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INVESTMENTS | 12 Months Ended
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Mar. 31, 2024
Investments, Debt and Equity Securities [Abstract] |
INVESTMENTS | INVESTMENTS Fair Value In accordance with ASC 820, the fair value of our investments 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 identical financial instruments in active markets; •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. As of March 31, 2024 and 2023, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in Funko Acquisition Holdings, LLC (“Funko”), which was valued using Level 2 inputs. 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, 2024 and 2023, respectively. As of March 31, 2024 and 2023, our investments, by security type, at fair value were categorized as follows within the ASC 820 fair value hierarchy:
|  |  | 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, 2024: |  |  |  |  |  |  |  |
Secured first lien debt | $ | 474,856 |  |  | $ | — |  |  | $ | — |  |  |  | $ | 474,856 |
Secured second lien debt | 138,703 |  |  | — |  |  | — |  |  |  | 138,703 |
Preferred equity | 213,480 |  |  | — |  |  | — |  |  |  | 213,480 |
Common equity/equivalents | 93,465 |  |  | — |  |  | 18 |  | (A) |  | 93,447 |
Total Investments at March 31, 2024 | $ | 920,504 |  |  | $ | — |  |  | $ | 18 |  |  |  | $ | 920,486 |
|  |  | 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 |
(A)Fair value was determined based on the closing market price of shares of Funko, Inc. (our units in Funko can be 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 investments, valued using Level 3 inputs within the ASC 820 fair value hierarchy, and carried at fair value as of March 31, 2024 and 2023, by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type:
| Total Recurring Fair Value Measurements Reported in Consolidated Statements of Assets and Liabilities Valued Using Level 3 Inputs
| March 31,
| 2024 |  | 2023
Non-Control/Non-Affiliate Investments |  |  |
Secured first lien debt | $ | 324,348 |  |  | $ | 279,748 |
Secured second lien debt | 93,340 |  |  | 50,842 |
Preferred equity | 162,522 |  |  | 164,534 |
Common equity/equivalents(A) | 42,005 |  |  | 1,724 |
Total Non-Control/Non-Affiliate Investments | 622,215 |  |  | 496,848 |
Affiliate Investments |  |  |
Secured first lien debt | 147,603 |  |  | 157,769 |
Secured second lien debt | 45,363 |  |  | 24,892 |
Preferred equity | 50,958 |  |  | 58,051 |
Common equity/equivalents | 51,442 |  |  | 15,243 |
Total Affiliate Investments | 295,366 |  |  | 255,955 |
Control Investments |  |  |
Secured first lien debt | 2,905 |  |  | — |
Secured second lien debt | — |  |  | — |
Preferred equity | — |  |  | — |
Common equity/equivalents | — |  |  | 713 |
Total Control Investments | 2,905 |  |  | 713 |
Total investments at fair value using Level 3 inputs | $ | 920,486 |  |  | $ | 753,516 |
(A)Excludes our investment in Funko with a fair value of $18 thousand and $27 thousand as of March 31, 2024 and 2023, respectively, which was valued using Level 2 inputs. 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, 2024 and 2023. 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, 2024 |  | March 31, 2023 |  |  |  | March 31, 2024 |  | March 31, 2023
Secured first lien debt | $ | 474,856 |  |  | $ | 432,126 |  |  | TEV |  | EBITDA multiple |  | 4.2x – 8.8x / 6.4x |  | 4.4x – 7.7x / 6.4x
|  |  |  |  |  |  | EBITDA |  | $1,091 – $23,547 / $10,509 |  | $4,251 – $19,083 / $10,764
|  |  |  |  |  |  | Revenue multiple |  | 0.3x – 0.6x / 0.4x |  | 0.3x – 0.6x / 0.3x
|  |  |  |  |  |  | Revenue |  | $31,586 – $93,916 / $77,580 |  | $15,483 – $109,615 / $94,957
| — |  |  | 5,391 |  |  | Yield Analysis |  | Discount Rate |  | N/A |  | 19.4% – 19.9% / 19.7%
Secured second lien debt | 113,703 |  |  | 62,750 |  |  | TEV |  | EBITDA multiple |  | 5.1x – 15.0x / 7.0x |  | 5.4x – 6.6x / 6.2x
