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glad:DebtSecuritiesSecuredFirstLienDebtMember glad:PersonalAndNonDurableConsumerProductsManufacturingOnlyMember us-gaap:InvestmentAffiliatedIssuerControlledMember 2024-10-01 2025-09-30 0001143513 TNCP Intermediate HoldCo, LLC – Line of Credit 2024-10-01 2025-09-30 0001143513 us-gaap:InvestmentAffiliatedIssuerControlledMember glad:DebtSecuritiesSecuredFirstLienDebtMember 2024-10-01 2025-09-30 0001143513 Defiance Integrated Technologies, Inc.—Term Debt 2024-10-01 2025-09-30 0001143513 Defiance Integrated Technologies, Inc.—Term Debt 2024-09-30 0001143513 Alsay Incorporated – Term Debt 2024-10-01 2025-09-30 0001143513 Alsay Incorporated – Term Debt 2024-09-30 0001143513 us-gaap:InvestmentAffiliatedIssuerControlledMember glad:DebtSecuritiesSecuredSecondLienDebtMember 2024-10-01 2025-09-30 0001143513 Technical Resource Management, LLC – Term Debt 2024-10-01 2025-09-30 0001143513 Technical Resource Management, LLC – Term Debt 2024-09-30 0001143513 Alsay Incorporated – Preferred Stock 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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________
FORM 10-K
__________________________
(Mark One)

x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2025
OR

o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________
Commission file number 814-00237
__________________________
GLADSTONE CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
__________________________

Maryland | 54-2040781
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
1521 Westbranch Drive, Suite 100 McLean, Virginia | 22102
(Address of principal executive offices) | (Zip Code)

(703) 287-5800
(Registrant’s telephone number, including area code)
__________________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Symbol |  | Name of each exchange on which registered
Common Stock, $0.001 par value per share |  | GLAD |  | The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:
6.25% Series A Cumulative Redeemable Preferred Stock, par value $0.001 per share
__________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | o | Accelerated filer | o
Non-accelerated filer | x | Smaller reporting company | o
Emerging growth company | o |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report o
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12 b-2 of the Act). Yes o No x.
The aggregate market value of the voting common stock held by non-affiliates of the Registrant on March 31, 2025, based on the closing price on that date of $27.46 per share on the Nasdaq Global Select Market was $589,377,217. For the purposes of calculating this amount only, all directors and executive officers of the Registrant have been treated as affiliates. There were 22,593,069 shares of the Registrant’s common stock, $0.001 par value per share, outstanding as of November 14, 2025.
Documents Incorporated by Reference. Portions of the Registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the Registrant’s 2026 Annual Meeting of Stockholders, which will be filed subsequent to the date hereof, are incorporated by reference into Part III of this Form 10-K. Such proxy statement will be filed with the Securities and Exchange Commission not later than 120 days following the end of the Registrant’s fiscal year ended September 30, 2025.

Table of Contents
GLADSTONE CAPITAL CORPORATION
FORM 10-K FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 2025
TABLE OF CONTENTS

PART I | ITEM 1 | Business | 3
| ITEM 1A | Risk Factors | 21
| ITEM 1B | Unresolved Staff Comments | 48
| ITEM 1C | Cybersecurity | 48
| ITEM 2 | Properties | 50
| ITEM 3 | Legal Proceedings | 50
| ITEM 4 | Mine Safety Disclosures | 50
PART II | ITEM 5 | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 51
| ITEM 6 | Reserved | 59
| ITEM 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 59
| ITEM 7A | Quantitative and Qualitative Disclosures About Market Risk | 75
| ITEM 8 | Financial Statements and Supplementary Data | 77
| ITEM 9 | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 130
| ITEM 9A | Controls and Procedures | 130
| ITEM 9B | Other Information | 130
| ITEM 9C | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 130
PART III | ITEM 10 | Directors, Executive Officers and Corporate Governance | 131
| ITEM 11 | Executive Compensation | 131
| ITEM 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 131
| ITEM 13 | Certain Relationships and Related Transactions, and Director Independence | 131
| ITEM 14 | Principal Accountant Fees and Services | 131
PART IV | ITEM 15 | Exhibits and Financial Statement Schedules | 132
| ITEM 16 | Form 10-K Summary | 135
SIGNATURES | 136

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FORWARD-LOOKING STATEMENTS
All statements contained herein, other than historical facts, may constitute “forward-looking statements.” These statements may relate to, among other things, our future operating results, our business prospects and the prospects of our portfolio companies, actual and potential conflicts of interest with Gladstone Management Corporation (the “Adviser”), our investment adviser, and its affiliates, the use of borrowed money to finance our investments, the adequacy of our financing sources and working capital, and our ability to co-invest, among other factors. In some cases, you can identify forward-looking statements by terminology such as “estimate,” “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “project,” “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,” “potential,” “likely” or the negative or variations of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Such factors include: (1) changes in the economy and the capital markets, including stock price volatility, inflation, changing interest rates, tariffs and trade wars and risks of recession; (2) risks associated with negotiation and consummation of pending and future transactions; (3) the loss of one or more of our executive officers, in particular David Gladstone or Robert L. Marcotte; (4) changes in our investment objectives and strategy; (5) availability, terms (including the possibility of interest rate volatility) and deployment of capital; (6) changes in our industry, interest rates, exchange rates or the general economy; (7) our business prospects and the prospects of our portfolio companies; (8) the degree and nature of our competition; (9) changes in governmental regulation, tax rates and similar matters; (10) our ability to exit investments in a timely manner; (11) our ability to maintain our qualification as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”); and (12) those factors described herein, including Item 1A. “Risk Factors,” of this Annual Report on Form 10-K (this “Annual Report”). We caution readers not to place undue reliance on any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements and future results could differ materially from historical performance. We have based forward-looking statements on information available to us on the date of this Annual Report. Except as required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Annual Report. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the U.S. Securities and Exchange Commission’s (“SEC”) from time to time, including quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements contained in this Annual Report are excluded from the safe harbor protection provided by the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”).
In this Annual Report, the “Company, ” “we, ” “us, ” and “our” refer to Gladstone Capital Corporation and its wholly-owned subsidiaries unless the context otherwise indicates. Dollar amounts in tables, except per share amounts, are in thousands unless otherwise indicated.
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PART I
The information contained in this section should be read in conjunction with our accompanying Consolidated Financial Statements and the notes thereto appearing elsewhere in this Annual Report.
ITEM 1. BUSINESS
Overview
Organization
Gladstone Capital Corporation was incorporated under the Maryland General Corporation Law on May 30, 2001. We are an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a BDC under the 1940 Act. In addition, we have elected to be treated for tax purposes as a RIC under the Code. We were established for the purpose of investing in debt and equity securities of established private businesses operating in the United States (“U.S.”).
Shares of our common stock trade on the Nasdaq Global Select Market (“Nasdaq”) under the trading symbol “GLAD”. Our 6.25% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”), our 3.75% notes due 2027 (the “2027 Notes”), and our 5.875% Convertible Notes due 2030 (the “2030 Convertible Notes”) are not listed or traded on any exchange or automated quotation system.
The outstanding shares and per share amounts of the Company’s common stock in this Annual Report have been retroactively adjusted for the 1-for-2 reverse stock split (the “Reverse Stock Split”) effected on April 4, 2024 (effective April 5, 2024 for trading purposes) for all activity prior to that date, unless stated otherwise.
Investment Adviser and Administrator
We are externally managed by the Adviser, an investment adviser registered with the SEC and an affiliate of ours, pursuant to an investment advisory and management agreement (as amended and/or restated from time to time, the “Advisory Agreement”). We have also entered into an administration agreement with Gladstone Administration, LLC (the “Administrator”), an affiliate of ours and the Adviser, whereby we pay separately for administrative services (the “Administration Agreement”). Each of the Adviser and the Administrator are privately-held companies that are indirectly owned by David Gladstone, our chairman and chief executive officer. Mr. Gladstone also serves on the board of directors of the Adviser, the board of managers of the Administrator, and as an executive officer of the Adviser and the Administrator. The Administrator employs, among others, our chief financial officer and treasurer, chief valuation officer, chief compliance officer, chief administrative officer, co-general counsels and co-secretaries (one of whom also serves as the president of the Administrator) and their respective staffs. The Adviser and Administrator have extensive experience in our lines of business and also provide investment advisory and administrative services, respectively, to our affiliates, including: Gladstone Commercial Corporation (“Gladstone Commercial”), a publicly-traded real estate investment trust; Gladstone Investment Corporation (“Gladstone Investment”), a publicly-traded BDC and RIC; Gladstone Land Corporation, a publicly-traded real estate investment trust (“Gladstone Land”); and Gladstone Alternative Income Fund, a registered, non-diversified, closed-end management investment company that operates as an interval fund (“Gladstone Alternative,” with “Gladstone Land,” “Gladstone Commercial,” and “Gladstone Investment,” collectively the “Affiliated Public Funds”). In the future, the Adviser and Administrator may provide investment advisory and administrative services, respectively, to other funds and companies, both public and private.
The Adviser was organized as a corporation under the laws of the State of Delaware on July 2, 2002, and is an SEC registered investment adviser under the Investment Advisors Act of 1940, as amended. The Administrator was organized as a limited liability company under the laws of the State of Delaware on March 18, 2005. The Adviser and Administrator are headquartered in McLean, Virginia, a suburb of Washington, D.C., at 1521 Westbranch Drive, McLean, Virginia 22102. The Adviser also has offices in other states.
Investment Objectives and Strategy
Our investment objectives are to: (1) achieve and grow current income by investing in debt securities of established lower middle market companies (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $3 million to $25 million) in the U.S. that we believe will provide stable earnings and cash flow to pay expenses, make principal and interest payments on our outstanding indebtedness, and make distributions to stockholders; and (2) provide our stockholders with long-term capital appreciation in the value of our assets
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by investing in equity securities, in connection with our debt investments, that we believe can grow over time to permit us to sell our equity investments for capital gains. To achieve our objectives, our primary investment strategy is to invest in several categories of debt and equity securities, with each investment generally ranging from $8 million to $40 million, although investment size may vary, depending upon our total assets or available capital at the time of investment. We lend to borrowers that need funds for growth capital, to finance acquisitions, or to recapitalize or refinance their existing debt facilities. We seek to avoid investing in high-risk, early-stage enterprises. Our targeted portfolio companies are generally considered too small for the larger capital marketplace. We expect that our investment portfolio over time will consist of approximately 90.0% debt investments and 10.0% equity investments, at cost. As of September 30, 2025, our investment portfolio was made up of approximately 90.9% debt investments and 9.1% equity investments, at cost.
We invest by ourselves or jointly with other funds and/or management of the portfolio company, depending on the opportunity. In July 2012, the SEC granted us an exemptive order (the “Co-Investment Order”) that expanded our ability to co-invest, under certain circumstances, with certain of our affiliates, including Gladstone Investment, Gladstone Alternative and any future BDC or registered closed-end management investment company that is advised (or sub-advised if it controls the fund) by the Adviser, or any combination of the foregoing, subject to the conditions in the Co-Investment Order. In September 2025, the SEC granted us a new Co-Investment Order that contains a more flexible requirement that allocations be “fair and equitable” to us and that the Adviser consider the interests of us in allocations and which minimizes certain board approval requirements from the prior Co-Investment Order. We believe the Co-Investment Order has enhanced and will continue to enhance our ability to further our investment objectives and strategies. If we are participating in an investment with one or more co-investors, whether or not an affiliate of ours, our investment is likely to be smaller than if we were investing alone.
In general, our investments in debt securities have a term of no more than seven years, accrue interest at variable rates (generally based on one-month term Secured Overnight Financing Rate (“SOFR”) and, to a lesser extent, at fixed rates. We seek debt instruments that pay interest monthly or, at a minimum, quarterly, may have a success fee or deferred interest provision and are primarily interest only, with all principal and any accrued but unpaid interest due at maturity. Generally, success fees accrue at a set rate and are contractually due upon a change of control of a portfolio company, typically from an exit or sale. Some debt securities have deferred interest whereby some portion of the interest payment is added to the principal balance so that the interest is paid, together with the principal, at maturity. This form of deferred interest is often called paid-in-kind (“PIK”) interest.
Typically, our equity investments consist of common stock, preferred stock, limited liability company interests, or warrants to purchase the foregoing. Often, these equity investments occur in connection with our original investment, recapitalizing a business, or refinancing existing debt.
Since our initial public offering in 2001 and through September 30, 2025, we have invested in approximately 292 different companies. We expect that our investment portfolio will primarily include the following three categories of investments in private companies operating in the U.S.:
•Secured First Lien Debt Securities: We seek to invest a portion of our assets in secured first lien debt securities also known as senior loans, senior term loans, lines of credit and senior notes. Using its assets as collateral, the borrower typically uses first lien debt to cover a substantial portion of the funding needs of the business. These debt securities usually take the form of first priority liens on all, or substantially all, of the assets of the business. First lien debt securities may include investments sourced from the syndicated loan market.
•Secured Second Lien Debt Securities: We seek to invest a portion of our assets in secured second lien debt securities, also known as subordinated loans, subordinated notes and mezzanine loans. These secured second lien debt securities rank junior to the secured borrowers’ first lien debt securities and may be secured by second priority liens on all or a portion of the assets of the business. Additionally, we may receive other yield enhancements in addition to or in lieu of success fees such as warrants to buy common and preferred stock or limited liability interests in connection with these second lien secured debt securities. Second lien debt securities may include investments sourced from the syndicated loan market.
•Preferred and Common Equity/Equivalents: In some cases we will purchase equity securities which consist of preferred and common equity or limited liability company interests, or warrants or options to acquire such securities, and are in combination with our debt investment in a business. Additionally, we may receive equity investments derived from restructurings on some of our existing debt investments. In some cases, we will own a significant portion of the equity and in other cases we may have voting control of the businesses in which we invest.
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Under the 1940 Act, we may not acquire any asset other than assets of the type listed in Section 55 of the 1940 Act, which are referred to as “qualifying assets” and generally include each of the investment types listed above, unless, at the time the acquisition is made, qualifying assets (other than certain assets related to our operations) represent at least 70.0% of our total assets. See “—Regulation as a BDC — Qualifying Assets.”
We expect that most, if not all, of the debt securities we acquire will not be rated by a credit rating agency. Investors should assume that these loans would be rated below “investment grade” quality. Investments rated below investment grade are often referred to as high yield securities or junk bonds and may be considered higher risk, as compared to investment-grade debt instruments. In addition, many of the debt securities we hold may not amortize prior to maturity.
Investment Policies
We seek to achieve a high level of current income and capital gains through investments in debt securities and preferred or common stock that we generally acquire in connection with buyouts and other recapitalizations. The following investment policies, along with these investment objectives, may not be changed without the approval of our board of directors (the “Board of Directors”):
•We will at all times conduct our business so as to retain our status as a BDC. See “—Regulation as a BDC — Qualifying Assets.”
•We will at all times endeavor to conduct our business so as to retain our status as a RIC under the Code. See “—Material U.S. Federal Income Tax Considerations.”
With the exception of our policy to conduct our business as a BDC, these policies are not fundamental and may be changed without stockholder approval.
Investment Concentrations
As of September 30, 2025, our investment portfolio consisted of investments in 55 companies located in 22 states across 16 different industries, with an aggregate fair value of $859.1 million. The five largest investments at fair value as of September 30, 2025, totaled $196.5 million, or 22.9% of our total investment portfolio.
The following table outlines our investments by security type as of September 30, 2025 and 2024:

| September 30, 2025 |  | September 30, 2024
| Cost |  | Fair Value |  | Cost |  | Fair Value
Secured first lien debt | $ | 646,131 |  |  | 73.7 | % |  | $ | 622,371 |  |  | 72.4 | % |  | $ | 580,736 |  |  | 75.3 | % |  | $ | 554,937 |  |  | 69.7 | %
Secured second lien debt | 149,937 |  |  | 17.1 |  |  | 150,542 |  |  | 17.5 |  |  | 113,691 |  |  | 14.8 |  |  | 113,716 |  |  | 14.3 |
Unsecured debt | 555 |  |  | 0.1 |  |  | 333 |  |  | 0.1 |  |  | 198 |  |  | 0.0 |  |  | 32 |  |  | 0.0 |
Total debt investments | 796,623 |  |  | 90.9 |  |  | 773,246 |  |  | 90.0 |  |  | 694,625 |  |  | 90.1 |  |  | 668,685 |  |  | 84.0 |
Preferred equity | 37,429 |  |  | 4.3 |  |  | 31,214 |  |  | 3.6 |  |  | 45,017 |  |  | 5.8 |  |  | 31,346 |  |  | 3.9 |
Common equity/equivalents | 42,562 |  |  | 4.8 |  |  | 54,664 |  |  | 6.4 |  |  | 31,369 |  |  | 4.1 |  |  | 96,229 |  |  | 12.1 |
Total equity investments | 79,991 |  |  | 9.1 |  |  | 85,878 |  |  | 10.0 |  |  | 76,386 |  |  | 9.9 |  |  | 127,575 |  |  | 16.0 |
Total Investments | $ | 876,614 |  |  | 100.0 | % |  | $ | 859,124 |  |  | 100.0 | % |  | $ | 771,011 |  |  | 100.0 | % |  | $ | 796,260 |  |  | 100.0 | %

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Our investments at fair value consisted of the following industry classifications as of September 30, 2025 and 2024:

Industry Classification |  | September 30, 2025 |  | September 30, 2024
| Fair Value |  | Percentage of Total Investments |  | Fair Value |  | Percentage of Total Investments
Healthcare, Education, and Childcare |  | $ | 273,262 |  |  | 31.8 | % |  | $ | 101,707 |  |  | 12.8 | %
Diversified/Conglomerate Manufacturing |  | 202,466 |  |  | 23.6 |  |  | 160,264 |  |  | 20.1 |
Diversified/Conglomerate Service |  | 152,042 |  |  | 17.7 |  |  | 179,032 |  |  | 22.5 |
Beverage, Food, and Tobacco |  | 54,605 |  |  | 6.4 |  |  | 88,327 |  |  | 11.1 |
Home and Office Furnishings, Housewares and Durable Consumer Products |  | 30,000 |  |  | 3.5 |  |  | — |  |  | — |
Automobile |  | 27,361 |  |  | 3.2 |  |  | 28,286 |  |  | 3.6 |
Machinery |  | 26,381 |  |  | 3.1 |  |  | 21,816 |  |  | 2.7 |
Personal, Food, and Miscellaneous Services |  | 23,700 |  |  | 2.7 |  |  | — |  |  | — |
Cargo Transportation |  | 20,000 |  |  | 2.3 |  |  | 20,200 |  |  | 2.5 |
Oil and Gas |  | 17,512 |  |  | 2.0 |  |  | 20,554 |  |  | 2.6 |
Personal and Non-Durable Consumer Products |  | 13,866 |  |  | 1.6 |  |  | 13,586 |  |  | 1.7 |
Printing and Publishing |  | 5,809 |  |  | 0.7 |  |  | 4,312 |  |  | 0.5 |
Aerospace and Defense |  | 1,184 |  |  | 0.1 |  |  | 153,096 |  |  | 19.2 |
Other, < 2.0% |  | 10,936 |  |  | 1.3 |  |  | 5,080 |  |  | 0.7 |
Total Investments |  | $ | 859,124 |  |  | 100.0 | % |  | $ | 796,260 |  |  | 100.0 | %

Our investments at fair value were included in the following U.S. geographic regions as of September 30, 2025 and 2024:

Location |  | September 30, 2025 |  | September 30, 2024
| Fair Value |  | Percentage of Total Investments |  | Fair Value |  | Percentage of Total Investments
South |  | $ | 287,371 |  |  | 33.5 | % |  | $ | 314,010 |  |  | 39.4 | %
Midwest |  | 237,417 |  |  | 27.6 |  |  | 192,897 |  |  | 24.2 |
West |  | 233,564 |  |  | 27.2 |  |  | 249,082 |  |  | 31.3 |
Northeast |  | 100,772 |  |  | 11.7 |  |  | 40,271 |  |  | 5.1 |
Total Investments |  | $ | 859,124 |  |  | 100.0 | % |  | $ | 796,260 |  |  | 100.0 | %

