In accordance with ASC 820, we determine the fair value of our investments 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 2 — inputs to the valuation methodology include quoted prices for similar financial instruments in active or inactive markets, and inputs that are observable for the financial instrument, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists, or instances where prices vary substantially over time or among brokered market makers; and

•Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs are those inputs that reflect assumptions that market participants would use when pricing the financial instrument and can include the Valuation Team’s assumptions based upon the best available information.

When a determination is made to classify our investments within Level 3 of the valuation hierarchy, such determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable, or Level 3, inputs, observable inputs (or components that are actively quoted and can be validated to external sources). The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

We transfer investments in and out of Level 1, 2 and 3 of the valuation hierarchy as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period. There were no transfers in or out of Level 1, 2 and 3 during the years ended March 31, 2023 and 2022, respectively.


			Fair Value Measurements

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
As of March 31, 2023:
Secured first lien debt	$	437,517	$	—	$	—		$	437,517
Secured second lien debt	75,734		—		—			75,734
Preferred equity	222,585		—		—			222,585
Common equity/equivalents	17,707		—		27		(A)	17,680
Total Investments at March 31, 2023	$	753,543	$	—	$	27		$	753,516


			Fair Value Measurements

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
As of March 31, 2022:
Secured first lien debt	$	425,087	$	—	$	—		$	425,087
Secured second lien debt	67,958		—		—			67,958
Preferred equity	217,599		—		—			217,599
Common equity/equivalents	3,752		—		74		(A)	3,678
Total Investments at March 31, 2022	$	714,396	$	—	$	74		$	714,322


	Total Recurring Fair Value Measurements Reported in Consolidated Statements of Assets and Liabilities Valued Using Level 3 Inputs
	March 31,
	2023		2022
Non-Control/Non-Affiliate Investments
Secured first lien debt	$	279,748	$	233,673
Secured second lien debt	50,842		66,917
Preferred equity	164,534		139,927
Common equity/equivalents(A)	1,724		1,533
Total Non-Control/Non-Affiliate Investments	496,848		442,050

Affiliate Investments
Secured first lien debt	157,769		191,414
Secured second lien debt	24,892		1,041
Preferred equity	58,051		77,672
Common equity/equivalents	15,243		1,432
Total Affiliate Investments	255,955		271,559

Control Investments
Secured first lien debt	—		—
Secured second lien debt	—		—
Preferred equity	—		—
Common equity/equivalents	713		713
Total Control Investments	713		713

Total investments at fair value using Level 3 inputs	$	753,516	$	714,322

In accordance with ASC 820, the following table provides quantitative information about our investments valued using Level 3 fair value measurements as of March 31, 2023 and 2022. The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements. The weighted-average calculations in the table below are based on the principal balances for all debt-related calculations and on the cost basis for all equity-related calculations for the particular input.

Quantitative Information about Level 3 Fair Value Measurements

Fair Value as of

Valuation

Technique/

Methodology

Unobservable
Input

Range / Weighted-Average as of

March 31, 2023

March 31, 2022

March 31, 2023

March 31, 2022

Secured first lien debt

432,126

411,023

TEV

EBITDA multiple

4.4x – 7.7x /

6.4x

3.4x – 9.3x /

7.0x

EBITDA

$4,251 – $19,083 /

$10,764

$3,990 – $13,707 /

$8,221

Revenue multiple

0.3x – 0.6x /

0.3x

0.7x – 0.7x /

0.7x

Revenue

$15,483 – $109,615 /

$94,957

$14,072 – $14,072 / $14,072

5,391

14,064

Yield Analysis

Discount Rate

19.4% – 19.9% / 19.7%

11.3% – 15.2% /

14.6%

Secured second lien debt

62,750

39,637

TEV

EBITDA multiple

5.4x – 6.6x /

6.2x

5.6x – 6.8x /

6.0x

EBITDA

$4,112 – $6,379 /

$5,501

$3,953 – $5,488 /

$4,959

Revenue multiple

N/A

0.7x – 0.7x /

0.7x

Revenue

N/A

$14,072 – $14,072 /

$14,072

12,984

28,321

Yield Analysis

Discount Rate

14.0% – 14.0% /

14.0%

10.0% – 12.2% /

11.6%

Preferred equity

222,585

217,599

TEV

EBITDA multiple

4.4x – 7.7x /

5.9x

3.4x – 9.3x /

6.8x

EBITDA

$4,251 – $19,083 /

$9,486

$1,210 – $13,707 /

$6,926

Revenue multiple

0.3x – 0.6x /

0.4x

0.7x – 0.7x /

0.7x

Revenue

$15,483 – $109,615 /

$69,247

$14,072 – $14,072 /

$14,072

Common equity/equivalents(A)

17,680

3,678

TEV

EBITDA multiple

4.7x – 7.2x /

6.4x

4.8x – 8.4x /

5.8x

EBITDA

$1,105 – $30,833 /

$6,273

$829 – $13,707 /

$5,709

Revenue multiple

N/A

0.7x – 0.7x /

0.7x

Revenue

N/A

$14,072 – $14,072 /

$14,072

Total

753,516

714,322

Fair value measurements can be sensitive to changes in one or more of the valuation inputs. Changes in discount rates, EBITDA, or EBITDA multiples (or revenue or revenue multiples), each in isolation, may change the fair value of certain of our investments. Generally, an increase/(decrease) in discount rates or a (decrease)/increase in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a (decrease)/increase in the fair value of certain of our investments.