|  |  |  |  |  |  | EBITDA |  | $5,648 – $23,003 / $14,192 |  | $4,112 – $6,379 / $5,501
| 25,000 |  |  | 12,984 |  |  | Yield Analysis |  | Discount Rate |  | 13.8% – 13.8% / 13.8% |  | 14.0% – 14.0% / 14.0%
Preferred equity | 213,480 |  |  | 222,585 |  |  | TEV |  | EBITDA multiple |  | 4.2x – 8.8x / 6.1x |  | 4.4x – 7.7x / 5.9x
|  |  |  |  |  |  | EBITDA |  | $1,091 – $23,547 / $9,502 |  | $4,251 – $19,083 / $9,486
|  |  |  |  |  |  | Revenue multiple |  | 0.3x – 0.6x / 0.4x |  | 0.3x – 0.6x / 0.4x
|  |  |  |  |  |  | Revenue |  | $31,586 – $93,916 / $75,099 |  | $15,483 – $109,615 / $69,247
Common equity/equivalents(A) | 93,447 |  |  | 17,680 |  |  | TEV |  | EBITDA multiple |  | 5.0x – 15.0x / 6.4x |  | 4.7x – 7.2x / 6.4x
|  |  |  |  |  |  | EBITDA |  | $1,154 – $63,269 / $23,615 |  | $1,105 – $30,833 / $6,273
Total | $ | 920,486 |  |  | $ | 753,516 |  |  |  |  |  |  |  |  |
(A)Fair value as of both March 31, 2024 and 2023 excludes our investment in Funko with a fair value of $18 thousand and $27 thousand, respectively, which was valued using Level 2 inputs. 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. Changes in Level 3 Fair Value Measurements of Investments The following tables provide our portfolio’s changes in fair value, broken out by security type, during the years ended March 31, 2024 and 2023 for all investments for which the Adviser determines fair value using unobservable (Level 3) inputs. Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
| Secured First Lien Debt |  | Secured Second Lien Debt |  | Preferred Equity |  | Common Equity/ Equivalents |  | Total
Year ended March 31, 2024: |  |  |  |  |  |  |  |  |
Fair value as of March 31, 2023 | $ | 437,517 |  |  | $ | 75,734 |  |  | $ | 222,585 |  |  | $ | 17,680 |  |  | $ | 753,516 |
Total gain (loss): |  |  |  |  |  |  |  |  |
Net realized gain (loss)(A) | (4,550) |  |  | (3,200) |  |  | 36,833 |  |  | 881 |  |  | 29,964 |
Net unrealized appreciation (depreciation)(B) | (7,859) |  |  | (1,031) |  |  | 34,050 |  |  | 37,159 |  |  | 62,319 |
Reversal of previously recorded (appreciation) depreciation upon realization(B) | 3,212 |  |  | 3,200 |  |  | (35,329) |  |  | (92) |  |  | (29,009) |
New investments, repayments and settlements(C): |  |  |  |  |  |  |  |  |
Issuances / originations | 74,536 |  |  | 64,000 |  |  | 14,688 |  |  | 30,700 |  |  | 183,924 |
Settlements / repayments | (28,000) |  |  | — |  |  | — |  |  | — |  |  | (28,000) |
Sales(D) | — |  |  | — |  |  | (50,726) |  |  | (1,502) |  |  | (52,228) |
Transfers(E) | — |  |  | — |  |  | (8,621) |  |  | 8,621 |  |  | — |
Fair value as of March 31, 2024 | $ | 474,856 |  |  | $ | 138,703 |  |  | $ | 213,480 |  |  | $ | 93,447 |  |  | $ | 920,486 |
| 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 |
(A)Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the respective years ended March 31, 2024 and 2023. (B)Included in net unrealized appreciation (depreciation) of investments on our accompanying Consolidated Statements of Operations for the respective years ended March 31, 2024 and 2023. (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. (D)2024: Includes $0.3 million of proceeds from the recapitalization of Old World Christmas, Inc. ("Old World") 2023: Includes $13.4 million of proceeds from the recapitalization of Old World and $12.3 million of proceeds from the recapitalization of Horizon Facilities Services, Inc ("Horizon"). (E)2024: Transfers represent preferred equity of SFEG Holdings, Inc. ("SFEG") with a total cost basis and fair value of $4.8 million and $8.6 million, respectively, which was converted to common equity in October 2023. 