fun LLC

HB Capital Resources, Ltd.

Vision Government Solutions, Inc.

Frontier Financial Group, Inc.

GFRC Holdings, LLC

Meridian Rack & Pinion, Inc.

Vacation Rental Pros Property Management, LLC

Defiance Integrated Technologies, Inc.

Sunshine Media Holdings

Arc Drilling Holding LLC

New Trident Holdcorp, Inc.

LWO Acquisitions Company, LLC

Francis Drilling Fluids, Ltd.

Other, net (<$250)

The primary drivers of our net unrealized appreciation for the year ended September 30, 2018, were the reversal of

previously recorded depreciation on our investment in Sunshine upon restructure and improved performance

on certain of our portfolio companies, namely Edge Adhesives Holdings, Inc.

These factors were partially offset by a decline in performance of certain of our other portfolio companies, namely

As of September 30, 2019, the fair value of our investment portfolio was less than its cost basis by approximately $25.6 million and our

entire investment portfolio was valued at 94.0% of cost, as compared to cumulative net unrealized depreciation of $37.4 million and a valuation of our entire portfolio at 91.2% of cost as of September 30, 2018.

This year over year decrease

in the cumulative unrealized depreciation on investments represents net unrealized appreciation of $11.8 million for the year ended September 30, 2019.

The cumulative net unrealized depreciation of our investments does not have an impact on our current ability to pay distributions to stockholders;

may be an indication of future realized losses, which could ultimately reduce our income available for distribution to stockholders.

Net Unrealized

(Appreciation) Depreciation of Other

During the year ended September 30, 2019, we recorded $0.2 million of unrealized depreciation on our

Credit Facility at fair value as compared to $0.1 million of unrealized appreciation during the year ended September 30, 2018.

During the year ended September 30, 2021, we recorded $0.4 million of unrealized depreciation on our Credit Facility at fair value as compared to

$0.5 million of unrealized appreciation during the year ended September 30, 2020.

The comparison of the fiscal year ended September 30,

2020 to the fiscal year ended September 30, 2019 can be found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, as filed with the SEC on November 11, 2020, located

within Item 7.

Managements Discussion and Analysis of Financial Condition and Results of Operations , which is incorporated by reference herein.

LIQUIDITY AND CAPITAL RESOURCES

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We utilize this cash primarily to fund

new investments, make interest payments on our Credit Facility, make distributions to our stockholders, pay management and administrative fees to the Adviser and Administrator, and for other operating expenses.

Net cash used in operating activities for the year ended September 30, 2020 was $46.1 million as compared to net cash provided by operating

activities of $9.3 million for the year ended September 30, 2019.

The change was primarily due to a decrease in principal repayments and net proceeds from sales of investments.

Repayments and net proceeds from sales were $78.8 million

during the year ended September 30, 2020 compared to $131.1 million during the year ended September 30, 2019.

Net cash provided by

operating activities for the year ended September 30, 2019 was $9.3 million as compared to net cash used in operating activities of $17.8 million for the year ended September 30, 2018.

The change was primarily due to an increase

in principal repayments and net proceeds from sales of investments partially offset by an increase in purchases of investments year over year.

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

Net cash used in operating activities for the year ended September 30, 2021 was $14.1 million as compared to $46.1 million for the year ended

September 30, 2020.

The change was primarily due to an increase in principal repayments and net proceeds from sales of investments.

Repayments and net proceeds from sales were $142.7 million during the year ended September 30, 2021

compared to $78.8 million during the year ended September 30, 2020.

Purchases of investments were $147.1 million during the year ended September 30, 2019, compared to $106.6 million during the year ended

September 30, 2018.

As of September 30, 2020, we had loans to, syndicated participations in or equity investments in 48 companies, with an

aggregate cost basis of approximately $494.6 million.

Net cash used in operating activities for the year ended September 30,

2020 was $46.1 million as compared to net cash provided by operating activities of $9.3 million for the year ended September 30, 2019.

The change was primarily due to a decrease in principal repayments and net proceeds from sales of

Repayments and net proceeds from sales were $78.8 million during the year ended September 30, 2020 compared to $131.1 million during the year ended September 30, 2019.

As of September 30, 2021, we had loans to, syndicated participations in or equity investments in 46 companies, with an aggregate cost basis of

approximately $546.5 million.

