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Item 8. Financial Statements and Supplementary Data

2021-11-15 compared with 2020-11-10 · 757 added, 708 removed, 1369 unchanged (52% of the section changed)

14 unchanged sentences

Notes to Consolidated Financial Statements

Managements Annual Report on Internal

Control over Financial Reporting

Managements Annual Report on Internal Control over Financial

To the Stockholders and Board of Directors of Gladstone Capital Corporation:

20 unchanged sentences

audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Gladstone Capital Corporation and its subsidiaries (the Company) as of September 30,

2020 and 2019, and the related consolidated statements of operations, changes in net assets and cash flows for each of the three years in the period ended September 30, 2020, including the related notes and financial

statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all

material respects, the financial position of the Company as of September 30, 2020 and 2019, and the results of its operations, changes in its net assets and its cash flows for each of the three years in the period ended

September 30, 2020 in conformity with accounting principles generally accepted in the United States of America.

2021 and 2020, and the related consolidated statements of operations, changes in net assets and cash flows for each of the three years in the period ended September 30, 2021, including the related notes and financial statement

schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material

respects, the financial position of the Company as of September 30, 2021 and 2020, and the results of its operations, changes in its net assets and its cash flows for each of the three years in the period ended September 30, 2021

in conformity with accounting principles generally accepted in the United States of America.

We have also previously audited, in accordance with the

standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of assets and liabilities, including the consolidated schedules of investments, of the Company as of September 30, 2019, 2018, 2017, 2016,

2015, 2014, 2013, and 2012, and the related consolidated statements of operations, changes in net assets and cash flows for the years ended September 30, 2018, 2017, 2016, 2015, 2014, 2013, and 2012 (none of which are presented herein), and we

expressed unqualified opinions on those consolidated financial statements.

In our opinion, the information set forth in the Senior Securities table of the Company for each of the ten years in the period ended September 30, 2021, appearing on

pages 57-58 under Item 5 of this Form 10-K, is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been

Basis for Opinion

These consolidated financial statements are the responsibility of the Companys management.

Our responsibility is to express an opinion on

the Companys consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the

Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of

its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys

internal control over financial reporting.

consolidated financial statements are the responsibility of the Companys management.

Our responsibility is to express an opinion on the Companys consolidated financial statements based on our audits.

We are a public accounting

firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of

the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not

required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of

expressing an opinion on the effectiveness of the Companys internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of

material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

procedures included confirmation of securities owned as of September 30, 2020 and 2019 by correspondence with the custodian, agent banks and portfolio company investees;

when replies were not received, we performed other auditing

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included

examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the consolidated financial statements.

Our procedures included confirmation of securities owned as of September 30, 2021 and 2020 by correspondence with the custodian, agent banks and

portfolio company investees;

when replies were not received, we performed other auditing procedures.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated

or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate

opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Level 3 Investments

As described in Notes 2 and 3 to the consolidated financial statements, the Company held $551.0 million of total level 3 investments at fair value as of

September 30, 2021.

Management uses significant unobservable inputs in estimating the fair value of its level 3 investments, including (i) with respect to investments valued using a total enterprise value, portfolio company earnings before

interest, taxes, depreciation and amortization (EBITDA) and EBITDA multiples, revenue and revenue multiples, or a discounted cash flow analysis using estimated risk-adjusted discount rates;

(ii) with respect to investments valued

using a yield analysis, a modified discount rate;

and (iii) with respect to investments valued using market quotations for which a limited market exists, the lower indicative bid price in the bid-to-ask price range.

The principal considerations for our determination that performing procedures relating

to the valuation of level 3 investments is a critical audit matter are (i) the significant judgment by management to determine the fair value of these level 3 investments using a total enterprise value or yield analysis due to the use of

significant unobservable inputs, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to the EBITDA and EBITDA multiples and revenue and revenue multiples used

in a total enterprise value and the modified discount rate used in a yield analysis, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated

financial statements.

These procedures included, among others, either (i) testing managements process for determining the fair value estimate, including testing the completeness and accuracy of data provided by management, evaluating the

appropriateness of managements valuation methods, and evaluating the reasonableness of the EBITDA and EBITDA multiples and revenue and revenue multiples used in a total enterprise value and the modified discount rate used in a yield analysis

by considering current and past performance of the investment, consistency of the unobservable inputs with external market data and evidence obtained in other areas of the audit, and managements historical forecasting accuracy, or

(ii) the involvement of professionals with specialized skill and knowledge to assist in developing an independent fair value estimate for certain level 3 investments and comparison of managements estimate to the independently developed

Developing an independent fair value estimate involved testing the completeness and accuracy of data provided by management and independently developing significant unobservable inputs related to the modified discount rate for those

investments valued using a yield analysis.

/s/ PricewaterhouseCoopers LLP

Washington, DC

November 15, 2021

We have served as the Companys

auditor since 2002.

We have served as the Companys auditor since 2002.

GLADSTONE CAPITAL CORPORATION

16 unchanged sentences

Notes payable, net of unamortized deferred financing costs of $2,202 and $2,428,

Mandatorily redeemable preferred stock, $0.001 par value per share, $25 liquidation preference per

5,440,000 and 5,440,000 shares authorized, respectively, and 0 and 2,070,000 shares issued and outstanding, respectively, net

Accounts payable and accrued expenses

8 unchanged sentences

Capital in excess of par value (C)

Cumulative net unrealized depreciation of investments

Cumulative net unrealized appreciation (depreciation) of investments

Cumulative net unrealized appreciation of other

100 unchanged sentences

Net increase (decrease) in net assets resulting from operations

Adjustments to reconcile net increase in net assets resulting from operations to net cash

provided by (used in) operating activities:

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net

cash provided by (used in) operating activities:

Purchase of investments

Principal repayments on investments

Net proceeds from sale of investments

Proceeds from sale of investments

Increase in investments due to

4 unchanged sentences

Net realized loss (gain) on other

Net unrealized appreciation (depreciation) of other

Net unrealized depreciation (appreciation) of other

Amortization of deferred financing costs

15 unchanged sentences

Proceeds from issuance of notes payable

Redemption of notes payable

Deferred financing costs

Proceeds from issuance of notes payable

Proceeds from issuance of common stock

Offering costs for issuance of common stock

5 unchanged sentences

CASH PAID DURING YEAR FOR INTEREST

NON-CASH ACTIVITIES

NON-CASH ACTIVITIES (B)

Refer to Note 4 Related Party Transactions for additional information.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

Significant non-cash operating activities consisted principally of the following transactions:

In June 2021, our investment in NetFortris Corp.

was restructured.

As part of the transaction, approximately $3.5

million of fees and accrued interest were capitalized to the term loan.

Approximately $3.1 million of non-cash activities consists of estimated tax liabilities for portfolio company

exits that occurred during the year ended September 30, 2021.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE

CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE CAPITAL CORPORATION

2 unchanged sentences

(DOLLAR AMOUNTS IN THOUSANDS)

Investment (A)(B)(W)(Y)

Investment (A)(B)(W)(K)

NON-CONTROL/NON-AFFILIATE

2 unchanged sentences

Aerospace and Defense 20.3%

Aerospace Engineering, LLCLine of Credit, $2,350 available (L + 7.3%, 8.3% Cash, Due 8/2025) (C)

Aerospace Engineering, LLCTerm Debt (L + 7.3%, 8.3% Cash, Due 8/2025) (C)

Antenna Research Associates, Inc.Term Debt (L + 10.0%, 12.0% Cash, 4.0% PIK, Due 11/2023) (E)

Antenna Research Associates, Inc.

Term Debt (L + 10.0%, 12.0% Cash, 4.0% PIK, Due 11/2023) (E)

Ohio Armor Holdings, LLC Term Debt (L + 8.0%, 9.0% Cash, Due 2/2026) (C)

SpaceCo Holdings, LLC Line of Credit, $1,300 available (L + 6.8%, 7.8% Cash, Due 12/2025) (C)

SpaceCo Holdings, LLC Term Debt (L + 6.8%, 7.8% Cash, Due 12/2025) (C)

Beverage, Food, and Tobacco 13.5%

Zupas Line of Credit, $4,000 available (L + 7.4%, 8.9% Cash, Due 12/2024) (C)

ZupasDelayed Draw Term Loan, $3,030 available (L + 7.4%, 8.9% Cash, Due 12/2024) (C)

Zupas Delayed Draw Term Loan, $3,030 available (L + 7.4%, 8.9% Cash, Due

Zupas Term Debt (L + 7.4%, 8.9% Cash, Due 12/2024) (C)

Eegees LLC Line of Credit, $1,000 available (L + 7.3%, 8.3% Cash, Due 6/2026) (C)

Eegees LLC Delayed Draw Term Loan, $7,500 available (L + 7.3%, 8.3% Cash, Due 6/2026) (C)

Eegees LLC Term Debt (L + 7.3%, 8.3% Cash, Due 6/2026) (C)

Buildings and Real Estate 0.5%

1 unchanged sentence

GFRC 360, LLC Term Debt (L + 8.0%, 9.0% Cash, Due 9/2022) (C)

Diversified/Conglomerate Manufacturing 3.8%

Line of Credit, $1,003 available (L + 7.0%, 8.0% Cash, Due 6/2026) (C)(U)

Delayed Draw Term Loan, $1,254 available (L + 7.0%, 8.0% Cash, Due 6/2026) (C)(U)

Term Debt (L + 7.0%, 8.0% Cash, Due 6/2026) (C)(U)

Diversified/Conglomerate Service 21.3%

1 unchanged sentence

DKI Ventures, LLC Term Debt (L + 8.3%, 9.3% Cash, 2.0% PIK, Due 12/2023) (C)

ENET Holdings, LLCTerm Debt (10.2% Cash, Due 12/2022) (C)(F)

ENET Holdings, LLCTerm Debt (10.2% Cash, Due 4/2025) (C)(F)

ENET Holdings, LLC Term Debt (L + 8.8%, 10.2% Cash, Due 12/2022) (C)

ENET Holdings, LLC Term Debt (L + 8.8%, 10.2% Cash, Due 4/2025) (C)

MCG Energy Solutions, LLC Line of Credit, $3,000 available (L + 7.5%, 8.5% Cash, Due 3/2026) (C)

MCG Energy Solutions, LLC Term Debt (L + 7.5%, 8.5% Cash, 1.5% PIK, Due 3/2026) (C)

MCG Energy Solutions, LLC Delayed Draw Term Loan, $3,000 available (L + 7.5%, 8.5% Cash,

1.5% PIK, Due 3/2026) (C)

R2i Holdings, LLC Line of Credit, $1,171 available (8.0% Cash, Due 12/2021) (C)(F)

R2i Holdings, LLC Term Debt (8.0% Cash, Due 12/2023) (C)(F)

Vision Government Solutions, Inc.Line of Credit, $2,500 available (L + 8.8%, 9.8% Cash, Due

Vision Government Solutions, Inc.Term Debt (L + 8.8%, 9.8% Cash, Due 12/2022) (C)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2021

(DOLLAR AMOUNTS IN THOUSANDS)

Investment (A)(B)(W)(K)

Healthcare, Education, and Childcare 24.9%

1 unchanged sentence

ALS Education, LLC Term Debt (L + 7.0%, 8.5% Cash, Due 5/2025) (C)

EL Academies, Inc.Delayed Draw Term Loan, $0 available (L + 8.0%, 9.0% Cash, Due 8/2022) (C)

EL Academies, Inc.Term Debt (L + 8.0%, 9.0% Cash, Due 8/2022) (C)

Effective School Solutions LLC Line of Credit, $2,000 available (L + 7.3%, 8.3% Cash, Due

Effective School Solutions LLC Term Debt (L + 7.3%, 8.3% Cash, Due 12/2025) (C)

Effective School Solutions LLC Delayed Draw Term Loan, $3,200 available (L + 7.3%, 8.3%

Cash, Due 12/2025) (C)

EL Academies, Inc.

Delayed Draw Term Loan, $0 available (L + 8.0%, 9.0% Cash, Due 8/2022) (C)

EL Academies, Inc.

Term Debt (L + 8.0%, 9.0% Cash, Due 8/2022) (C)

Turn Key Health Clinics, LLC Line of Credit, $1,500 available (L + 7.3%, 8.3% Cash, Due

Turn Key Health Clinics, LLC Term Debt (L + 7.3%, 8.3% Cash, Due 6/2026) (C)

Machinery 1.8%

1 unchanged sentence

Arc Drilling Holdings LLC Term Debt (L + 9.5%, 10.8% Cash, 3.0% PIK, Due 11/2022) (C)

Precision International, LLCLine of Credit, $500 available (L + 7.5%, 8.5% Cash, Due 9/2021) (C)

Precision International, LLCTerm Debt (10.0% Cash, Due 9/2021) (C)(F)

Printing and Publishing 0.0%

Chinese Yellow Pages Company Line of Credit, $0 available (PRIME + 4.0%, 7.3% Cash, Due

2/2015) (E)(V)

2/2015) (E)(V)(Q)

Telecommunications 9.4%

B+T Group Acquisition, Inc.