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. Investment Activity During the fiscal year ended March 31, 2024, the following significant transactions occurred: •In May 2023, we invested $15.3 million in a new portfolio company, Home Concepts Acquisition, Inc. ("Home Concepts"), in the form of $12.0 million of secured first lien debt and $3.3 million of preferred equity. Home Concepts, headquartered in Santa Barbara, California, is a leading home improvement advertising publication focusing on connecting homeowners to high-quality residential repair and remodeling businesses. •In June 2023, we recapitalized our existing investment in Old World and invested an additional $2.5 million in the form of secured first lien debt. In connection with this investment, we received proceeds of $2.2 million, of which $1.9 million was recognized as dividend income and $0.3 million was recognized as a realized gain. •In June 2023, we invested an additional $30.0 million in the form of $25.0 million of secured second lien debt and $5.0 million of common equity in Nth Degree Investment Group, LLC ("Nth Degree") to fund an add-on acquisition. •In June 2023, we received a $1.5 million escrow settlement in connection with our December 2021 exit of SOG Specialty Knives & Tools, LLC, of which $0.6 million was recognized as a return of cost basis and $0.9 million as a realized gain. As a result of the escrow release, there are no remaining assets held by Gladstone SOG Investments, Inc. •In August 2023, we invested an additional $18.7 million in the form of secured first lien debt in Nocturne Luxury Villas, Inc. ("Nocturne") to fund an add-on acquisition. •In September 2023, we invested $46.0 million in a new portfolio company, The E3 Company, LLC ("E3"), in the form of $34.8 million of secured first lien debt and $11.2 million of preferred equity. E3, headquartered in Kilgore, Texas, is a market leader in advanced pressure management solutions for oil and gas well completions. •In October 2023, we invested an additional $64.7 million in the form of $39.0 million of secured second lien debt and $25.7 million of common equity in SFEG to fund an add-on acquisition. In connection with the investment, our existing preferred equity, with a cost basis of $4.8 million, was converted to common equity. •In October 2023, we exited our investment in Counsel Press, Inc., which resulted in success fee income of $1.4 million, a realized gain of $43.5 million and the repayment of our debt investment of $27.5 million at par. •In March 2024, we recognized a $14.7 million realized loss on our preferred and common equity investments and related first and second lien debt investments in The Mountain upon its liquidation and dissolution. Investment Concentrations As of March 31, 2024, our investment portfolio consisted of investments in 24 portfolio companies located in 18 states across 16 different industries with an aggregate fair value of $920.5 million. Our investments in SFEG, Nocturne, Nth Degree, Old World and Brunswick Bowling Products, Inc. represent our five largest portfolio investments at fair value, and collectively comprised $393.5 million, or 42.7%, of our total investment portfolio at fair value as of March 31, 2024. The following table summarizes our investments by security type as of March 31, 2024 and 2023:
| March 31, 2024 |  | March 31, 2023
| Cost |  | Fair Value |  | Cost |  | Fair Value
Secured first lien debt | $ | 513,425 |  |  | 60.1 | % |  | $ | 474,856 |  |  | 51.6 | % |  | $ | 471,439 |  |  | 65.4 | % |  | $ | 437,517 |  |  | 58.1 | %
Secured second lien debt | 144,958 |  |  | 16.9 | % |  | 138,703 |  |  | 15.0 | % |  | 84,158 |  |  | 11.7 | % |  | 75,734 |  |  | 10.1 | %
Total debt | 658,383 |  |  | 77.0 | % |  | 613,559 |  |  | 66.6 | % |  | 555,597 |  |  | 77.1 | % |  | 513,251 |  |  | 68.2 | %
Preferred equity | 145,070 |  |  | 17.0 | % |  | 213,480 |  |  | 23.2 | % |  | 149,099 |  |  | 20.7 | % |  | 222,585 |  |  | 29.5 | %