As of September 30, 2020, we had loans to, syndicated participations in or equity investments in 48 companies, with an aggregate cost basis of approximately $494.6 million.

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Net proceeds from sales of investments

Net unrealized depreciation of investments

Reversal of prior period net depreciation of investments

Net realized loss on investments

Net unrealized appreciation (depreciation) of investments

Reversal of prior period net appreciation (depreciation) of investments

Net realized gain (loss) on investments

Increase in investment balance due to PIK

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Investments held as of September 30, 2021 at Cost:

Includes debt investments with contractual principal amounts totaling $44.1 million for which the maturity

date has passed as of September 30, 2021.

Financing Activities

Net cash provided by financing activities for the year ended September 30, 2020 was $32.8 million, which consisted primarily of $61.1 million in

net borrowings on our Credit Facility and $38.8 million in gross proceeds from the issuance of notes payable, partially offset by $51.8 million used in the redemption of our Series 2024 Term Preferred Stock and $25.2 million in

distributions to common shareholders.

Net cash provided by financing activities for the year ended September 30, 2019 was $4.5 million, which

consisted primarily of $57.5 million in gross proceeds from the issuance of the 2023 Notes and $17.2 million in gross proceeds from the issuance of common stock, partially offset by $43.1 million in net repayments on our Credit

Facility and $24.6 million in distributions to common stockholders.

Net cash provided by financing activities for the year ended September 30,

2018 was $14.5 million, which consisted primarily of $17.0 million in net borrowings on our Credit Facility and $22.0 million in gross proceeds from the issuance of common stock, partially offset by $22.8 million in distributions

to common stockholders.

Net cash provided by financing activities for the year ended September 30, 2021 was $12.4 million, which consisted primarily of $150.0 million

in gross proceeds from the issuance of notes payable and $26.9 million in gross proceeds from the issuance of common stock, partially offset by $77.5 million in net repayments on our Credit Facility, $57.5 million used in the

redemption of our 2023 Notes, and $26.0 million in distributions to common shareholders.

Net cash provided by financing activities for the year

ended September 30, 2020 was $32.8 million, which consisted primarily of $61.1 million in net borrowings on our Credit Facility and $38.8 million in gross proceeds from the issuance of notes payable, partially offset by

$51.8 million used in the redemption of our Series 2024 Term Preferred Stock and $25.2 million in distributions to common shareholders.

cash provided by financing activities for the year ended September 30, 2019 was $4.5 million, which consisted primarily of $57.5 million in gross proceeds from the issuance of the 2023 Notes and $17.2 million in gross proceeds

from the issuance of common stock, partially offset by $43.1 million in net repayments on our Credit Facility and $24.6 million in distributions to common stockholders.

Distributions to Stockholders

Common Stock Distributions

To qualify to be taxed

as a RIC and thus avoid corporate level federal income tax on the income we distribute to our stockholders, we are required to distribute to our stockholders on an annual basis at least 90.0% of our Investment Company Taxable Income.

Additionally,

our Credit Facility has a covenant that generally restricts the amount of distributions to stockholders that we can pay out to be no greater than our aggregate net investment income, net capital gains and amounts elected to have been paid during the

prior year in accordance with Section 855(a) of the Code.

In accordance with these requirements, during the year ended September 30, 2020, we paid monthly cash distributions of $0.07 per common share for the months of October 2019 through

March 2020 and paid monthly cash distributions of $0.065 per common share for the months of April 2020 through September 2020.

These distributions totaled an aggregate of $25.2 million.

During the years ended September 30, 2019 and 2018,

we paid monthly cash distributions of $0.07 per common share for each month, which totaled an aggregate of $24.6 million and $22.8 million, respectively.

In October 2020, our Board of Directors declared a monthly distribution of $0.065 per

common share for each of October, November, and December 2020.

Distributions

To qualify to be taxed as a RIC and thus avoid corporate level federal income tax on the income we distribute to our stockholders,

we are required to distribute to our stockholders on an annual basis at least 90.0% of our Investment Company Taxable Income.

Additionally, our Credit Facility has a covenant that generally restricts the amount of distributions to stockholders that

we can pay out to be no greater than our aggregate net investment income, net capital gains and amounts elected to have been paid during the prior year in accordance with Section 855(a) of the Code.