Credit, $0 available (L + 11.0%, 13.0% Cash, Due 12/2021) (C)(H)

(S) Line of

Credit, $0 available (L + 11.0%, 13.0% Cash,

Due 12/2021) (C)

B+T Group Acquisition, Inc.

(S) Term Debt

(L + 11.0%, 13.0% Cash, Due 12/2021) (C)(H)

NetFortris Corp.Term Debt (L + 9.0%, 9.5% Cash, Due 2/2021) (C)

Debt (L + 11.0%, 13.0% Cash, Due 12/2021) (C)

NetFortris Corp.

Term Debt (L + 11.0%, 4.0% Cash, 7.5% PIK, Due 5/2021) (C)(Q)

Total Secured First Lien Debt

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2020

(DOLLAR AMOUNTS IN THOUSANDS)

Investment (A)(B)(W)(Y)

Secured Second Lien Debt 30.6%

Automobile 3.3%

Sea Link International IRB, Inc.Term Debt (13.3% PIK, Due 3/2023) (C)(F)

Sea Link International IRB, Inc.

Term Debt (11.3% Cash, 2.0% PIK, Due 3/2023) (C)(F)

Beverage, Food, and Tobacco 1.1%

8 th Avenue Food & Provisions,

Inc.Term Debt (L + 7.8%, 7.9% Cash, Due 10/2026) (D)

Cargo Transportation13.1%

AG Transportation Holdings, LLCTerm Debt (L + 10.0%, 13.3% Cash, Due 12/2021) (C)

American Trailer Rental Group LLCTerm Debt (L + 8.9%, 10.4% Cash, Due 8/2025) (C)

8 th Avenue Food & Provisions, Inc.

Term Debt (L + 7.8%, 7.8% Cash, Due 10/2026) (D)

Chemicals, Plastics, and Rubber 3.2%

Phoenix Aromas & Essential Oils, LLC Term Debt (L + 9.3%, 10.3% Cash, Due 5/2024) (C)

Vertellus Holdings LLCTerm Debt (L + 12.0%, 13.0% Cash, Due 7/2022) (C)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2020

(DOLLAR AMOUNTS IN THOUSANDS)

Investment (A)(B)(W)(K)

Diversified/Conglomerate Manufacturing 1.5%

Magpul Industries Corp.Term Debt (L + 11.5%, 12.5% Cash, Due 5/2026) (C)

Tailwind Smith Cooper Intermediate Corporation Term Debt (L + 9.0%, 9.1% Cash, Due 5/2027) (D)

Diversified/Conglomerate Service 8.7%

CHA Holdings, Inc.Term Debt (L + 8.8%, 9.8% Cash, Due 4/2026) (D)(U)

Drive Chassis Holdco, LLCTerm Debt (L + 8.3%, 8.5% Cash, Due 4/2026) (D((U)

CHA Holdings, Inc.

Term Debt (L + 8.8%, 9.8% Cash, Due 4/2026) (D)(U)

Gray Matter Systems, LLC Term Debt (12.0% Cash, Due 12/2026) (C)(F)

Keystone Acquisition Corp.Term Debt (L + 9.3%, 10.3% Cash, Due 5/2025) (D)(U)

Keystone Acquisition Corp.

Term Debt (L + 9.3%, 10.3% Cash, Due 5/2025) (D)(U)

Prophet Brand Strategy Delayed Draw Term Loan, $5,000 available (L + 8.5%, 10.5% Cash, Due

Prophet Brand StrategyTerm Debt (L + 8.5%, 10.5% Cash, Due 2/2025) (C)

2/2025) (Y)(Z)

Prophet Brand Strategy Term Debt (L + 8.5%, 10.5% Cash, Due 2/2025) (Y)(Z)

Healthcare, Education, and Childcare 1.8%

Medical Solutions Holdings, Inc.Term Debt (L + 8.4%, 9.4% Cash, Due 6/2025) (D)

Medical Solutions Holdings, Inc.Term Debt (L + 8.8%, 9.8% Cash, Due 6/2025) (D)

Medical Solutions Holdings, Inc.

Term Debt (L + 8.4%, 9.4% Cash, Due 6/2025) (C)

Medical Solutions Holdings, Inc.

Term Debt (L + 8.8%, 9.8% Cash, Due 6/2025) (C)

Home and Office Furnishings, Housewares and Durable Consumer Products 3.2%

Belnick, Inc.Term Debt (11.0% Cash, Due

8/2023) (C)(F)

Hotels, Motels, Inns, and Gaming3.4%

Vacation Rental Pros Property Management, LLCTerm Debt (L + 10.0%, 11.0% Cash, 3.0% PIK, Due

Belnick, Inc.

Term Debt (11.0% Cash, Due 8/2023) (C)(F)

Machinery 0.2%

CPM Holdings, Inc.Term Debt (L + 8.3%, 8.4% Cash, Due 11/2026) (D)

CPM Holdings, Inc.

Term Debt (L + 8.3%, 8.3% Cash, Due 11/2026) (D)

Oil and Gas 7.6%

1 unchanged sentence

Total Secured Second Lien Debt

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2020

(DOLLAR AMOUNTS IN THOUSANDS)

Investment (A)(B)(W)(Y)

Unsecured Debt 0.0%

Diversified/Conglomerate Service 0.0%

Frontier Financial Group Inc.Convertible Debt (6.0%, Due 6/2022) (E)(F)

Healthcare, education, and childcare1.8%

Edmentum Ultimate Holdings, LLCTerm Debt (10.0% PIK, Due 12/2021) (C)(F)

Total Unsecured Debt

Frontier Financial Group Inc.

Convertible Debt (6.0%, Due 6/2022) (E)(F)

Preferred Equity 5.7%

Automobile 0.0%

Sea Link International IRB, Inc.

Preferred Stock (E)(G)

Beverage, Food, and Tobacco 0.0%

3 unchanged sentences

Diversified/Conglomerate Service 2.8%

Frontier Financial Group Inc.Preferred

Frontier Financial Group Inc.Preferred Stock Warrant (E)(G)

Frontier Financial Group Inc.

Preferred Stock Warrant (E)(G)

MCG Energy Solutions, LLC Preferred

Oil and Gas 0.5%

FES Resources Holdings LLCPreferred Equity

FES Resources Holdings LLC Preferred Equity Units (E)(G)

Imperative Holdings Corporation Preferred Equity Units (E)(G)

1 unchanged sentence

B+T Group Acquisition, Inc.

(S) Preferred

NetFortris Corp.Preferred

Preferred Stock (E)(G)

NetFortris Corp.

Total Preferred Equity

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2021

(DOLLAR AMOUNTS IN THOUSANDS)

Investment (A)(B)(W)(K)

Common Equity 11.0%

Aerospace and Defense 4.8%

Antenna Research Associates, Inc.Common Equity Units (E)(G)

Antenna Research Associates, Inc.

Common Equity Units (E)(G)

Ohio Armor Holdings, LLC Common

Equity (E)(G)

Automobile 0.1%

5 unchanged sentences

Warrants (E)(G)

Cargo Transportation1.7%

AG Transportation Holdings, LLCMember Profit Participation (E)(G)

AG Transportation Holdings, LLCProfit Participation Warrants (E)(G)

American Trailer Rental Group LLCCommon

Chemicals, Plastics, and Rubber1.2%

Vertellus Holdings LLCCommon Stock

Units ((E)(G)

Healthcare, Education, and Childcare 2.3%

Edmentum Ultimate Holdings, LLCCommon

GSM MidCo LLCCommon Stock (E)(G)

Leeds Novamark Capital I, L.P.Limited Partnership Interest ($843 uncalled capital commitment) (G)(L)(R)

GSM MidCo LLC Common

Leeds Novamark Capital I, L.P.

Limited Partnership Interest ($843 uncalled capital

commitment) (G)(L)(R)

Machinery 0.0%

Arc Drilling Holdings LLC Common

Precision International, LLCMembership Unit Warrant (E)(G)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2020

(DOLLAR AMOUNTS IN THOUSANDS)

Investment (A)(B)(W)(Y)

Oil and Gas 0.0%

4 unchanged sentences

(Manufacturing Only) 0.0%

Funko Acquisition Holdings, LLC (S) Common

Funko Acquisition Holdings, LLC (S)

Common Units (G)(T)

Telecommunications 0.1%

1 unchanged sentence

Stock Warrant (E)(G)

NetFortris Corp.Common Stock

NetFortris Corp.

Common Stock

Warrant (E)(G)

Textiles and Leather 3.2%

Targus Cayman HoldCo, Ltd.Common

Targus Cayman HoldCo, Ltd.

Total Common Equity

Non-Control/Non-Affiliate Investments

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2021

(DOLLAR AMOUNTS IN THOUSANDS)

Investment (A)(B)(W)(K)

AFFILIATE INVESTMENTS (N)

2 unchanged sentences

Edge Adhesives Holdings, Inc.

Credit, $0 available (L + 8.0%, 10.0% Cash, Due 12/2020) (C)

Edge Adhesives Holdings, Inc.

Debt (L + 10.5%, 12.5% Cash, Due 2/2022) (C)

Edge Adhesives Holdings, Inc.

Debt (L + 11.8%, 13.8% Cash, Due 2/2022) (C)

Diversified/Conglomerate Service 7.4%

Encore Dredging Holdings, LLC Line of Credit, $3,000 available (L + 8.0%, 9.0% Cash, Due

Encore Dredging Holdings, LLC Term Debt (L + 8.0%, 9.0% Cash, Due 12/2025) (C)

Encore Dredging Holdings, LLC Delayed Draw Term Loan, $5,000 available (L + 8.0%, 9.0% Cash,

Due 12/2025) (C)

Total Secured First Lien Debt

1 unchanged sentence

Diversified Natural Resources, Precious Metals and Minerals 9.6%

Lignetics, Inc.Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025) (C)

Lignetics, Inc.

Term Debt (L + 9.8%, 11.8% Cash, Due 6/2026) (Y)(Z)

Lignetics, Inc.

Term Debt (L + 9.8%, 11.8% Cash, Due 6/2026) (Y)(Z)

Lignetics, Inc.

Term Debt (L + 9.8%, 11.8% Cash, Due 6/2026) (Y)(Z)

Lignetics, Inc.

Term Debt (L + 9.8%, 11.8% Cash, Due 6/2026) (Y)(Z)

Lignetics, Inc.

Term Debt (L + 9.8%, 11.8% Cash, Due 6/2026) (Y)(Z)

Lignetics, Inc.

Term Debt (L + 9.8%, 11.8% Cash, Due 6/2026) (Y)(Z)

Total Secured Second Lien Debt

2 unchanged sentences

Edge Adhesives Holdings, Inc.

(S) Preferred Stock (E)(G)

Preferred Stock (E)(G)

Diversified/Conglomerate Service 1.4%

Encore Dredging Holdings, LLC (S)

Preferred Stock (E)(G)

Diversified Natural Resources, Precious Metals and Minerals 1.8%

Lignetics, Inc.Preferred

Lignetics, Inc.

Stock (G)(Y)(Z)

Personal and Non-Durable Consumer Products

4 unchanged sentences

Diversified Natural Resources, Precious Metals and Minerals 3.5%

Lignetics, Inc.Common

Lignetics, Inc.

Stock (G)(Y)(Z)

Personal and Non-Durable Consumer Products

8 unchanged sentences

(DOLLAR AMOUNTS IN THOUSANDS)

Investment (A)(B)(W)(Y)

INVESTMENTS (O) 6.9%

Investment (A)(B)(W)(K)

CONTROL INVESTMENTS (O)

Secured First Lien Debt 1.3%

Diversified/Conglomerate Manufacturing 0.9%

LWO Acquisitions Company LLCTerm Debt (L + 7.5%, 10.0% Cash, Due 6/2021) (E)

LWO Acquisitions Company LLCTerm Debt (Due 6/2021) (E)(P)

LWO Acquisitions Company LLC Term Debt (L + 7.5%, 10.0% Cash, Due 6/2021) (E)(Q)

LWO Acquisitions Company LLC Term Debt (Due 6/2021) (E)(P)(Q)

Printing and Publishing 0.4%

TNCP Intermediate HoldCo, LLCLine of Credit, $500 available (8.0% Cash, Due 9/2021) (E)(F)

TNCP Intermediate HoldCo, LLC Line of Credit, $700 available (8.0% Cash, Due

10/2024) (E)(F)

Total Secured First Lien Debt

1 unchanged sentence

Automobile 2.5%

Defiance Integrated Technologies, Inc.Term Debt (L + 9.5%, 11.0% Cash, Due 5/2026) (E)

Defiance Integrated Technologies, Inc.

Term Debt (L + 9.5%, 11.0% Cash, Due 5/2026) (E)

Unsecured Debt 0.0%

3 unchanged sentences

Automobile 0.1%

Defiance Integrated Technologies, Inc.Preferred Stock (E)(G)

Defiance Integrated Technologies, Inc.

Preferred Stock (E)(G)

Common Equity 2.6%

Automobile 0.8%

Defiance Integrated Technologies, Inc.Common Stock (E)(G)

Defiance Integrated Technologies, Inc.