Common equity/equivalents | 50,837 |  |  | 6.0 | % |  | 93,465 |  |  | 10.2 | % |  | 15,934 |  |  | 2.2 | % |  | 17,707 |  |  | 2.3 | %
Total equity/equivalents | 195,907 |  |  | 23.0 | % |  | 306,945 |  |  | 33.4 | % |  | 165,033 |  |  | 22.9 | % |  | 240,292 |  |  | 31.8 | %
Total investments | $ | 854,290 |  |  | 100.0 | % |  | $ | 920,504 |  |  | 100.0 | % |  | $ | 720,630 |  |  | 100.0 | % |  | $ | 753,543 |  |  | 100.0 | %
Investments at fair value consisted of the following industry classifications as of March 31, 2024 and 2023:
| March 31, 2024 |  | March 31, 2023
| Fair Value |  | Percentage of Total Investments |  | Fair Value |  | Percentage of Total Investments
Diversified/Conglomerate Services | $ | 264,535 |  |  | 28.7 | % |  | $ | 268,954 |  |  | 35.7 | %
Home and Office Furnishings, Housewares, and Durable Consumer Products | 160,038 |  |  | 17.3 | % |  | 143,685 |  |  | 19.1 | %
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) | 92,781 |  |  | 10.1 | % |  | 20,088 |  |  | 2.7 | %
Hotels, Motels, Inns, and Gaming | 77,366 |  |  | 8.4 | % |  | 58,713 |  |  | 7.8 | %
Buildings and Real Estate | 60,431 |  |  | 6.6 | % |  | 60,571 |  |  | 8.0 | %
Oil and Gas | 51,171 |  |  | 5.6 | % |  | — |  |  | — | %
Healthcare, Education, and Childcare | 49,638 |  |  | 5.4 | % |  | 37,445 |  |  | 5.0 | %
Leisure, Amusement, Motion Pictures, and Entertainment | 39,350 |  |  | 4.3 | % |  | 47,616 |  |  | 6.3 | %
Mining, Steel, Iron and Non-Precious Metals | 30,537 |  |  | 3.3 | % |  | 25,998 |  |  | 3.5 | %
Aerospace and Defense | 29,064 |  |  | 3.2 | % |  | 22,215 |  |  | 2.8 | %
Chemicals, Plastics, and Rubber | 20,363 |  |  | 2.2 | % |  | 24,891 |  |  | 3.3 | %
Printing and Publishing | 14,238 |  |  | 1.5 | % |  | — |  |  | — | %
Cargo Transport | 13,500 |  |  | 1.5 | % |  | 14,707 |  |  | 2.0 | %
Telecommunications | 9,002 |  |  | 1.0 | % |  | 18,987 |  |  | 2.5 | %
Other < 2.0% | 8,490 |  |  | 0.9 | % |  | 9,673 |  |  | 1.3 | %
Total investments | $ | 920,504 |  |  | 100.0 | % |  | $ | 753,543 |  |  | 100.0 | %
Investments at fair value were included in the following geographic regions of the U.S. as of March 31, 2024 and 2023:
|  | March 31, 2024 |  | March 31, 2023
Location |  | Fair Value |  | Percentage of Total Investments |  | Fair Value |  | Percentage of Total Investments
South |  | $ | 346,838 |  |  | 37.7 | % |  | $ | 171,056 |  |  | 22.7 | %
West |  | 223,871 |  |  | 24.3 | % |  | 197,989 |  |  | 26.3 | %
Northeast |  | 207,870 |  |  | 22.6 | % |  | 266,612 |  |  | 35.4 | %
Midwest |  | 141,925 |  |  | 15.4 | % |  | 117,886 |  |  | 15.6 | %
Total investments |  | $ | 920,504 |  |  | 100.0 | % |  | $ | 753,543 |  |  | 100 | %
The geographic region indicates the location of the headquarters for our portfolio companies. A portfolio company may have additional business locations in other geographic regions. Investment Principal Repayments The following table summarizes the contractual principal repayment and maturity of our investment portfolio for the next five fiscal years and thereafter, assuming no voluntary prepayments, as of March 31, 2024:
|  |  |  | Amount
For the fiscal years ending March 31: |  | 2025 |  | $ | 72,770 |
|  | 2026 |  | 236,193 |
|  | 2027 |  | 185,776 |
|  | 2028 |  | 38,250 |
|  | 2029 |  | 100,394 |
|  | Thereafter |  | 25,000 |
|  | Total contractual repayments |  | $ | 658,383 |
|  | Investments in equity securities |  | 195,907 |
|  | Total cost basis of investments held as of March 31, 2024: |  | $ | 854,290 |
Receivables from Portfolio Companies 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, 2024 and 2023, we had gross receivables from portfolio companies of $2.2 million. As of March 31, 2024 and 2023, the allowance for uncollectible receivables was $1.4 million and $1.6 million, respectively.

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