In accordance with these requirements, during

the year ended September 30, 2021, we paid monthly cash distributions of $0.065 per common share for each month, which totaled an aggregate of $26.0 million.

During the year ended September 30, 2020, we paid monthly cash distributions

of $0.07 per common share for the months of October 2019 through March 2020 and paid monthly cash distributions of $0.065 per common share for the months of April 2020 through September 2020.

These distributions totaled an aggregate of

$25.2 million.

During the year ended September 30, 2019, we paid monthly cash distributions of

$0.07 per common share for each month, which totaled an aggregate of $24.6 million.

In October 2021, our Board of Directors declared a monthly distribution of $0.065 per common share for

each of October, November, and December 2021.

Our Board of Directors declared these distributions to our stockholders based on our estimates of our Investment Company Taxable Income for the fiscal year ending September 30, 2022.

From inception through September 30, 2020, we have paid 212 monthly or quarterly consecutive distributions to common stockholders totaling approximately $370.3 million or $20.26 per share.

For the fiscal years ended September 30, 2020 and 2019, distributions declared and 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.

For the fiscal year ended September 30, 2018, our current and 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 $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.

Preferred Stock

From inception

through September 30, 2021, we have paid 224 monthly or quarterly consecutive distributions to common stockholders totaling approximately $396.3 million or $21.04 per share.

For the fiscal years ended September 30, 2021, 2020, and 2019, distributions declared and paid exceeded taxable income available for common distributions

resulting in a partial return of capital of approximately $1.0 million, $0.4 million, and $0.7 million, respectively.

Stock Dividends

On October 2, 2019, we voluntarily redeemed all 2,070,000 outstanding shares of our Series 2024 Term Preferred Stock at a

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securities under the registration statement.

In 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 $50.0 million shares of our common stock.

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 per share and raised $11.7 million of gross proceeds.

In February 2019, we entered into an equity distribution agreement with Jefferies LLC (the Jefferies Sales Agreement) under which we had the

ability to issue and sell, from time to time, shares of our common stock with an aggregate offering price of up to $50.0 million.

During the year ended September 30, 2021, we sold 2,082,269 shares of our common stock under the Jefferies

Sales Agreement, at a weighted-average price of $9.21

per share and raised $19.2 million of gross proceeds.

Net proceeds, after deducting commissions and offering costs borne by us, were approximately $18.8 million.

As of 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.

In May 2021, we entered into a new equity distribution agreement with Jefferies LLC (the New Jefferies Sales Agreement) under which we have the

ability to issue and sell, from time to time, shares of our common stock with an aggregate offering price of up to $60.0 million.

During the year ended September 30, 2021, we sold 655,252 shares of our common stock under the New Jefferies

Sales Agreement, at a weighted-average price of $11.71 per share and raised $7.7 million of gross proceeds.

Net proceeds, after deducting commissions and offering costs borne by us, were approximately $7.5 million.

September 30, 2021, we had a remaining capacity to sell up to an additional $52.3 million of our common stock under the New Jefferies Sales Agreement.

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

However, we cannot determine

the timing or terms of any future equity issuances or whether we will be able to issue equity on terms favorable to us, or at all.

To the extent that our common stock trades at a market price below our NAV per share, we will generally be precluded

from raising equity capital through public offerings of our common stock, other than pursuant to stockholder and independent director approval or a rights offering to existing common stockholders.

However, we cannot determine the timing or terms of any future equity

issuances or whether we will be able to issue equity on terms favorable to us, or at all.

To the extent that our common stock trades at a market price below our NAV per share, we will generally be precluded from raising equity capital through public

offerings of our common stock, other than pursuant to stockholder and independent director approval or a rights offering to existing common stockholders.

On September 30, 2021, the closing market price of our common stock was $11.30 per share, a 21.8% premium to our September 30, 2021 NAV per share of

Revolving Credit Facility

April 29, 2020, we, through Business Loan, entered into Amendment No.

6 to our Credit Facility with KeyBank, which extended the revolving period end date by approximately six months to July 15, 2021, included certain LIBOR transition

considerations and decreased the commitment amount from $190 million to $180 million.