	Secured First Lien Debt		Secured Second Lien Debt		Preferred Equity		Common Equity/ Equivalents		Total
Year ended March 31, 2023:
Fair value as of March 31, 2022	$	425,087	$	67,958	$	217,599	$	3,678	$	714,322
Total gain (loss):
Net realized gain (loss)(A)	—		(10,000)		20,778		—		10,778
Net unrealized appreciation (depreciation)(B)	(29,552)		(5,235)		11,216		13,622		(9,949)
Reversal of previously recorded (appreciation) depreciation upon realization(B)	—		10,001		(12,250)		—		(2,249)
New investments, repayments and settlements(C):
Issuances / originations	107,200		5,188		21,000		380		133,768
Settlements / repayments	(50,800)		(6,596)		—		—		(57,396)
Sales(D)	—		—		(35,758)		—		(35,758)
Transfers(E)	(14,418)		14,418		—		—		—
Fair value as of March 31, 2023	$	437,517	$	75,734	$	222,585	$	17,680	$	753,516


	Secured First Lien Debt		Secured Second Lien Debt		Preferred Equity		Common Equity/ Equivalents		Total
Year ended March 31, 2022:
Fair value as of March 31, 2021	$	368,688	$	102,897	$	159,478	$	2,671	$	633,734
Total gain (loss):
Net realized gain (loss)(A)	(10,000)		—		23,725		—		13,725
Net unrealized appreciation (depreciation)(B)	756		2,956		111,405		(15,027)		100,090
Reversal of previously recorded (appreciation) depreciation upon realization(B)	860		—		(26,053)		—		(25,193)
New investments, repayments and settlements(C):
Issuances / originations	68,638		9,648		14,472		—		92,758
Settlements / repayments	(48,898)		(2,500)		—		—		(51,398)
Sales	—		—		(49,394)		—		(49,394)
Transfers(E)	45,043		(45,043)		(16,034)		16,034		—
Fair value as of March 31, 2022	$	425,087	$	67,958	$	217,599	$	3,678	$	714,322

(C)Includes increases in the cost basis of investments resulting from new portfolio investments, the amortization of discounts, and other non-cash disbursements to portfolio companies, as well as decreases in the cost basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs, and other cost-basis adjustments.

(E)2023: Transfers include (1) secured second lien debt of Ginsey with a total cost basis and fair value of $12.2 million, which was converted into secured first lien debt in August 2022 and (2) secured first lien debt of PSI Molded Plastics, Inc. with a total cost basis and fair value of $26.6 million, which was converted into secured second lien debt in September 2022.

2022: Transfers represent (1) secured second lien debt of J.R. Hobbs with a total cost basis and fair value of $52.5 million and $$52.4 million, respectively, which was converted into secured first lien debt in June 2021, (2) secured first lien debt of D.P.M.S., Inc. ("Danco") with a total cost basis and fair value of $12.3 million and $7.3 million, respectively, which was converted into secured second lien debt of Galaxy Technologies Holdings, Inc. (“Galaxy Technologies Holdings”) in September 2021, (3) preferred equity of Galaxy Technologies, Inc. ("Galaxy") with a total cost basis and fair value of $11.5 million and $16.0 million, respectively, which was converted into common equity of Galaxy Technologies Holdings in September 2021 and (4) preferred equity of SOG Specialty Knives & Tools, LLC with a total cost and fair value of $0.6 million and $0.0 million, respectively, which was converted into common equity of Gladstone SOG Investments, Inc. in December 2021.

•In June 2022, we exited our investment in Bassett Creek Services, Inc. ("Bassett Creek"), which resulted in success fee income of $3.0 million and a realized gain on preferred equity of $4.7 million. In connection with the sale, we received net cash proceeds of $57.6 million, including the repayment of our debt investment of $48.0 million at par.

•In June 2022, we invested $21.0 million in a new portfolio company, Dema/Mai Holdings, Inc. (“Dema/Mai”), in the form of preferred equity to acquire Mai Mechanical, LLC, a leading provider of plumbing and mechanical services focused on multi-family residential construction headquartered in Denver, Colorado, from J.R. Hobbs, an existing portfolio company. In July 2022, we invested an additional $39.1 million in the form of secured first lien debt in Dema/Mai to fund the acquisition of Dema Plumbing, a plumbing and mechanical systems installation and service provider to single-family residential homebuilders.

•In July 2022, we recapitalized our investment in Horizon and invested an additional $30.0 million in the form of secured first lien debt. In connection with this investment, we received equity proceeds of $12.3 million, which were recognized as a $10.1 million return of preferred equity cost basis and a realized gain of $2.2 million, as well as dividend income of $3.1 million and success fee income of $1.7 million.