The geographic composition indicates the location of the headquarters for our portfolio companies. A portfolio company may have additional locations in other geographic regions.
Investment Process
Overview of Investment and Approval Process
To originate investments, the Adviser’s investment professionals use an extensive referral network comprised primarily of private equity sponsors, private credit managers, venture capitalists, leveraged buyout funds, investment bankers, attorneys, accountants, commercial bankers, and business brokers. The Adviser’s investment professionals review information received from these and other sources in search of potential financing opportunities. If a potential opportunity matches our investment objectives, the investment professionals will seek an initial screening of the opportunity with our president, Robert L. Marcotte, to authorize the submission of an indication of interest (“IOI”) to the prospective portfolio company. If the prospective portfolio company passes this initial screening and the IOI is accepted by the prospective company, the investment professionals will seek approval to issue a letter of intent (“LOI”) to the prospective company from the Adviser’s investment committee, which currently is comprised of David Gladstone, Robert L. Marcotte, Laura Gladstone, and John Sateri. If this LOI is issued, then the Adviser and Gladstone Securities, LLC (“Gladstone Securities”) (collectively, the “Due Diligence Team”) will conduct a due diligence investigation and create a detailed profile summarizing the prospective portfolio company’s historical financial statements, industry, competitive position and management team, analyzing its conformity to our general investment criteria. The investment professionals then present this profile to the Adviser’s investment committee, which must approve each investment.
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Prospective Portfolio Company Characteristics
We have identified certain characteristics that we believe are important in identifying and investing in prospective portfolio companies. The criteria listed below provide general guidelines for our investment decisions, although not all of these criteria may be met by each portfolio company.
•Growth-and-Income Orientation and Positive Cash Flow. Our investment philosophy places a premium on fundamental analysis from an investor’s perspective and has a distinct growth-and-income orientation. We typically invest in companies that generate growing sales and cash flow to provide some assurance that they will be able to service their debt and deleverage over time. We do not expect to invest in start-up companies or companies with what we believe to be cyclical industries or speculative business plans.
•Experienced Management. We typically require that the businesses in which we invest have experienced management teams or a hiring plan in place to install an experienced management team. We also require the businesses to have proper incentives in place to induce management teams to succeed and align with our interests as an investor, including having significant equity or other interests in the financial performance of their respective companies.
•Strong Competitive Position in an Industry. We seek to invest in businesses that have a differentiated product or service and significant relative market share within their respective markets and that we believe have the strategy and resources to take advantage of the expected growth in their market. We seek businesses that demonstrate significant competitive advantages versus their competitors, which we believe will help to protect their market positions and profitability.
•Enterprise Collateral Value. The projected enterprise valuation of the business, based on market based comparable cash flow multiples, is an important factor in our investment analysis in determining the collateral coverage of our debt securities.
Extensive Due Diligence
The Due Diligence Team conducts what we believe are extensive evaluation and due diligence investigations of our prospective portfolio companies and investment opportunities. The due diligence investigation typically begins with a review of publicly available information followed by in depth business analysis, including any of the following:
•a review of the prospective portfolio company’s historical and projected financial information, including a quality of earnings or similar analysis;
•detailed review of the track record of the private equity firm or ownership group acquiring or controlling any prospective borrower;
•visits to the prospective portfolio company’s business site(s);
•interviews with the prospective portfolio company’s management, employees, advisers, sponsors, customers, and vendors;
•review of loan documents and material contracts;
•background checks and a management capabilities assessment on the prospective portfolio company’s management team and controlling shareholders; and
•research on the prospective portfolio company’s products, services or particular industry and its competitive position therein.
Upon completion of a due diligence investigation and a decision to proceed with an investment, the Adviser’s investment professionals who have primary responsibility for the investment present the investment opportunity to the Adviser’s investment committee. The investment committee then determines whether to pursue the potential investment. Prior to the closing of an investment, additional due diligence may be conducted by the Adviser or on our behalf by attorneys, independent accountants, and other outside advisers, as appropriate.
We also rely on the long-term relationships that the Adviser’s investment professionals have with leveraged buyout funds, private credit managers, investment bankers, commercial bankers, private equity sponsors, attorneys, accountants, and business brokers. In addition, the extensive direct experiences of our executive officers and managing directors in the operations of lower middle market companies and providing debt and equity capital to lower middle market companies plays a significant role in our investment evaluation and assessment of risk.
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Investment Structure
Once the Adviser has determined that an investment meets our standards and investment criteria, the Adviser works with the management of that company, the private equity firm or ownership group controlling any prospective borrower, and other capital providers to structure the transaction in a way that we believe will provide us with the greatest opportunity to maximize our return on the investment, while providing appropriate incentives to the shareholders and management of the company. As discussed above, the capital classes through which we typically structure a deal include secured first lien debt, secured second lien debt, and preferred and common equity or equivalents. Through its risk management process, the Adviser seeks to limit the downside risk of our investments by:
•seeking collateral or superior positions in the portfolio company’s capital structure where possible;
•negotiating covenants in connection with our investments that afford our portfolio companies as much flexibility as possible in managing their businesses, consistent with preserving our capital;
•securing board observation rights at the portfolio company;
•incorporating call protection into the investment structure where possible; and
•making investments with an expected total return (including both interest and potential equity appreciation) that it believes compensates us appropriately for the credit risk of the investment.
We expect to hold most of our debt investments until maturity or repayment, but may sell our investments (including our equity investments) earlier if a liquidity event takes place, such as the sale or recapitalization of a portfolio company. Occasionally, we may sell some or all of our investment interests in a portfolio company to a third party in a privately negotiated transaction to manage our credit or sector exposures or to enhance our portfolio yield.
Competitive Advantages
A large number of entities compete with us and make the types of investments that we seek to make in lower middle market privately-owned businesses. Such competitors include other BDCs, registered investment companies, private investment funds, and other financing sources, including traditional financial services companies such as commercial banks. Many of our competitors are substantially larger than we are and have considerably greater funding sources or are able to access capital more cost effectively. In addition, certain of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments, serve a broader customer base, and establish a greater market share. Furthermore, many of these competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or the regulatory requirements we must comply with as a publicly traded company. However, we believe that we have the following competitive advantages over many other providers of financing to lower middle market companies.
Management Expertise
Our Adviser has a separate investment committee for the Company and each of the Affiliated Public Funds. The Adviser’s investment committee for the Company is comprised of Messrs. Gladstone, Marcotte and Sateri and Ms. Gladstone, each of whom have a wealth of experience in our area of operation. Ms. Gladstone and Messrs. Gladstone and Sateri also serve on the Adviser’s investment committee for the other Affiliated Public Funds. Ms. Gladstone has over 20 years of experience in investing in middle market companies and continues to hold the role of managing director with the Company and the Adviser. Each of Messrs. Gladstone, Marcotte and Sateri has over 30 years of experience in investing in middle market companies and with operating in the BDC marketplace in general. Mr. Gladstone also has principal management responsibility for the Adviser as its executive officer, and has worked at the Gladstone Companies for more than 20 years. These four individuals dedicate a significant portion of their time to managing our investment portfolio. Our senior management has extensive experience providing capital to lower middle market companies. In addition, we have access to the resources and expertise of the Adviser’s investment professionals and support staff who possess a broad range of transactional, financial, managerial, and investment skills.
Increased Access to Investment Opportunities Developed Through Extensive Research Capability and Network of Contacts
The Adviser seeks to identify potential investments through active origination and due diligence and through its dialogue with numerous private equity firms and other members of the financial community with whom the Adviser’s investment professionals have long-term relationships. We believe that the Adviser’s investment professionals have developed a broad network of contacts within the investment, commercial banking, private equity and investment management communities,
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and that their reputation, experience and focus on investing in lower middle market companies enables us to source and identify well-positioned prospective portfolio companies that provide attractive investment opportunities. Additionally, the Adviser expects to generate information from its professionals’ network of accountants, consultants, lawyers and management teams of portfolio companies and other contacts to support the Adviser’s investment activities.
Disciplined, Value and Income-Oriented Investment Philosophy with a Focus on Preservation of Capital
In making its investment decisions, the Adviser focuses on the risk and reward profile of each prospective portfolio company, seeking to minimize the risk of capital loss without foregoing the potential for capital appreciation. We expect the Adviser to use the same investment philosophy that its professionals use in the management of the other Affiliated Public Funds and to commit resources to manage downside exposure. The Adviser’s approach seeks to reduce our risk in investments by using some or all of the following approaches:
•focusing on companies with sustainable market positions and cash flow;
•investing in businesses with experienced and established management teams;
•engaging in extensive due diligence from the perspective of a long-term investor;
•investing in businesses backed by successful private equity sponsors or owner operators; and
•adopting flexible transaction structures by drawing on the experience of the investment professionals of the Adviser and its affiliates.
Longer Investment Horizon
Unlike private equity and private credit funds that are often organized as finite-life partnerships (generally seven to ten years), we are not subject to standard periodic capital return requirements. These structures often force private equity and private credit funds to seek returns on their investments by causing their portfolio companies to pursue mergers, public equity offerings, or other liquidity events more quickly than might otherwise be optimal or desirable, potentially resulting in a lower overall return to investors and/or an adverse impact on their portfolio companies. In contrast, we are an exchange-traded corporation of perpetual duration. We believe that our flexibility to make investments with a long-term view and without the capital return requirements of traditional private investment vehicles provides us with the opportunity to achieve greater long-term returns on invested capital.
Flexible Transaction Structuring
We believe our management team’s broad expertise and years of combined experience enable the Adviser to identify, assess, and structure investments successfully across all levels of a company’s capital structure and manage potential risk and return at all stages of the economic cycle. We are not subject to many of the regulatory limitations that govern traditional lending institutions, such as banks. As a result, we are flexible in selecting and structuring investments, adjusting investment criteria and transaction structures and, in some cases, the types of securities in which we invest. We believe that this approach enables the Adviser to craft a financing structure which best fits the investment and growth profile of the underlying business and yields attractive investment opportunities that will continue to generate current income and capital gain potential throughout the economic cycle, including during turbulent periods in the capital markets.
Ongoing Management of Investments and Portfolio Company Relationships
The Adviser’s investment professionals actively oversee each investment by continuously evaluating the portfolio company’s performance and, although generally not expected to control such companies or become involved in day-to-day operations, will work collaboratively with the portfolio company’s management, either at the portfolio company’s request or in connection with any board observer rights, to identify and incorporate best resources and practices that help us achieve our projected investment performance.
Monitoring
The Adviser’s investment professionals monitor the financial performance, trends, and changing risks of each portfolio company on an ongoing basis to determine if each company is performing within expectations and to guide the portfolio
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company’s management in taking the appropriate courses of action. The Adviser employs various methods of evaluating and monitoring the performance of our investments in portfolio companies, which can include the following:
•monthly or quarterly analysis of financial and operating performance;
•frequent assessment of the portfolio company’s performance against its business plan and our investment expectations;
•attendance at and/or participation in the portfolio company’s board of directors or management meetings;
•assessment of portfolio company management, sponsor, governance, and strategic direction;
•assessment of the portfolio company’s industry and competitive environment; and
•review and assessment of the portfolio company’s operating outlook and financial projections.
Relationship Management
The Adviser’s investment professionals interact with various parties involved with a portfolio company, or investment, by actively engaging with internal and external constituents, including:
•management;
•boards of directors;
•private equity sponsors;
•capital partners; and
•advisers and consultants.
Managerial Assistance and Services
As a BDC, we make available significant managerial assistance, as defined in the 1940 Act, to our portfolio companies and provide other services (other than such managerial assistance) to such portfolio companies. Neither we, nor the Adviser, currently receive fees in connection with the managerial assistance we make available. At times, the Adviser may also provide other services to our portfolio companies under certain agreements and may receive fees for services other than managerial assistance. Such services may include: (i) assistance obtaining, sourcing or structuring credit facilities, long term loans or additional equity from unaffiliated third parties; (ii) negotiating important contractual financial relationships; (iii) consulting services regarding restructuring of the portfolio company and financial modeling as it relates to raising additional debt and equity capital from unaffiliated third parties; and (iv) 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 received for such services against the base management fee that we would otherwise be required to pay to the Adviser as discussed below in “—Transactions with Related Parties – Investment Advisory and Management Agreement – Base Management Fee.” However, pursuant to the terms of the Advisory Agreement, a small percentage of certain of such fees is 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.
Gladstone Securities also provides other services (such as investment banking and due diligence services) to certain of our portfolio companies and receives fees for the provision of such services; see “—Transactions with Related Parties – Other Transactions” below.
Valuation Process
Our Board of Directors has approved investment valuation policies and procedures pursuant to Rule 2a-5 (the “Policy”)
and, in July 2022, designated the Adviser to serve as the Board of Directors’ valuation designee (“Valuation Designee”)
under the 1940 Act.
The following is a general description of the Policy that the professionals of the Adviser and Administrator, with oversight and direction from our chief valuation officer, an employee of the Administrator that reports directly to our Board of Directors (collectively, the “Valuation Team”), use each quarter to determine the fair value of our investment portfolio. In accordance with the 1940 Act, our Board of Directors has the ultimate responsibility for reviewing the good faith fair value determination of our investments for which market quotations are not readily available based on our Policy and for overseeing the Valuation Designee. The Adviser values our investments in accordance with the requirements of the 1940
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Act and accounting principles generally accepted in the U.S. (“GAAP”). There is no single standard for determining fair value (especially for privately-held businesses), as fair value depends upon the specific facts and circumstances of each individual investment. Each quarter, our Board of Directors reviews the Policy to determine if changes thereto are advisable and whether the Valuation Team has applied the Policy consistently. With respect to the valuation of our investment portfolio, the Valuation Team performs the following steps each quarter:
•Each investment is initially assessed by the Valuation Team using the Policy, which may include:
•obtaining fair value quotes or utilizing valuation inputs from third party valuation firms; and
•using techniques, such as total enterprise value, yield analysis, market quotes and other factors, including but not limited to: the nature and realizable value of the collateral, including external parties’ guaranties; any relevant offers or letters of intent to acquire the portfolio company; and the markets in which the portfolio company operates.
•Preliminary valuation conclusions are then discussed amongst the Valuation Team and with our management and documented for review by our Board of Directors. Fair value determinations and supporting material are sent to the Board of Directors in advance of its quarterly meetings.
•The Valuation Committee of the Board of Directors (comprised entirely of independent directors) meets to review the valuation determinations and supporting materials, discusses the information provided by the Valuation Team, determines whether the Valuation Team has followed the Policy and reviews other facts and circumstances, including current valuation risks, conflicts of interest, material valuation matters, appropriateness of valuation methodologies, back-testing results, price challenges/overides, and ongoing monitoring and oversight of pricing services. After the Valuation Committee concludes its meeting, it and the chief valuation officer, representing the Valuation Designee, present the Valuation Committee’s findings on the Valuations Designee's determinations to the entire Board of Directors so that the full Board of Directors may review the Valuation Designee's determined fair values of such investments in accordance with the Policy.
Fair value measurements of our investments may involve subjective judgment and estimates. Due to the uncertainty inherent in valuing these securities, the determinations of fair value may fluctuate from period to period and may differ materially from the values that could be obtained if a ready market for these securities existed. Our net asset value (“NAV”) could be materially affected if the determinations regarding the fair value of our investments are materially
different from the values that we ultimately realize upon our disposal of such securities. Our valuation policies, procedures and processes are more fully described in Note 2—Summary of Significant Accounting Policies in our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
Transactions with Related Parties
Investment Advisory and Management Agreement
In 2006, we entered into the Advisory Agreement, which was most recently amended and restated in January 2025. In accordance with the Advisory Agreement, we pay the Adviser fees as compensation for its services, consisting of a base management fee and an incentive fee. On July 10, 2025, our Board of Directors, including a majority of the directors who are not parties to the Advisory Agreement or interested persons of such party, unanimously approved the renewal of the Advisory Agreement through August 31, 2026. The Board of Directors considered the following factors as the basis for its decision to renew the Advisory Agreement: (1) the nature, extent and quality of services provided by the Adviser to our shareholders; (2) the investment performance of the Company and the Adviser; (3) the costs of the services to be provided and profits to be realized by the Adviser and its affiliates from the relationship with the Company; (4) the extent to which economies of scale will be realized as the Company and the Affiliated Public Funds grow and whether the fee level under the Advisory Agreement reflects the economies of scale for the Company’s investors; (5) the fee structure of the advisory and administrative agreements of comparable funds; (6) indirect profits to the Adviser created through the Company; and (7) in light of the foregoing considerations, the overall fairness of the advisory fees paid under the Advisory Agreement.
Based on the information reviewed and the considerations detailed above, our Board of Directors, including all of the directors who are not “interested persons” as that term is defined in the 1940 Act, concluded that the investment advisory fee rates and terms are fair and reasonable in relation to the services provided and approved the Advisory Agreement, as being in the best interests of our stockholders.
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Base Management Fee
The base management fee is payable quarterly to the Adviser pursuant to our Advisory Agreement and is assessed at an annual rate of 1.75%, computed on the basis of the value of our average total assets at the end of the two most recently-completed quarters (inclusive of the current quarter), which are total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings and adjusted appropriately for any share issuances or repurchases during the period. Our Board of Directors may (as it has for the years ended September 30, 2025, 2024, and 2023) accept a non-contractual, unconditional and irrevocable credit from the Adviser to reduce the annual 1.75% base management fee on syndicated loan participations to 0.5%, to the extent that proceeds resulting from borrowings were used to purchase such syndicated loan participations.
Additionally, pursuant to the requirements of the 1940 Act, the Adviser makes available significant managerial assistance to our portfolio companies. The Adviser may also provide other services to our portfolio companies under certain agreements and may receive fees for services other than managerial assistance. The Adviser non-contractually, unconditionally, and irrevocably credits 100% of these fees 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 is 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. Loan servicing fees that are payable to the Adviser pursuant to our revolving line of credit with KeyBank National Association (“KeyBank”), as administrative agent, lead arranger and lender (as amended and restated from time to time, our “Credit Facility") are also 100% credited against the base management fee as discussed below, “—Loan Servicing Fee Pursuant to Credit Agreement.”
Incentive Fee
The incentive fee consists of two parts: 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% of our net assets (2.0% during the period from April 1, 2020 through March 31, 2023), 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 pre-incentive fee net investment income is generally payable quarterly to the Adviser and is computed as follows:
•no incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the hurdle rate;
•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% (2.50% from April 1, 2022 through March 31, 2023) of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter; and
•20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% (2.50% from April 1, 2022 through March 31, 2023) of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter.
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Quarterly Incentive Fee Based on Net Investment Income
Pre-incentive fee net investment income
(expressed as a percentage of the value of net assets)
Percentage of pre-incentive fee net investment income
allocated to income-related portion of incentive fee
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 below) 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 portfolio's 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 portfolio’s 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 portfolio’s 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, 2025, 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. 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 future. No GAAP accrual for a capital gains-based incentive fee has been recorded from our inception through September 30, 2025.
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 cover 100.0% of distributions to common stockholders for the years ended September 30, 2025 and 2024, which credits totaled $2.3 million and $0.2 million, respectively. There were no such credits during the year ended September 30, 2023.
Loan Servicing Fee Pursuant to Credit Agreement
The Adviser also services the loans held by our wholly-owned subsidiary, Gladstone Business Loan, LLC (“Business Loan”) (the borrower under our Credit Facility), in return for which the Adviser receives a 1.5% annual fee payable monthly based on the monthly aggregate outstanding balance of loans pledged under our Credit Facility. Since Business Loan is a consolidated subsidiary of ours, and the total base management fee paid to the Adviser pursuant to the Advisory Agreement cannot exceed 1.75% of total assets (less any uninvested cash or cash equivalents resulting from borrowings and adjusted appropriately for any share issuances or repurchases during the period) during any given calendar year, we
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treat payment of the loan servicing fee pursuant to our Credit Facility as a pre-payment of the base management fee under the Advisory Agreement. Accordingly, these loan servicing fees are 100% non-contractually, unconditionally, and irrevocably credited back to us by the Adviser.
Administration Agreement
We reimburse the Administrator pursuant to the Administration Agreement for our allocable portion of the Administrator’s expenses incurred while performing services to us, which are primarily rent and salaries and benefits expenses of the Administrator’s employees, including our chief financial officer and treasurer, chief compliance officer, chief valuation officer and co-general counsel and co-secretary (who also serves as the Administrator’s president), and their respective staffs.
Our allocable portion of the Administrator’s expenses are generally derived by multiplying the Administrator’s total expenses by the approximate percentage of time during the current quarter the Administrator’s employees performed services for us in relation to their time spent performing services for all companies serviced by the Administrator. On July 10, 2025, 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, 2026.
Other Transactions
Mr. Gladstone also serves on the board of managers of our affiliate, Gladstone Securities, a privately-held broker-dealer registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation. Gladstone Securities is 100% indirectly owned and controlled by Mr. Gladstone and 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. For additional information refer to Note 4 — Related Party Transactions of our accompanying Notes to Consolidated Financial Statements.
Material U.S. Federal Income Tax Considerations
This is a general summary of certain material U.S. federal income tax considerations applicable to us, to our qualification and taxation as a RIC for U.S. federal income tax purposes under Subchapter M of the Code and to the ownership and disposition of our common stock. This summary does not purport to be a complete description of all of the tax considerations relating thereto. In particular, we have not described certain considerations that may be relevant to certain types of stockholders subject to special treatment under U.S. federal income tax laws. This summary does not discuss any aspect of state, local or foreign tax laws, or the U.S. estate or gift tax, and it does not discuss any tax considerations relevant to holders of our preferred stock or Notes. Stockholders and note holders are urged to consult their tax advisors regarding their particular situations and the possible applicability of federal, state, local, non-U.S. or other tax laws, and any proposed tax law changes.
A “U.S. stockholder” is a beneficial owner of our common stock that is for U.S. federal income tax purposes:
•an individual who is a citizen or resident of the United States;
•a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof of the District of Columbia;
•a trust, if a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons (as defined in the Code) have the authority to control all of its substantial decisions, or if the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a domestic trust for U.S. federal income tax purposes; or
•an estate, the income of which is subject to U.S. federal income taxation regardless of its source.
RIC Status
To qualify for treatment as a RIC under Subchapter M of the Code, we must generally distribute to our stockholders, for each taxable year, at least 90.0% of our taxable ordinary income plus the excess of our realized net short-term capital gains
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over our realized net long-term capital losses (“Investment Company Taxable Income”). We refer to this as the “annual distribution requirement.” We must also meet several additional requirements, including:
•Business Development Company status. At all times during the taxable year, we must maintain our status as a BDC.
•Income source requirements. At least 90.0% of our gross income for each taxable year must be from dividends, interest, payments with respect to securities, loans, gains from sales or other dispositions of securities or other income (including certain deemed inclusions) derived with respect to our business of investing in securities, and net income derived from an interest in a qualified publicly traded partnership.
•Asset diversification requirements. As of the close of each quarter of our taxable year: (1) at least 50% of the value of our assets must consist of cash, cash items, U.S. government securities, the securities of other regulated investment companies and other securities to the extent that (a) we do not hold more than 10% of the outstanding voting securities of an issuer of such other securities and (b) such other securities of any one issuer do not represent more than 5% of our total assets, and (2) no more than 25% of the value of our total assets may be invested in the securities (other than U.S. government securities or the securities of other regulated investment companies) of (i) one issuer, (ii) two or more issuers that are controlled by us and are engaged in the same or similar or related trades or businesses, and (iii) one or more qualified publicly-traded partnerships.
Failure to Qualify as a RIC
If we were to fail to meet the income, diversification, or distribution tests described above, we could in some cases cure such failure, including by paying a fund-level tax, paying interest, making additional distributions, or disposing of certain assets. If we were ineligible to or otherwise did not cure such failure, or were otherwise unable to qualify for treatment as a RIC, we would be subject to U.S. federal income tax on all of our taxable income at the regular corporate income tax rate and would be subject to any applicable state and local taxes, even if we distributed all of our Investment Company Taxable Income to our stockholders. We would not be able to deduct distributions to our stockholders, nor would we be required to make such distributions for U.S. federal income tax purposes. Distributions would be taxable to our stockholders as ordinary dividend income and, subject to certain limitations under the Code, would be eligible for the current maximum rate applicable to qualifying dividend income of individuals and other non-corporate U.S. stockholders to the extent of our current or accumulated earnings and profits. Subject to certain limitations under the Code, corporate distributees would be eligible for the dividends received deduction, if applicable. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder’s adjusted tax basis, and then as capital gain. If we fail to meet the RIC requirements for more than two consecutive years and then seek to requalify as a RIC, we generally would be subject to corporate-level U.S. federal income tax on any unrealized appreciation with respect to our assets unless we make a special election to pay corporate-level U.S. federal income tax on any such unrealized appreciation during the succeeding five-year period.
Qualification as a RIC
If we qualify as a RIC and meet the annual distribution requirement, we will not be subject to U.S. federal income tax on the portion of our Investment Company Taxable Income and net capital gain (realized net long term capital gain in excess of realized net short term capital loss) that we timely distribute (or are deemed to timely distribute) to our stockholders. If we fail to distribute in a timely manner an amount at least equal to the sum of (1) 98.0% of our ordinary income for the calendar year, (2) 98.2% of our net capital gains for the one-year period ending on October 31 of the calendar year (or November 30 or December 31 of that year if we are permitted to elect and so elect) and (3) any income realized, but not distributed, in the preceding period (to the extent that income tax was not imposed on such amounts), less certain reductions, as applicable (together, the “excise tax distribution requirements”), we will be subject to a 4% nondeductible federal excise tax on the portion of the undistributed amounts of such income that are less than the amounts required to be distributed based on the excise tax distribution requirements. For the calendar year ended December 31, 2024, we incurred $0.1 million in excise taxes. For the calendar years ended December 31, 2023 and 2022, we did not incur any excise taxes.
If we acquire debt obligations that (i) were originally issued at a discount, (ii) bear interest at rates that are not either fixed rates or certain qualified variable rates, or (iii) are not unconditionally payable at least annually over the life of the obligation, we will be required to include in taxable income each year a portion of the original issue discount (“OID”) that accrues over the life of the obligation. Additionally, PIK interest, which is computed at the contractual rate specified in a loan agreement and is added to the principal balance of a loan, is also a non-cash source of income that we are required to include in taxable income each year. Both OID and PIK income will be included in our Investment Company Taxable Income even though we receive no cash corresponding to such amounts. As a result, we may be required to make
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additional distributions corresponding to such OID and PIK amounts in order to satisfy the annual distribution requirement and to continue to qualify as a RIC or to avoid the imposition of federal income and excise taxes. In this event, we may be required to sell investments or other assets to meet the RIC distribution requirements. For the year ended September 30, 2025, we recorded $0.4 million of OID income and the unamortized balance of OID investments as of September 30, 2025 totaled $0.2 million. As of September 30, 2025, we had nine investments which had a PIK interest component and we recorded PIK interest income of $5.0 million during the year ended September 30, 2025.
Taxation of Our U.S. Stockholders
Distributions
For any period during which we qualify as a RIC for U.S. federal income tax purposes, distributions to our U.S. stockholders attributable to our Investment Company Taxable Income generally will be taxable as ordinary income to our U.S. stockholders to the extent of our current or accumulated earnings and profits. We first allocate our earnings and profits to distributions to our preferred stockholders, if any, and then to distributions to our common stockholders based on priority in our capital structure. Any distributions in excess of our earnings and profits will first be treated as a return of capital to the extent of the stockholder’s adjusted basis in his or her shares of stock and thereafter as capital gain. Distributions of our long-term capital gains, reported by us as such, will be taxable to our stockholders as long-term capital gains regardless of the U.S. stockholder’s holding period of the stock and whether the distributions are paid in cash or invested in additional stock. Corporate U.S. stockholders generally are eligible for the 50% dividends received deduction with respect to ordinary income dividends received from us, but only to the extent such amount is attributable to dividends received by us from taxable domestic corporations.
A RIC that has two or more classes of stock generally is required to allocate to each class proportionate amounts of each type of its income (such as ordinary income, capital gains, qualified dividend income and dividends qualifying for the dividends-received deduction) based upon the percentage of total distributions paid to each class for the tax year. Accordingly, for any tax year in which we have common shares and preferred shares, we intend to allocate capital gain distributions, distributions of qualified dividend income, and distributions qualifying for the dividends-received deduction, if any, between our common shares and preferred shares in proportion to the total distributions paid to each class with respect to such tax year.
Any distribution declared by us in October, November or December of any calendar year, payable to our stockholders of record on a specified date in such a month and actually paid during January of the following year, will be treated as if it were paid by us and received by our stockholders on December 31 of the previous year. In addition, we may elect (in accordance with Section 855(a) of the Code) to relate a distribution back to the prior taxable year if we (1) declare such distribution prior to the later of the extended due date for filing our return for that taxable year or the 15 th day of the ninth month following the close of the taxable year, (2) make the election in that return, and (3) distribute the amount in the 12-month period following the close of the taxable year but not later than the first regular distribution payment of the same type following the declaration. Any such election will not alter the general rule that a stockholder will be treated as receiving a distribution in the taxable year in which the distribution is made, subject to the October, November, December rule described above.
If a common stockholder participates in our “opt in” dividend reinvestment plan, then the common stockholder will have their cash dividends and distributions automatically reinvested in additional shares of our common stock, rather than receiving cash dividends and distributions. Any distributions reinvested under the plan will be taxable to the common stockholder to the same extent, and with the same character, as if the common stockholder had received the distribution in cash. The common stockholder will have an adjusted basis in the additional common shares purchased through the plan equal to the dollar amount that would have been received if the U.S. stockholder had received the dividend or distribution in cash, unless we were to issue new shares that are trading at or above net asset value, in which case, the U.S. stockholder’s basis in the new shares would generally be equal to their fair market value. The additional common shares will have a new holding period commencing on the day following the day on which the shares are credited to the common stockholder’s account. The plan agent purchases shares in the open market in connection with the obligations under the plan.
Sale of Our Shares
A U.S. stockholder generally will recognize taxable gain or loss if the U.S. stockholder sells or otherwise disposes of the shares of our common stock. Any gain arising from such sale or disposition generally will be treated as long-term capital gain or loss if the U.S. stockholder has held the shares for more than one year. Otherwise, it will be classified as short-term
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capital gain or loss. However, any capital loss arising from the sale or disposition of shares of our stock held for six months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed capital gain deemed received, with respect to such shares. All or a portion of any loss realized upon a taxable disposition of shares will be disallowed under the Code’s “wash sale” rule if other substantially identical shares are purchased within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.Under the tax laws in effect as of the date of this filing, individual U.S. stockholders are subject to a maximum federal income tax rate of 20% on their net capital gain (i.e. the excess of realized net long-term capital gain over realized net short-term capital loss for a taxable year) including any long-term capital gain derived from an investment in our shares. Such rate is lower than the maximum rate on ordinary income currently payable by individuals. Corporate U.S. stockholders currently are subject to federal income tax on net capital gain at the same rates applied to their ordinary income. Capital losses are subject to limitations on use for both corporate and non-corporate stockholders. Certain U.S. stockholders who are individuals, estates or trusts generally are also subject to a 3.8% Medicare tax on, among other things, dividends on and capital gain from the sale or other disposition of shares of our stock.
Backup Withholding and Other Required Withholding
We may be required to withhold U.S. federal income tax (i.e. backup withholding) from all taxable distributions to any non-corporate U.S. stockholder (i) who fails to furnish us with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding, or (ii) with respect to whom the Internal Revenue Service (“IRS”) notifies us that such stockholder has failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect. An individual’s taxpayer identification number is generally his or her social security number. Any amount withheld under backup withholding is allowed as a credit against the U.S. stockholder’s federal income tax liability, provided that proper information is timely provided to the IRS.
Sections 1471-1474 of the Code and the U.S. Treasury and IRS guidance issued thereunder (collectively, “FATCA”) generally require that we obtain information sufficient to identify the status of each shareholder under FATCA or under an applicable intergovernmental agreement (an “IGA”) between the United States and a foreign government. If a shareholder fails to provide the requested information or otherwise fails to comply with FATCA or an IGA, we may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on ordinary dividends it pays. The IRS and the Department of Treasury have issued proposed regulations providing that these withholding rules will not apply to the gross proceeds of share redemptions or capital gain dividends we pay. If a payment is subject to FATCA withholding, we are required to withhold even if such payment would otherwise be exempt from withholding under the rules applicable to foreign shareholders described above (e.g., interest-related dividends). In addition, subject to certain exceptions, this legislation also imposes a 30% withholding on payments to foreign entities that are not financial institutions unless the foreign entity certifies that it does not have a greater than 10% U.S. owner or provides the withholding agent with identifying information on each greater than 10% U.S. owner. Depending on the status of a non-U.S. stockholder and the status of the intermediaries through which they hold their shares, non-U.S. stockholders could be subject to this 30% withholding tax with respect to distributions on their shares and proceeds from the sale of their shares. Under certain circumstances, a non-U.S. stockholder might be eligible for refunds or credits of such taxes.
Information Reporting
We will send to each of our U.S. stockholders, after the end of each calendar year, a notice providing, on a per share and per distribution basis, the amounts includible in the U.S. stockholder’s taxable income for such year as ordinary income and as long-term capital gain, if any. In addition, the U.S. federal tax status of each year’s distributions will generally be reported to the IRS (including the amount of dividends, if any, eligible for the preferential rates applicable to long-term capital gains).
Regulation as a BDC
We are a closed-end, non-diversified management investment company that has elected to be regulated as a BDC under Section 54 of the 1940 Act. As such, we are subject to regulation under the 1940 Act. The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates, principal underwriters and affiliates of those affiliates or underwriters and requires that a majority of the directors be persons other than “interested persons,” as defined in the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless approved by a “vote of a majority of outstanding voting securities,” as defined in the 1940 Act.
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In general, a BDC must have been organized and have its principal place of business in the U.S. and must be operated for the purpose of making investments in qualifying assets, as described in Sections 55(a)(1) through (a)(3) of the 1940 Act.
Qualifying Assets
Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets, other than certain interests in furniture, equipment, real estate, or leasehold improvements (“Operating Assets”) represent at least 70.0% of total assets, exclusive of Operating Assets. The types of qualifying assets in which we may invest under the 1940 Act include the following:
(1)Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer is an eligible portfolio company. An eligible portfolio company is generally defined in the 1940 Act as any issuer which:
(a)is organized under the laws of, and has its principal place of business in, any state or states in the U.S.;
(b)is not an investment company (other than a small business investment company wholly owned by the BDC or otherwise excluded from the definition of investment company); and
(c)satisfies one of the following:
(i)it does not have any class of securities with respect to which a broker or dealer may extend margin credit;
(ii)it is controlled by the BDC and for which an affiliate of the BDC serves as a director;
(iii)it has total assets of not more than $4.0 million and capital and surplus of not less than $2 million;
(iv)it does not have any class of securities listed on a national securities exchange; or
(v)it has a class of securities listed on a national securities exchange, with an aggregate market value of outstanding voting and non-voting equity of less than $250.0 million.
(2)Securities received in exchange for or distributed on or with respect to securities described in (1) above, or pursuant to the exercise of options, warrants or rights relating to such securities.
(3)Cash, cash items, government securities or high quality debt securities maturing in one year or less from the time of investment.
As of September 30, 2025, 99.1% of our assets were qualifying assets.
Asset Coverage
Pursuant to Section 61(a)(3) of the 1940 Act, we are permitted to issue multiple classes of “senior securities representing indebtedness.” However, pursuant to Section 18(c) of the 1940 Act, we are permitted to issue only one class of “senior securities that is stock.” In either case, we may only issue such senior securities if such class of senior securities, after such issuance, has an asset coverage, as defined in Section 18(h) of the 1940 Act, of at least 150%.
In addition, our ability to pay dividends or distributions (other than dividends payable in our common stock) to holders of any class of our capital stock would be restricted if our “senior securities representing indebtedness” fail to have an asset coverage of at least 150% (measured at the time of declaration of such distribution and accounting for such distribution). The 1940 Act does not apply this limitation to privately arranged debt that is not intended to be publicly distributed, unless this limitation is specifically negotiated by the lender. In addition, our ability to pay dividends or distributions (other than dividends payable in our common stock) to our common stockholders would be restricted if our “senior securities that are stock” fail to have an asset coverage of at least 150% (measured at the time of declaration of such distribution and accounting for such distribution). If the value of our assets declines, we might be unable to satisfy these asset coverage requirements. To satisfy the 150% asset coverage requirement in the event that we are seeking to pay a distribution, we might either have to (i) liquidate a portion of our portfolio to repay a portion of our indebtedness or (ii) issue common stock. This may occur at a time when a sale of a portfolio asset may be disadvantageous, or when we have limited access to capital markets on agreeable terms. In addition, any amounts that we use to service our indebtedness or for offering costs will not be available for distributions to our stockholders. If we are unable to regain the requisite asset coverage through these methods, we may be forced to suspend the payment of such dividends or distributions.
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Significant Managerial Assistance
A BDC generally must make available significant managerial assistance to issuers of certain of its portfolio securities that the BDC counts as a qualifying asset for the 70.0% test described above. Making available significant managerial assistance means, among other things, any arrangement whereby the BDC, through its directors, officers or employees, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company. Significant managerial assistance also includes the exercise of a controlling influence over the management and policies of the portfolio company. However, with respect to certain, but not all such securities, where the BDC purchases such securities in conjunction with one or more other persons acting together, one of the other persons in the group may make available such managerial assistance, or the BDC may exercise such control jointly.
Summary Risk Factors
Below is a summary of the principal risk factors associated with an investment in our securities. In addition to the below, you should carefully consider the information included in “Risk Factors” beginning on page 21 of this Annual Report together with all of the other information included in this Annual Report and the other reports and documents filed or furnished by us with the SEC for a more detailed discussion of the principal risks as well as certain other risks that you should carefully consider before deciding to invest in our securities.
•Market conditions could negatively impact our business, results of operations, cash flows and financial condition.
•Volatility in the capital markets may make it more difficult to raise capital and may adversely affect the valuations of our investments.
•Tariffs may adversely affect us or our portfolio companies.
•We may experience fluctuations in our quarterly and annual results based on the impact of inflation in the U.S.
•Market interest rates may have an effect on the value of our securities.
•Changes in interest rates may negatively impact our investments and have an adverse effect on our business, financial condition, results of operations, and cash flows.
•The lack of liquidity of our privately held investments may adversely affect our business.
•Our investments in lower middle market companies are extremely risky and could cause you to lose all or a part of your investment.
•We often invest in transactions involving acquisitions, buyouts and recapitalizations of companies, which will subject us to the risks associated with change in control transactions.
•Our portfolio is concentrated in a limited number of companies and industries, which subjects us to an increased risk of significant loss if any one of these companies does not repay us or if the industries experience downturns.
•Any inability to renew, extend or replace our Credit Facility on terms favorable to us, or at all, could adversely impact our liquidity and ability to fund new investments or maintain distributions to our stockholders.
•We are subject to restrictions that may discourage a change of control. Certain provisions contained in our articles of incorporation and Maryland law may prohibit or restrict a change of control and adversely impact the price of our common stock.
•There are significant potential conflicts of interest, including with the Adviser, which could impact our investment returns.
•Our success depends on the Adviser’s ability to attract and retain qualified personnel in a competitive environment.
•Our incentive fee may induce the Adviser to make certain investments, including speculative investments.
•We may be obligated to pay the Adviser incentive compensation even if we incur a loss.
•The Adviser is not obligated to provide a credit of the base management fee or incentive fee, which could negatively impact our earnings and our ability to maintain our current level of distributions to our stockholders.
•There is a risk that you may not receive distributions or that distributions may not grow over time.
•Investing in our securities may involve an above average degree of risk.
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•Common shares of closed-end investment companies frequently trade at a discount to the NAV per share.
•The indentures under which our unsecured notes were issued contain limited protection for holders of such notes.
•Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, or the operations of businesses in which we invest, a compromise or corruption of our confidential information and/or damage to our business relationships, all of which could negatively impact our business, financial condition and operating results.
Code of Ethics
We, and all of the Gladstone Companies, have adopted a code of ethics and business conduct applicable to all of the officers, directors and personnel of such companies that complies with the guidelines set forth in Item 406 of Regulation S-K and Rule 17j-1 of the 1940 Act. As required by the 1940 Act, this code establishes procedures for personal investments, restricts certain transactions by such personnel and requires the reporting of certain transactions and holdings by such personnel. This code of ethics and business conduct is publicly available on the Investors section of our website under “Governance – Governance Documents” at www.GladstoneCapital.com. Appendix A to the code of ethics and business conduct is our insider trading policy. We intend to provide any required disclosure of any amendments to or waivers of the provisions of this code by posting information regarding any such amendment or waiver to our website or in a Current Report on Form 8-K.
Compliance Policies and Procedures
We and the Adviser have adopted and implemented written policies and procedures reasonably designed to prevent violation of the federal securities laws, and our Board of Directors is required to review these compliance policies and procedures annually to assess their adequacy and the effectiveness of their implementation. We have designated a chief compliance officer, John Dellafiora, Jr., who also serves as chief compliance officer for all of the Gladstone Companies.
Staffing
We do not currently have any employees and do not expect to have any employees in the foreseeable future. Currently, services necessary for our business are provided by individuals who are employees of the Adviser and the Administrator pursuant to the terms of the Advisory Agreement and the Administration Agreement, respectively. We expect that 25 to 30 full time employees of the Adviser and the Administrator will spend substantial time on our matters during the remainder of calendar year 2025 and all of calendar year 2026. As of September 30, 2025, the Adviser and the Administrator collectively had 73 full-time employees. A breakdown of these employees is summarized by functional area in the table below:

Number of Individuals |  | Functional Area
12 |  | Executive management
24 |  | Accounting, administration, compliance, human resources, legal and treasury
37 |  | Investment management, portfolio management and due diligence

The Adviser and the Administrator aim to attract and retain capable advisory and administrative personnel, respectively, by offering competitive base salaries and bonus structure and by providing employees with appropriate opportunities for professional growth.
Available Information
We file with or furnish to the SEC copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other information meeting the information requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and make such reports and any amendments thereto available free of charge through the Investors section of our website at www.GladstoneCapital.com as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC. Information contained on our website is not incorporated by reference into this Annual Report. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
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ITEM 1A. RISK FACTORS
You should carefully consider these risk factors, together with all of the other information included in this Annual Report and the other reports and documents filed by us with the SEC. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us, or not presently deemed material by us, may also impair our operations and performance. If any of the following events occur, our business, financial condition, results of operations and cash flows could be materially and adversely affected. If that happens, the trading price of our securities and the NAV of our common stock could decline, and you may lose all or part of your investment. The risk factors described below are the principal risk factors associated with an investment in our securities as well as those factors generally associated with an investment company with investment objectives, investment policies, capital structure or trading markets similar to ours.
Risks Related to the Economy
Market conditions could negatively impact our business, results of operations, cash flows and financial condition.
The market in which we operate is affected by a number of factors that are largely beyond our control but can nonetheless have a potentially significant, negative impact on us. These factors include:
•changes in interest rates and credit spreads and the effects of inflation on us and our portfolio companies;
•the availability of credit, including the price, terms, and conditions under which it can be obtained;
•the quality, pricing, and availability of suitable investments and credit losses with respect to our investments;
•the ability to obtain accurate market-based valuations;
•investment values relative to the value of the underlying assets;
•default rates on the loans underlying our investments and the amount of related losses;
•prepayment rates, delinquency rates and the timing and amount of servicer advances;
•competition;
•the actual and perceived state of the economy and capital markets generally;
•amendments or repeals of legislation, or changes in regulations or regulatory interpretations thereof, and transitions of government, including uncertainty regarding any of the foregoing;
•the national and global political environment, including government shutdowns, war, armed conflicts, foreign relations and trading policies;
•the impact of potential changes to the Code; and
•the attractiveness of other types of investments relative to investments in lower middle market companies generally.
Changes in these factors are difficult to predict, and a change in one factor could affect other factors, which could result in adverse effects to our business, results of operations, financial condition, and cash flows.
Volatility in the capital markets could make it more difficult to raise capital and may adversely affect the valuations of our investments.
Given the volatility and dislocation that the capital markets have experienced from time to time, many BDCs have faced, and may in the future face, a challenging environment in which to raise capital. We may in the future have difficulty accessing debt and equity capital, and a severe disruption in U.S. or global financial markets or deterioration in credit and financing conditions could have a material adverse effect on our business, financial condition, results of operations, and cash flows. In addition, significant changes in the capital markets have had, and may in the future have, a negative effect on the valuations of our investments and on the potential for liquidity events involving our investments. An inability to raise capital, and any required sale of our investments for liquidity purposes or failure of our portfolio companies to realize liquidity events, could have a material adverse impact on our business, financial condition, results of operations, or cash flows.
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Tariffs may adversely affect us or our portfolio companies.
Existing or new tariffs imposed on foreign goods imported by the U.S. or on U.S. goods imported by foreign countries could subject us or our portfolio companies to additional risks. Among other effects, tariffs could increase the cost of production for certain of our portfolio companies or reduce demand for their products, which could affect their results of operations. We cannot predict whether, or to what extent, any tariff or other trade protections may affect us or our portfolio companies.
We may experience fluctuations in our quarterly and annual results based on the impact of inflation in the U.S.
Certain of our portfolio companies are in industries that have been and, in the future, may be impacted by inflation, such as consumer goods and services and manufacturing. Our portfolio companies may not be able to pass on to customers increases in their costs of operations which could greatly affect their operating results, impacting their ability to repay our loans. In addition, any projected future decreases in our portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments could result in future realized or unrealized losses and therefore reduce our net assets resulting from operations.
Risks Related to Interest Rates
Market interest rates may have an effect on the value of our securities.
One of the factors that influences the price of our securities is the distribution yield on our securities (as a percentage of the price of our securities) relative to market interest rates. An increase in market interest rates may lead prospective purchasers of our securities to expect a higher distribution yield. In addition, higher interest rates have increased our borrowing costs. As a result, higher market interest rates could cause the market price of our securities to decrease.
Changes in interest rates may negatively impact our investments and have an adverse effect on our business, financial condition, results of operations, and cash flows.
Generally, interest rate fluctuations and changes in credit spreads on floating rate loans may have a negative impact on our investments and investment opportunities and, accordingly, may have a material adverse effect on our rate of return on invested capital, our net investment income, our NAV and the market price of our securities. As interest rates increase, generally, the cost of borrowing under our Credit Facility increases, which may affect our ability to make new investments on favorable terms or at all. A substantial portion of our debt investments have variable interest rates that reset periodically and are generally based on SOFR. If interest rates increase, the operating performance of certain of our portfolio companies may be affected by increasing debt service obligations and, therefore, may affect our results of operations. In addition, to the extent that increases in interest rates make it difficult or impossible to make payments on outstanding indebtedness to us or other financial sponsors or refinance debt that is maturing in the near term, some of our portfolio companies may be unable to repay such debt at maturity and may be forced to sell assets, undergo a recapitalization or seek bankruptcy protection. Elevated interest rates could also cause borrowers to shift cash from other productive uses to the payment of interest, which may have a material adverse effect on their business and operations and could, over time, lead to increased defaults. Additionally, as interest rates increase and the corresponding risk of a default by borrowers increases, the liquidity of higher interest rate loans may decrease as fewer investors may be willing to purchase such loans in the secondary market in light of the increased risk of a default by the borrower and the heightened risk of a loss of an investment in such loans. Decreases in credit spreads on debt that pays a floating rate of return would have an impact on the income generation of our floating rate assets. Trading prices for debt that pays a fixed rate of return tend to fall as interest rates rise. Trading prices tend to fluctuate more for fixed rate securities that have longer maturities. If interest rates remain elevated or rise again in the future, it could have a negative effect on our investments, which could negatively impact our operating results, financial condition, and cash flows.
Conversely, reduced interest rates, including recent rate decreases, will result in a decrease in our total investment income unless offset by interest rate floors or an increase in the spread of our debt investments with variable interest rates. In addition, our net investment income could decrease if there is no reduction or credit to the base management or incentive fees that we pay to the Adviser or if we are unable to refinance our fixed rate debt obligations or issue new fixed rate debt at lower rates. In addition, when interest rates decline, borrowers may refinance their loans at lower interest rates, which could shorten the average life of the loans and reduce the associated returns on the investment, as well as require the Adviser and its investment professionals to incur management time and expense to re-deploy such proceeds, including on terms that may not be as favorable as our existing loans.
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A change in interest rates may adversely affect our profitability and any hedging strategy we adopt may expose us to additional risks.
We use a combination of equity and long-term and short-term borrowings to finance our investment activities. As a result, a portion of our income depends upon the spread between the rate at which we borrow funds and the rate at which we loan these funds. An increase or decrease in interest rates could reduce the spread between the rate at which we invest and the rate at which we borrow, and thus, adversely affect our profitability if we have not appropriately hedged against such event. Alternatively, interest rate hedging arrangements may limit our ability to participate in the benefits of lower interest rates with respect to the hedged portfolio.
As of September 30, 2025, based on the total principal balance of debt investments outstanding, our portfolio consisted of approximately 86.9% of loans at variable rates with floors and approximately 13.1% at fixed rates.
As of September 30, 2025, we did not have any hedging arrangements, such as interest rate hedges, in place. While hedging arrangements may insulate us against adverse fluctuations in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the hedged portfolio. Adverse developments resulting from changes in interest rates or any future hedging transactions could have a material adverse effect on our business, financial condition and results of operations. Our ability to receive payments pursuant to a hedging arrangement is linked to the ability of the counter-party to that hedging arrangement to make the required payments. To the extent that the counter-party to the hedging arrangement is unable to pay pursuant to the terms of the agreement, we may lose the hedging protection of the arrangement.
Also, the fair value of certain of our debt investments is based, in part, on the current market yields or interest rates of similar securities. A change in interest rates could have a significant impact on our determination of the fair value of these debt investments. In addition, a change in interest rates could also have an impact on the fair value of any hedging arrangements then in effect that could result in the recording of unrealized appreciation or depreciation in future periods. Therefore, adverse developments resulting from changes in interest rates could have a material adverse effect on our business, financial condition, results of operations, and cash flows. Refer to “Quantitative and Qualitative Disclosures About Market Risk” for additional information on interest rate fluctuations.
Risks Related to Our Investments
We operate in a highly competitive market for investment opportunities.
There is competitive pressure in the BDC and investment company marketplace for first and second lien secured debt, which can result in reduced yields on investment. A large number of entities compete with us and make the types of investments that we seek to make in lower middle market companies. We compete with public and private buyout funds, public and private credit funds and other BDCs, commercial and investment banks, commercial financing companies, and, to the extent that they provide an alternative form of financing, hedge funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which would allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC. The competitive pressures we face could have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time and we can offer no assurance that we will be able to identify and make investments that are consistent with our investment objectives. We do not seek to compete based on the interest rates we offer, and we believe that some of our competitors may make loans with interest rates that will be comparable to or lower than the rates we offer. We may lose investment opportunities if we do not match our competitors’ pricing, terms, and structure. However, if we match our competitors’ pricing, terms, and structure, we may experience decreased net interest income and increased risk of credit loss.
Our investments in lower middle market companies are extremely risky and could cause you to lose all or a part of your investment.
Investments in lower middle market companies are subject to a number of significant risks including the following:
•Lower middle market companies are likely to have greater exposure to economic downturns than larger businesses. Our portfolio companies may have fewer resources than larger businesses, and thus any economic downturns or recessions are more likely to have a material adverse effect on them. When the economy contracts,
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the financial results of lower middle market business, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements and an increase in defaults. Consequently, for any portfolio company that is adversely impacted by an economic downturn or recession, its ability to repay our loan or engage in a liquidity event, such as a sale, recapitalization or initial public offering would be diminished.
•Lower middle market companies may have limited financial resources and may not be able to repay the loans we make to them. Our strategy includes providing financing to portfolio companies that typically do not have readily available access to financing. While we believe that this provides an attractive opportunity for us to generate profits, this may make it difficult for the portfolio companies to repay their loans to us upon maturity. A borrower’s ability to repay its loan may be adversely affected by numerous factors, including the failure to meet its business plan, a downturn in its industry, or negative economic conditions, including those created by the current market environment. Deterioration in a borrower’s financial condition and prospects usually will be accompanied by deterioration in the value of any collateral and a reduction in the likelihood of us realizing on any guaranties we may have obtained from the borrower’s management. As of September 30, 2025, our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC were on non-accrual status with a cost basis of $28.8 million, or 3.6% of the cost basis of all debt investments in our portfolio, and a fair value of $13.0 million, or 1.7% of the fair value of all debt investments in our portfolio. For any loans that are placed on non-accrual status, we cannot assure you that our efforts to improve profitability and cash flows of these companies will prove successful. In some of our portfolio companies we expect to be subordinated to a senior lender, and our interest in any collateral would, accordingly, likely be subordinate to another lender’s security interest.
•Lower middle market companies typically have narrower product lines and smaller market shares than large businesses. Because our target portfolio companies are lower middle market businesses, they tend to be more vulnerable to competitors’ actions, supply chain issues and market conditions, as well as general economic downturns. In addition, our portfolio companies often face intense competition, including competition from companies with greater financial resources, more extensive development, manufacturing, marketing, and other capabilities and a larger number of qualified managerial, or technical personnel.
•There is generally little or no publicly available information about these businesses. Because we seek to invest in privately owned businesses, there is generally little or no publicly available operating and financial information about our potential portfolio companies. As a result, we rely on our officers, the Adviser and its employees, Gladstone Securities and certain consultants to perform due diligence investigations of these portfolio companies, their operations, and their prospects. We may not learn all of the material information we need to know regarding these businesses through our investigations to make a well-informed investment decision.
•Lower middle market companies generally have less predictable operating results. We expect that our portfolio companies may have significant variations in their operating results, may from time to time be exposed to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, may require substantial additional capital to support their operations, to finance expansion or to maintain their competitive position, may otherwise have a weak financial position, or may be adversely affected by changes in the business cycle. Our portfolio companies may not meet net income, cash flow, and other coverage tests typically imposed by their senior lenders. A borrower’s failure to satisfy financial or operating covenants imposed by senior lenders could lead to defaults and, potentially, foreclosure on its senior credit facility, which could additionally trigger cross-defaults in other agreements. If this were to occur, it is possible that the borrower’s ability to repay any of our loans would be jeopardized.
•Lower middle market companies are more likely to be dependent on one or two persons. Typically, the success of a lower middle market business also depends on the management talents and efforts of one or two persons or a small group of persons. The death, disability, or resignation of one or more of these persons could have a material adverse impact on our certain of our portfolio companies and, in turn, on us.
•Lower middle market companies may have limited operating histories. While we focus on stable companies with proven track records, we may make loans to new companies that meet our other investment criteria. Portfolio companies with limited operating histories will be exposed to all of the operating risks that new businesses face and may be particularly susceptible to, among other risks, market downturns, competitive pressures and the departure of key executive officers.
•Debt securities of lower middle market companies typically are not rated by a credit rating agency. Typically, a lower middle market private business cannot or will not expend the resources to have its debt securities rated by a credit rating agency. We expect that most, if not all, of the debt securities we acquire will be unrated. Investors
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should assume that these loans would be at rates below “investment grade” quality. Investments rated below investment grade are often referred to as high yield securities or junk bonds and may be considered high risk as compared to investment-grade debt instruments.
•Lower middle market companies may be highly leveraged. Some of our portfolio companies are highly leveraged, which could have adverse consequences to these companies and to us as an investor. These companies m ay be subject to restrictive financial and operating covenants and the leverage could impair these companies’ ability to finance their future operations and capital needs. As a result, these companies’ flexibility to respond to changing business and economic conditions and to take advantage of business opportunities may be limited. Further, a leveraged company’s income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used.
•Lower middle market companies may operate in regulated industries or provide services to governments. Some of our portfolio companies may operate in regulated industries and/or provide services to federal, state or local governments, or operate in industries that provide services to regulated industries or federal, state or local governments, any of which could lead to delayed payments for services or subject the company to changing payment and reimbursement rates or other terms.
Because the majority of the loans we make and equity securities we receive when we make loans are not publicly traded, there is uncertainty regarding the value of our privately held securities.
The majority of our portfolio investments are, and we expect will continue to be, in the form of securities that are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable. In valuing our investment portfolio, several techniques are used, including, a total enterprise value approach, a yield analysis, market quotes, and independent third party assessments. A third party valuation firm provides estimates of fair value on our proprietary debt investments. Another third party valuation firm is used to provide valuation inputs for our significant equity investments, including earnings multiple ranges, as well as other information. In addition to these techniques, other factors are considered when determining fair value of our investments, including: the nature and realizable value of the collateral, including external parties’ guaranties; any relevant offers or letters of intent to acquire the portfolio company; and the markets in which the portfolio company operates.
Fair value measurements of our investments may involve subjective judgments and estimates and due to the inherent uncertainty of determining these fair values, the determination of fair value may fluctuate from period to period. Additionally, changes in the market environment and other events that may occur over the life of the investment may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities, and any investments that include OID or PIK interest may have unreliable valuations because their continuing accruals require ongoing judgments about the collectability of their deferred payments and the value of their underlying collateral. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which it is recorded.
Our NAV would be adversely affected if fair values at which we record of our investments are higher than the values that we ultimately realize upon the disposal of such securities.
The valuation process for certain of our portfolio holdings creates a conflict of interest.
A substantial portion of our portfolio investments are securities for which market quotations are not readily available. In connection with the determination of the fair value of these securities, our Valuation Team prepares portfolio company valuations based upon the most recent portfolio company financial statements available and projected financial results of each portfolio company. The participation of the Adviser’s investment professionals in our valuation process, and Mr. Gladstone’s pecuniary interest in the Adviser may result in a conflict of interest, as the management fees that we pay our Adviser are based on average gross assets, less uninvested cash or cash equivalents from borrowings, and adjusted appropriately for any share issuances or repurchases during the period.
The lack of liquidity of our privately held investments may adversely affect our business.
We generally make investments in private companies whose securities are not traded in any public market. Substantially all of the investments we presently hold are, and the investments we expect to acquire in the future will be, subject to legal and other restrictions on resale and will otherwise be less liquid than publicly traded securities. The illiquidity of our investments may make it difficult for us to quickly obtain cash equal to the value at which we record our investments if the
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need arises. This could cause us to miss important investment opportunities to the extent we do not have other sources of capital available. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may record substantial realized losses upon liquidation. We may also face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we, the Adviser, the Administrator, or our respective officers, employees or affiliates have material non-public information regarding such portfolio company.
Due to the uncertainty inherent in valuing these securities, the Adviser’s determinations of fair value may differ materially
from the values that could be obtained if a ready market for these securities existed. Our NAV could be materially affected
if the Adviser’s determinations regarding the fair value of our investments are materially different from the values that we
ultimately realize upon our disposal of such securities.
When we are a debt or minority equity investor in a portfolio company, which we expect will generally be the case, we may not be in a position to control the entity, and its management may make decisions that could decrease the value of our investment.
Most of our investments are, and we anticipate that most of our investments will continue to be, either debt or minority equity investments in our portfolio companies. Therefore, we generally will not be involved in the day-to-day operations and decision making of our portfolio companies, even though we may have board observation rights and our debt agreement may contain certain restrictive covenants. As a result, we are and will remain subject to the risk that a portfolio company may make business decisions with which we disagree, and the shareholders and management of such company may take risks or otherwise act in ways that do not serve our best interests. As a result, a portfolio company may make decisions that could decrease the value of our debt investments.
We often invest in transactions involving acquisitions, buyouts and recapitalizations of companies, which will subject us to the risks associated with change in control transactions.
Our strategy, in part, includes making debt and minority equity investments in companies in connection with acquisitions, buyouts, and recapitalizations, which subjects us to the risks associated with change in control transactions. Change in control transactions often present a number of uncertainties. Companies undergoing change in control transactions often face challenges retaining key employees and maintaining relationships with customers and suppliers. While we hope to avoid many of these difficulties by participating in transactions where the management team is retained and by conducting thorough due diligence in advance of our decision to invest, if our portfolio companies experience one or more of these problems, we may not realize the value that we expect in connection with our investments, which would likely harm our operating results, financial condition, and cash flows.
Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies and/or we could be subject to lender liability claims.
We invest primarily in debt securities issued by our portfolio companies. In some cases portfolio companies will be permitted to have other debt that ranks equally with, or senior to, the debt securities in which we invest. By their terms, such debt instruments may provide that the holders thereof are entitled to receive payment of interest and principal on or before the dates on which we are entitled to receive payments in respect of the debt securities in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization, or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution in respect of our investment. Furthermore, in the case of debt ranking equally with debt securities in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization, or bankruptcy of a portfolio company.
In addition, even though we have structured some of our investments as senior loans, if one of our portfolio companies were to go bankrupt, depending on the facts and circumstances, including the extent to which we actually provided managerial assistance to that portfolio company, a bankruptcy court might re-characterize our debt investments and subordinate all, or a portion, of our claims to that of other creditors. After repaying such senior creditors, such portfolio company may not have any remaining assets to use to repay its obligation to us. We may also be subject to lender liability claims for actions taken by us with respect to a borrower’s business, in instances in which we exercised control over the borrower or as a result of actions taken in rendering significant managerial assistance.
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Prepayments of our investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.
In addition to risks associated with delays in investing our capital, we are also subject to the risk that investments we make in our portfolio companies may be repaid prior to maturity. For the year ended September 30, 2025, we received unscheduled repayments of investments totaling $252.7 million. We will generally first use any proceeds from prepayments to repay any borrowings outstanding on our Credit Facility. In the event that funds remain after repayment of our outstanding borrowings, then we will generally reinvest these proceeds in government securities, pending their future investment in new debt and/or equity securities. These government securities will typically have substantially lower yields than the debt securities being prepaid and we could experience significant delays in reinvesting these amounts. In addition, once the proceeds have been reinvested in new portfolio companies, the yields on such new investments may also be lower than the yields on the debt securities being repaid. As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us. Additionally, prepayments could negatively impact our return on equity, which could result in a decline in the market price of our common stock.
Our portfolio is concentrated in a limited number of companies and industries, which subjects us to an increased risk of significant loss if any one of these companies does not repay us or if the industries experience downturns.
As of September 30, 2025, we had investments in 55 portfolio companies, of which our five largest investments comprised approximately $196.5 million, or 22.9% of our total investment portfolio, at fair value. A consequence of a concentration in a limited number of investments is that the aggregate returns we realize may be substantially adversely affected by the unfavorable performance of a small number of such investments or a substantial write-down of any one investment. Beyond our regulatory and income tax diversification requirements as well as Credit Facility requirements, we do not have fixed guidelines for industry concentration and our investments could potentially be concentrated in relatively few industries. In addition, while we do not intend to invest 25.0% or more of our total assets in a particular industry or group of industries at the time of investment, it is possible that as the values of our portfolio companies change, one industry or a group of industries may comprise in excess of 25.0% of the value of our total assets. As of September 30, 2025, our largest industry concentrations of our total investments at fair value were in healthcare, education, and childcare companies, representing 31.8%; diversified/conglomerate manufacturing companies, representing 23.6%; and diversified/conglomerate service companies, representing 17.7%. Therefore, we are susceptible to the economic circumstances in these industries, and a downturn in one or more of these industries could have a material adverse effect on our results of operations and financial condition.
Investments in securities of foreign portfolio companies, if any, may involve significant risks in addition to the risks inherent in U.S. investments.
We may make investments in securities of foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.
In addition, any investments that we make that are denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital gains, and political developments. We may employ hedging techniques to minimize these risks, but we cannot assure you that we will, in fact, hedge currency risk, or, that if we do, such strategies will be effective.
We invest in equity securities, which involves a substantial degree of risk.
We invest in common and other equity securities of portfolio companies. The returns on common stock have historically been significantly more volatile than fixed income securities. The value of such equity securities, which oftentimes are not publicly traded or liquid, will rise and fall in response to the activities of the company that issued the securities, general market conditions, and/or specific economic or political conditions. The equity securities that we acquire may fail to appreciate or may decline in value.
Because preferred stock represents an equity ownership interest in a company and is typically subordinated to bonds and other debt instruments in a company’s capital structure, in terms of priority to corporate income, they are generally subject
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to greater credit risk than those debt instruments. Accordingly, their value usually will react more strongly than bonds and other debt instruments to actual or perceived changes in a company’s financial condition or prospects or to fluctuations in the equity markets. Preferred stockholders generally have no voting rights or their voting rights are limited to certain extraordinary transactions or events. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.
The disposition of our investments may result in contingent liabilities.
Currently, all of our investments involve private securities. In connection with the disposition of an investment in private securities, we may be required to make representations about the business and financial affairs of the underlying portfolio company typical of those made in connection with the sale of a business. We may also be required to indemnify the purchasers of such investment to the extent that any such representations turn out to be inaccurate or with respect to certain potential liabilities. These arrangements may result in contingent liabilities that ultimately yield funding obligations that must be satisfied through our return of certain distributions previously made to us.
Portfolio company litigation or other litigation or claims against us or our personnel could result in additional costs and the diversion of management time and resources.
In the course of investing in and providing significant managerial assistance to certain of our portfolio companies, certain persons employed by the Adviser may serve as directors on the boards of such companies. To the extent that litigation arises out of our investments in these companies or otherwise, even if without merit, we or such employees may be named as defendants in such litigation, which could result in additional costs, including defense costs, and the diversion of management time and resources. We may be unable to accurately estimate our exposure to litigation risk if we record balance sheet reserves for probable loss contingencies. As a result, any reserves we establish to cover any settlements or judgments may not be sufficient to cover our actual financial exposure, which may have a material impact on our results of operations, financial condition, or cash flows.
While we believe we would have valid defenses to potential claims brought due to our investment in any portfolio company, and will defend any such claims vigorously, we may nevertheless expend significant amounts of money in defense costs and expenses. Further, if we enter into settlements or suffer an adverse outcome in any litigation, we could be required to pay significant amounts. In addition, if any of our portfolio companies become subject to direct or indirect claims or other obligations, such as defense costs or damages in litigation or settlement, our investment in such companies could diminish in value and we could suffer indirect losses. Further, these matters could cause us to expend significant management time and effort in connection with assessment and defense of any claims.
Any unrealized depreciation we experience on our investment portfolio may be an indication of future realized losses, which could reduce our income available for distribution.
As a BDC we are required to carry our investments at market value or, if no market value is ascertainable, at fair value. We will record decreases in the market values or fair values of our investments as unrealized depreciation. Since our inception, we have, at times, incurred a cumulative net unrealized depreciation of our portfolio. Any unrealized depreciation in our investment portfolio could result in realized losses in the future and ultimately in reductions of our income available for distribution to stockholders in future periods.
Risks Related to Our External Financing
In addition to regulatory limitations on our ability to raise capital, our Credit Facility contains various covenants which, if not complied with, could accelerate our repayment obligations under the facility, thereby materially and adversely affecting our liquidity, financial condition, results of operations and ability to pay distributions.
We will have a continuing need for capital to finance our investments. As of September 30, 2025, we had $0 in borrowings, at cost, outstanding under our Credit Facility, which provides for maximum borrowings of $320.0 million, with a revolving period end date of October 31, 2027 (the “Revolving Period End Date”). Our Credit Facility permits us to fund additional loans and investments as long as we are within the conditions set forth in the credit agreement. Our Credit Facility contains covenants that require our wholly-owned subsidiary, Business Loan, to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions) and restrict material changes to our credit and collection policies without lenders’ consent. The Credit Facility also limits distributions to our stockholders on a fiscal year basis to the sum of our net investment income, net capital gains and amounts deemed to
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have been paid during the prior year in accordance with Section 855(a) of the Code. We are also subject to certain limitations on the type of loan investments we can make, including restrictions on geographic concentrations, sector concentrations, loan size, interest rate type, payment frequency and status, average life and lien property. Our Credit Facility further requires us to comply with other financial and operational covenants, which obligate us to, among other things, maintain certain financial ratios, including asset and interest coverage, and a minimum number of 25 obligors in the borrowing base. Additionally, we are required to maintain (i) a minimum net worth (defined in our Credit Facility to include any outstanding mandatorily redeemable preferred stock) of $500.0 million plus 50.0% of all equity and subordinated debt raised after June 23, 2025 less 50% of any equity and subordinated debt retired or redeemed after June 23, 2025, which equates to $581.0 million as of September 30, 2025, (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. Continued compliance with the covenants in our Credit Facility depends on many factors, some of which are beyond our control.
Any unrealized depreciation in our portfolio may increase in future periods and threaten our ability to comply with the minimum net worth covenant and other covenants under our Credit Facility. Our failure to satisfy these covenants could result in foreclosure by our lenders, which would accelerate our repayment obligations under the facility and thereby have a material adverse effect on our business, liquidity, financial condition, results of operations and ability to pay distributions to our stockholders.
Any inability to renew, extend or replace our Credit Facility on terms favorable to us, or at all, could adversely impact our liquidity and ability to fund new investments or maintain distributions to our stockholders.
If our Credit Facility is not renewed or extended by the Revolving Period End Date, all principal and interest will be due and payable on or before October 31, 2029. Subject to certain terms and conditions, our Credit Facility may be expanded to a total of $400.0 million pursuant to an accordion feature. However, if additional lenders are unwilling to join the facility on its terms, we will be unable to expand the facility and thus will continue to have limited availability to finance new investments under our Credit Facility. There can be no guarantee that we will be able to renew, extend or replace our Credit Facility by the Revolving Period End Date on terms that are favorable to us, if at all. Our ability to expand our Credit Facility, and to obtain replacement financing at or before the Revolving Period End Date, will be constrained by then-current economic conditions affecting the credit markets. In the event that we are not able to expand our Credit Facility, or to renew, extend or refinance our Credit Facility by the Revolving Period End Date, this could have a material adverse effect on our liquidity and ability to fund new investments, our ability to make distributions to our stockholders and our ability to qualify as a RIC under the Code.
If we are unable to secure replacement financing, we may be forced to sell certain assets on disadvantageous terms, which may result in realized losses, and such realized losses could materially exceed the amount of any unrealized depreciation on these assets as of our most recent balance sheet date, which would have a material adverse effect on our results of operations. In addition to selling assets, or as an alternative, we may issue equity in order to repay amounts outstanding under our Credit Facility. Depending on the trading prices of our common stock, such an equity offering could have a substantial dilutive impact on our existing stockholders’ interest in our earnings, assets and voting interest in us. If we are not able to renew, extend or refinance our Credit Facility prior to its maturity, it could result in significantly higher interest rates and related charges and may impose significant restrictions on the use of borrowed funds to fund investments or maintain distributions to stockholders.
Our business plan is dependent upon external financing, which is constrained by the limitations of the 1940 Act.
There can be no assurance that we will be able to raise additional capital through issuing equity or debt in the near future. However, our business requires a substantial amount of cash to operate and grow. We may acquire such additional capital from the following sources:
•Senior Securities. We may issue “senior securities representing indebtedness” (such as borrowings under our Credit Facility and our notes payable) and “senior securities that are stock” (such as preferred stock) up to the maximum amount permitted by the 1940 Act. The 1940 Act currently permits us, as a BDC, to issue such senior securities in amounts such that our asset coverage, as defined in Section 18(h) of the 1940 Act, is at least 150% on such senior security immediately after each issuance of such senior security. As a result of issuing senior securities (in whatever form), we will be exposed to the risks associated with leverage. Although borrowing money for investments increases the potential for gain, it also increases the risk of a loss. A decrease in the value of our investments will have a greater impact on the value of our common stock to the extent that we have borrowed
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money to make investments. There is a possibility that the costs of borrowing could exceed the income we receive on the investments we make with such borrowed funds. In addition, our ability to pay distributions, issue senior securities or repurchase shares of our common stock would be restricted if the asset coverage on each of our senior securities is not at least 150%. If the aggregate value of our assets declines, we might be unable to satisfy that 150% requirement. To satisfy the 150% asset coverage requirement in the event that we are seeking to pay a distribution, we might either have to (i) liquidate a portion of our loan portfolio to repay a portion of our indebtedness or (ii) issue common stock. This may occur at a time when a sale of a portfolio asset may be disadvantageous, or when we have limited access to capital markets on agreeable terms. In addition, any amounts that we use to service our indebtedness, pay dividends on our preferred stock, or for offering expenses will not be available for distributions to common stockholders. Furthermore, if we issue common stock at below NAV per common share, any non-participating stockholders will be subject to dilution, as described below. Pursuant to Section 61(a)(3) of the 1940 Act, we are permitted to issue multiple classes of “senior securities representing indebtedness.” However, pursuant to Section 18(c) of the 1940 Act, we are permitted to issue only one class of “senior securities that are stock.”
•Common and Convertible Preferred Stock. Because we are constrained in our ability to issue debt or senior securities for the reasons given above, we may at times be dependent on the issuance of equity as a financing source. If we raise additional funds by issuing more common stock, the percentage ownership of our common stockholders at the time of the issuance would decrease and our existing common stockholders may experience dilution. In addition, under the 1940 Act, we will generally not be able to issue additional shares of our common stock at a price below NAV per common share to purchasers, other than to our existing common stockholders through a rights offering, without first obtaining the approval of our stockholders and our independent directors. If we were to sell shares of our common stock below our then-current NAV per common share, such sales would result in an immediate dilution to the NAV per common share. This dilution would occur as a result of the sale of common shares at a price below the then-current NAV per share of our common stock and a proportionately greater decrease in a common stockholder’s interest in our earnings and assets and voting percentage than the increase in our assets resulting from such issuance. For example, if we issue and sell an additional 10.0% of our common stock at a 5.0% discount to NAV, a common stockholder who does not participate in that offering for its proportionate interest will suffer NAV dilution of up to 0.5% or $5 per $1,000 of NAV. This imposes constraints on our ability to raise capital when our common stock is trading below NAV per common share. As noted above, the 1940 Act prohibits the issuance of multiple classes of “senior securities that are stock.”
We financed certain of our investments with borrowed money and capital from the issuance of senior securities, which will magnify the potential for gain or loss on amounts invested and may increase the risk of investing in us.
The use of leverage, including through the issuance of senior securities that are debt or stock, magnifies the potential for gain or loss on amounts invested, and, if we incur additional leverage, this potential will be further magnified. As of September 30, 2025, we incurred leverage through the Credit Facility, the Series A Preferred Stock, the 5.125% Notes due 2026 (the “2026 Notes”), the 2027 Notes, the 7.75% Notes due 2028 (the “2028 Notes”), and the 2030 Convertible Notes. From time to time, we intend to incur additional leverage to the extent permitted under the 1940 Act. The use of leverage is generally considered a speculative investment technique and increases the risks associated with investing in our securities. In the future, we may borrow from, and issue senior securities, to banks and other lenders. Holders of these senior securities will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such holders to seek recovery against our assets in the event of a default.
The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns on our portfolio, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.