All principal and interest will continue to be due and payable on April 15, 2022.

On July 10, 2019, we, through Business Loan, entered into Amendment No.

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% (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% under certain circumstances and (iii) amended the distributions covenant to allow a

distribution to be applied towards the redemption of our Series 2024 Term Preferred Stock.

On March 9, 2018, we, through Business Loan, entered into

Amendment No.

4 to our Credit Facility with 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% 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 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%.

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.

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.

May 13, 2021, we, through Business Loan, amended and restated the Credit Facility to, among other things, (i) decrease the commitment amount from $205.0 million to $175.0 million, (ii) extend the revolving period end date to

October 31, 2023, (iii) extend the maturity date to October 31, 2025 (at which time all principal and interest will be due and payable if the Credit Facility is not extended by the revolving period end date), (iv) reduce the interest rate

margin to 2.70% during the revolving period and 3.25% thereafter, with a LIBOR floor of 0.35%, (v) revise the unused fee to include an additional fee tier of 0.35% per annum on the daily undrawn amounts if the average unused amount is equal to or

less than 35% during the applicable period, (vi) provide for certain excess concentration limits, including a reduced second lien limit and a new broadly syndicated loan limit and (vii) add customary LIBOR replacement language.

fees of approximately $1.1 million in connection with this amendment and restatement, which are being amortized through our Credit Facilitys revolving period end date of October 31, 2023.

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

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Business Loan is also subject to certain limitations on the type of loan investments it can apply as collateral towards the borrowing base to receive additional borrowing availability under our Credit Facility, including restrictions on

geographic concentrations, sector concentrations, loan size, payment frequency

and status, average life, portfolio company leverage and lien property.

Our Credit Facility further requires Business Loan to comply with other financial and operational covenants, which obligate

Business Loan to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of 25 obligors required in the borrowing base.

Additionally, we are required to maintain (i) a minimum net worth of $205.0 million plus 50% 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 $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 modified by Section 61 of the 1940 Act), and (iii) our status as a BDC under the 1940 Act and as a RIC under

As of September 30, 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% and an active status as a BDC and RIC.

In addition, we had 31 obligors in our Credit Facilitys borrowing base as of September 30, 2020.

As of September 30, 2020, we

were in compliance with all of our Credit Facility covenants.

Refer to Note 5 Borrowings of the notes to our Consolidated Financial Statements included elsewhere in this Annual Report for additional information regarding our

Credit Facility.

geographic concentrations, sector concentrations, loan size, payment frequency and status, average life, portfolio company leverage and lien property.

Our Credit Facility further requires Business Loan to comply with other financial and operational

covenants, which obligate Business Loan to,

among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of 25 obligors required in the borrowing base.

Additionally, we are required to maintain (i) a minimum net worth (defined in our Credit Facility to include any outstanding mandatorily redeemable

preferred stock) of $325.0 million plus 50.0% of all equity and subordinated debt raised after May 13, 2021 less 50% of any equity and subordinated debt retired or redeemed after May 13, 2021, which equates to $328.8 million as

of September 30, 2021, (ii) asset coverage with respect to senior securities representing indebtedness of at least 150% (or such percentage as may be set forth in Section 18 of the 1940 Act, as modified by Section 61

of the 1940 Act), and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code.

As of September 30, 2021, and as defined in our

Credit Facility, we had a net worth of $504.0 million, asset coverage on our senior securities representing indebtedness of 230.7% and an active status as a BDC and RIC.

In addition, as of September 30, 2021, we had 31 obligors

in our Credit Facilitys borrowing base and we were in compliance with all of our Credit Facility covenants.

Refer to Note 5 Borrowings of the notes to our Consolidated Financial Statements included elsewhere in this Annual

Report for additional information regarding our Credit Facility.

Notes Payable

2019, we completed a public debt offering of $38.8 million aggregate principal amount of 2024 Notes, inclusive of the overallotment option exercised by the underwriters, for net proceeds of approximately $37.5 million after deducting

underwriting discounts, commissions and offering expenses borne by us.

In November 2018, we completed a public debt offering of $57.5 million

aggregate principal amount of 2023 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.

The 2024 Notes and 2023 Notes are traded under the ticker symbols GLADL and GLADD on the Nasdaq Global Select Market, respectively.