Common Stock (E)(G)

Diversified/Conglomerate Manufacturing 0.0%

6 unchanged sentences

Total Control Investments

INVESTMENTS (Z) 192.7%

Certain of the securities listed in this schedule are issued by affiliate(s) of the indicated portfolio

The majority of the securities listed, totaling $412.5 million at fair value, are pledged as collateral under our revolving line of credit, as described further in Note 5 Borrowings in the accompanying Notes to

Consolidated Financial Statements.

Under the Investment Company Act of 1940, as amended, (the 1940 Act), we may not acquire any non-qualifying assets unless, at the time such acquisition is

made, qualifying assets represent at least 70% of our total assets.

TOTAL INVESTMENTS 175.1%

Certain of the securities listed in this schedule are issued by affiliate(s) of the indicated portfolio company.

The majority of the securities listed, totaling $512.0 million at fair value, are pledged as collateral under our revolving line of credit, as described further in Note 5 Borrowings in the accompanying Notes to Consolidated

Financial Statements.

Under the Investment Company Act of 1940, as amended (the 1940 Act), we may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying

assets represent at least 70% of our total assets.

As of September 30, 2021, our investments in Leeds Novamark Capital I, L.P.

16 unchanged sentences

Security is non-income producing.

Debt security is on non-accrual status.

Where applicable, aggregates all shares of a class of stock owned without regard to specific series owned

within such class (some series of which may or may not be voting shares) or aggregates all warrants to purchase shares of a class of stock owned without regard to specific series of such class of stock such warrants allow us to purchase.

Represents the principal balance for debt investments and the number of shares/units held for equity

Warrants are represented as a percentage of ownership, as applicable.

Where applicable, aggregates all shares of a class of stock owned without regard to specific series owned within

such class (some series of which may or may not be voting shares) or aggregates all warrants to purchase shares of a class of stock owned without regard to specific series of such class of stock such warrants allow us to purchase.

Category percentages represent the fair value of each category and subcategory as a percentage of net assets as

of September 30, 2021.

There are certain limitations on our ability to withdraw our partnership interest prior to dissolution of the

7 unchanged sentences

Debt security does not have a stated interest rate that is payable thereon.

Investment maturity date has passed.

Investment continues to make applicable interest payments.

Fair value was based on net asset value provided by the fund as a practical expedient.

15 unchanged sentences

3.25% as of September 30, 2021.

Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the ASC 820

fair value hierarchy.

Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the ASC 820 fair

value hierarchy.

Refer to Note 3 Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

Represents the principal balance for debt investments and the number of shares/units held for equity

Warrants are represented as a percentage of ownership, as applicable.

Category percentages represent the fair value of each category and subcategory as a percentage of net assets

as of September 30, 2020.

Cumulative gross unrealized depreciation for federal income tax purposes is $59.4 million;

gross unrealized appreciation for federal income tax purposes is $13.9 million.

cumulative gross

unrealized appreciation for federal income tax purposes is $57.7 million.

Cumulative net unrealized depreciation is $1.7 million, based on a tax cost of $559.3 million.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

Fair value was based on the expected exit or payoff amount, where such event has occurred or is expected to

occur imminently.

Investment was exited subsequent to September 30, 2021.

Refer to Note 15 Subsequent Events in

the accompanying Notes to the Consolidated Financial Statements for additional information.

THE ACCOMPANYING

NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE CAPITAL CORPORATION

7 unchanged sentences

Aerospace and Defense 14.3%

Antenna Research Associates, Inc.Term Debt (L + 10.0%, 12.0% Cash, 4.0% PIK, Due 11/2023) (C)

Automobile0.0%

Meridian Rack & Pinion, Inc.

(S) Term Debt (L + 11.5%, 13.5% Cash, Due 12/2019) (E)(H)

Aerospace Engineering, LLC Line of Credit, $2,350 available (L + 7.3%, 8.3% Cash, Due

Aerospace Engineering, LLC Term Debt (L + 7.3%, 8.3% Cash, Due 8/2025) (C)

Antenna Research Associates, Inc.

Term Debt (L + 10.0%, 12.0% Cash, 4.0% PIK, Due 11/2023) (E)

Beverage, Food, and Tobacco 10.9%

Zupas Line of Credit, $4,000 available (L + 7.4%, 8.9% Cash, Due 12/2024) (C)

Zupas Delayed Draw Term Loan, $3,030 available (L + 7.4%, 8.9% Cash,

Zupas Term Debt (L + 7.4%, 8.9% Cash, Due 12/2024) (C)

Buildings and Real Estate 0.7%

2 unchanged sentences

Diversified/Conglomerate Service 24.9%

DKI Ventures, LLCLine of Credit, $2,500 available (L + 8.3%, 10.3% Cash, Due 12/2021) (C)

DKI Ventures, LLCDelayed Draw Term Loan, $5,000 available (L + 8.3%, 10.3% Cash, Due 12/2023) (C)

DKI Ventures, LLCTerm Debt (L + 8.3%, 10.3% Cash, Due 12/2023) (C)

ENET Holdings, LLCLine of Credit, $1,000 available (L + 7.3%, 9.3% Cash, Due 4/2022) (C)

ENET Holdings, LLCTerm Debt (L + 7.3%, 9.3% Cash, Due 4/2025) (C)

R2i Holdings, LLCLine of Credit, $2,000 available (L + 8.0%, 10.0% Cash, Due 12/2021) (C)

R2i Holdings, LLCTerm Debt (L + 8.0%, 10.0% Cash, Due 12/2023) (C)

Travel Sentry, Inc.Term Debt (L + 8.0%, 10.1% Cash, Due 12/2021) (C)(U)

Vision Government Solutions, Inc.Line of Credit, $2,500 available (L + 8.8%, 10.8% Cash, Due

Vision Government Solutions, Inc.Term Debt (L + 8.8%, 10.8% Cash, Due 12/2022) (C)

DKI Ventures, LLC Line of Credit, $2,500 available (L + 8.3%, 9.3% Cash, 2.0% PIK, Due

DKI Ventures, LLC Term Debt (L + 8.3%, 9.3% Cash, 2.0% PIK, Due 12/2023) (C)

ENET Holdings, LLC Term Debt (10.2% Cash, Due 12/2022) (C)(F)

ENET Holdings, LLC Term Debt (10.2% Cash, Due 4/2025) (C)(F)

R2i Holdings, LLC Line of Credit, $1,171 available (8.0% Cash, Due 12/2021) (C)(F)

R2i Holdings, LLC Term Debt (8.0% Cash, Due 12/2023) (C)(F)

Vision Government Solutions, Inc.

Line of Credit, $2,500 available (L + 8.8%, 9.8% Cash, Due

Vision Government Solutions, Inc.

Term Debt (L + 8.8%, 9.8% Cash, Due 12/2022) (C)

Healthcare, Education, and Childcare 20.9%

EL Academies, Inc.Line of Credit, $2,000 available (L + 8.8%, 10.8% Cash, Due 8/2020) (C)

EL Academies, Inc.Delayed Draw Term Loan, $0 available (L + 8.8%, 10.8% Cash, Due 8/2022) (C)

EL Academies, Inc.Term Debt (L + 8.8%, 10.8% Cash, Due 8/2022) (C)

ALS Education, LLC Line of Credit, $4,000 available (L + 7.5%, 9.0% Cash, Due 5/2025) (C)

ALS Education, LLC Term Debt (L + 7.5%, 9.0% Cash, Due 5/2025) (C)

EL Academies, Inc.

Delayed Draw Term Loan, $0 available (L + 8.0%, 9.0% Cash, Due 8/2022) (C)

EL Academies, Inc.

Term Debt (L + 8.0%, 9.0% Cash, Due 8/2022) (C)

Machinery 2.6%

Arc Drilling Holdings LLCLine of Credit, $875 available (L + 8.0%, 10.0% Cash, Due 11/2020) (C)

Arc Drilling Holdings LLC Line of Credit, $875 available (L + 8.0%, 9.3% Cash,

Arc Drilling Holdings LLC Term Debt (L + 9.5%, 10.8% Cash, 3.0% PIK, Due 11/2022) (C)

Precision International, LLCLine of Credit, $500 available (L + 7.5%, 9.5% Cash, Due 9/2021) (C)

Precision International, LLC Line of Credit, $500 available (L + 7.5%, 8.5% Cash,

Precision International, LLC Term Debt (10.0% Cash, Due 9/2021) (C)(F)

4 unchanged sentences

B+T Group Acquisition, Inc.

Credit, $435 available (L + 11.0%, 13.0% Cash, Due 12/2021) (C)

(S) Line of

Credit, $0 available (L + 11.0%, 13.0% Cash, Due 12/2021) (C)(H)

B+T Group Acquisition, Inc.

(S) Term Debt

(L + 11.0%, 13.0% Cash, Due 12/2021) (C)

NetFortris Corp.Term Debt (L + 9.0%, 11.0% Cash, Due 2/2021) (C)

XMedius America, Inc.Term Debt (L + 9.3%, 11.3% Cash, Due 10/2022) (Q)

XMedius Solutions Inc.Term Debt (L + 9.3%, 11.3% Cash, Due 10/2022) (Q)

Debt (L + 11.0%, 13.0% Cash, Due 12/2021) (C)(H)

NetFortris Corp.

Term Debt (L + 9.0%, 9.5% Cash, Due 2/2021) (C)

Total Secured First Lien Debt

7 unchanged sentences

Automobile 4.1%

Sea Link International IRB, Inc.Term Debt (11.3% Cash, Due 3/2023) (C)(F)

Sea Link International IRB, Inc.

Term Debt (13.3% PIK, Due 3/2023) (C)(F)

Beverage, Food, and Tobacco 1.6%

8 th Avenue Food & Provisions,

Inc.Term Debt (L + 7.8%, 9.8% Cash, Due 10/2026) (D)

The Mochi Ice Cream CompanyTerm Debt (L + 10.5%, 12.5% Cash, Due 12/2023) (C)

8 th Avenue Food & Provisions, Inc.

Term Debt (L + 7.8%, 7.9% Cash, Due 10/2026) (D)

Cargo Transportation 13.1%

AG Transportation Holdings, LLC Term Debt (L + 10.0%, 13.3% Cash, Due 12/2021) (C)

American Trailer Rental Group LLC Term Debt (L + 8.9%, 10.4% Cash, Due 8/2025) (C)

Chemicals, Plastics, and Rubber 4.7%

Phoenix Aromas & Essential Oils, LLCTerm Debt (L + 9.5%, 11.5% Cash, Due

Phoenix Aromas & Essential Oils, LLC Term Debt (L + 11.5%, 12.5% Cash, Due 5/2024) (C)

Vertellus Holdings LLC Term Debt (L + 12.0%, 13.0% Cash, Due 7/2022) (C)

Diversified/Conglomerate Manufacturing 13.7%

Tailwind Smith Cooper Intermediate CorporationTerm Debt (L + 9.0%, 11.0% Cash, Due

Magpul Industries Corp.

Term Debt (L + 11.5%, 12.5% Cash, Due 5/2026) (C)

Tailwind Smith Cooper Intermediate Corporation Term Debt (L + 9.0%, 9.1% Cash, Due 5/2027) (D)

Diversified/Conglomerate Service 14.9%

CHA Holdings, Inc.Term Debt (L + 8.8%, 10.8% Cash, Due 4/2026) (D)(U)

DigiCert Holdings, Inc.Term Debt (L + 8.0%, 10.0% Cash, Due 10/2025) (D)(AA)

DiscoverOrg, LLCTerm Debt (L + 8.5%, 10.5% Cash, Due 2/2027) (D)

Drive Chassis Holdco, LLCTerm Debt (L + 8.3%, 10.3% Cash, Due 4/2026) (D)

CHA Holdings, Inc.

Term Debt (L + 8.8%, 9.8% Cash, Due 4/2026) (D)(U)

Drive Chassis Holdco, LLC Term Debt (L + 8.3%, 8.5% Cash, Due 4/2026) (D)(U)

Gray Matter Systems, LLC Term Debt (12.0% Cash, Due 11/2023) (C)(F)

Keystone Acquisition Corp.Term Debt (L + 9.3%, 11.3% Cash, Due 5/2025) (D)(U)

LDiscovery, LLCTerm Debt (L + 10.0%, 12.0% Cash, Due 12/2023) (D)

Prophet Brand StrategyDelayed Draw Term Loan, $5,000 available (L + 9.5%, 11.5% Cash,

Due 2/2025) (C)

Keystone Acquisition Corp.

Term Debt (L + 9.3%, 10.3% Cash, Due 5/2025) (D)(U)

Prophet Brand Strategy Delayed Draw Term Loan, $5,000 available (L + 8.5%, 10.5% Cash, Due

Prophet Brand Strategy Term Debt (L + 8.5%, 10.5% Cash, Due 2/2025) (C)

Healthcare, Education, and Childcare 2.3%

Medical Solutions Holdings, Inc.Term Debt (L + 8.3%, 10.3% Cash, Due 6/2025) (D)

New Trident Holdcorp, Inc.Term Debt (L + 10.0%, 12.1% Cash, Due 7/2020) (E)(H)(K)(U)

Medical Solutions Holdings, Inc.