| Assumed Return on Our Portfolio (Net of Expenses)
| (10.0) | % | (5.0) | % | 0.0 | % | 5.0 | % | 10.0 | %
Corresponding return to common stockholder(A) | (23.83) | % | (14.42) | % | (5.00) | % | 4.41 | % | 13.83 | %

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(A)The hypothetical return to common stockholders is calculated by multiplying our total assets as of September 30, 2025 by the assumed rates of return and subtracting all interest on our debt to be paid during the 12 months following September 30, 2025, and then dividing the resulting difference by our total net assets attributable to common stock as of September 30, 2025. Based on $907.6 million in total assets, $0 drawn on our Credit Facility (at cost), $150.0
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million in our 2026 Notes payable (at cost), $50.0 million in our 2027 Notes payable (at cost), $57.0 million in our 2028 Notes payable (at cost), $149.5 million in our 2030 Convertible Notes payable (at cost), $21.6 million in our Series A Preferred Stock (at cost), and $482.0 million in net assets, each as of September 30, 2025.
Based on an aggregate outstanding indebtedness of $428.1 million at cost as of September 30, 2025 and the effective annual cash interest rate of 5.6% as of that date, our investment portfolio at fair value would have had to produce an annual return of at least 2.8% to cover annual interest payments on the outstanding debt.
Risks Related to Our Regulation and Structure
We will be subject to corporate-level tax if we are unable to satisfy Code requirements for RIC qualification.
To maintain our qualification as a RIC, we must meet income source, asset diversification, and annual distribution requirements. The annual distribution requirement is satisfied if we distribute at least 90.0% of our Investment Company Taxable Income to our stockholders on an annual basis. Because we use leverage, we are subject to certain asset coverage ratio requirements under the 1940 Act and could, under certain circumstances, be restricted from making distributions necessary to qualify as a RIC. Warrants we receive with respect to debt investments generally create OID, which we must recognize as ordinary income over the term of the debt investment. Similarly, PIK interest which is accrued generally over the term of the debt investment but not paid in cash, is recognized as ordinary income. Both OID and PIK interest will increase the amounts we are required to distribute to maintain our RIC status. Because such OIDs and PIK interest will not produce distributable cash for us at the same time as we are required to make distributions, we will need to use cash from other sources to satisfy such distribution requirements. For the year ended September 30, 2025, we recognized $0.4 million of OID income and the unamortized balance of OID investments as of September 30, 2025 totaled $0.2 million. As of September 30, 2025, we had nine investments which had a PIK interest component and we recorded PIK interest income of $5.0 million during the year ended September 30, 2025. We collected $7.2 million in PIK interest in cash for the year ended September 30, 2025. Additionally, we must meet asset diversification and income source requirements at the end of each calendar quarter. If we fail to meet these tests, we may need to quickly dispose of certain investments to prevent the loss of RIC status. Since most of our investments will be illiquid, such dispositions, if even possible, may not be made at prices advantageous to us and may result in substantial losses. If we fail to qualify as a RIC as of a calendar quarter or annually for any reason and become fully subject to U.S. federal corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution, and the actual amount distributed. Such a failure would have a material adverse effect on us and our common stock.
Some of our debt investments may include success fees that would generate payments to us if the business is ultimately sold. Because the satisfaction of these success fees, and the ultimate payment of these fees, is uncertain, we generally only recognize them as income when the payment is received. Success fee amounts are characterized as ordinary income for tax purposes and, as a result, we are required to distribute such amounts to our stockholders in order to maintain RIC status.
If we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a BDC or be precluded from investing according to our current business strategy.
As a BDC, we may not acquire any assets other than qualifying assets unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets, exclusive of Operating Assets, are qualifying assets, as defined in Section 55(a) of the 1940 Act.
We believe that most of the investments that we may acquire in the future will constitute qualifying assets. However, we may be precluded from investing in what we believe to be attractive investments if such investments are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets, we could violate the 1940 Act provisions applicable to BDCs. As a result of such violation, specific rules under the 1940 Act could prevent us, for example, from making follow-on investments in existing portfolio companies (which could result in the dilution of our position) or could require us to dispose of investments at disadvantageous times in order to come into compliance with the 1940 Act. If we need to dispose of such investments quickly, it could be difficult to dispose of such investments on favorable terms. We may not be able to find a buyer for such investments and, even if we do find a buyer, we may have to sell the investments at a substantial loss. Any such outcomes would have a material adverse effect on our business, financial condition, results of operations and cash flows.
If we do not maintain our status as a BDC, we would be subject to regulation as a registered closed-end investment company under the 1940 Act. As a registered closed-end investment company, we would be subject to substantially more regulatory restrictions under the 1940 Act, which would significantly decrease our operating flexibility. In addition, any
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such failure to maintain our status as a BDC could cause an event of default under out outstanding indebtedness, which could have a material adverse effect on our business, financial condition or results of operations.
We are subject to restrictions that may discourage a change of control. Certain provisions contained in our articles of incorporation and Maryland law may prohibit or restrict a change of control and adversely impact the price of our common stock.
Our Board of Directors is divided into three classes, with the term of the directors in each class expiring every third year. At each annual meeting of stockholders, the successors to the class of directors whose term expires at such meeting will be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. After election, a director may only be removed by our stockholders for cause. Election of directors for staggered terms with limited rights to remove directors makes it more difficult for a hostile bidder to acquire control of us. The existence of this provision may negatively impact the price of our securities and may discourage third-party bids to acquire our securities. This provision may reduce any premiums paid to stockholders in a change in control transaction.
Certain provisions of Maryland law applicable to us prohibit business combinations with:
•any person who beneficially owns 10.0% or more of the voting power of our stock (an “interested stockholder”);
•an affiliate of ours who at any time within the two-year period prior to the date in question was an interested stockholder; or
•an affiliate of an interested stockholder.
These prohibitions last for five years after the most recent date on which the interested stockholder became an interested stockholder. Thereafter, any business combination with the interested stockholder must be recommended by our Board of Directors and approved by the affirmative vote of at least 80.0% of the votes entitled to be cast by holders of our outstanding shares of common stock and preferred stock, voting together as a single class, and two-thirds of the votes entitled to be cast by holders of our common stock other than shares held by the interested stockholder. These requirements could have the effect of inhibiting a change in control even if a change in control were in our stockholders’ interest. These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted by our Board of Directors prior to the time that someone becomes an interested stockholder.
Our articles of incorporation permit our Board of Directors to issue up to 50.0 million shares of capital stock. In addition, our Board of Directors, without any action by our stockholders, may amend our articles of incorporation from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series of stock that we have authority to issue. Our Board of Directors may classify or reclassify any unissued common stock or preferred stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms or conditions of redemption of any such stock. Thus, our Board of Directors could authorize the issuance of preferred stock with terms and conditions that could have a priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our common stock.
We may not be permitted to declare a dividend or make any distribution to stockholders or repurchase shares until such time as we satisfy the asset coverage tests under the provisions of the 1940 Act that apply to BDCs.
Regulations governing our operation as a BDC and RIC will affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth. As a result of the annual distribution requirement to qualify as a RIC, we may need to periodically access the capital markets to raise cash to fund new investments. We may issue “senior securities representing indebtedness,” including borrowing money from banks or other financial institutions or “senior securities that are stock,” such as preferred stock, only in amounts such that our asset coverage on each senior security, as defined in the 1940 Act, equals at least 150% after each such incurrence or issuance. Further, we may not be permitted to declare a dividend or make any distribution to our outstanding stockholders or repurchase shares until such time as we satisfy these tests. Our ability to issue different types of securities is also limited. Compliance with these requirements may unfavorably limit our investment opportunities and reduce our ability in comparison to other companies to profit from favorable spreads between the rates at which we can borrow and the rates at which we can lend. As a BDC, therefore, we may issue equity at a rate more frequent than our privately owned competitors, which may lead to greater stockholder dilution. We have incurred leverage to generate capital to make additional investments. If the value of our assets declines, we may be unable to satisfy the asset coverage test under the
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1940 Act, which could prohibit us from paying distributions and could prevent us from qualifying as a RIC. If we cannot satisfy the asset coverage test, we may be required to sell a portion of our investments and, depending on the nature of our debt financing, repay a portion of our indebtedness at a time when such sales and repayments may be disadvantageous. Such events, if they were to occur, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Risks Related to Our External Management
We are dependent upon our key management personnel and the key management personnel of the Adviser, particularly David Gladstone and Robert L. Marcotte, and on the continued operations of the Adviser, for our future success.
We have no employees. Our chief executive officer, chief financial officer and treasurer, and the employees of the Adviser do not spend all of their time managing our activities and our investment portfolio. We are particularly dependent upon David Gladstone and Robert L. Marcotte for their experience, skills and networks. Our executive officers and the employees of the Adviser allocate some, and in some cases a material portion, of their time to businesses and activities that are not related to our business. We have no separate facilities and are completely reliant on the Adviser, which has significant discretion as to the implementation and execution of our business strategies and risk management practices. We are subject to the risk of discontinuation of the Adviser’s operations or termination of the Advisory Agreement and the risk that, upon such event, no suitable replacement will be found. We believe that our success depends to a significant extent upon the Adviser and that discontinuation of its operations or the loss of its key management personnel could have a material adverse effect on our ability to achieve our investment objectives.
Our success depends on the Adviser’s ability to attract and retain qualified personnel in a competitive environment.
The Adviser experiences competition in attracting and retaining qualified personnel, particularly investment professionals and senior executives, and we may be unable to maintain or grow our business if we cannot attract and retain such personnel. The Adviser’s ability to attract and retain personnel with the requisite credentials, experience and skills depends on several factors including its ability to offer competitive wages, benefits and professional growth opportunities. The Adviser competes with investment funds (such as private equity funds and mezzanine funds) and traditional financial services companies for qualified personnel, many of which have greater resources than us. Searches for qualified personnel may divert management’s time from the operation of our business. Strain on the existing personnel resources of the Adviser, in the event that it is unable to attract experienced investment professionals and senior executives, could have a material adverse effect on our business.
The Adviser can resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.
The Adviser has the right to resign under the Advisory Agreement at any time upon not less than 60 days’ written notice, whether we have found a replacement or not. If the Adviser resigns, we may not be able to find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our common stock may decline. In addition, the coordination of our internal management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by the Adviser and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.
The Adviser's liability is limited under the Advisory Agreement, and we are required to indemnify our investment adviser against certain liabilities, which may lead the Adviser to act in a riskier manner on our behalf than it would when acting for its own account.
The Adviser has not assumed any responsibility to us other than to render the services described in the Advisory Agreement, and it will not be responsible for any action of our Board of Directors in declining to follow the Adviser’s advice or recommendations. Pursuant to the Advisory Agreement, the Adviser and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser will not be liable to us for their acts under the Advisory Agreement, absent willful misfeasance, bad faith or gross negligence in the performance
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of their duties or by reason of the reckless disregard of their duties and obligations under the Advisory Agreement. We have agreed to indemnify, defend and protect the Adviser and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser with respect to all damages, liabilities, costs and expenses arising out of or otherwise based upon the performance of any of the Adviser’s duties or obligations under the Advisory Agreement or otherwise as an investment adviser for us, and not arising out of willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of the reckless disregard of their duties and obligations under the Advisory Agreement. These protections may lead the Adviser to act in a riskier manner when acting on our behalf than it would when acting for its own account.
Our incentive fee may induce the Adviser to make certain investments, including speculative investments.
The incentive fee structure that has been implemented under the Advisory Agreement may cause the Adviser to invest in high-risk investments or take other risks. In addition to its management fee, the Adviser is entitled under the Advisory Agreement to receive incentive compensation based in part upon our achievement of specified levels of income. In evaluating investments and other management strategies, the opportunity to earn incentive compensation based on net investment income may lead the Adviser to place undue emphasis on the maximization of net investment income at the expense of other criteria, such as preservation of capital, maintaining sufficient liquidity, or management of credit risk or market risk, in order to achieve higher incentive compensation. Investments with higher yield potential are generally riskier or more speculative. This could result in increased risk to the value of our investment portfolio.
In addition, the Adviser will receive a capital gains incentive fee based, in part, upon net capital gains realized on our investments. Unlike the portion of the incentive fee based on income, there is no hurdle rate applicable to the incentive fee based on capital gains. As a result, the Adviser may seek to invest more capital in investments that are likely to result in capital gains as compared to income producing securities. This practice could result in us investing in more speculative securities than would otherwise be the case, which could result in higher investment losses, particularly during economic downturns.
We may be obligated to pay the Adviser incentive compensation even if we incur a loss.
The Advisory Agreement entitles the Adviser to incentive compensation for each fiscal quarter in an amount equal to a percentage of the excess of our investment income for that quarter (before deducting incentive compensation, net operating losses and certain other items) above a threshold return for that quarter. When calculating our incentive compensation, our pre-incentive fee net investment income excludes realized and unrealized capital losses that we may incur in the fiscal quarter, even if such capital losses result in a net loss on our statement of operations for that quarter. Thus, we may be required to pay the Adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.
We may be required to pay the Adviser incentive compensation on income accrued, but not yet received in cash.
That part of the incentive fee payable by us that relates to our net investment income is computed and paid on income that may include interest that has been accrued but not yet received in cash, such as debt instruments with PIK interest or OID. If a portfolio company defaults on a loan, it is possible that such accrued interest previously used in the calculation of the incentive fee will become uncollectible. Consequently, we may make incentive fee payments on income accruals that we may not collect in the future and with respect to which we do not have a clawback right against the Adviser. Our OID investments totaled $49.0 million as of September 30, 2025, at cost. For the year ended September 30, 2025, we recognized $0.4 million of OID income and the unamortized balance of OID investments as of September 30, 2025 totaled $0.2 million. As of September 30, 2025, we had nine investments which had a PIK interest component and we recorded PIK interest income of $5.0 million during the year ended September 30, 2025. We collected $7.2 million in PIK interest in cash for the year ended September 30, 2025.
The Adviser’s failure to identify and invest in securities that meet our investment criteria or perform its responsibilities under the Advisory Agreement would likely adversely affect our ability for future growth.
Our ability to achieve our investment objectives will depend on our ability to grow, which in turn will depend on the Adviser’s ability to identify and invest in securities that meet our investment criteria. Accomplishing this result on a cost-effective basis will be largely a function of the Adviser’s structuring of the investment process, its ability to provide competent and efficient services to us, and our access to financing on acceptable terms. The Adviser’s senior management team has substantial responsibilities under the Advisory Agreement. In order to grow, the Adviser will need to hire, train,
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supervise, and manage new employees successfully. Any failure to manage our future growth effectively would likely have a material adverse effect on our business, financial condition, and results of operations.
There are significant potential conflicts of interest, including with the Adviser, which could impact our investment returns.
Our executive officers and directors, and the officers and directors of the Adviser, serve or may serve as officers, directors, or principals of entities that operate in the same or a related line of business as we do or of investment funds managed by our affiliates. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in our or our stockholders’ best interests. For example, Mr. Gladstone, our chairman and chief executive officer, is the chairman of the board and chief executive officer of each of the Gladstone Companies. In addition, Mr. Marcotte is an executive vice president of the Adviser. While portfolio managers and the officers and other employees of the Adviser devote as much time to the management of us as appropriate to enable the Adviser to perform its duties in accordance with the Advisory Agreement, the portfolio managers and other of the Adviser's officers may have conflicts in allocating their time and services among us, on the one hand, and other investment vehicles managed by the Adviser, on the other hand. These activities could be viewed as creating a conflict of interest insofar as the time and effort of the portfolio managers and the officers and employees of the Adviser will not be devoted exclusively to our business but will instead be allocated between our business and the management of these other investment vehicles. Moreover, the Adviser may establish or sponsor other investment vehicles which from time to time may have potentially overlapping investment objectives with ours and accordingly may invest in, whether principally or secondarily, asset classes we target. While the Adviser generally has broad authority to make investments on behalf of the investment vehicles that it advises, the Adviser has adopted investment allocation procedures to address these potential conflicts and intends to direct investment opportunities to us or the Affiliated Public Fund with the investment strategy that most closely fits the investment opportunity. Nevertheless, the management of the Adviser may face conflicts in the allocation of investment opportunities to other entities it manages. As a result, it is possible that we may not be given the opportunity to participate in certain investments made by other funds managed by the Adviser. In certain circumstances, we may make investments in a portfolio company in which one of our affiliates has or will have an investment, subject to satisfaction of any regulatory restrictions and, where required, to the prior approval of our Board of Directors. As of September 30, 2025, our Board of Directors has approved the following types of co-investment transactions:
•Our affiliate, Gladstone Commercial, may, under certain circumstances, lease property to portfolio companies that we do not control. We may pursue such transactions only if (i) the portfolio company is not controlled by us or any of our affiliates, (ii) the portfolio company satisfies the tenant underwriting criteria of Gladstone Commercial, and (iii) the transaction is approved by a majority of our independent directors and a majority of the independent directors of Gladstone Commercial. We expect that any such negotiations between Gladstone Commercial and our portfolio companies would result in lease terms consistent with the terms that the portfolio companies would be likely to receive were they not portfolio companies of ours.
•We may invest simultaneously with our affiliates Gladstone Investment and/or Gladstone Alternative in senior loans in the broadly syndicated market whereby neither we nor any affiliate has the ability to dictate the terms of the loans.
•Pursuant to the Co-Investment Order, under certain circumstances, we may co-invest with Gladstone Investment, Gladstone Alternative and any future BDC or closed-end management investment company that is advised by the Adviser (or sub-advised by the Adviser if it controls the fund), or any combination of the foregoing, subject to the conditions included therein.
Certain of our officers, who are also officers of the Adviser, may from time to time serve as directors of certain of our portfolio companies. If an officer serves in such capacity with one of our portfolio companies, such officer will owe fiduciary duties to stockholders of the portfolio company, which duties may from time to time conflict with the interests of our stockholders.
In the course of our investing activities, we will pay base management and incentive fees to the Adviser and will reimburse the Administrator for certain expenses it incurs. As a result, investors in our common stock will invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in, among other things, a lower rate of return than one might achieve through our investors themselves making direct investments. As a result of this arrangement, there may be times when the management team of the Adviser has interests that differ from those of our stockholders, giving rise to a conflict. In addition, as a BDC, we make available significant managerial assistance to our portfolio companies and provide other services to such portfolio companies. While, neither we nor the Adviser currently receives fees in connection with managerial assistance, the Adviser and Gladstone Securities have, at various times, provided other services to certain of our portfolio companies and received fees for these other services.
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The Adviser is not obligated to provide a credit of the base management fee or incentive fee, which could negatively impact our earnings and our ability to maintain our current level of distributions to our stockholders.
The Advisory Agreement provides for a base management fee based on our total assets and an incentive fee which consists of two parts: an income-based incentive fee and a capital gains-based incentive fee. Our Board of Directors has historically accepted and may accept in the future quarterly or annual non-contractual, unconditional and irrevocable credits to reduce the annual base management fee. Further, our Board of Directors has accepted on a quarterly basis non-contractual, unconditional and irrevocable credits from the Adviser to reduce the income-based incentive fee to the extent net investment income did not cover 100.0% of distributions to common stockholders. Any waived fees may not be recouped by the Adviser in the future. However, the Adviser is not required to issue these or other credits of fees under the Advisory Agreement, and to the extent our investment portfolio grows in the future, we expect these management and incentive fees will increase. If the Adviser does not issue these credits in future quarters, it could negatively impact our earnings and may compromise our ability to maintain our current level of distributions to our stockholders, which could have a material adverse impact on our stock price.
Our business model is dependent upon developing and sustaining strong referral relationships with investment bankers, business brokers and other intermediaries and any change in our referral relationships may impact our business plan.
We are dependent upon informal relationships with investment bankers, business brokers and traditional lending institutions to provide us with deal flow. If we fail to maintain our relationship with such funds or institutions, or if we fail to establish strong referral relationships with other funds, we will not be able to grow our portfolio of investments and fully execute our business plan.
Our base management fee may induce the Adviser to incur leverage.
The fact that our base management fee is payable based upon our total assets, which would include any investments made with proceeds of borrowings, may encourage the Adviser to use leverage to make additional investments. Under certain circumstances, the use of increased leverage may increase the likelihood of default, which would disfavor holders of our securities. Given the subjective nature of the investment decisions made by the Adviser on our behalf, we will not be able to monitor this potential conflict of interest.
Risks Related to an Investment in Our Securities
There is a risk that you may not receive distributions or that distributions may not grow over time.
We intend to distribute at least 90.0% of our Investment Company Taxable Income to our stockholders by paying monthly distributions. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. Furthermore, we expect to retain some or all net realized long-term capital gains by first offsetting them with realized capital losses, and secondly through a deemed distribution to supplement our equity capital and support the growth of our portfolio, although our Board of Directors may determine in certain cases to distribute these gains to our common stockholders. In addition, our Credit Facility restricts the amount of distributions we are permitted to make. We cannot assure you that we will achieve investment results or maintain a tax status that will allow or require any specified level of cash distributions.
Investing in our securities may involve an above average degree of risk.
The investments we make in accordance with our investment objectives may result in a higher amount of risk than alternative investment options and a higher risk of volatility or loss of principal. Our investments in portfolio companies may be highly speculative, and therefore, an investment in our securities may not be suitable for someone with lower risk tolerance.
Distributions to our stockholders have included and may in the future include a return of capital.
Quarterly, our Board of Directors declares monthly distributions based on then-current estimates of taxable income for each fiscal year, which may differ, and in the past have differed, from actual results. Because our distributions are based on estimates of taxable income that may differ from actual results, future distributions payable to our stockholders may also include a return of capital. Moreover, to the extent that we distribute amounts that exceed our current and accumulated earnings and profits, these distributions constitute a return of capital to the extent of the common stockholder’s adjusted tax basis in its shares of our common stock. A return of capital represents a return of a stockholder’s original investment in