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 November 1, 2021 and

November 1, 2020, respectively.

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 each year (which equates

to approximately $5.6 million per year).

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 .

The indenture relating to the 2024 Notes and 2023 Notes 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, (ii) an inability to declare any dividend or distribution (except a dividend or distribution

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 to) such declaration or

purchase, and (iii) if, at any time, we are not subject to the reporting requirements of the Exchange Act, we will provide the holders of the 2024 Notes and 2023 Notes and the trustee with audited annual consolidated financial statements and

unaudited interim consolidated financial statements.

In December 2020, we completed an offering of $100.0 million aggregate principal amount of the 2026 Notes for net proceeds of approximately

$97.7 million after deducting underwriting discounts, commissions and offering expenses borne by us.

In March 2021, we completed an offering of an additional $50.0 million aggregate principal amount of the 2026 Notes for net proceeds of

approximately $50.6 million after adding premiums and deducting underwriting costs, commissions and offering expenses borne by us.

The 2026 Notes will mature on January 31, 2026 and may be redeemed in whole or in part at any time or from

time to time at the Companys option prior to maturity at par plus a make-whole premium, if applicable.

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

Interest is payable semi-annually on January 31 and July 31

of each year (which equates to approximately $7.7 million per year).

In October 2019, we completed a debt offering of $38.8 million aggregate

principal amount of the 2024 Notes, inclusive of the overallotment option exercised by the underwriters, for net proceeds of approximately $37.5 million after deducting underwriting discounts, commissions and offering expenses borne by us.

of September 30, 2021, the 2024 Notes were traded under the ticker symbol GLADL on the Nasdaq Global Select Market.

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

$38.8 million.

In November 2018, we completed a public debt offering of $57.5 million aggregate principal amount of the 2023 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.

On January 7, 2021, we voluntarily redeemed the 2023

Notes with an aggregate principal amount outstanding of $57.5 million.

The redemption amount was $58.1 million inclusive of accrued interest through the date of redemption.

In connection with the voluntary redemption of the 2023 Notes, we

incurred a loss on extinguishment of debt of $1.2 million, which is primarily comprised of the unamortized deferred issuance costs at the time of redemption.

The indenture relating to the 2026 Notes and the 2024 Notes contains certain covenants, including (i) an inability to incur additional debt or issue

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 to) such declaration or purchase, and

(iii) if, at any time, we are not subject to the reporting requirements of the Exchange Act, we will provide the holders of the 2026 Notes and the 2024 Notes, as

applicable, and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.

The 2026 Notes and 2024 Notes are recorded at the principal amount, plus applicable premiums, less discounts and offering costs, on our Consolidated

Statements of Assets and Liabilities .

Off-Balance Sheet Arrangements

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As of September 30, 2021 and 2020, we had

off-balance sheet success fee receivables on our accruing debt investments of $9.9 million and

$6.2 million (or approximately $0.31 per common share and $0.21 per common share), respectively, that would be owed to us, generally upon a change of control of the portfolio companies.

off-balance sheet success fee receivables on our accruing debt investments of $11.7 million and $9.9 million (or approximately $0.34 per common share and $0.31 per common share), respectively, that

would be owed to us, generally upon a change of control of the portfolio companies.

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

Due to the contingent nature of our success fees, there are no guarantees that we will be

able to collect all of these success fees or know the timing of such collections.

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

Contractual Obligations

We have lines of credit, delayed draw term loans, and an uncalled capital commitment with certain of our portfolio companies that have not been fully drawn.

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

We estimate the fair value of the combined unused lines of credit, the

unused delayed draw term loans, and the uncalled capital commitment as of September 30, 2020 and 2019 to be immaterial.

The following table shows

our contractual obligations as of September 30, 2020, at cost:

We have lines of credit,

delayed draw term loans, and an uncalled capital commitment with certain of our portfolio companies that have not been fully drawn.

Since these commitments have expiration dates and we expect many will never be fully drawn, the total commitment

amounts do not necessarily represent future cash requirements.