Term Debt (L + 8.4%, 9.4% Cash, Due 6/2025) (D)(Z)

Medical Solutions Holdings, Inc.

Term Debt (L + 8.8%, 9.8% Cash, Due 6/2025) (D)(Z)

Home and Office Furnishings, Housewares and Durable Consumer Products 4.1%

Belnick, Inc.Term Debt (11.0% Cash, Due 8/2023) (C)(F)

Belnick, Inc.

Term Debt (11.0% Cash, Due 8/2023) (C)(F)

Hotels, Motels, Inns, and Gaming 3.4%

2 unchanged sentences

Machinery 0.4%

CPM Holdings, Inc.Term Debt (L + 8.3%, 10.3% Cash, Due 11/2026) (D)

CPM Holdings, Inc.

Term Debt (L + 8.3%, 8.4% Cash, Due 11/2026) (D)

Oil and Gas 9.9%

Imperative Holdings CorporationTerm Debt (L + 10.3%, 12.3% Cash, Due 9/2022) (C)

Retail Stores1.2%

United PF Holdings, LLCTerm Debt (L + 8.5%, 10.5% Cash, Due 6/2027) (D)

Imperative Holdings Corporation Term Debt (L + 10.3%, 12.3% Cash, 1.8% PIK,

Due 9/2022) (C)

Total Secured Second Lien Debt

6 unchanged sentences

Unsecured Debt 1.8%

Diversified/Conglomerate Service 0.0%

Frontier Financial Group Inc.

Convertible Debt (6.0%, Due 6/2022) (E)(F)

Healthcare, education, and childcare 1.8%

Edmentum Ultimate Holdings, LLC Term Debt (10.0% PIK, Due 12/2021) (C)(F)

Total Unsecured Debt

Preferred Equity 2.0%

Automobile0.0%

Meridian Rack & Pinion,

(S) Preferred Stock (E)(G)

Beverage, Food, and Tobacco 0.0%

Triple H Food Processors, LLC Preferred

Buildings and Real Estate 0.6%

1 unchanged sentence

Diversified/Conglomerate Service 0.0%

Frontier Financial Group Inc.Preferred

Frontier Financial Group Inc.Preferred Stock Warrant (E)(G)

Frontier Financial Group Inc.

Preferred Stock Warrant (E)(G)

Oil and Gas 0.6%

2 unchanged sentences

Telecommunications 0.8%

B+T Group Acquisition,

(S) Preferred Stock (E)(G)

NetFortris Corp.Preferred

B+T Group Acquisition, Inc.

Preferred Stock (E)(G)

NetFortris Corp.

Total Preferred Equity

1 unchanged sentence

Aerospace and Defense 1.8%

Antenna Research Associates, Inc.Common Equity Units (E)(G)

Antenna Research Associates, Inc.

Common Equity Units (E)(G)

Automobile 0.1%

1 unchanged sentence

Beverage, Food, and Tobacco 0.0%

The Mochi Ice Cream CompanyCommon

Triple H Food Processors, LLC Common

5 unchanged sentences

AG Transportation Holdings, LLC Profit Participation Warrants (E)(G)

American Trailer Rental Group LLC Common

Chemicals, Plastics, and Rubber 1.2%

Vertellus Holdings LLC Common Stock

Units ((E)(G)

Healthcare, Education, and Childcare 2.3%

1 unchanged sentence

GSM MidCo LLC Common

Leeds Novamark Capital I, L.P.Limited Partnership Interest ($843 uncalled capital

Leeds Novamark Capital I, L.P.

Limited Partnership Interest ($843 uncalled capital

commitment) (G)(L)(R)

2 unchanged sentences

Precision International, LLC Membership Unit Warrant (E)(G)

Oil and Gas0.1%

FES Resources Holdings LLCCommon Equity

Total Safety Holdings, LLCCommon

Equity (E)(G)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

4 unchanged sentences

Investment (A)(B)(W)(Y)

Oil and Gas 0.1%

FES Resources Holdings LLC Common Equity

Total Safety Holdings, LLC Common

Equity (E)(G)

Personal and Non-Durable Consumer Products

(Manufacturing Only) 0.0%

Funko Acquisition Holdings,

LLC (S) Common Units (G)(T)

Funko Acquisition Holdings, LLC (S)

Common Units (G)(T)

Telecommunications 0.0%

B+T Group Acquisition,

(S) Common Stock Warrant (E)(G)

NetFortris Corp.Common Stock

B+T Group Acquisition, Inc.

Stock Warrant (E)(G)

NetFortris Corp.

Common Stock

Warrant (E)(G)

Textiles and Leather 2.5%

Targus Cayman HoldCo, Ltd.Common

Targus Cayman HoldCo, Ltd.

Total Common Equity

Non-Control/Non-Affiliate Investments

INVESTMENTS (N) 14.2%

AFFILIATE INVESTMENTS (N)

Secured First Lien Debt 3.7%

1 unchanged sentence

Edge Adhesives Holdings, Inc.

(S) Term Debt (L + 10.5%, 12.5% Cash, Due 2/2022) (C)

of Credit, $0 available (L + 8.0%, 10.0% Cash, Due 12/2020) (C)

Edge Adhesives Holdings, Inc.

(S) Term Debt (L + 11.8%, 13.8% Cash, Due 2/2022) (C)

Debt (L + 10.5%, 12.5% Cash, Due 2/2022) (C)

Edge Adhesives Holdings, Inc.

Debt (L + 11.8%, 13.8% Cash, Due 2/2022) (C)

Total Secured First Lien Debt

1 unchanged sentence

Diversified Natural Resources, Precious Metals and Minerals 8.7%

Lignetics, Inc.Term Debt (L + 9.0%, 12.0% Cash, Due 11/2022) (C)

Personal and Non-Durable Consumer Products

(Manufacturing Only)1.5%

Canopy Safety Brands, LLCTerm Debt (L + 10.5%, 12.5% Cash, Due 7/2022) (C)

Lignetics, Inc.

Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025) (C)

Lignetics, Inc.

Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025) (C)

Lignetics, Inc.

Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025) (C)

Lignetics, Inc.

Term Debt (L + 9.0%, 12.0% Cash, Due 5/2025) (C)

Total Secured Second Lien Debt

2 unchanged sentences

Edge Adhesives Holdings, Inc.

(S) Preferred Stock (E)(G)

Preferred Stock (E)(G)

Diversified Natural Resources, Precious Metals and Minerals 0.7%

Lignetics, Inc.Preferred

Lignetics, Inc.

Personal and Non-Durable Consumer Products

4 unchanged sentences

Diversified Natural Resources, Precious Metals and Minerals 0.9%

Lignetics, Inc.Common

Lignetics, Inc.

Personal and Non-Durable Consumer Products

9 unchanged sentences

Investment (A)(B)(W)(Y)

INVESTMENTS (O) 8.7%

CONTROL INVESTMENTS (O)

Secured First Lien Debt 2.1%

7 unchanged sentences

Automobile 3.5%

Defiance Integrated Technologies, Inc.Term Debt (L + 9.5%, 11.5% Cash, Due 8/2023) (E)

Defiance Integrated Technologies, Inc.

Term Debt (L + 9.5%, 11.0% Cash, Due 5/2026) (E)

Unsecured Debt 0.0%

1 unchanged sentence

LWO Acquisitions Company LLC Term Debt (Due 6/2023) (E)(P)

Preferred Equity 0.1%

Automobile 0.1%

Defiance Integrated Technologies, Inc.

Preferred Stock (E)(G)

Common Equity 1.2%

Automobile 0.0%

Defiance Integrated Technologies, Inc.Common Stock (E)(G)

Defiance Integrated Technologies, Inc.

Common Stock (E)(G)

Diversified/Conglomerate Manufacturing 0.0%

6 unchanged sentences

Total Control Investments

INVESTMENTS (Z) 161.6%

Certain of the securities listed in this schedule are issued by affiliate(s) of the indicated portfolio

The majority of the securities listed, totaling $369.0 million at fair value, are pledged as collateral under our revolving line of credit, as described further in Note 5 Borrowings in the accompanying Notes to

Consolidated Financial Statements.

Under the Investment Company Act of 1940, as amended, (the 1940 Act), we may not acquire any non-qualifying assets unless, at the time such acquisition is

made, qualifying assets represent at least 70% of our total assets.

TOTAL INVESTMENTS )(Z)

Certain of the securities listed in this schedule are issued by affiliate(s) of the indicated portfolio company.

Financial Statements.

Under the Investment Company Act of 1940, as amended, (the 1940 Act), we may not acquire any non-qualifying assets unless, at the time such acquisition is made, qualifying

assets represent at least 70% of our total assets.

As of September 30, 2020, our investments in Leeds Novamark Capital I, L.P.

(Leeds), Funko Acquisition Holdings, LLC (Funko), and XMedius Solutions Inc.

(XMedius) are considered non-qualifying assets under Section 55 of the 1940 Act.

Such non-qualifying assets represent 2.7% of total investments, at fair

value, as of September 30, 2019.

(Leeds) and Funko Acquisition Holdings, LLC (Funko) are considered non-qualifying assets under Section 55 of the 1940 Act.

Such non-qualifying assets represent 1.1% of total investments, at fair value, as of September 30, 2020.

Unless indicated otherwise, all cash interest rates are indexed to

14 unchanged sentences

Debt security is on non-accrual status.

Where applicable, aggregates all shares of a class of stock owned without regard to specific series owned

In February 2019, New Trident Holdcorp, Inc.

filed for Chapter 11 bankruptcy protection.

Where applicable, aggregates all shares of a class of stock owned without regard to specific series owned within

There are certain limitations on our ability to withdraw our partnership interest prior to dissolution of the

7 unchanged sentences

Debt security does not have a stated interest rate that is payable thereon.

Fair value was based on the expected exit or payoff amount, where such event has occurred or is expected to

occur imminently.

Fair value was based on net asset value provided by the fund as a practical expedient.

2 unchanged sentences

Securities and Exchange Commission.

Our investment in Funko was valued using Level 2 inputs within the Financial Accounting Standards Board

(FASB) Accounting Standard Codification (ASC) Topic 820, Fair Value Measurements and Disclosures (ASC 820) fair value hierarchy.

Our common units in Funko are convertible to class A common stock in

Our investment in Funko was valued using Level 2 inputs within the ASC 820 fair value hierarchy.

units in Funko are convertible to class A common stock in Funko, Inc.

upon meeting certain requirements.

1 unchanged sentence

as of the reporting date, less a discount for lack of marketability.

is traded on the Nasdaq Stock Market under the

trading symbol FNKO. Refer to Note 3 Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

is traded on the Nasdaq Global Select Market under the trading symbol FNKO. Refer to Note 3 Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

The cash interest rate on this investment was indexed to 90-day LIBOR,

which was 0.23% as of September 30, 2020.

The cash interest rate on this investment was indexed to the U.S.

Prime Rate (PRIME), which was

5.00% as of September 30, 2019.

Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the ASC 820

fair value hierarchy.

The cash interest rate on this investment was indexed to, PRIME, which was 3.25% as of September 30, 2020.

Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the ASC 820 fair

value hierarchy.

Refer to Note 3 Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

1 unchanged sentence

Warrants are represented as a percentage of ownership, as applicable.

Category percentages represent the fair value of each category and subcategory as a percentage of net assets

as of September 30, 2019.

Category percentages represent the fair value of each category and subcategory as a percentage of net assets as

of September 30, 2020.

Cumulative gross unrealized depreciation for federal income tax purposes is $68.3 million;

gross unrealized appreciation for federal income tax purposes is $19.8 million.

cumulative gross

unrealized appreciation for federal income tax purposes is $13.9 million.

Cumulative net unrealized depreciation is $54.5 million, based on a tax cost of $504.9 million.

Investment was exited subsequent to September 30, 2019.

Refer to Note 15 Subsequent Events in

the accompanying Notes to Consolidated Financial Statements for additional information.

THE ACCOMPANYING NOTES

ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

GLADSTONE CAPITAL CORPORATION

58 unchanged sentences

Classification of Investments

In accordance with the BDC

regulations in the 1940 Act, we classify portfolio investments on our accompanying Consolidated Financial Statements into the following categories:

In accordance with the

provisions of the 1940 Act applicable to BDCs, we classify portfolio investments on our accompanying Consolidated Financial Statements into the following categories:

Control Investments Control investments are those where we have the power to exercise a controlling

influence over the management or policies of the portfolio company, which may include owning, with the power to vote, more than 25.0% of the issued and outstanding voting securities;

influence over the management or policies of the portfolio company, which may include owning, with the power to vote, more than 25.0% of the issued and outstanding voting securities of such portfolio company;

Affiliate Investments Affiliate investments are those in which we own, with the power to vote,

9 unchanged sentences

We seek to mitigate this concentration of credit risk by depositing funds with major financial institutions.

Restricted Cash and Cash Equivalents

Restricted Cash

and Cash Equivalents

Restricted cash is cash held in escrow that was generally received as part of an investment exit.

Restricted cash is carried at cost, which

approximates fair value.

Restricted cash is carried at

cost, which approximates fair value.