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shares of our common stock and should not be confused with a distribution from earnings and profits. Although return of capital distributions may not be taxable, such distributions may increase an investor’s tax liability for capital gains upon the sale of shares of our common stock by reducing the investor’s tax basis in its shares of our common stock. Such returns of capital reduce our asset base and also adversely impact our ability to raise debt capital as a result of the leverage restrictions under the 1940 Act, which could have material adverse impact on our ability to make new investments.
Common shares of closed-end investment companies frequently trade at a discount to NAV.
Shares of closed-end investment companies frequently trade at a discount to NAV per common share. Since our inception, our common stock has at times traded above NAV, and at times below NAV per share. This characteristic of shares of closed-end investment companies is separate and distinct from the risk that our NAV per share will decline. As with any stock, the price of our common stock will fluctuate with market conditions and other factors. If shares are sold, the price received may be more or less than the original investment. Whether investors will realize gains or losses upon the sale of shares of our common stock will not depend directly upon our NAV, but will depend upon the market price of the shares at the time of sale. Since the market price of our common stock will be affected by such factors as the relative demand for and supply of the shares in the market, general market and economic conditions and other factors beyond our control, we cannot predict whether the shares will trade at, below, or above our NAV.
Under the 1940 Act, we are generally not able to issue additional shares of our common stock at a price below NAV per share to purchasers other than our existing stockholders through a rights offering without first obtaining the approval of our common stockholders and our independent directors. Additionally, when our common stock is trading below its NAV per share, our dividend yield may exceed the weighted average returns that we would expect to realize on new investments that would be made with the proceeds from the sale of such stock, making it unlikely that we would determine to issue additional shares in such circumstances. Thus, for as long as our common stock may trade below NAV, we will be subject to significant constraints on our ability to raise capital through the issuance of common stock. Additionally, an extended period of time in which we are unable to raise capital may restrict our ability to grow and adversely impact our ability to increase or maintain our distributions.
Risks Related to the 2027 Notes and 2030 Convertible Notes (collectively, the “Notes”)
The Notes are unsecured and therefore are effectively subordinated to any secured indebtedness we have incurred or may incur in the future and rank pari passu with, or equal to, all outstanding and future unsecured indebtedness issued by us and our general liabilities (total liabilities, less debt).
The Notes are not secured by any of our assets or any of the assets of our subsidiaries. As a result, the Notes are subordinated to any secured indebtedness we or our subsidiaries have currently incurred and may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes. In addition, the Notes rank pari passu with, or equal to, all outstanding and future unsecured, unsubordinated indebtedness issued by us and our general liabilities (total liabilities, less debt).
The Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries.
The Notes are obligations exclusively of the Company and not of any of our subsidiaries. None of our subsidiaries is a guarantor of the Notes and the Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future. Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors of our subsidiaries will have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of the Notes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our claims would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims. Consequently, the Notes are structurally subordinated to all indebtedness and other liabilities of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish. As of September 30, 2025, there was $0 outstanding under the Credit Facility. Borrowings under the Credit Facility are the obligation of Business Loan, and are structurally senior to the Notes. In addition, our subsidiaries may incur substantial additional indebtedness in the future, all of which would be structurally senior to the Notes.
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The indentures under which the Notes were issued contain limited protection for holders of the Notes.
The indentures under which the Notes were issued offer limited protection to holders of the Notes. The terms of the indentures do not restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances or events that could have an adverse impact on your investment in the Notes. In particular, the terms of the indenture and the Notes do not place any restrictions on our or our subsidiaries’ ability to:
•issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Notes to the extent of the value of the assets securing such debt, (3) indebtedness that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Notes with respect to the assets of our subsidiaries, in each case, other than an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) as modified by Section 61(a)(2) of the 1940 Act or any successor provisions, whether or not we continue to be subject to such provisions of the 1940 Act, which generally prohibit us from incurring additional debt or issuing additional debt or preferred securities, unless our asset coverage, as defined in the 1940 Act, equals at least 150% after such incurrence or issuance;
•with respect to the 2027 Notes, pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the Notes, including preferred stock and any subordinated indebtedness, other than, dividends, purchases, redemptions or payments that would cause our asset coverage to fall below the threshold specified in Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act or any successor provisions, giving effect to any no-action relief granted by the SEC to another BDC and upon which we may reasonably rely (or to us if we determine to seek such similar SEC no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act in order to maintain the BDC’s status as a RIC under Subchapter M of the Code;
•sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);
•enter into transactions with affiliates;
•create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;
•make investments; or
•create restrictions on the payment of dividends or other amounts to us from our subsidiaries.
Under the terms of the indentures governing the Notes, the holders of the 2027 Notes and 2030 Convertible Notes may require us to repurchase 100% of such notes upon the occurrence of a “Change of Control Repurchase Event,” which would occur upon certain changes of control that result in a downgrade in such notes below investment grade or “fundamental change”, respectively.
Furthermore, the terms of the indenture and the Notes do not protect holders of the Notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, if any, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow, or liquidity.
Our ability to recapitalize, incur additional debt (including additional debt that matures prior to the maturity of the Notes), and take a number of other actions that are not limited by the terms of the Notes may have important consequences for you as a holder of the Notes, including making it more difficult for us to satisfy our obligations with respect to the Notes or negatively affecting the trading value of the Notes.
Other debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes, including additional covenants and events of default. The issuance or incurrence of any such debt with incremental protections could affect the market for, trading levels and prices of the Notes.
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We cannot assure you an active trading market for the Notes will develop or be maintained.
We have not listed, and do not intend to list in the future, the 2027 Notes and the 2030 Convertible Notes on any securities exchange or for quotation of the Notes on any automated dealer quotation system. Accordingly, we cannot assure you that a liquid trading market will develop and/or be maintained for any of the Notes, that a holder will be able to sell its Notes at a particular time or that the price received when a holder sells its Notes will be favorable. To the extent an active trading market does not develop or is not maintained, the liquidity and trading price for the Notes may be harmed. Accordingly, the holder of a Note may be required to bear the financial risk of an investment in the Notes for an indefinite period of time.
If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Notes.
Any default under the agreements governing our indebtedness, including a default under the Credit Facility or other indebtedness to which we may be a party, that is not waived by the required lenders or holders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal and interest on the Notes and substantially decrease the market value of such notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under the Credit Facility or other debt we may incur in the future could elect to terminate their commitments, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may in the future need to refinance or restructure our debt, including the Notes, sell assets, reduce or delay capital investments, seek to raise additional capital or seek to obtain waivers from the required lenders under the Credit Facility or other debt that we may incur in the future to avoid being in default. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under the Notes or our other debt. If we breach our covenants under the Credit Facility or other debt and seek a waiver, we may not be able to obtain a waiver from the required lenders or holders. If this occurs, we would be in default under the Credit Facility or other debt, the lenders or holders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation. If we are unable to repay debt, lenders having secured obligations, including the lenders under the Credit Facility, could proceed against the collateral securing the debt. Because the Credit Facility has, and any future credit facilities will likely have, customary cross-default provisions, if the indebtedness under the Notes or the Credit Facility or under any future credit facility is accelerated, we may be unable to repay or finance the amounts due.
We may choose to redeem the Notes when prevailing interest rates are relatively low.
The 2027 Notes may be redeemed in whole or in part at any time or from time to time at the Company’s option prior to maturity at par plus a “make-whole” premium, if applicable. We may not redeem the 2030 Convertible Notes prior to October 6, 2028. We may redeem for cash all or any portion of the 2030 Convertible Notes (subject to the “partial redemption limitation”), at our option, on a redemption date on or after October 6, 2028 and on or before the 45th scheduled trading day immediately prior to the maturity date if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the 2030 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If prevailing rates are lower at the time of redemption, and we redeem the Notes, you likely would not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the interest rate on the Notes being redeemed.
We may not be able to repurchase the 2027 Notes upon a Change of Control Repurchase Event.
We may not be able to repurchase the 2027 Notes upon a Change of Control Repurchase Event (as defined in the indenture governing such Notes) because we may not have sufficient funds. We would not be able to borrow under our Credit Facility to finance such a repurchase of the 2027 Notes, and we expect that any future credit facility would have similar limitations. Upon a Change of Control Repurchase Event, holders of the 2027 Notes may require us to repurchase for cash some or all of such Notes at a repurchase price equal to 100% of the aggregate principal amount of the Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date. The terms of our Credit Facility also provide that certain change of control events will constitute an event of default thereunder entitling the lenders to accelerate any indebtedness outstanding under our Credit Facility at that time and to terminate our Credit Facility. Our
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failure to purchase such tendered Notes upon the occurrence of such Change of Control Repurchase Event would cause an event of default under the indenture governing the Notes and a cross-default under the agreements governing the Credit Facility, which may result in the acceleration of such indebtedness requiring us to repay that indebtedness immediately. If the holders of the 2027 Notes exercise their right to require us to repurchase such Notes upon a Change of Control Repurchase Event, the financial effect of this repurchase could cause a default under our current and future debt instruments, and we may not have sufficient funds to repay any such accelerated indebtedness.
A downgrade, suspension or withdrawal of the credit rating assigned by a rating agency to us or the Notes or change in the debt markets could cause the liquidity or market value of the Notes to decline significantly.
Any credit rating assigned to us or the Notes represents an assessment by the assigning rating agency of our ability to pay our debts when due. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of the Notes. These credit ratings may not reflect the potential impact of risks relating to the structure or marketing of the Notes. Credit ratings are paid for by the issuer and are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion.
An increase in market interest rates could result in a decrease in the value of the Notes.
In general, as market interest rates rise, notes bearing interest at a fixed rate generally decline in value because the premium, if any, over market interest rates will decline. Consequently, if you purchase the Notes and market interest rates increase, the market value of your Notes may decline. We cannot predict the future level of market interest rates.
Additional Risks Related to our 2030 Convertible Notes
We may not have the ability to raise the funds necessary to settle conversions of the 2030 Convertible Notes in cash or to repurchase the 2030 Convertible Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the 2030 Convertible Notes.
Holders of the 2030 Convertible Notes will have the right to require us to repurchase all or any portion of their 2030 Convertible Notes upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the 2030 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, upon conversion of the 2030 Convertible Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the 2030 Convertible Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of 2030 Convertible Notes surrendered therefor or pay cash with respect to 2030 Convertible Notes being converted. In addition, our ability to repurchase the 2030 Convertible Notes or to pay cash upon conversions of the 2030 Convertible Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness. Our failure to repurchase Notes at a time when the repurchase is required by the indenture governing the 2030 Convertible Notes or to pay any cash payable on future conversions of the 2030 Convertible Notes as required by the indenture governing the 2030 Convertible Notes would constitute a default under the indenture governing the 2030 Convertible Notes. A default under the indenture governing the 2030 Convertible Notes or the fundamental change itself could also lead to a default under agreements governing our future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2030 Convertible Notes or make cash payments upon conversions thereof.
Recent and future regulatory actions and other events may adversely affect the trading price and liquidity of the 2030 Convertible Notes.
We expect that many investors in, and potential purchasers of, the 2030 Convertible Notes will employ, or seek to employ, a convertible arbitrage strategy with respect to the 2030 Convertible Notes. Investors would typically implement such a strategy by selling short the common stock underlying the 2030 Convertible Notes and dynamically adjusting their short position while continuing to hold the 2030 Convertible Notes. Investors may also implement this type of strategy by entering into swaps on our common stock in lieu of or in addition to short selling the common stock. We cannot assure you that market conditions will permit investors to implement this type of strategy, whether on favorable pricing and other terms or at all. If market conditions do not permit investors to implement this type of strategy, whether on favorable pricing and other terms or at all, at any time while the 2030 Convertible Notes are outstanding, the trading price and liquidity of the 2030 Convertible Notes may be adversely affected.
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The SEC and other regulatory and self-regulatory authorities have implemented various rules and taken certain actions, and may in the future adopt additional rules and take other actions, that may impact those engaging in short selling activity involving equity securities (including our common stock). Such rules and actions include Rule 201 of SEC Regulation SHO, the adoption by the Financial Industry Regulatory Authority, Inc. and the national securities exchanges of a “Limit Up-Limit Down” program, the imposition of market-wide circuit breakers that halt trading of securities for certain periods following specific market declines, and the implementation of certain regulatory reforms required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Any governmental or regulatory action that restricts the ability of investors in, or potential purchasers of, the 2030 Convertible Notes to effect short sales of our common stock, borrow our common stock or enter into swaps on our common stock could adversely affect the trading price and the liquidity of the 2030 Convertible Notes.
In addition, the number of shares of our common stock available for lending in connection with short sale transactions and the number of counterparties willing to enter into an equity swap on our common stock with a Note investor may not be sufficient for the implementation of a convertible arbitrage strategy. These and other market events could make implementing a convertible arbitrage strategy prohibitively expensive or infeasible. We cannot assure you that a sufficient number of shares of our common stock will be available to borrow on commercial terms, or at all, to holders of the 2030 Convertible Notes. If purchasers of the 2030 Convertible Notes that seek to employ a convertible arbitrage strategy are unable to do so on commercial terms, or at all, then the trading price of, and the liquidity of the market for, the 2030 Convertible Notes may significantly decline.
Volatility in the market price and trading volume of our common stock could adversely impact the trading price of the 2030 Convertible Notes.
The stock market in recent years has experienced significant price and volume fluctuations that have often been unrelated to the operating performance of companies. The market price of our common stock could fluctuate significantly for many reasons, including in response to the risks described in this Annual Report or the documents we have incorporated by reference in this Annual Report or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance, as well as industry conditions and general financial, economic and political instability. A decrease in the market price of our common stock would likely adversely impact the trading price of the 2030 Convertible Notes. The market price of our common stock could also be affected by possible sales of our common stock by investors who view the 2030 Convertible Notes as a more attractive means of equity participation in us and by hedging or arbitrage trading activity that we expect to develop involving our common stock. This trading activity could, in turn, affect the trading price of the 2030 Convertible Notes.
Conversion of the 2030 Convertible Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock.
The conversion of some or all of the 2030 Convertible Notes may dilute the ownership interests of our stockholders. Upon conversion of the 2030 Convertible Notes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock. If we elect to settle our conversion obligation in shares of our common stock or a combination of cash and shares of our common stock, any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the 2030 Convertible Notes may encourage short selling by market participants because the conversion of the 2030 Convertible Notes could be used to satisfy short positions, or anticipated conversion of the 2030 Convertible Notes into shares of our common stock could depress the price of our common stock.
The accounting method for the 2030 Convertible Notes could adversely affect our reported financial condition and results.
The accounting method for reflecting the 2030 Convertible Notes on our balance sheet, accruing interest expense for the 2030 Convertible Notes and reflecting the underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.
In accordance with Financial Accounting Standards Board’s Accounting Standards Update 2020-06 (“ASU 2020-06”), the 2030 Convertible Notes are reflected as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of the 2030 Convertible Notes, net of issuance costs. The issuance costs are treated as a debt discount for accounting purposes, which will be amortized into interest expense over the term of the 2030 Convertible Notes. As a result of this amortization, the expense that we recognize for the 2030 Convertible Notes for accounting purposes will be greater than the cash interest payments we pay on the 2030 Convertible Notes, which results in lower reported income.
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In addition, we expect that the shares of common stock underlying the 2030 Convertible Notes will be reflected in our diluted earnings per share using the “if converted” method, in accordance with ASU 2020-06.
Under that method, diluted earnings per share are generally calculated assuming that all the 2030 Convertible Notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive. The application of the if-converted method may reduce our reported diluted earnings per share.
In addition, in the future, we may, in our sole discretion, irrevocably elect to settle the conversion value of the 2030 Convertible Notes in cash up to the principal amount being converted. Following such an irrevocable election, if the conversion value of the 2030 Convertible Notes exceeds their principal amount for a reporting period, then we will calculate our diluted earnings per share by assuming that all of the 2030 Convertible Notes were converted at the beginning of the reporting period and that we issued shares of our common stock to settle the excess, unless the result would be anti-dilutive.
Future sales of our common stock or equity-linked securities in the public market could lower the market price for our common stock and adversely impact the trading price of the 2030 Convertible Notes.
In the future, we may sell additional shares of our common stock or equity-linked securities to raise capital. In addition, a substantial number of shares of our common stock is reserved for issuance upon the exercise of conversion of the 2030 Convertible Notes. We cannot predict the size of future issuances or the effect, if any, that they may have on the market price for our common stock. The issuance and sale of substantial amounts of common stock or equity-linked securities, or the perception that such issuances and sales may occur, could adversely affect the trading price of the 2030 Convertible Notes and the market price of our common stock and impair our ability to raise capital through the sale of additional equity or equity-linked securities.
Holders of 2030 Convertible Notes are not entitled to any rights with respect to our common stock, but they will be subject to all changes made with respect to our common stock to the extent our conversion obligation includes shares of our common stock.
Holders of 2030 Convertible Notes are not entitled to any rights with respect to our common stock (including, without limitation, voting rights and rights to receive any dividends or other distributions on our common stock) prior to the conversion date relating to such 2030 Convertible Notes (if we have elected to settle the relevant conversion by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share)) or the last trading day of the relevant observation period (if we elect to pay and deliver, as the case may be, a combination of cash and shares of our common stock in respect of the relevant conversion), but holders of 2030 Convertible Notes will be subject to all changes affecting our common stock. For example, if an amendment is proposed to our charter or bylaws requiring stockholder approval and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to the conversion date related to a holder’s conversion of its 2030 Convertible Notes (if we have elected to settle the relevant conversion by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share)) or the last trading day of the relevant observation period (if we elect to pay and deliver, as the case may be, a combination of cash and shares of our common stock in respect of the relevant conversion), such holder will not be entitled to vote on the amendment, although such holder will nevertheless be subject to any changes affecting our common stock.
Upon conversion of the 2030 Convertible Notes, you may receive less valuable consideration than expected because the value of our common stock may decline after you exercise your conversion right but before we settle our conversion obligation.
Under the 2030 Convertible Notes, a converting holder will be exposed to fluctuations in the value of our common stock during the period from the date such holder surrenders 2030 Convertible Notes for conversion until the date we settle our conversion obligation.
Upon conversion of the 2030 Convertible Notes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock. If we elect to satisfy our conversion obligation in cash or a combination of cash and shares of our common stock, the amount of consideration that you will receive upon conversion of your 2030 Convertible Notes will be determined by reference to the volume-weighted average price of our common stock for each trading day in a 40 trading day observation period. If the price of our common stock decreases during this period, the amount and/or value of consideration you receive will be adversely affected. In addition, if the market price of our common stock at the end of such period is below the average volume-weighted average price of our common stock during such period, the value of any shares of our common stock that you will receive in satisfaction of our conversion obligation will be less than the value used to determine the number of shares that you will receive.
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If we elect to satisfy our conversion obligation solely in shares of our common stock upon conversion of the 2030 Convertible Notes, we will be required to deliver the shares of our common stock, together with cash for any fractional share, on the second business day following the relevant conversion date. Accordingly, if the price of our common stock decreases during this period, the value of the shares that you receive will be adversely affected and would be less than the conversion value of the 2030 Convertible Notes on the conversion date.
The increase in the conversion rate for 2030 Convertible Notes converted in connection with a make-whole fundamental change or a notice of redemption may not adequately compensate you for any lost value of your 2030 Convertible Notes as a result of such transaction or redemption.
If a make-whole fundamental change occurs prior to the maturity date or if we deliver a notice of redemption, we will, under certain circumstances, increase the conversion rate by a number of additional shares of our common stock for 2030 Convertible Notes converted in connection with such make-whole fundamental change or notice of redemption. The increase, if any, in the conversion rate for 2030 Convertible Notes converted in connection with a make-whole fundamental change or a notice of redemption may not adequately compensate you for any lost value of your 2030 Convertible Notes as a result of such transaction or redemption. In addition, if the “stock price” is greater than $32.50 per share or less than $23.65 per share (in each case, subject to adjustment), no additional shares will be added to the conversion rate. Moreover, in no event will the conversion rate per $1,000 principal amount of 2030 Convertible Notes as a result of this adjustment exceed 42.2834 shares of common stock, subject to adjustment in the same manner as the conversion rate. Our obligation to increase the conversion rate for 2030 Convertible Notes converted in connection with a make-whole fundamental change or a notice of redemption could be considered a penalty, in which case the enforceability thereof would be subject to general principles of reasonableness and equitable remedies.
The conversion rate of the 2030 Convertible Notes may not be adjusted for all dilutive events.
The conversion rate of the 2030 Convertible Notes is subject to adjustment for certain events, including, but not limited to, the issuance of certain stock dividends on our common stock, the issuance of certain rights or warrants, subdivisions, combinations, distributions of capital stock, indebtedness, or assets, cash dividends (excluding regular monthly dividends in an amount that do not exceed $0.165 per share) and certain issuer tender or exchange offers. However, the conversion rate will not be adjusted for other events, such as a third-party tender or exchange offer or an issuance of common stock for cash, that may adversely affect the trading price of the 2030 Convertible Notes or our common stock. An event that adversely affects the value of the 2030 Convertible Notes may occur, and that event may not result in an adjustment to the conversion rate.
Some significant restructuring transactions may not constitute a fundamental change, in which case we would not be obligated to offer to repurchase the 2030 Convertible Notes.