We estimate the fair value of the combined unused lines of credit, the unused delayed draw term loans, and the uncalled capital commitment as of September 30, 2021 and 2020 to be

The following table shows our contractual obligations as of September 30, 2021, at cost:

Payments Due by Period

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Additionally, refer to Note 3 Investments in

our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information regarding fair value measurements and our application of Financial Accounting Standards Board Accounting

Standards Codification Topic 820, Fair Value Measurements and Disclosures. We have also identified our revenue recognition policy as a critical accounting policy, which is described in Note 2 Summary of Significant

Accounting Policies in our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report.

our accompanying Notes to Consolidated

Financial Statements included elsewhere in this Annual Report for additional information regarding fair value measurements and our application of Financial Accounting Standards Board

Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures. We have also identified our revenue recognition policy as a critical accounting policy, which is described in Note 2 Summary of

Significant Accounting Policies in our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report.

Investment Valuation

Credit Monitoring and Risk Rating

The Adviser monitors a

wide variety of key credit statistics that provide information regarding our portfolio companies to help us assess credit quality and portfolio performance and, in some instances, used as inputs in our valuation techniques.

Generally, we, through

the Adviser, participate in periodic board meetings of our portfolio companies in which we hold board seats and also require them to provide annual audited and monthly unaudited financial statements.

Using these statements or comparable information

and board discussions, the Adviser calculates and evaluates certain credit statistics.

Credit Monitoring and

The Adviser monitors a wide variety of key credit statistics that provide information regarding our portfolio companies to help us assess

credit quality and portfolio performance and, in some instances, used as inputs in our valuation techniques.

Generally, we, through the Adviser, participate in periodic board meetings of our portfolio companies in which we hold board seats and also

require them to provide annual audited and monthly unaudited financial statements.

Using these statements or comparable information and board discussions, the Adviser calculates and evaluates certain credit statistics.

The Adviser risk rates all of our investments in debt securities.

The Adviser does not risk rate our equity securities.

For syndicated loans that have been rated by an SEC registered Nationally Recognized Statistical Rating Organization (NRSRO), the Adviser generally uses the average of two corporate

level NRSROs risk ratings for such security.

For all other debt securities, the Adviser uses a proprietary risk rating system.

While the Adviser seeks to mirror the NRSRO systems, we cannot provide any assurance that the Advisers risk

rating system will provide the same risk rating as an NRSRO would for these securities.

For syndicated loans that have been

rated by an SEC registered Nationally Recognized Statistical Rating Organization (NRSRO), the Adviser generally uses the average of two corporate level NRSROs risk ratings for such security.

For all other debt securities, the

Adviser uses a proprietary risk rating system.

While the Adviser seeks to mirror the NRSRO systems, we cannot provide any assurance that the Advisers risk rating system will provide the same risk rating as an NRSRO would for these securities.

The Advisers risk rating system is used to estimate the probability of default on debt securities and the expected loss if there is a default.

Advisers risk rating system uses a scale of 0 to >10, with >10 being the lowest probability of default.

It is the Advisers understanding that most debt securities of medium-sized companies do

not exceed the grade of BBB on an NRSRO scale, so there would be no debt securities in the middle market that would meet the definition of AAA, AA or A.

Therefore, the Advisers scale begins with the designation >10 as the best risk rating

which may be equivalent to a BBB from an NRSRO;

however, no assurance can be given that a >10 on the Advisers scale is equal to a BBB or Baa2 on an NRSRO scale.

The Advisers risk rating system covers both qualitative and quantitative

aspects of the business and the securities we hold.

The following table reflects risk ratings for all proprietary loans in our portfolio as of

September 30, 2020 and 2019, representing approximately 92.7% and 87.7%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:

The Advisers risk rating system uses a scale of 0 to >10, with >10 being the lowest

probability of default.

It is the Advisers understanding that most debt securities of medium-sized companies do not exceed the grade of BBB on an NRSRO scale, so there would be no debt securities in the

middle market that would meet the definition of AAA, AA or A.

Therefore, the Advisers scale begins with the designation >10 as the best risk rating which may be equivalent to a BBB from an NRSRO;

however, no assurance can be given that a

>10 on the Advisers scale is equal to a BBB or Baa2 on an NRSRO scale.

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

The following table reflects risk ratings for all proprietary loans in our portfolio as of September 30, 2021 and 2020, representing approximately 95.5%

and 92.7%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:

As of September 30,

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What changed 10-K

Item 5. Market for Registrant’s Common Equity