Investment Valuation Policy

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Second, the Valuation Committee of our Board of Directors (comprised entirely of independent directors)

meets to review the valuation recommendations and supporting materials presented by the chief valuation officer.

Third, after the Valuation Committee concludes its meeting, it and the chief valuation officer present the Valuation Committees

findings to the entire Board of Directors so that the full Board of Directors may review and determine in good faith the fair value of such investments in accordance with the Policy.

meets to review the valuation recommendations and supporting materials, discusses the information provided by the Valuation Team, determines whether the Valuation Team has followed the Policy, determines whether the Valuation Teams recommended

fair value is reasonable in light of the Policy, and reviews other facts and circumstances.

1 Third, after the Valuation Committee concludes its meeting, it and the chief valuation officer present

the Valuation Committees findings to the entire Board of Directors so that the full Board of Directors may review and determine in good faith the fair value of such investments in accordance with the Policy.

There is no single standard for determining fair value (especially for privately-held businesses), as fair value depends upon the specific facts and

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Generally, at least once per year, we engage an independent valuation firm to value or review the valuation of each of our significant equity

investments, which includes providing the information noted above.

investments, which includes providing the information noted

The Valuation Team evaluates such information for incorporation into our TEV, including review of all inputs provided by the independent valuation firm.

The Valuation Team then

makes a recommendation to our Valuation Committee and Board of Directors as to the fair value.

Our Board of Directors reviews the

recommended fair value, and whether it is reasonable in light of the Policy, and other relevant facts and circumstances before determining fair value.

The Valuation Team then makes

a recommendation to our Valuation Committee and Board of Directors as to the fair value.

Our Board of Directors reviews the recommended fair value, and whether it is reasonable in light of the Policy, and other relevant facts and circumstances

before determining fair value.

Valuation Techniques

In accordance with ASC 820, the

Valuation Team uses the following techniques when valuing our investment portfolio:

Total Enterprise Value In determining the fair value using a TEV, the Valuation Team first calculates

the TEV of the portfolio company by incorporating some or all of the following factors:

In accordance with ASC 820, the Valuation Team uses the following techniques when valuing our investment portfolio:

Total Enterprise Value In determining the fair value using a TEV, the Valuation Team first

calculates the TEV of the portfolio company by incorporating some or all of the following factors:

the portfolio companys ability to make payments and other specific portfolio company attributes;

the earnings of the portfolio company (the trailing or

projected twelve month revenue or EBITDA);

EBITDA obtained from our indexing methodology whereby the original transaction EBITDA at the time of our closing is indexed to a general subset of comparable disclosed transactions and EBITDA from recent

sales to third parties of similar securities in similar industries;

the earnings of the portfolio company (the

trailing or projected twelve month revenue or EBITDA);

EBITDA multiples obtained from our indexing methodology whereby the original transaction EBITDA multiple at the time of our closing is indexed to a general subset of comparable disclosed

transactions and EBITDA multiples from recent sales to third parties of similar securities in similar industries;

a comparison to publicly traded securities in similar industries, and other pertinent factors.

The Valuation Team generally reviews industry statistics and may use outside experts

when gathering this information.

Once the TEV is determined for a portfolio company, the Valuation Team generally allocates the TEV to the portfolio companys securities based on the facts and circumstances of the securities, which typically

results in the allocation of fair value to securities based on the order of their relative priority in the capital structure.

Generally, the Valuation Team uses TEV to value our equity investments and, in the circumstances where we have the ability

to effectuate a sale of a portfolio company, our debt investments.

TEV is primarily calculated using EBITDA;

TEV may also be calculated using revenue multiples or a discounted cash flow (DCF) analysis whereby future expected cash flows of the portfolio company are discounted to determine a net present value using estimated risk-adjusted

discount rates, which incorporate adjustments for nonperformance and liquidity risks.

Generally, the Valuation Team uses a DCF analysis to calculate TEV to corroborate estimates of value for our equity investments where we do not have the ability to

effectuate a sale of a portfolio company or for debt of credit impaired portfolio companies.

The Valuation Team generally reviews

industry statistics and may use outside experts when gathering this information.

Once the TEV is determined for a portfolio company, the Valuation Team generally allocates the TEV to the portfolio companys securities based on the facts and

circumstances of the securities, which typically results in the allocation of fair value to securities based on the order of their relative priority in the capital structure.

Generally, the Valuation Team uses TEV to value our equity investments

and, in the circumstances where we have the ability to effectuate a sale of a portfolio company, our debt investments.

TEV is primarily calculated using EBITDA and EBITDA multiples;

however, TEV may also be calculated using revenue and revenue multiples or a

discounted cash flow (DCF) analysis whereby future expected cash flows of the portfolio company are discounted to determine a net present value using estimated risk-adjusted discount rates, which incorporate adjustments for

nonperformance and liquidity risks.

Generally, the Valuation Team uses a DCF analysis to calculate TEV to corroborate estimates of value for our equity investments where we do not have the ability to effectuate a sale of a portfolio company or for

debt of credit impaired portfolio companies.

Yield Analysis The Valuation Team generally determines the fair value of our debt investments for

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Generally, the Valuation Team uses the yield analysis to corroborate both estimates of value provided by ICE and market quotes.

Market Quotes For our investments for which a limited market exists, we generally base fair value on

readily available and reliable market quotations which are corroborated by the Valuation Team (generally by using the yield analysis explained above).

Market Quotes For our investments for which a limited market exists, we generally base fair value

on readily available and reliable market quotations which are corroborated by the Valuation Team (generally by using the yield analysis described above).

In addition, the Valuation Team assesses trading activity for similar investments and evaluates

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For restricted securities that

are publicly traded, we generally base fair value on the closing market price of the securities we hold as of the reporting date less a discount for the restriction, which includes consideration of the nature and term to expiration of the

are publicly traded, we

generally base fair value on the closing market price of the securities we hold as of the reporting date less a discount for the restriction, which includes consideration of the nature and term

to expiration of the restriction.

Investments in Funds For equity investments in other funds for which we cannot effectuate a sale of

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As of September 30,

2020, loans to B+T Group Acquisition Inc.

(B+T) were on non-accrual status with an aggregate debt cost basis of $7.2 million, or 1.6% of the cost basis of all debt investments in our

portfolio, and an aggregate fair value of approximately $6.5 million, or 1.6% of the fair value of all debt investments in our portfolio.

As of September 30, 2019, loans to Meridian Rack & Pinion Inc.

and New Trident Holdcorp,

were on non-accrual status with an aggregate debt cost basis of approximately $8.5 million, or 2.2% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of

approximately $0.1 million, or 0.0% of the fair value of all debt investments in our portfolio.

We currently hold, and we expect to hold in the

future, some loans in our portfolio that contain OID or PIK provisions.

We recognize OID for loans originally issued at discounts and recognize the income over the life of the obligation based on an effective yield calculation.

PIK interest,

computed at the contractual rate specified in a loan agreement, is added to the principal balance of a loan and recorded as income over the life of the obligation.

Thus, the actual collection of PIK income may be deferred until the time of debt

principal repayment.

2021, there were no loans on non-accrual status.

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

were on non-accrual status with an aggregate debt

cost basis of $7.2 million, or 1.6% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of approximately $6.5 million, or 1.6% of the fair value of all debt investments in our portfolio.

We currently hold, and we expect to hold in the future, some loans in our portfolio that contain OID or PIK provisions.

We recognize OID for loans originally

issued at discounts and recognize the income over the life of the obligation based on an effective yield calculation.

PIK interest, computed at the contractual rate specified in a loan agreement, is added to the principal balance of a loan and

recorded as income over the life of the obligation.

Thus, the actual collection of PIK income may be deferred until the time of debt principal repayment.

maintain our ability to be taxed as a RIC, we may need to pay out both OID and PIK non-cash income amounts in the form of distributions, even though we

have not yet collected the cash on either.

As of September 30, 2020 and 2019, we held five and ten OID loans, respectively, primarily from the

syndicated loans in our portfolio.

As of September 30, 2021 and 2020, we held six and five OID loans, respectively, primarily from the

syndicated loans as well as some participation interests in our portfolio.

We recorded OID income of $0.3 million, $0.3 million, and $0.1 million during the years ended September 30, 2021, 2020, and 2019, respectively.

The unamortized balance of OID investments as of

September 30, 2020 and 2019 totaled $0.6 million and $0.8 million, respectively.

As of September 30, 2020 and 2019, we had seven and four investments which had a PIK interest component, respectively.

We recorded PIK interest

income of $2.6 million, $1.4 million, and $3.8 million during the years ended September 30, 2020, 2019, and 2018, respectively.

We collected $0.1 million, $0, and $0.8 million of PIK interest in cash during the years ended

September 30, 2020, 2019, and 2018, respectively.

unamortized balance of OID investments as of September 30, 2021 and 2020 totaled $1.1 million and $0.6 million, respectively.

As of each of September 30, 2021 and 2020, we had seven investments which had a PIK interest component.

We recorded PIK interest income of $2.5 million, $2.6 million, and $1.4 million during the years ended September 30, 2021, 2020, and 2019, respectively.

We collected $3.4 million, $0.1 million, and $0 of PIK interest in

cash during the years ended September 30, 2021, 2020, and 2019, respectively.

Success Fee Income Recognition

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Certain costs associated with our

revolving line of credit are deferred and amortized using the straight-line method, which approximates the effective interest method, over the term of the revolving line of credit.

Costs associated with the issuance of our notes payable are

presented as discounts to the principal amount of the notes payable and are amortized using the straight-line method, which approximates the effective interest method, over the term of the notes.

Costs associated with the issuance of our mandatorily

redeemable preferred stock are presented as discounts to the liquidation value of the mandatorily redeemable preferred stock and are amortized using the straight-line method, which approximates the effective interest method, over the term of the

respective series of preferred stock.

Credit Facility (as defined below) are deferred and amortized using the straight-line method, which approximates the effective interest method, over the term of our Credit Facilitys revolving period.

Costs associated with the issuance of our

notes payable are presented as discounts to the principal amount of the notes payable and are amortized using the straight-line method, which approximates the effective interest method, over the term of the notes.

Costs associated with the issuance

of our mandatorily redeemable preferred stock are presented as discounts to the liquidation value of the mandatorily redeemable preferred stock and are amortized using the straight-line method, which approximates the effective interest method, over

the term of the respective series of preferred stock.

Refer to Note 5 Borrowings and Note 6 Mandatorily Redeemable Preferred Stock for further discussion.

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incentive fee.

Additionally, we pay the Adviser a loan servicing fee as compensation for its services as servicer under the terms of our Fifth Amended and Restated Credit Agreement with KeyBank National Association (KeyBank), as

administrative agent, lead arranger and lender (our Credit Facility).

Additionally, we pay the Adviser a loan servicing fee as compensation for its services as servicer under the terms of our revolving credit facility with KeyBank National Association (KeyBank), as administrative agent, lead

arranger and lender (as amend and/or restated from time to time, our Credit Facility).

These fees are accrued at the end of the quarter when the services are performed and generally paid the following quarter.

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Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04).

ASU 2020-04 provides optional expedients and exceptions

for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

ASU 2020-04 was effective

The adoption of ASU 2020-04 did not have a material impact on our financial position, results of operations or cash flows.

In August 2021, the FASB issued Accounting Standards Update 2021-06, Presentation of Financial Statements

Financial Services Depository and Lending (Topic 942), and Financial Services Investment Companies (Topic 946) (ASU 2021-06), which codifies SEC final

ASU 2021-06 is effective immediately.

Our adoption of ASU 2021-06 did not have a material impact on our financial position, results of operations or cash

In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (Topic

Disclosure FrameworkChanges to the Disclosure Requirements for Fair Value (ASU 2018-13), which modifies the disclosure requirements in ASC 820.

We are currently assessing the

impact of ASU 2018-13 and do not anticipate a material impact on our disclosures.

ASU 2018-13 is effective for annual reporting periods beginning after

December 15, 2019, including interim periods within those fiscal years, with early adoption permitted.

In accordance with ASC 820, the fair value of each investment is determined to be the price that would be received for an investment in a current sale, which

assumes an orderly transaction between willing market participants on the measurement date.

This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use

of market-based inputs over

entity-specific inputs.

ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument

as of the measurement date.

ASU 2018-13 is effective for annual reporting periods beginning after December 15, 2019, and we adopted ASU 2018-13 effective October 1, 2020.

Our adoption of ASU 2018-13 did not have a material impact on our financial position, results of operations or cash flows.

In accordance with ASC 820, the fair value of each investment is determined to be the price that would be received for an investment in a

current sale, which assumes an orderly transaction between willing market participants on the measurement date.

This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of

fair value, the use of market-based inputs over entity-specific inputs.

ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument as of

the measurement date.

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for

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During the years ended September 30, 2021 and 2020, there were no investments transferred into or out of Levels 1, 2 or 3 of the valuation hierarchy.