Upon the occurrence of a fundamental change, you have the right to require us to repurchase all or any portion of your 2030 Convertible Notes. However, the fundamental change provisions will not afford protection to holders of 2030 Convertible Notes in the event of other transactions that could adversely affect the 2030 Convertible Notes. For example, transactions such as leveraged recapitalizations, refinancings, restructurings, or acquisitions initiated by us may not constitute a fundamental change requiring us to offer to repurchase the 2030 Convertible Notes. In the event of any such transaction, the holders would not have the right to require us to repurchase 2030 Convertible Notes, even though each of these transactions could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or any credit ratings, thereby adversely affecting the holders of 2030 Convertible Notes.
Certain provisions in the indenture governing the 2030 Convertible Notes may delay or prevent an otherwise beneficial takeover attempt of us.
Certain provisions in the indenture governing the 2030 Convertible Notes may make it more difficult or expensive for a third party to acquire us. For example, the indenture governing the 2030 Convertible Notes will require us, except as described in this Annual Report, to repurchase the 2030 Convertible Notes for cash upon the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a holder that converts its 2030 Convertible Notes in connection with a make-whole fundamental change. A takeover of us may trigger the requirement that we repurchase the 2030 Convertible Notes and/or increase the conversion rate, which could make it costlier for a potential acquirer to engage in such takeover. Such additional costs may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to investors.
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You may be subject to tax if we make or fail to make certain adjustments to the conversion rate of the 2030 Convertible Notes even though you do not receive a corresponding cash distribution.
The conversion rate of the 2030 Convertible Notes is subject to adjustment in certain circumstances, including the payment of cash dividends (excluding regular monthly cash dividends in an amount that does not exceed $0.165 per share). If the conversion rate is adjusted as a result of a distribution that is taxable to our common stockholders, such as a cash dividend, you may be deemed to have received a dividend subject to U.S. federal income tax without the receipt of any cash. In addition, a failure to adjust (or to adjust adequately) the conversion rate after an event that increases your proportionate interest in us could be treated as a deemed taxable dividend to you. If a make-whole fundamental change occurs prior to the maturity date or if we deliver a notice of redemption, under some circumstances, we will increase the conversion rate for 2030 Convertible Notes converted in connection with the make-whole fundamental change or notice of redemption, as the case may be. Such increase also may be treated as a distribution subject to U.S. federal income tax as a dividend. If you are a non-U.S. Holder, any deemed dividend would be subject to U.S. federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable treaty, which may be set off against subsequent payments on the 2030 Convertible Notes or any common stock received upon conversion thereof or from any proceeds of any subsequent sale, exchange or other disposition of such 2030 Convertible Notes (including the retirement of such 2030 Convertible Notes) or such common stock by such non-U.S. Holder or other funds or assets of such non-U.S. Holder.
Risks Related to our Preferred Stock
There is no public market for the Series A Preferred Stock as we do not intend to apply for listing on a national securities exchange unless the Share Repurchase Program is terminated.
There is currently no public market for our Series A Preferred Stock and we do not intend to apply to list the Series A Preferred Stock on a national securities exchange or to include the Series A Preferred Stock for listing on any national securities market. Unless shares of the Series A Preferred Stock are listed on a national securities exchange, holders of shares of Series A Preferred Stock may be unable to sell them at all or, if they are able to, only at substantial discounts from the liquidation preference of such shares. Even if the Series A Preferred Stock is listed on Nasdaq or another national securities exchange following the termination of any share repurchase program, there is a risk that such shares may be thinly traded, and the market for such shares may be relatively illiquid compared to the market for other types of securities, with the spread between the bid and asked prices considerably greater than the spreads of other securities with comparable terms and features. Also, since the Series A Preferred Stock does not have a stated maturity date, you may be forced to hold your Series A Preferred Stock with no assurance as to ever receiving the liquidation preference of such shares.
Dividend payments on the Series A Preferred Stock are not guaranteed.
Although dividends on the Series A Preferred Stock are cumulative, our Board of Directors must approve the actual payment of the dividends. Our Board of Directors can elect at any time or from time to time, and for an indefinite duration, not to pay any or all accrued dividends. Our Board of Directors could elect to suspend dividends for any reason, and may be prohibited from approving dividends in the following instances:
•poor historical or projected cash flows;
•the need to make payments on our indebtedness;
•concluding that payment of dividends on the Series A Preferred Stock would cause us to breach the terms of any indebtedness or other instrument or agreement; or
•determining that the payment of dividends would violate applicable law regarding unlawful distributions to stockholders.
The Series A Preferred Stock will bear a risk of redemption by us.
Except in limited circumstances, including those related to us maintaining the asset coverage required by Sections 18 and 61 of the 1940 Act, we, at our option, may not redeem shares of the Series A Preferred Stock prior to the earlier of (1) the one‑year anniversary of the earlier of (a) December 31, 2026 (unless earlier terminated or extended by our Board of Directors) or (b) the date on which all 6,000,000 shares of Series A Preferred Stock are sold (the “Series A Termination Date”) and (2) January 1, 2027. However, after such date, we may redeem the shares of Series A Preferred Stock at any time after such date and may do so at a time that is unfavorable to holders of the Series A Preferred Stock. We may have an incentive to voluntarily redeem the Series A Preferred Stock if market conditions allow us to issue other Preferred Stock or debt securities at a dividend or interest rate that is lower than the dividend rate on the Series A Preferred Stock.
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Your option to request that your shares of Series A Preferred Stock be repurchased is subject to a 5% quarterly limitation, the continuation of the share repurchase program and our availability of funds, and may also be limited by law.
We will only repurchase, in each quarter, up to 5% of our then outstanding Series A Preferred Stock (by number of shares outstanding), calculated as of the end of the previous calendar quarter. As a result, depending on the amount of repurchase requests, a stockholder’s repurchase request may not be fulfilled in the amount requested. In addition, our Board of Directors may terminate or suspend the share repurchase program at any time for any reason in its sole and absolute discretion. Therefore, our obligation to repurchase shares at the request of a holder of Series A Preferred Stock is limited to the extent our Board of Directors suspends or terminates the optional repurchase right for any reason, including after delivery of a stockholder repurchase request but prior to the corresponding stockholder repurchase date. Our obligation to repurchase shares at the option of a holder of Series A Preferred Stock is also limited to the extent that our Board of Directors determines, in its sole and absolute discretion, that we do not have sufficient funds available to fund any such repurchase or we are restricted by applicable law from making such repurchase. If you deliver a request to repurchase your shares of Series A Preferred Stock, but our Board of Directors determines we do not have sufficient funds available to fund such repurchase (even if there is sufficient funding as determined under applicable law), only a portion, if any, of your shares of Series A Preferred Stock may be repurchased.
Our ability to pay dividends on and/or repurchase shares of Series A Preferred Stock may be limited by Maryland law, the 1940 Act and the terms of our debt facilities as well as future agreements we may enter.
Under Maryland law, a corporation may pay dividends on and repurchase stock as long as, after giving effect to the dividend payment or repurchase, the corporation is able to pay its debts as they become due in the usual course of business (the equity solvency test), or, except in limited circumstances, the corporation’s total assets exceed the sum of its total liabilities plus, unless its charter permits otherwise, the amount that would be needed, if the corporation were to be dissolved at the time of the dividend payment or repurchase, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the dividend or whose stock is being repurchased (the balance sheet solvency test). If we are insolvent at any time when a repurchase of shares of Series A Preferred Stock is desired or required to be made, we may not be able to effect such repurchase. Furthermore, the terms of our debt facilities may restrict our ability to repurchase shares of Series A Preferred Stock for cash during an event of default, and we expect to enter agreements in the future that may similarly restrict our ability to repurchase in cash in such instances.
In addition, under the 1940 Act, we may not (1) declare any dividend with respect to any shares of preferred stock if, at the time of such declaration (and after giving effect thereto), our asset coverage with respect to any of our borrowings that are senior securities representing indebtedness (as defined in the 1940 Act) would be less than 150% (or such other percentage as may in the future be specified in or under the 1940 Act as the minimum asset coverage for senior securities representing indebtedness of a BDC as a condition of declaring dividends on its preferred stock) or (2) declare any other distribution on the preferred stock or purchase or redeem preferred stock if at the time of the declaration or redemption (and after giving effect thereto), our asset coverage with respect to such borrowings that are senior securities representing indebtedness would be less than 150% (or such other percentage as may in the future be specified in or under the 1940 Act as the minimum asset coverage for senior securities representing indebtedness of a BDC as a condition of declaring distributions, purchases or redemptions of its shares).
The cash distributions you receive may be less frequent or lower in amount than you expect.
Our Board of Directors intends to pay distributions on the Series A Preferred Stock monthly in arrears on or about the fifth day of each month for dividends accrued the previous month (or such later date as our Board of Directors may designate) in an amount equal to $1.5625 per share per year. However, our Board of Directors has ultimate discretion to determine the amount and timing of these distributions. In making this determination, our Board of Directors will consider all relevant factors, including the amount of cash available for distribution, capital expenditure and reserve requirements and general operational requirements. We cannot assure you that we will consistently be able to generate sufficient available cash flow to fund distributions on the Series A Preferred Stock at the stated dividend rate nor can we assure you that sufficient cash will be available to make distributions to you. We cannot predict the amount of distributions you may receive and we may be unable to pay distributions over time. Our inability to acquire additional investments or operate profitably may have a negative effect on our ability to generate sufficient cash flow from operations to pay distributions on the Series A Preferred Stock.
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If you elect to participate in the Share Repurchase Program, the cash payment that you receive as a result of your optional repurchase request may be a substantial discount to the price that you paid for the shares of Series A Preferred Stock.
The cash payment that stockholders who request to have their shares of Series A Preferred Stock repurchased will receive will be at a substantial discount if such request is made within three years of the purchase date. Repurchases under the share repurchase program for the Series A Preferred Stock will be at a price per share equal to the liquidation preference of the Series A Preferred Stock plus accrued and unpaid dividends, except that shares that have been outstanding for less than one year will be subject to an early repurchase discount of 10% (or at a price of $22.50 per share), shares that have been outstanding for at least one year but less than two years will be subject to an early repurchase discount of 6% (or at a price of $23.50 per share), and shares that have been outstanding for at least two years but less than three years will be subject to an early repurchase discount of 3% (or at a price of $24.25 per share). If you request to have your shares repurchased such request could cause you to lose a substantial portion of your investment.
Holders of the Series A Preferred Stock will be subject to inflation risk.
Inflation is the reduction in the purchasing power of money resulting from the increase in the price of goods and services. Inflation risk is the risk that the inflation-adjusted, or “real,” value of an investment or the income from that investment will be worth less in the future. As inflation occurs, the real value of the Series A Preferred Stock and dividends payable on such Shares declines.
An investment in the Series A Preferred Stock bears interest rate risk.
The Series A Preferred Stock will pay dividends at a fixed dividend rate. Prices of fixed income investments vary inversely with changes in market yields. The market yields on securities comparable to the Series A Preferred Stock may increase, which could result in a decline in the value or secondary market price of the Series A Preferred Stock.
Holders of the Series A Preferred Stock will bear reinvestment risk.
Given the potential for redemption of the Series A Preferred Stock at our option commencing with the earlier of (1) first anniversary of the Series A Termination Date and (2) January 1, 2027, holders of such Shares may face an increased reinvestment risk, which is the risk that the return on an investment purchased with proceeds from the sale or redemption of the Series A Preferred Stock may be lower than the return previously obtained from the investment in such shares.
General Risk Factors
Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, or the operations of businesses in which we invest, a compromise or corruption of our confidential information and/or damage to our business relationships, all of which could negatively impact our business, financial condition and operating results.
Maintaining our network security is of critical importance because our systems store highly confidential financial models and portfolio company information. Although we have implemented, and will continue to implement, security measures, our technology platform may be vulnerable to intrusion, computer viruses, ransomware attacks, phishing schemes, or similar disruptive problems caused by cyber-attacks. A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources or those of our portfolio companies. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems or those of our portfolio companies for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, costs to repair system damage, increased cybersecurity protection and insurance costs, litigation and damage to our business relationships or those of our portfolio companies. As our and our portfolio companies’ reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided to us by third-party service providers, and the information systems of our portfolio companies. We have implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent of a risk of a cyber incident, do not guarantee that a cyber incident will not occur and/or that our financial results, operations, stock price or confidential information will not be negatively impacted by such an incident. In addition, any such incident, disruption or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disrupt our operations, and damage our and our Adviser’s reputations, resulting in a loss of confidence in our services and our Adviser’s services, which could adversely affect our business.
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We are dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.
Our business is dependent on our and third parties’ communications and information systems. Any failure or interruption of those systems, including as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. There could be:
•sudden electrical or telecommunications outages;
•natural disasters such as earthquakes, tornadoes and hurricanes;
•disease pandemics;
•events arising from local or larger scale political or social matters, including terrorist acts; and
•cyber-attacks.
These events, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay dividends to our stockholders.
We are subject to risks associated with artificial intelligence and machine learning technology.
Recent technological advances in artificial intelligence and machine learning technology, or Machine Learning Technology, pose risks to us and our portfolio companies. We and our portfolio companies could be exposed to the risks of Machine Learning Technology if third-party service providers or any counterparties use Machine Learning Technology in their business activities. We and the Adviser are not in a position to control the use of Machine Learning Technology in third-party products or services. Use of Machine Learning Technology could include the input of confidential information in contravention of applicable policies, contractual or other obligations or restrictions, resulting in such confidential information becoming part accessible by other third-party Machine Learning Technology applications and users. Machine Learning Technology and its applications continue to develop rapidly, and we cannot predict the risks that may arise from such developments.
Machine Learning Technology is generally highly reliant on the collection and analysis of large amounts of data, and it is not possible or practicable to incorporate all relevant data into the model that Machine Learning Technology utilizes to operate. Certain data in such models will inevitably contain a degree of inaccuracy and error and could otherwise be inadequate or flawed, which would be likely to degrade the effectiveness of Machine Learning Technology. To the extent we or our portfolio companies are exposed to the risks of Machine Learning Technology use, any such inaccuracies or errors could adversely impact us or our portfolio companies.
Changes in laws or regulations governing our operations, or changes in the interpretation thereof, and any failure by us to comply with laws or regulations governing our operations may adversely affect our business.
We and our portfolio companies are subject to regulation by laws at the local, state and federal levels. These laws and regulations, as well as their interpretation, may be changed from time to time. Accordingly, any change in these laws or regulations, or their interpretation, or any failure by us or our portfolio companies to comply with these laws or regulations may adversely affect our business. For additional information regarding the regulations to which we are subject, see “Business—Material U.S. Federal Income Tax Considerations” and “Business—Regulation as a BDC.”
We and/or our portfolio companies may be subject to risks related to global climate change.
Climate change is widely considered to be a significant threat to the global economy. Our business operations and our portfolio companies may face risks associated with climate change, including risks related to the impact of climate-related legislation and regulation (both domestically and internationally), risks related to climate-related business trends (such as the process of transitioning to a lower-carbon economy), and risks stemming from the physical impacts of climate change, such as the increasing frequency or severity of extreme weather events and rising sea levels and temperatures.
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We may experience fluctuations in our quarterly and annual operating results.
We may experience fluctuations in our quarterly and annual operating results due to a number of factors, including, among others, variations in our investment income, the interest rates payable on the debt securities we acquire, the default rates on such securities, variations in and the timing of the recognition of realized and unrealized gains or losses, the level of our expenses, the degree to which we encounter competition in our markets, and general economic conditions, including the impacts of public health emergencies or elevated interest rates. The majority of our portfolio companies are in industries that are directly impacted by inflation, such as manufacturing and consumer goods and services. Our portfolio companies may not be able to pass on to customers increases in their costs of production which could greatly affect their operating results, impacting their ability to repay our loans. In addition, any projected future decreases in our portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments could result in future realized and unrealized losses and therefore reduce our net assets resulting from operations. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.
Public health threats may adversely impact the businesses in which we invest and affect our business, operating results and financial condition.
Public health threats, such as pandemics, may disrupt the operations of the businesses in which we invest. Such threats can create economic and political uncertainties and can contribute to global economic instability. In the event of a future public health threat, our portfolio companies may face limitations on their business activities for an unknown period of time, including shutdowns that may be requested or mandated by governmental authorities, or that they may experience disruptions in their supply chains or decreased consumer demand. Certain of our portfolio companies have experienced increases in health and safety expenses, payroll costs and other operating expenses and future increases are possible. These adverse economic impacts may decrease the value of the collateral securing our loans in such portfolio companies, as well as the value of our equity investments. In addition, these adverse impacts could cause certain of our portfolio companies to have difficulty meeting their debt service requirements, which in turn could lead to an increase in defaults, and/or could diminish the ability of certain of our portfolio companies to engage in liquidity events. These negative impacts on our portfolio companies and their performance may reduce the interest income we receive and/or increase realized and unrealized losses related to our investments, which may, in turn, adversely impact our business, financial condition or results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
Our Adviser and Administrator have implemented ongoing processes that are designed to continually identify, assess, manage, monitor and mitigate the dynamic and evolving material risks to us from cybersecurity threats. Our Adviser’s and Administrator’s resource management, information technology (“IT”), and compliance departments work in conjunction with an independent third-party information technology service provider (“ISP”) engaged by our Adviser to manage our information technology strategy. The ISP regularly performs cyber assessments and assist our Adviser and Administrator in monitoring our cyber and information security programs. The ISP proposes recommendations for improvements to our Adviser’s Head of Resource Management, Director of IT, and Chief Compliance Officer (“CCO”), which then are considered by other relevant officers of our Adviser and Administrator before implementation.
In addition, regular ongoing cybersecurity threat risk assessments, which also cover third-party business applications, are performed throughout the year and reported to our officers and Board of Directors by our CCO no less than quarterly. Cybersecurity risks are assessed in general as part of the overall enterprise risk management for us, but also specifically between the ISP and our Adviser and Administrator in monitoring and determining not only the risks but also in assessing corresponding processes and procedures to mitigate those risks appropriately.
Our ISP constantly monitors information technology risk and cybersecurity threats globally. When risks are detected the Director of IT, Head of Resource Management, and CCO consult with the ISP to assess if the risk is a cybersecurity threat to our information technology systems or data. If a risk to our information systems or data is identified, we, through our
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Adviser and Administrator, work in conjunction with the ISP to implement recommended processes, improvements, or safeguards to our systems or processes to address the risks as needed. Relevant examples of such efforts include but are not limited to:
•implementation of industry leading Cloud solutions and business applications which possess integrated cybersecurity safeguards;
•anti-malware, antivirus and threat detection software;
•ransomware containment and isolation software;
•enhanced password requirements and multifactor authentication requirements;
•endpoint encryption;
•intrusion detection and response system conduct file integrity monitoring;
•email archiving, firewalls, and quarantine capabilities;
•mobile device management of business applications;
•frequent systems backups with recovery capabilities; and
•regular vulnerability scans and penetration testing.
Contractually, we require the ISP to annually provide a third-party report on its systems and on the suitability of the design and operating effectiveness of its controls relevant to information and cyber security. In addition to the ongoing dialogue and technology interaction between the director of IT, our Adviser and Administrator and the ISP, any significant findings in these reports are shared with us, including our Board of Directors and other officers, to enhance ongoing monitoring and assessment of our information technology and cybersecurity risk management.
Our Adviser and Administrator also regularly trains employees working on our behalf on the evolving threats and educates them on cybersecurity risks to provide an additional protection barrier through end-user knowledge.
Notwithstanding our risk management and strategy described above, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. We are not currently aware of any known cybersecurity risks that may materially impact our operations and we may not be able to determine the likelihood of such risks. See “Risk Factors - Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, or the operations of businesses in which we invest, a compromise or corruption of our confidential information and/or damage to our business relationships, all of which could negatively impact our business, financial condition and operating results.” for a discussion of risks related to cybersecurity and cyber incidents.
Governance
Our Board of Directors is actively engaged in overseeing our cybersecurity and information security program. Our Board of Directors receives regular reports during board meetings from our CCO on our and our Adviser’s and Administrator’s efforts concerning information security and addressing information technology and cybersecurity risks, no less than quarterly, and regularly receives updates from third parties on various business risks, which include cybersecurity matters. The reports are distributed to our Board of Directors, and our CCO engages in detailed discussions with the independent board members during the independent members’ session. The reports cover potentially material cybersecurity threats facing us, as well as key risks and mitigation efforts undertaken by us and our Adviser and Administrator. As significant threats or events are identified by management or the ISP between regular reporting periods, our CCO will inform our Board of Directors immediately and keep it informed as to the developments of assessing the risks, mitigating efforts, and potential disclosure. Appropriate members of management and third party providers will be involved as deemed necessary based on the potential impact.
Our Head of Resources Management, who is also a member of our Board of Directors, and our CCO lead our cybersecurity program. Our Head of Resources Management has more than 30 years of overall experience and more than 20 years directly assessing and managing our cyber information technology and human resources systems, and the associated security concerns. Our CCO has more than 30 years of overall experience as a CPA, with more than 15 years managing information technology systems and databases, and more than 15 years supporting our Adviser’s and Administrator’s resource management department. This includes identifying, assessing, mitigating, and monitoring cyber information security risks. Our Director of IT has over 20 years of experience in IT, with a focus in the implementation of information
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security projects to enhance organizations’ resilience against emerging threats, and has collaborated closely with security vendors/partners to contain and address cybersecurity incidents. These managers, as well as other management personnel, attend various professional continuing education programs, which include cybersecurity matters. Certain members of our Board of Directors have, or previously held, positions with other companies, including other public companies, that involved managing risks associated with their cyber and information technology systems.
ITEM 2. PROPERTIES
We do not own any real estate or other physical properties material to our operations. The Adviser is the current leaseholder of all properties in which we operate. We occupy these premises pursuant to the Advisory and Administration Agreements with the Adviser and Administrator, respectively.
ITEM 3. LEGAL PROCEEDINGS
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on Nasdaq under the symbol “GLAD.” The following table reflects, by quarter, the high and low intraday sales prices per share of our common stock on the Nasdaq, the high and low intraday sales prices as a percentage of NAV per share and quarterly distributions declared per common share for each fiscal quarter during the last two completed fiscal years and the current fiscal year through November 14, 2025.