•In August 2022, in conjunction with a refinancing at Ginsey, our $13.3 million secured second lien debt investment was reduced to $12.2 million and converted to secured first lien debt. The reduction in our cost basis was the result of a $5.1 million payment made by Ginsey to extinguish our secured borrowing liability, which was partially offset by an additional investment in Ginsey of $4.0 million. Refer to Note 5 - Borrowings for discussion of the secured borrowing liability.

•In November 2022, our $1.5 million secured second lien debt investment in Country Club Enterprises, LLC ("CCE") was repaid at par. In connection with the repayment, we received success fee income of $1.1 million and our $1.0 million guaranty was released. Refer to Note 11 - Commitments and Contingencies for discussion of the guaranty.

•In December 2022, we recapitalized our investment in Old World and invested an additional $15.5 million in the form of secured first lien debt. In connection with this investment, we received proceeds of $17.9 million, of which $13.4 million was recognized as a realized gain and $4.5 million was recognized as dividend income.

•In December 2022, we replaced our previously outstanding secured second lien term loan and secured second lien delayed draw term loan to The Mountain with a total aggregate cost basis of $13.2 million with a new $3.2 million secured second lien term loan, which resulted in a realized loss of $10.0 million.

As of March 31, 2023, our investment portfolio consisted of investments in 25 portfolio companies located in 19 states across 14 different industries with an aggregate fair value of $753.5 million. Our investments in Old World, Horizon, Dema/Mai, Nocturne, and Brunswick Bowling Products, Inc., represent our five largest portfolio investments at fair value, and collectively comprised $322.3 million, or 42.8%, of our total investment portfolio at fair value as of March 31, 2023.


	March 31, 2023								March 31, 2022
	Cost				Fair Value				Cost				Fair Value
Secured first lien debt	$	471,439	65.4	%	$	437,517	58.1	%	$	429,457	64.2	%	$	425,087	59.5	%
Secured second lien debt	84,158		11.7	%	75,734		10.1	%	81,147		12.1	%	67,958		9.5	%
Total debt	555,597		77.1	%	513,251		68.2	%	510,604		76.3	%	493,045		69.0	%

Preferred equity	149,099		20.7	%	222,585		29.5	%	143,079		21.4	%	217,599		30.5	%
Common equity/equivalents	15,934		2.2	%	17,707		2.3	%	15,565		2.3	%	3,752		0.5	%
Total equity/equivalents	165,033		22.9	%	240,292		31.8	%	158,644		23.7	%	221,351		31.0	%
Total investments	$	720,630	100.0	%	$	753,543	100.0	%	$	669,248	100.0	%	$	714,396	100.0	%


	March 31, 2023				March 31, 2022
	Fair Value		Percentage of Total Investments		Fair Value		Percentage of Total Investments
Diversified/Conglomerate Services	$	268,954	35.7	%	$	307,403	43.0	%
Home and Office Furnishings, Housewares, and Durable Consumer Products	143,685		19.1	%	125,440		17.6	%
Buildings and Real Estate	60,571		8.0	%	—		—	%
Hotels, Motels, Inns, and Gaming	58,713		7.8	%	37,923		5.3	%
Leisure, Amusement, Motion Pictures, and Entertainment	47,616		6.3	%	46,514		6.5	%
Healthcare, Education, and Childcare	37,445		5.0	%	39,252		5.5	%
Mining, Steel, Iron and Non-Precious Metals	25,998		3.5	%	24,250		3.4	%
Chemicals, Plastics, and Rubber	24,891		3.3	%	26,618		3.7	%
Aerospace and Defense	22,215		2.8	%	25,296		3.5	%
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic)	20,088		2.7	%	13,823		1.9	%
Telecommunications	18,987		2.5	%	32,467		4.6	%
Cargo Transport	14,707		2.0	%	14,533		2.0	%
Diversified/Conglomerate Manufacturing	9,646		1.3	%	14,064		2.0	%
Other < 2.0%	27		0.0	%	6,813		1.0	%
Total investments	$	753,543	100.0	%	$	714,396	100.0	%


	March 31, 2023				March 31, 2022
Location	Fair Value		Percentage of Total Investments		Fair Value		Percentage of Total Investments
Northeast	$	266,612	35.4	%	$	194,100	27.2	%
West	197,989		26.3	%	158,607		22.2	%
South	171,056		22.7	%	188,978		26.4	%
Midwest	117,886		15.6	%	172,711		24.2	%
Total investments	$	753,543	100.0	%	$	714,396	100	%

Receivables from portfolio companies represent non-recurring costs that we incurred on behalf of portfolio companies. Such receivables, net of any allowance for uncollectible receivables, are included in Other assets, net on our accompanying Consolidated Statements of Assets and Liabilities. We generally maintain an allowance for uncollectible receivables from portfolio companies when the receivable balance becomes 90 days or more past due or if it is determined, based upon management’s judgment, that the portfolio company is unable to pay its obligations. We write-off accounts receivable when we have exhausted collection efforts and have deemed the receivables uncollectible. As of March 31, 2023 and 2022, we had gross receivables from portfolio companies of $2.2 million and $1.7 million, respectively. As of March 31, 2023 and 2022, the allowance for uncollectible receivables was $1.6 million and $1.3 million, respectively.