As of September 30, 2020 and 2019, our investments, by security type, at fair value were categorized as follows within the ASC 820 fair value hierarchy:

As of September 30, 2021 and 2020, our investments, by security type, at fair value were categorized as

follows within the ASC 820 fair value hierarchy:

Fair Value Measurements

Quoted Prices

Identical Assets

As of September 30, 2021:

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Quoted Prices

Identical Assets

As of September 30, 2020:

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converted into common shares of Funko, Inc.) at the reporting date less a discount for lack of marketability as our investment was subject to certain restrictions.

The following table presents our portfolio investments, valued using Level 3 inputs within the ASC 820 fair value hierarchy and carried at fair value as

of September 30, 2020 and 2019 by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type:

The following table presents our portfolio investments, valued using Level 3 inputs within the ASC 820 fair

value hierarchy and carried at fair value as of September 30, 2021 and 2020 by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type:

Total Recurring Fair Value

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and Liabilities

Using Significant

Inputs (Level 3)

Unobservable Inputs (Level 3)

September 30,

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Leeds was valued using NAV as a practical expedient, and Funko was valued using Level 2 inputs.

Excludes our investments in Leeds and Funko with fair values of $4.1 million and $0.2 million,

Excludes our investments in Leeds and Funko with fair values of $4.7 million and $48 thousand,

respectively, as of September 30, 2020.

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12.6%12.6% / 12.6%

12.2%12.2% / 12.2%

Revenue multiple

0.3x1.4x / 1.0x

$752$9,968 / $3,740

$883$11,500 / $4,325

Preferred and common equity /

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which were valued using the expected payoff amount as the unobservable input.

Fair value as of September 30, 2020 excludes our investments in Leeds and Funko with fair values of

$4.7 million and $48 thousand, respectively, as of September 30, 2020.

Fair value as of September 30, 2019 excludes our investments in Leeds and Funko with fair values of $4.1 million and $0.2 million, respectively, as

of September 30, 2019.

Leeds was valued using NAV as a practical expedient and Funko was valued using Level 2 inputs as of both September 30, 2020 and 2019.

Fair value as of September 30, 2021 includes one proprietary equity investment totaling

$16.6 million, which was valued using the expected payoff amount as the unobservable input.

Fair value as of September 30, 2021 excludes our investments in Leeds and Funko with fair values of $6.5 million and $78 thousand,

respectively, as of September 30, 2021.

Fair value as of September 30, 2020 excludes our investments in Leeds and Funko with fair values of $4.7 million and $48 thousand, respectively, as of September 30, 2020.

valued using NAV as a practical expedient and Funko was valued using Level 2 inputs as of both September 30, 2021 and 2020.

Fair value measurements can be sensitive to changes in one or more of the valuation inputs.

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transactions occurred during the year ended September 30, 2021:

In October 2019, we invested $14.0 million in Universal Survey Center, 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 connection with the sale, we received net cash proceeds of approximately $9.7 million, including the repayment of our debt investment of $6.8 million at par.

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.

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

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

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 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.

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

through secured second lien debt.

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 fee of approximately $0.3 million.

Syndicated Investments

September 30, 2020 and 2019, we held 11 and 16 syndicated investments with an aggregate fair value of $38.9 million and $49.2 million, or 8.6% and 12.2% of the total portfolio at fair value, respectively.

September 30, 2021 and 2020, we held eight and 11 syndicated investments with an aggregate fair value of $31.7 million and $38.9 million, or 5.7% and 8.6% of the total portfolio at fair value, respectively.

The following significant

syndicated investment transactions occurred during the year ended September 30, 2021:

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.

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.

Investment Concentrations

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Healthcare, Education, and Childcare

Diversified/Conglomerate Manufacturing

Aerospace and Defense

Cargo Transportation

Beverage, Food, and Tobacco

Telecommunications

Diversified Natural Resources, Precious Metals, and Minerals

Telecommunications

Diversified/Conglomerate Manufacturing

Chemicals, Plastics, and Rubber

Textiles and Leather

Home and Office Furnishings, Housewares, and Durable Consumer Products

Cargo Transportation

Hotels, Motels, Inns, and Gaming

Textiles and Leather

Buildings and Real Estate

Personal and Non-Durable Consumer Products

Other, < 2.0%

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Our investments at fair value were included in the following U.S.

geographic regions and Canada as of September 30, 2020

geographic regions as of September 30, 2021 and 2020:

September 30, 2021

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Total Investments

The geographic composition indicates the location of the headquarters for our portfolio companies.

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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.

Receivables from Portfolio Companies

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As of September 30, 2021 and 2020, we had gross receivables from portfolio companies of $0.7 million and $0.4 million, respectively.

The allowance for uncollectible receivables was

$11 thousand and $16 thousand as of September 30, 2020 and 2019, respectively.

The allowance for uncollectible receivables was $0 and

$11 thousand as of September 30, 2021 and 2020, respectively.

RELATED PARTY TRANSACTIONS

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(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) taking a primary role in interviewing, vetting and negotiating employment contracts with candidates in connection with

adding and retaining key portfolio company management team members.

The Adviser non-contractually, unconditionally, and irrevocably credits 100% of any fees for such services against the base management fee

that we would otherwise be required to pay to the Adviser;

however, pursuant to the terms of the Advisory Agreement, a small percentage of certain of such fees, totaling $0.1 million for the years ended September 30, 2020, 2019, and 2018,

was retained by the Adviser in the form of reimbursement, at cost, for tasks completed by personnel of the Adviser primarily for the valuation of portfolio companies.

portfolio company and financial modeling as it relates to raising additional debt and equity capital from unaffiliated third parties;

and (iv) taking a primary role in interviewing, vetting and negotiating employment contracts with candidates

in connection with adding and retaining key portfolio company management team members.

The Adviser non-contractually, unconditionally, and irrevocably credits 100% of any fees for such services against the

base management fee that we would otherwise be required to pay

to the Adviser;

however, pursuant to the terms of the Advisory Agreement, a small percentage of certain of such fees, totaling $0.1 million for the years ended September 30, 2021, 2020,

and 2019, was retained by the Adviser in the form of reimbursement, at cost, for tasks completed by personnel of the Adviser primarily for the valuation of portfolio companies.

Our Board of Directors accepted a non-contractual, unconditional, and irrevocable credit from the Adviser to reduce

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an income-based incentive fee and a capital gains-based incentive fee.

The income-based incentive fee rewards the Adviser if our quarterly net investment income (before giving effect to any incentive fee) exceeds 1.75% (2.0% during the one year

period from April 1, 2020 through March 31, 2021) of our net assets, which we define as total assets less indebtedness and before taking into account any incentive fees payable or contractually due but not payable during the period, at the

end of the immediately preceding calendar quarter, adjusted appropriately for any share issuances or repurchases during the period (the hurdle rate).

The income-based incentive fee rewards the Adviser if our quarterly net investment income (before giving effect to any incentive fee) exceeds 1.75% (2.0% during the period from

April 1, 2020 through March 31, 2022) of our net assets, which we define as total assets less indebtedness and before taking into account any incentive fees payable or contractually due but not payable during the period, at the end of the

immediately preceding calendar quarter, adjusted appropriately for any share issuances or repurchases during the period (the hurdle rate).

The income-based incentive fee with respect to our

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100.0% of our pre-incentive fee net investment income with respect to

that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% (2.4375% during the one year period from April 1, 2020 through March 31,

2021) of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter;

that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875% (2.4375% during the period from April 1, 2020 through March 31, 2022) of

our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter;

20.0% of the amount of our pre-incentive fee net investment income, if

any, that exceeds 2.1875% (2.4375% during the one year period from April 1, 2020 through March 31, 2021) of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter.

As reflected above, on April 14, 2020, our Board of Directors approved the amendment of the Advisory Agreement, which temporarily

any, that exceeds 2.1875% (2.4375% during the period from April 1, 2020 through March 31, 2022) of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter.

As reflected above, on April 14, 2020, our Board of Directors approved an amendment of the Advisory Agreement, which temporarily

revised the hurdle rate, for the period beginning April 1, 2020 and ending March 31, 2021, increasing the hurdle rate from 1.75% per quarter (7% annualized) to 2.00% per quarter (8% annualized) and increasing the excess incentive fee

hurdle rate from 2.1875% per quarter (8.75% annualized) to 2.4375% per quarter (9.75% annualized).

The second part of the incentive fee is a capital

gains-based incentive fee that is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination

date) and equals 20.0% of our net realized capital gains (as defined herein) as of the end of the fiscal year.

In determining the capital gains-based incentive fee payable to the

Adviser, we calculate net realized capital gains at the end of each applicable year by subtracting the sum of our cumulative aggregate realized capital losses and our entire portfolios aggregate unrealized capital depreciation from

our cumulative aggregate realized capital gains.

For this purpose, cumulative aggregate realized capital gains, if any, equals the sum of the differences between the net sales price of each investment, when sold, and the original cost of such

investment since inception.

Cumulative aggregate realized capital losses equals the sum of the amounts by which the net sales price of each investment, when sold, is less than the original cost of such investment since inception.

portfolios aggregate unrealized capital depreciation, if any, equals the sum of the difference between the valuation of each investment as of the applicable calculation date and the original cost of such investment.

At the end of the

applicable fiscal year, the amount of capital gains that serves as the basis for our calculation of the capital gains-based incentive fee equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less

the entire portfolios aggregate unrealized capital depreciation, if any.

If this number is positive at the end of such fiscal year, then the capital gains-based incentive fee for such year equals 20.0% of such amount, less the aggregate amount

of any capital gains-based incentive fees paid in respect of our portfolio in all prior years.

No capital gains-based incentive fee has been recorded or paid since our inception through September 30, 2020, as cumulative unrealized capital

depreciation has exceeded cumulative realized capital gains net of cumulative realized capital losses.

In accordance with GAAP, a capital gains-based

incentive fee accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital appreciation and depreciation.

If such amount is positive at the end of a period, then GAAP requires us

to record a capital gains-based incentive fee equal to 20.0% of such amount, less the aggregate amount of actual capital gains-based incentive fees paid in all prior years.

On April 13, 2021, our Board of Directors approved an additional amendment of the Advisory Agreement which extended the temporary revision to the

hurdle rate through the period beginning April 1, 2021 and ending March 31, 2022.

The second part of the incentive fee is a capital gains-based

incentive fee that is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination date) and equals 20.0% of our net realized capital gains (as defined herein)

as of the end of the fiscal year.

determining the capital gains-based incentive fee payable to the Adviser, we calculate net realized capital gains at the end of each applicable year by subtracting the sum of our

cumulative aggregate realized capital losses and our entire portfolios aggregate unrealized capital depreciation from our cumulative aggregate realized capital gains.

For this purpose, cumulative aggregate realized capital gains, if any,

equals the sum of the differences between the net sales price of each investment, when sold, and the original cost of such investment since inception.

Cumulative aggregate realized capital losses equals the sum of the amounts by which the net sales

price of each investment, when sold, is less than the original cost of such investment since inception.

The entire portfolios aggregate unrealized capital depreciation, if any, equals the sum of the difference between the valuation of each

investment as of the applicable calculation date and the original cost of such investment.

At the end of the applicable fiscal year, the amount of capital gains that serves as the basis for our calculation of the capital gains-based incentive fee

equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less the entire portfolios aggregate unrealized capital depreciation, if any.

If this number is positive at the end of such fiscal year,

then the capital gains-based incentive fee for such year equals 20.0% of such amount, less the aggregate amount of any capital gains-based incentive fees paid in respect of our portfolio in all prior years.

No capital gains-based incentive fee has

been recorded or paid since our inception through September 30, 2021, as cumulative unrealized capital depreciation has exceeded cumulative realized capital gains net of cumulative realized capital losses.

In accordance with GAAP, a capital gains-based incentive fee accrual is calculated using the aggregate cumulative realized capital gains and losses and

aggregate cumulative unrealized capital appreciation and depreciation.

If such amount is positive at the end of a period, then GAAP requires us to record a capital gains-based incentive fee equal to 20.0% of such amount, less the aggregate amount of

actual capital gains-based incentive fees paid in all prior years.

If such amount is negative, then there is no accrual for such period.

requires that the capital gains-based incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains-based incentive fee would be payable if such unrealized capital appreciation were

There can be no assurance that such unrealized capital appreciation will be realized in the future.

GAAP requires that the capital gains-based incentive fee accrual consider the cumulative aggregate unrealized

capital appreciation in the calculation, as a capital gains-based incentive fee would be payable if such unrealized capital appreciation were realized.

There can be no assurance that such unrealized capital appreciation will be realized in the

No GAAP accrual for a capital gains-based incentive fee has been recorded from our inception through September 30, 2021.

Our Board of Directors accepted non-contractual, unconditional and irrevocable credits from the Adviser to reduce the

income-based incentive fee to the extent net investment income did not 100.0% cover distributions to common stockholders for the years ended September 30, 2020, 2019, and 2018.

Directors accepted non-contractual, unconditional and irrevocable credits from the Adviser to reduce the income-based incentive fee to the extent net investment income did not 100.0% cover distributions to

common stockholders for the years ended September 30, 2021, 2020, and 2019.

Transactions with the Administrator

We have entered into

the Administration Agreement with the Administrator to provide administrative services.

We reimburse the Administrator pursuant to the Administration Agreement for the portion of expenses the Administrator incurs while performing services for us.