Quarter Ended/ Ending(C) |  |  |  | Sales Prices |  | Premium / (Discount) of High to NAV(B) |  | Premium (Discount) of Low to NAV(B) |  | Declared Common Stock Distributions
| NAV(A) |  | High |  | Low |  |  |
Fiscal Year ended September 30, 2024: |  |  |  |  |  |  |  |  |  |  |  |
12/31/2023 |  | $ | 19.22 |  |  | $ | 21.64 |  |  | $ | 18.40 |  |  | 12.6 | % |  | (4.3) | % |  | $ | 0.495 |
3/31/2024 |  | 19.80 |  |  | 22.48 |  |  | 19.40 |  |  | 13.5 |  |  | (2.0) |  |  | 0.495 |
6/30/2024 |  | 20.18 |  |  | 23.34 |  |  | 19.20 |  |  | 15.7 |  |  | (4.9) |  |  | 0.495 |
9/30/2024 |  | 21.18 |  |  | 24.73 |  |  | 21.40 |  |  | 16.8 |  |  | 1.0 |  |  | 0.495 |
Fiscal Year ended September 30, 2025: |  |  |  |  |  |  |  |  |  |  |  |
12/31/2024 |  | $ | 21.51 |  |  | $ | 28.62 |  |  | $ | 23.70 |  |  | 33.1 | % |  | 10.2 | % |  | $ | 0.895 |
3/31/2025 |  | 21.41 |  |  | 30.43 |  |  | 26.30 |  |  | 42.1 |  |  | 22.8 |  |  | 0.495 |
6/30/2025 |  | 21.25 |  |  | 27.82 |  |  | 21.96 |  |  | 30.9 |  |  | 3.3 |  |  | 0.495 |
9/30/2025 |  | 21.34 |  |  | 29.50 |  |  | 21.79 |  |  | 38.2 |  |  | 2.1 |  |  | 0.595 |
Fiscal Year ending September 30, 2026: |  |  |  |  |  |  |  |  |  |  |  |
12/31/2025 (through 11/14/2025) |  | * |  | $ | 21.96 |  |  | $ | 18.85 |  |  | * |  | * |  | $ | 0.450 |