The Administrators expenses are primarily rent and the salaries, benefits and expenses of the Administrators employees, including:

our chief financial officer and treasurer, chief compliance officer, chief valuation officer, and general

counsel and secretary (who also serves as the Administrators president, general counsel and secretary) and their respective staffs.

Two of our executive officers, David Gladstone (our chairman and chief executive officer) and Terry Lee

Brubaker (our vice chairman and chief operating officer) serve as members of the board of managers and executive officers of the Administrator, which is 100% indirectly owned and controlled by Mr.

Another of our officers, Michael

LiCalsi (our general counsel and secretary), serves as the Administrators president as well as the executive vice president of administration for the Adviser.

Our allocable portion of the Administrators expenses is generally derived by multiplying the Administrators total expenses by the approximate

percentage of time during the current quarter the Administrators employees performed services for us in relation to their time spent performing services for all companies serviced by the Administrator.

On July 14, 2020, our Board of

Directors, including a majority of the directors who are not parties

to the Administration Agreement or interested persons of either party, approved the renewal of the Administration Agreement through August 31, 2021.

We have entered into the Administration Agreement with the Administrator to provide administrative services.

We reimburse the Administrator pursuant to the

Administration Agreement for the portion of expenses the Administrator incurs while performing services for us.

The Administrators expenses are primarily rent and the salaries, benefits and expenses of the Administrators employees,

our chief financial officer and treasurer, chief compliance officer, chief valuation officer, and general counsel and secretary (who also serves as the Administrators president, general counsel and secretary) and their respective

Two of our executive officers, David Gladstone (our chairman and chief executive officer) and Terry Lee Brubaker (our vice chairman and chief operating officer) serve as members of the board of managers and executive officers of the

Administrator, which is 100% indirectly owned and controlled by Mr.

Another of our officers, Michael LiCalsi (our general counsel and secretary), serves as the Administrators president as well as the executive vice president of

administration for the Adviser.

Our allocable portion of the Administrators expenses is generally derived by multiplying the Administrators

total expenses by the approximate percentage of time during the current quarter the Administrators employees performed services for us in relation to their time spent performing services for all companies serviced by the Administrator.

July 13, 2021, our Board of Directors, including a majority of the directors who are not parties to the Administration Agreement or interested persons of either party, approved the renewal of the Administration Agreement through August 31,

Other Transactions

Gladstone Securities, LLC

(Gladstone Securities), a privately-held broker-dealer registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation, which is 100% indirectly owned and controlled by

Gladstone, our chairman and chief executive officer, has provided other services, such as investment banking and due diligence services, to certain of our portfolio companies, for which Gladstone Securities receives a fee.

Any such fees

paid by portfolio companies to Gladstone Securities do not impact the fees we pay to the Adviser or the non-contractual, unconditional and irrevocable credits against the base management fee or incentive fee.

Gladstone Securities received fees from portfolio companies totaling $0.9 million, $1.3 million, and $0.8 million during the years ended September 30, 2020, 2019, and 2018, respectively.

Gladstone Securities, LLC (Gladstone Securities), a privately-held broker-dealer registered with the Financial Industry Regulatory Authority and

insured by the Securities Investor Protection Corporation, which is 100% indirectly owned and controlled by Mr.

Gladstone, our chairman and chief executive officer, has provided other services, such as investment banking and due diligence

services, to certain of our portfolio companies, for which Gladstone Securities receives a fee.

Any such fees paid by portfolio companies to Gladstone Securities do not impact the fees we pay to the Adviser or the

non-contractual, unconditional and irrevocable credits against the base management fee or incentive fee.

Gladstone Securities received fees from portfolio companies totaling $0.8 million,

$0.9 million, and $1.3 million during the years ended September 30, 2021, 2020, and 2019, respectively.

Related Party Fees Due

Amounts due to related parties on

our accompanying Consolidated Statements of Assets and Liabilities were as follows:

Amounts due to related parties on our accompanying Consolidated Statements of Assets and Liabilities were as follows:

September 30, 2021

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In addition, net expenses payable to Gladstone Investment Corporation (for reimbursement purposes), which includes certain co-investment expenses, totaled

$0 as of each of September 30, 2020 and 2019.

These amounts are generally settled in the quarter subsequent to being incurred and are included in other liabilities on the accompanying Consolidated Statements of Assets and Liabilities as

of September 30, 2020 and 2019.

$38 thousand and $0 as of September 30, 2021 and 2020, respectively.

These amounts are generally settled in the quarter subsequent to being incurred and are included in other liabilities on the accompanying Consolidated Statements of

Assets and Liabilities as of September 30, 2021 and 2020.

Revolving Credit Facility

On 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 to July 15, 2021, included certain LIBOR transition provisions 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,

On December 9, 2020, 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 6.00% Series 2024 Term Preferred Stock, par value $0.001 per share (Series 2024 Term Preferred

On March 9, 2018, we, through Business Loan, entered into Amendment No.

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%.

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

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.

8 to our Credit Facility with KeyBank, which increased the commitment amount from $180 million to $205 million.

On 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.

We incurred 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.

The following tables summarize noteworthy information related to our Credit Facility:

23 unchanged sentences

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

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

our mandatorily redeemable preferred stock) of $205.0 million plus 50.0% of all equity and subordinated debt raised after May 1, 2015 less 50% of any equity and subordinated debt retired or redeemed 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 the Code.

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%, calculated in accordance with the requirements of Section 18 and 61

of the 1940 Act, and an active status as a BDC and RIC.

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%, calculated in accordance with the requirements of Section 18 and 61 of the 1940 Act, 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, 2021.

As of September 30, 2020, we were in compliance with all of our Credit Facility

We elected to apply the fair

value option of ASC 825, Financial Instruments , specifically for the Credit Facility, which was consistent with our application of ASC 820 to our investments.

Generally, the fair value of our Credit Facility is determined using a

yield analysis which includes a DCF calculation and the assumptions that the Valuation Team believes market participants would use, including the estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of

similar securities as of the measurement date.

As of September 30, 2020, the discount rate used to determine the fair value of our Credit Facility was 30-day LIBOR, plus 3.20% per annum, plus a 0.50%

unused commitment fee.

As of September 30, 2021, we were in compliance with all of our Credit Facility covenants.

We elected to apply the fair value option of ASC 825, Financial Instruments , specifically for the Credit Facility, which was consistent with

our application of ASC 820 to our investments.

Generally, the fair value of our Credit Facility is determined using a yield analysis which includes a DCF calculation and the assumptions that the Valuation Team believes market participants would use,

including the estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of similar securities as of the measurement date.

As of September 30, 2021, the discount rate used to determine the fair value of

our Credit Facility was 30-day LIBOR, plus 2.97% per annum, plus a 1.00% unused commitment fee.

As of September 30, 2020, the discount rate used to determine the fair value of our Credit Facility was 30-day LIBOR, plus 3.20% per annum, plus a 0.50% unused commitment fee.

Generally, an increase or decrease in the discount rate used in the DCF calculation may result in a corresponding decrease or increase, respectively, in the fair value of our Credit Facility.

As of September 30, 2020 and 2019, our Credit

Facility was valued using Level 3 inputs and any changes in its fair value are recorded in net unrealized depreciation (appreciation) of other on our accompanying Consolidated Statements of Operations .

The following tables present our Credit Facility carried at fair value as of September 30, 2020 and 2019, on

our accompanying Consolidated Statements of Assets and Liabilities for Level 3 of the hierarchy established by ASC 820 and the changes in fair value of our Credit Facility during the years ended September 30, 2020 and 2019:

Generally, an increase or decrease in the discount rate used in the DCF calculation may result in a corresponding decrease or increase,

respectively, in the fair value of our Credit Facility.

As of September 30, 2021 and 2020, our Credit Facility was valued using Level 3 inputs and any changes in its fair value are recorded in net unrealized depreciation (appreciation) of

other on our accompanying Consolidated Statements of Operations .

The following tables present our Credit Facility carried at fair value as of

September 30, 2021 and 2020, on our accompanying Consolidated Statements of Assets and Liabilities for Level 3 of the hierarchy established by ASC 820 and the changes in fair value of our Credit Facility during the years ended

September 30, 2021 and 2020:

Total Recurring Fair Value

16 unchanged sentences

Notes Payable

In October 2019, we completed a public debt offering of $38.8 million aggregate principal amount of 5.375% Notes due 2024 (the 2024 Notes),

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 6.125% Notes due 2023 (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.

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

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 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 Securities Exchange Act of 1934, as amended, 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.

The fair value, based on the last quoted

closing price, of the 2023 Notes as of September 30, 2020 and 2019 was $57.8 million and $60.1 million, respectively.

The fair value, based on the last quoted closing price, of the 2024 Notes as of September 30, 2020 was

$38.7 million.

We consider the trading price of the 2024 Notes and 2023 Notes to be a Level 1 input within the ASC 820 hierarchy.

MANDATORILY REDEEMABLE PREFERRED STOCK

In September 2017, we completed a public offering of approximately 2.1 million shares of our Series 2024

Term Preferred Stock at a public offering price of $25.00 per share.

Gross proceeds totaled $51.8 million and net proceeds, after deducting underwriting discounts, commissions and offering expenses borne by us, were approximately

In December 2020, we completed an offering of $100.0 million aggregate principal amount of 5.125% Notes due 2026 (the 2026 Notes) for net

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

In 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 an offering of $38.8 million aggregate principal amount of 5.375% Notes due 2024 (the 2024 Notes), inclusive of

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

As 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.

The 2024 Notes would have

otherwise matured on November 1, 2024.

In November 2018, we completed an offering of $57.5 million aggregate principal amount of 6.125% Notes

due 2023 (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.

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.

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 2023 Notes would

have otherwise matured on November 1, 2024.

The indenture relating to the 2026 Notes and the 2024 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 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 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 .

The fair value, based on the last quoted closing price, of the 2024 Notes as of September 30, 2021 and September 30, 2020 was $39.3 million and

$38.7 million, respectively.

We consider the trading price of the 2024 Notes to be a Level 1 input within the ASC 820 hierarchy.

The fair value, based on a DCF analysis, of the 2026 Notes as of September 30, 2021 was

$154.1 million.

We incurred approximately $1.9 million in total underwriting discounts and offering costs related to the issuance of the Series 2024 Term Preferred Stock, which were recorded as discounts to the liquidation value on our

accompanying Consolidated Statements of Assets and Liabilities and were previously amortized from issuance through September 30, 2024, the mandatory redemption date.

We consider the 2026 Notes to be Level 3 within the ASC 820 fair value hierarchy.

MANDATORILY REDEEMABLE PREFERRED

In September 2017, we completed a public offering of approximately 2.1 million shares of our Series 2024 Term Preferred Stock at a public

offering price of $25.00 per share.

The shares of our Series 2024 Term Preferred Stock were traded under the ticker symbol GLADN on Nasdaq as of September 30, 2019.

coverage on our senior securities that are stock as of September 30, 2019 was 238.5%, calculated in accordance with Sections 18 and 61 of the 1940 Act.

On October 2, 2019, we voluntarily redeemed all 2,070,000 outstanding shares of our Series 2024 Term Preferred Stock at a redemption price of $25.00 per

share which represents the liquidation preference per share, plus accrued and unpaid dividends through October 1, 2019 in the amount of $0.004166 per share, for a total payment per share of $25.004166 and an aggregate redemption price of

approximately $51.8 million.

In connection with the voluntary redemption of our Series 2024 Term Preferred Stock, we incurred a loss on extinguishment of debt of $1.4 million, which has been reflected in Realized loss on other in our

accompanying Consolidated Statement of Operations and which is primarily comprised of the unamortized deferred issuance costs at the time of redemption.

We paid the following monthly dividends on our Series 2024 Term Preferred Stock for the year ended

September 30, 2019:

Declaration Date

Preferred Stock

October 9, 2018

October 19, 2018

October 31, 2018

October 9, 2018

November 20, 2018

November 30, 2018

October 9, 2018

December 20, 2018

December 31, 2018

January 8, 2019

January 18, 2019

January 31, 2019

January 8, 2019

February 20, 2019

February 28, 2019

January 8, 2019

March 20, 2019

March 29, 2019

April 9, 2019

April 22, 2019

April 30, 2019

April 9, 2019

June 19, 2019

June 28, 2019

July 22, 2019

July 31, 2019

August 20, 2019

August 30, 2019

September 17, 2019

September 30, 2019

Year Ended September 30, 2019:

The federal income tax characteristics of dividends paid to our preferred stockholders generally constitute ordinary income to

the extent of our current and accumulated earnings and profits and is reported after the end of the calendar year based on tax information for the full fiscal year.

Estimates of tax characterization made on a quarterly basis may not be

representative of the actual tax characterization of dividends for the full year.

Estimates made on a quarterly basis are updated as of each interim reporting date.

The tax characterization of dividends paid to our preferred stockholders during the

calendar years ended December 31, 2019 and 2018 was 100% from ordinary income.

In accordance with ASC 480, Distinguishing Liabilities from

Equity , mandatorily redeemable financial instruments should be classified as liabilities in the balance sheet.

Our mandatorily redeemable preferred stock was recorded at the liquidation preference, less discounts, on our accompanying

Consolidated Statements of Assets and Liabilities as of September 30, 2019.

The related dividend payments to our mandatorily redeemable preferred stockholders are treated as dividend expense on our Consolidated Statements of

Operations as of the ex-dividend date.

The fair value, based on the last quoted closing price, for our Series

2024 Term Preferred Stock as of September 30, 2019 was $51.8 million.

We consider the trading price of our mandatorily redeemable preferred stock to be a Level 1 input within the fair value hierarchy.

share, which represents the liquidation preference per share, plus accrued and unpaid dividends through October 1, 2019 in the amount of $0.004166 per share, for a total

payment per share of $25.004166 and an aggregate redemption price of approximately $51.8 million.

In connection with the voluntary redemption of our Series 2024 Term Preferred Stock, we

incurred a loss on extinguishment of debt of $1.4 million, which has been reflected in Realized loss on other in our accompanying Consolidated Statement of Operations and which is primarily comprised of the unamortized deferred issuance

costs at the time of redemption.

REGISTRATION STATEMENT AND COMMON EQUITY OFFERINGS

4 unchanged sentences

Common Stock Offerings

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.

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

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

September 30, 2020, we had a remaining capacity to sell up to an additional $21.1 million of our common stock under the Jefferies Sales Agreement.

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE

The following table sets forth the computation of basic and diluted net increase (decrease) in net assets resulting from operations per weighted average common

share for the years ended September 30, 2020, 2019, and 2018:

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

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

As of 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.

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER COMMON SHARE

The following table sets forth the computation of basic and diluted net increase (decrease) in net assets resulting from operations per weighted

average common share for the years ended September 30, 2021, 2020, and 2019:

Year Ended September 30,

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The federal income tax characteristics of all distributions will be reported to stockholders on the IRS Form 1099 after the end of each calendar year.

calendar year ended December 31, 2019, 97.4% of distributions to common stockholders were deemed to be paid from ordinary income and 2.6% of distributions to common stockholders were deemed to be a return of capital for 1099 stockholder

reporting purposes.

For the calendar year ended December 31, 2018, 100% of distributions to common stockholders were deemed to be paid from ordinary income for 1099 stockholder reporting purposes.

We paid the following monthly distributions to common stockholders for the years ended September 30, 2020

Estimates of tax characterization made on a quarterly basis may not be representative of the actual tax characterization of cash distributions for the full year.

Estimates made on a quarterly basis are updated as of each interim reporting date.

For the calendar year ended December 31, 2020, 97.3% of distributions to common stockholders were deemed to be paid from ordinary income and 2.7% of

distributions to common stockholders were deemed to be a return of capital for 1099 stockholder reporting purposes.

For the calendar year ended December 31, 2019, 97.4% of distributions to common stockholders were deemed to be paid from

ordinary income and 2.6% of distributions to common stockholders were deemed to be a return of capital for 1099 stockholder reporting purposes.

the following monthly distributions to common stockholders for the years ended September 30, 2021 and 2020:

Declaration Date

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July 24, 2020

July 31, 2020

July 14, 2020

August 24, 2020

August 31, 2020

July 14, 2020

September 23, 2020

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Aggregate distributions declared and paid to our common stockholders were approximately $26.0 million and

$24.6 million for the years ended September 30, 2020 and 2019, respectively, and were declared based on estimates of Investment Company Taxable Income.

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.

$25.2 million for the years ended September 30, 2021 and 2020, respectively, and were declared based on

estimates of Investment Company Taxable Income.

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.

components of our net assets on a tax basis were as follows:

September 30,

Capital in excess of par value

Cumulative net unrealized depreciation of investments

Cumulative net unrealized appreciation (depreciation) of investments

Cumulative net unrealized appreciation of other

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Other temporary differences

We intend to retain some or all of our realized capital gains first to the extent we have available capital loss

carryforwards and second, through treating the retained amount as a deemed distribution. As of September 30, 2020, we had $72.4 million of capital loss carryforwards that do not expire.

We intend to retain some or all of our realized capital gains first to the extent we have available capital loss carryforwards

and second, through treating the retained amount as a deemed distribution. As of September 30, 2021, we had $72.3 million of capital loss carryforwards that do not expire.

For the years ended September 30, 2021 and 2020, we recorded the following adjustments for permanent book-tax

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No excise tax provisions have been recorded for the years ended September 30, 2021, 2020, and 2019.

Under the RIC Modernization Act, we

are permitted to carry forward capital losses that we may incur in taxable years beginning after September 30, 2011 for an unlimited period, and such capital loss carryforwards will retain their character as either short-term or long-term

capital losses.

However, any losses incurred during post-enactment taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date.

a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.

Additionally, post-enactment capital loss carryforwards will retain their character as either

short-term or long-term capital losses.

Under the RIC Modernization Act, we are permitted to carry forward capital losses that we may incur in taxable

years beginning after September 30, 2011 for an unlimited period, and such capital loss carryforwards will retain their character as either short-term or long-term capital losses.

COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are party to certain legal

proceedings incidental to the normal course of our business.

We are required to establish reserves for litigation matters where those matters present loss contingencies that are both probable and estimable.

When loss contingencies are not both

probable and estimable, we do not establish reserves.

Based on current knowledge, we do not believe that loss contingencies, if any, arising from pending investigations, litigation or regulatory matters will have a material adverse effect on our

financial condition, results of operations or cash flows.

Additionally, based on our current knowledge, we do not believe such loss contingencies are both probable and estimable and therefore, as of September 30, 2020 and 2019, we had no

established reserves for such loss contingencies.

We are party to certain legal proceedings incidental to the normal course of our business.

We are required to establish reserves for

litigation matters where those matters present loss contingencies that are both probable and estimable.

When loss contingencies are not both probable and estimable, we do not establish reserves.

Based on current knowledge, we do not believe that

loss contingencies, if any, arising from pending investigations, litigation or regulatory matters will have a material adverse effect on our financial condition, results of operations or cash flows.

Additionally, based on our current knowledge, we

do not believe such loss contingencies are both probable and estimable and therefore, as of September 30, 2021 and 2020, we had no established reserves for such loss contingencies.

Escrow Holdbacks

From time to time, we enter into arrangements relating to exits of certain investments whereby specific amounts of the proceeds are held in escrow to be used

to satisfy potential obligations, as stipulated in the sales agreements.

We record escrow amounts in Restricted cash and cash equivalents, if received in cash but subject to potential obligations or other contractual restrictions, or as escrow

receivables in Other assets, net, if not yet received in cash, on our accompanying Consolidated Statements of Assets and Liabilities.

We establish reserves and holdbacks against escrow amounts if we determine that it is probable and estimable that a

portion of the escrow amounts will not ultimately be released or received at the end of the escrow period.

There were no aggregate reserves recorded against the escrow amounts as of September 30, 2020 and 2019.

Financial Commitments and 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 summarizes the amounts of our unused lines of credit, delayed draw term loans and uncalled capital commitment,

at cost, as of September 30, 2020 and 2019, which are not reflected as liabilities in the accompanying Consolidated Statements of Assets and Liabilities :

From time to time, we enter into

arrangements relating to exits of certain investments whereby specific amounts of the proceeds are held in escrow to be used to satisfy potential obligations, as stipulated in the sales agreements.

We record escrow amounts in Restricted cash and

cash equivalents, if received in cash but subject to potential obligations or other contractual restrictions, or as escrow receivables in Other assets, net, if not yet received in cash, on our accompanying Consolidated Statements of Assets and

We establish reserves and holdbacks against escrow amounts if we determine that it is probable and estimable that a portion of the escrow amounts will not ultimately be released or received at the end of the escrow period.

holdbacks against escrow amounts were $0.3 million and $0 as of September 30, 2021 and September 30, 2020, respectively.

Financial Commitments and

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 immaterial.

The following

table summarizes the amounts of our unused lines of credit, delayed draw term loans and uncalled capital commitment, at cost, as of September 30, 2021 and 2020, which are not reflected as liabilities in the accompanying Consolidated

Statements of Assets and Liabilities :

As of September 30,

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Per Common Share Data:

Net asset value at beginning of year

Net asset value at beginning of period / year

Income from operations (B)

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Capital share transactions (B)

Issuance of common stock

Discounts, commissions, and offering costs

Repurchase of common stock

Net anti-dilutive (dilutive) effect of equity offering (D)

Repayment of principal on employee notes

Net anti-dilutive (dilutive) effect of equity

Total capital share transactions

Other, net (B)(E)

Net asset value at end of year (A)

Net asset value at end of period /

Per common share market value at beginning of year

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assets (H)(I)

Ratio of net investment income to average net assets (J)

Ratio of net investment income to average net

Based on actual shares outstanding at the end of the corresponding fiscal year.

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issuing common shares during the period at a price above the then-current NAV per share.

During the fiscal years ended September 30, 2017 and 2016, the net dilution was a result of issuing common shares during the period at a price below the

then-current NAV per share.

During the fiscal year ended September 30, 2017, the net dilution was a result of issuing common shares during the period at a price below the then-current

NAV per share.

Represents the impact of the different share amounts (weighted average shares outstanding during the fiscal

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Had we not received any non-contractual, unconditional and irrevocable

credits of fees from the Adviser, the ratio of net expenses to average net assets would have been 14.36%, 14.18%, 13.12%, 12.14%, and 13.40% for the fiscal years ended September 30, 2020, 2019, 2018, 2017, and 2016, respectively.

credits of fees from the Adviser, the ratio of net expenses to average net assets would have been 13.17%, 14.36%, 14.18%, 13.12%, 12.14%, 13.40%, 13.65%, 11.88%, 10.18%, and 11.11% for the fiscal years ended September 30, 2021, 2020, 2019,

2018, 2017, 2016, 2015, 2014, 2013, and 2012, respectively.

Had we not received any non-contractual, unconditional and irrevocable

credits of fees from the Adviser, the ratio of net investment income to average net assets would have been 6.11%, 6.74%, 6.41%, 6.13%, and 6.90% for the fiscal years ended September 30, 2020, 2019, 2018, 2017, and 2016, respectively.

SELECTED QUARTERLY DATA (UNAUDITED)

Year Ended September 30, 2020

September 30,

Total investment income

Net investment income

Net increase (decrease) in net assets resulting from operations

Net increase (decrease) in net assets resulting from operations per weighted average common share

(basic and diluted)

Year Ended September 30, 2019

September 30,

Total investment income

Net investment income

Net increase (decrease) in net assets resulting from operations

Net increase (decrease) in net assets resulting from operations per weighted average common share

(basic and diluted)

credits of fees from the Adviser, the ratio of net investment income to average net assets would have been 6.40%, 6.11%, 6.74%, 6.41%, 6.13%, 6.90%, 5.55%, 6.37%, 8.90%, and 8.96% for the fiscal years ended September 30, 2021, 2020, 2019, 2018,

and 2017, 2016, 2015, 2014, 2013, and 2012, respectively.

UNCONSOLIDATED SIGNIFICANT SUBSIDIARIES

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We did not have any unconsolidated subsidiaries that met any of the significance conditions

under Rule 1-02(w)(2) of the SECs Regulation S-X as of or during the year ended September 30, 2020.

We had certain unconsolidated subsidiaries which met at

least one of the significance conditions under Rule 1-02(w) of the SECs Regulation S-X as of or during at least one of the years ended September 30, 2019 and

Accordingly, pursuant to Rule 4-08 of Regulation S-X, summarized, comparative financial information is presented below for our unconsolidated significant

subsidiaries as of September 30, 2020 and 2019 and for the years ended September 30, 2020, 2019, and 2018.

As of September 30,

For the Year Ended

September 30,

Portfolio Company

Balance Sheet

Income Statement

Defiance Integrated Technologies, Inc.

Current assets

Noncurrent assets

Current liabilities

Net (loss) income

Noncurrent liabilities

LWO Acquisitions Company LLC

Current assets

Noncurrent assets

Current liabilities

Net (loss) income

Noncurrent liabilities

under Rule 1-02(w)(2) of the SECs Regulation S-X as of or during at least one of the years ended September 30, 2021, 2020, and 2019.

SUBSEQUENT EVENTS

Portfolio Activity

In October 2021, we invested $26.3 million in Engineering Manufacturing Technologies, LLC through secured first lien debt and equity.

In November 2021, our investment in Medical Solutions Holdings, Inc.

paid off at par for net proceeds of $6.0 million.

In November 2021, our investment in Lignetics, Inc.

was sold, which resulted in success fee income of $1.6 million.

In connection with the sale, we

received net cash proceeds of approximately $47.2 million, including the repayment of our debt investment of $29.0 million at par.

In November 2021, our investment in Prophet Brand Strategy paid off at par for net proceeds of

$13.1 million.

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

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 the 2024 Notes with an aggregate principal amount outstanding of $38.8 million.

Distributions

In October 2020, our Board of

Directors declared the following monthly cash distributions to common stockholders:

In October 2021, our Board of Directors

declared the following monthly cash distributions to common stockholders:

October 22, 2021

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data