(A)NAV per share is determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low intraday sales prices. The NAVs per share shown are based on outstanding shares at the end of each period.
(B)The premiums (discounts) set forth in these columns represent the high or low, as applicable, intraday sale prices per share for the relevant quarter minus the NAV per share as of the end of such quarter, and therefore may not reflect the premium (discount) to NAV per share on the date of the high and low intraday sales prices.
(C)Per share data has been adjusted on a retroactive basis to reflect the 1-for-2 reverse stock split (the “Reverse Stock Split”) effected on April 4, 2024 (effective April 5, 2024 for trading purposes) for all activity prior to that date, as described in See Note 2 — Summary of Significant Accounting Policies in the accompanying Consolidated Financial Statements included elsewhere in this Annual Report.
* Not yet available, as the NAV per share as of the end of this quarter has not yet been determined.
As of November 14, 2025, there were 28 record owners of our common stock.
Distributions
We generally intend to distribute in the form of cash distributions a minimum of 90.0% of our Investment Company Taxable Income, if any, on a quarterly basis to our stockholders in the form of monthly distributions. We generally intend to retain some or all of our long-term capital gains, if any, but generally intend to designate the retained amount as a deemed distribution, after giving effect to any prior year realized losses that are carried forward, to supplement our equity capital and support the growth of our portfolio. However, in certain cases, our Board of Directors may choose to distribute our net realized long-term capital gains, if any, by paying a one-time special distribution. Additionally, our Credit Facility contains a covenant that limits distributions to our stockholders on an annual basis to the sum of our net investment income, net capital gains and amounts deemed to have been paid during the prior year in accordance with Section 855(a) of the Code.
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Recent Sales of Unregistered Securities
We did not sell any unregistered shares of stock during the fiscal year ended September 30, 2025.
Purchases of Equity Securities
We did not repurchase any shares of our stock during the fourth quarter ended September 30, 2025.
Stock Performance Graph
The following graph shows the total stockholder return on an investment of $100 in cash on September 30, 2020 for (i) our common stock, (ii) the Nasdaq’s 100 total return index (“Nasdaq 100 TR”), (iii) the Standard & Poor’s 500 total return index (the “S&P 500 TR”) and (iv) the Standard and Poor’s BDC index (“S&P BDC”). The graph and other information furnished under the heading “Stock Performance Graph” shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference and shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under, or to the liabilities of Section 18 of, the Exchange Act.
The returns on each investment assume reinvestment of dividends. This stock performance graph and the related textual information are not necessarily indicative of future performance. Per share data has been adjusted on a retroactive basis to reflect the Reverse Stock Split effected on April 4, 2024 for activity prior to that date.

| GLAD |  | Nasdaq 100 TR |  | S&P 500 TR |  | S&P BDC Index |
9/30/2020 | $ | 100.00 |  |  | $ | 100.00 |  |  | $ | 100.00 |  |  | $ | 100.00 |  |
9/30/2021 | 166.38 |  |  | 129.58 |  |  | 130.01 |  |  | 154.34 |  |
9/30/2022 | 134.54 |  |  | 97.54 |  |  | 109.89 |  |  | 131.45 |  |
9/29/2023 | 167.99 |  |  | 131.98 |  |  | 133.65 |  |  | 176.69 |  |
9/30/2024 | 229.56 |  |  | 181.45 |  |  | 182.23 |  |  | 205.43 |  |
9/30/2025 | 226.20 |  |  | 224.87 |  |  | 214.30 |  |  | 206.12 |  |

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Fees and Expenses
The following table is intended to assist you in understanding the costs and expenses that an investor in the Company will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this Annual Report contains a reference to fees or expenses paid by “us” or the “Company,” or that “we” will pay fees or expenses, stockholders will indirectly bear such fees or expenses. The following annualized percentages were calculated based on actual expenses incurred in the quarter ended September 30, 2025 and average net assets for the quarter ended September 30, 2025.

Stockholder Transaction Expenses:
Sales load (as a percentage of offering price)(1) | — | %
Offering expenses (as a percentage of offering price)(1) | — | %
Dividend reinvestment plan expenses(2) | Up to a $25.00 Transaction Fee
Total stockholder transaction expenses(1) | — | %
Annual expenses (as a percentage of net assets attributable to common stock)(3): |
Base Management fee(4) | 2.97 | %
Loan servicing fee(5) | 1.90 | %
Incentive fee (20% of realized capital gains and 20% of pre-incentive fee net investment income)(6) | 2.31 | %
Interest payments on borrowed funds(7) | 5.33 | %
Preferred stock dividends(8) | 0.27 | %
Other expenses(9) | 1.19 | %
Total annual expenses(10) | 13.97 | %

__________
(1)The amounts set forth in this table do not reflect the impact of any sales load, sales commission or other offering expenses borne by the Company and its stockholders. If applicable, the prospectus or prospectus supplement relating to an offering of our common stock will disclose the offering price and the estimated offering expenses and total stockholder transaction expenses borne by the Company and its common stockholders as a percentage of the offering price. In the event that shares of our common stock are sold to or through underwriters, the applicable prospectus or prospectus supplement will also disclose the applicable sales load.
(2)The expenses of the dividend reinvestment plan, if any, are included in stock record expenses, a component of “other expenses.” If a participant elects by written notice to the plan agent prior to termination of his or her account to have the plan agent sell part or all of the shares held by the plan agent in the participant’s account and remit the proceeds to the participant, the plan agent is authorized to deduct a transaction fee, plus per share brokerage commissions, from the proceeds. The participants in the dividend reinvestment plan will bear a pro rata share of brokerage commissions incurred with respect to open market purchases, if any. See “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Distributions and Dividends to Stockholders—Dividend Reinvestment Plan” for information on the dividend reinvestment plan.
(3)The percentages presented in this table are gross of credits to any fees.
(4)In accordance with our Advisory Agreement, our annual base management fee is 1.75% (0.4375% quarterly) of our average gross assets, which are defined as total assets of the Company, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings, and adjusted appropriately for any share issuances or repurchases. In accordance with the requirements of the SEC, the table above shows the Company’s management fee as a percentage of average net assets attributable to common shareholders. For purposes of the table, the gross base management fee has been converted to 2.97% of the average net assets as of September 30, 2025 by dividing the total dollar amount of the management fee by our average net assets. The base management fee for the quarter ended September 30, 2025 before application of any credits was $3.6 million. From time to time, the Adviser has non-contractually, unconditionally and irrevocably agreed to reduce the 1.75% base management fee on syndicated loan participations to 0.5%, to the extent that proceeds resulting from borrowings were used to purchase such syndicated loan participations. For the quarter ended September 30, 2025, this credit to the base management fee was $5 thousand.
Under the Advisory Agreement, the Adviser has provided and continues to provide managerial assistance to our portfolio companies. It may also provide services other than managerial assistance to our portfolio companies and receive fees therefor. Such services may include: (i) assistance obtaining, sourcing or structuring credit facilities, long term loans or additional equity from unaffiliated third parties; (ii) negotiating important contractual financial
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relationships; (iii) consulting services regarding restructuring of the portfolio company and financial modeling as it relates to raising additional debt and equity capital from unaffiliated third parties; and (iv) primary role in interviewing, vetting and negotiating employment contracts with candidates in connection with adding and retaining key portfolio company management team members. Generally, at the end of each quarter, 100.0% of the fees for such services are non-contractually, unconditionally and irrevocably credited against the base management fee that we would otherwise be required to pay to the Adviser; however, a small percentage of certain of such fees, primarily for valuation of the portfolio company, is retained by the Adviser in the form of reimbursement at cost for certain tasks completed by personnel of the Adviser. For the quarter ended September 30, 2025, the base management fee credit was $1.7 million. See “Item 1. Business — Transactions with Related Parties — Investment Advisory and Management Agreement” for additional information.
(5)The Adviser services, administers and collects on the loans held by Business Loan in return for which the Adviser receives a 1.5% annual loan servicing fee payable monthly by Business Loan based on the monthly aggregate balance of loans held by Business Loan in accordance with the Credit Facility. For the quarter ended September 30, 2025, the total loan servicing fee was $2.3 million. The entire loan servicing fee paid to the Adviser by Business Loan is generally non-contractually, unconditionally and irrevocably credited against the base management fee otherwise payable to the Adviser since Business Loan is a consolidated subsidiary of the Company, and overall, the base management fee (including any loan servicing fee) cannot exceed 1.75% of total assets (including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings) during any given fiscal year pursuant to the Advisory Agreement. See “Item 1. Business—Transactions with Related Parties—Loan Servicing Fee Pursuant to Credit Facility” and footnote 4 above for additional information.
(6)In accordance with our Advisory Agreement, the incentive fee consists of two parts: an income-based fee and a capital gains-based fee. The income-based fee is payable quarterly in arrears, and equals 20.0% of the excess, if any, of our pre-incentive fee net investment income that exceeds a 1.75% quarterly (7.0% annualized) hurdle rate of our net assets, subject to a “catch-up” provision measured as of the end of each calendar quarter. The “catch-up” provision requires us to pay 100.0% of our pre-incentive fee net investment income with respect to that portion of such income, if any, that exceeds the hurdle rate but is less than 125.0% of the quarterly hurdle rate (or 2.1875%) in any calendar quarter (8.75% annualized). The catch-up provision is meant to provide the Adviser with 20.0% of our pre-incentive fee net investment income as if a hurdle rate did not apply when our pre-incentive fee net investment income exceeds 125.0% of the quarterly hurdle rate in any calendar quarter (8.75% annualized). The income-based incentive fee is computed and paid on income that may include interest that is accrued but not yet received in cash. Our pre-incentive fee net investment income used to calculate this part of the income-based incentive fee is also included in the amount of our gross assets used to calculate the 1.75% base management fee (see footnote 4 above). The capital gains-based incentive fee equals 20.0% of our net realized capital gains since our inception, if any, computed net of all realized capital losses and unrealized capital depreciation since our inception, less any prior payments, and is payable at the end of each fiscal year. We have not recorded any capital gains-based incentive fee from our inception through September 30, 2025. The income-based incentive fee for the quarter ended September 30, 2025 was $2.8 million.
From time to time, the Adviser has non-contractually, unconditionally and irrevocably agreed to waive a portion of the incentive fees, to the extent net investment income did not cover 100.0% of the distributions to common stockholders during the period. The incentive fee credit for the quarter ended September 30, 2025 was $3 thousand. There can be no guarantee that the Adviser will continue to credit any portion of the fees under the Advisory Agreement in the future.
Examples of how the incentive fee would be calculated are as follows:
•Assuming pre-incentive fee net investment income of 0.55%, there would be no income-based incentive fee because such income would not exceed the hurdle rate of 1.75%.
•Assuming pre-incentive fee net investment income of 2.00%, the income-based incentive fee would be as follows:
= 100% x (2.00% - 1.75%)
= 0.25%
•Assuming pre-incentive fee net investment income of 2.30%, the income-based incentive fee would be as follows:
= (100% x (“catch - up”: 2.1875% - 1.75%)) + (20% x (2.30% - 2.1875%))
= (100% x 0.4375%) + (20% x 0.1125%)
= 0.4375%+ 0.0225%
= 0.46%
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•Assuming net realized capital gains of 6% and realized capital losses and unrealized capital depreciation of 1%, the capital gains-based incentive fee would be as follows:
= 20% x (6% - 1%)
= 20% x 5%
= 1%
For a more detailed discussion of the calculation of the two-part incentive fee, see “Item 1. Business — Transactions with Related Parties — Investment Advisory and Management Agreement.”
(7)Includes amortization of deferred financing costs. As of September 30, 2025, we had $0 in borrowings outstanding under our Credit Facility and $397.9 million in notes payable, net. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources— Revolving Line of Credit” for additional information regarding the Credit Facility and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources—Notes Payable” for additional information regarding our notes payable.
(8)Includes amounts paid to preferred stockholders.
(9)Includes our overhead expenses, including payments under the Administration Agreement based on our projected allocable portion of overhead and other expenses estimated to be incurred by the Administrator in performing its obligations under the Administration Agreement for the current fiscal year. See “Item 1. Business—Transactions with Related Parties—Administration Agreement” for additional information.
(10)Total annualized gross expenses, based on actual amounts incurred for the quarter ended September 30, 2025 (except as set forth in footnote 10), would be $67.2 million. After all non-contractual, unconditional and irrevocable credits described in footnote 4, footnote 5, and footnote 6 above are applied to the base management fee, the loan servicing fee, and the incentive fee, total annualized expenses, based on actual amounts incurred for the quarter ended September 30, 2025, would be $51.2 million or 10.65% as a percentage of net assets.
Examples
The following examples demonstrate the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we would have no additional leverage and that our quarterly operating expenses would remain at the levels set forth in the table above and are gross of credits to any fees. The amounts set forth below do not reflect the impact of sales load or offering expenses to be borne by the Company or its stockholders. In the prospectus supplement relating to an offering of securities pursuant to the applicable prospectus, the examples below will be restated to reflect the impact of the estimated offering expenses borne by the Company and its stockholders and, if applicable, the impact of the applicable sales load. The examples below and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses (including the cost of debt, incentive fees, if any, and other expenses) may be greater or less than those shown. While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%.

| 1 Year |  | 3 Years |  | 5 Years |  | 10 Years
You would pay the following expenses on a $1,000 investment: |  |  |  |  |  |  |
assuming a 5% annual return consisting entirely of ordinary income (1)(2) | $ | 122 |  |  | $ | 341 |  |  | $ | 529 |  |  | $ | 893 |
assuming a 5% annual return consisting entirely of capital gains (2)(3) | $ | 131 |  |  | $ | 363 |  |  | $ | 558 |  |  | $ | 923 |

(1)While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. Additionally, we have assumed that the entire amount of such 5% annual return would constitute ordinary income as we have not historically realized positive capital gains (computed net of all realized capital losses) on our investments. Because the assumed 5% annual return is significantly below the hurdle rate of 7% that we must achieve under the Advisory Agreement to trigger the payment of an income-based incentive fee, we have assumed, for purposes of this example, that no income-based incentive fee would be payable if we realized a 5% annual return on our investments.
(2)While the example assumes reinvestment of all dividends and distributions at NAV, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar
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amount of the dividend payable to a participant by the average cost of shares of our common stock purchased in the open market in the period beginning on or before the payment date of the distribution and ending when the plan agent has expended for such purchases all of the cash that would have been otherwise payable to participants. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Distributions and Dividends to Stockholders—Dividend Reinvestment Plan” for additional information regarding our dividend reinvestment plan.
(3)For purposes of this example, we have assumed that the entire amount of such 5% annual return would constitute capital gains and that no accumulated capital losses or unrealized depreciation exist that would have to be overcome first before a capital gains based incentive fee is payable.
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Senior Securities
Information about our senior securities is shown in the following table. The information as of and for each of the years ended September 30, 2025, 2024, 2023, 2022, and 2021, is derived from our consolidated financial statements, which have been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm, as stated in their report which is included herein.
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Class and Year |  | Total Amount Outstanding(1) |  | Asset Coverage per Unit (2) |  | Involuntary Liquidating Preference per Unit (3) |  | Average Market Value per Unit (4)
Revolving Credit Facilities |  |  |  |  |  |  |  |
September 30, 2025 |  | $ | — |  |  | $ | 2,198 |  |  | $ | — |  |  | N/A
September 30, 2024 |  | 70,600,000 |  |  | 2,436 |  |  | — |  |  | N/A
September 30, 2023 |  | 47,800,000 |  |  | 2,311 |  |  | — |  |  | N/A
September 30, 2022 |  | 141,800,000 |  |  | 1,904 |  |  | — |  |  | N/A
September 30, 2021 |  | 50,500,000 |  |  | 2,307 |  |  | — |  |  | N/A
September 30, 2020 |  | 128,000,000 |  |  | 2,026 |  |  | — |  |  | N/A
September 30, 2019 |  | 66,900,000 |  |  | 3,369 |  |  | — |  |  | N/A
September 30, 2018 |  | 110,000,000 |  |  | 3,590 |  |  | — |  |  | N/A
September 30, 2017 |  | 93,000,000 |  |  | 3,882 |  |  | — |  |  | N/A
September 30, 2016 |  | 71,300,000 |  |  | 4,623 |  |  | — |  |  | N/A
Series 2021 Term Preferred Stock (5) |  |  |  |  |  |  |  |
September 30, 2016 |  | $ | 61,000,000 |  |  | $ | 2,495 |  |  | $ | 25.00 |  |  | $ | 25.55 |
Series 2024 Term Preferred Stock (6) |  |  |  |  |  |  |  |
September 30, 2019 |  | $ | 51,750,000 |  |  | $ | 2,385 |  |  | $ | 25.00 |  |  | $ | 24.99 |
September 30, 2018 |  | 51,750,000 |  |  | 2,444 |  |  | 25.00 |  |  | 25.63 |
September 30, 2017 |  | 51,750,000 |  |  | 2,496 |  |  | 25.00 |  |  | 25.09 |
6.25% Series A Cumulative Redeemable Preferred Stock |  |  |  |  |  |  |  |
September 30, 2025 |  | $ | 21,636,300 |  |  | $ | 2,088 |  |  | $ | 25.00 |  |  | N/A
September 30, 2024 |  | 8,748,275 |  |  | 2,373 |  |  | 25.00 |  |  | N/A
September 30, 2023 |  | — |  |  | 2,311 |  |  | 25.00 |  |  | N/A
6.125% Notes due 2023 (7) |  |  |  |  |  |  |  |
September 30, 2020 |  | $ | 57,500,000 |  |  | $ | 2,026 |  |  | $ | — |  |  | $ | 25.28 |
September 30, 2019 |  | 57,500,000 |  |  | 3,369 |  |  | — |  |  | 26.18 |
5.375% Notes due 2024 (8) |  |  |  |  |  |  |  |
September 30, 2021 |  | $ | 38,812,500 |  |  | $ | 2,307 |  |  | $ | — |  |  | $ | 25.33 |
September 30, 2020 |  | 38,812,500 |  |  | 2,026 |  |  | — |  |  | 24.49 |
5.125% Notes due 2026 |  |  |  |  |  |  |  |
September 30, 2025 |  | $ | 150,000,000 |  |  | $ | 2,198 |  |  | $ | — |  |  | N/A
September 30, 2024 |  | 150,000,000 |  |  | 2,436 |  |  | — |  |  | N/A
September 30, 2023 |  | 150,000,000 |  |  | 2,311 |  |  | — |  |  | N/A
September 30, 2022 |  | 150,000,000 |  |  | 1,904 |  |  | — |  |  | N/A
September 30, 2021 |  | 150,000,000 |  |  | 2,307 |  |  | — |  |  | N/A
3.75% Notes due 2027 |  |  |  |  |  |  |  |
September 30, 2025 |  | $ | 50,000,000 |  |  | $ | 2,198 |  |  | $ | — |  |  | N/A
September 30, 2024 |  | 50,000,000 |  |  | 2,436 |  |  | — |  |  | N/A
September 30, 2023 |  | 50,000,000 |  |  | 2,311 |  |  | — |  |  | N/A
September 30, 2022 |  | 50,000,000 |  |  | 1,904 |  |  | — |  |  | N/A
7.75% Notes due 2028 |  |  |  |  |  |  |  |
September 30, 2025 |  | $ | 57,000,000 |  |  | $ | 2,198 |  |  | $ | 25.00 |  |  | $ | 25.13 |
September 30, 2024 |  | 57,000,000 |  |  | 2,436 |  |  | 25.00 |  |  | 25.55 |
September 30, 2023 |  | 57,000,000 |  |  | 2,311 |  |  | 25.00 |  |  | 25.06 |
5.875% Convertible Notes due 2030 |  |  |  |  |  |  |  |
September 30, 2025 |  | $ | 149,500,000 |  |  | $ | 2,198 |  |  | — |  |  | N/A

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(1)Total amount of each class of senior securities outstanding at the end of the period presented.
(2)Asset coverage ratio for a class of our “senior securities representing indebtedness” means the ratio of the value of our total assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of “senior securities representing indebtedness” and asset coverage ratio for a class of our “senior securities that are stock” means the ratio of the value of our total assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of “senior securities representing indebtedness” plus the aggregate involuntary liquidation preference of a class of “senior security that is stock.” Asset coverage per unit is the asset coverage ratio expressed in terms of dollar amounts per one thousand dollars of indebtedness.
(3)The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it.
(4)Only applicable to our Term Preferred Stock, 6.125% notes due 2023 (the “2023 Notes”), 5.375% notes due 2024 (“the 2024 Notes”), and 7.75% notes due 2028 (the “2028 Notes”) because the other senior securities are not registered for public trading. Average market value per unit is the average of the closing prices of the securities on the Nasdaq during the last 10 trading days of the period. Average market value per unit for our Series 2024 Term Preferred Stock for September 30, 2017 is the average of the closing prices of the shares on the Nasdaq during the last seven trading days of the period as the stock began trading on September 21, 2017.
(5)In May 2014, we issued 2,440,000 shares of 6.75% Series 2021 Term Preferred Stock (the “Series 2021 Term Preferred Stock”) through a public offering and subsequent exercise of an overallotment option. In September 2017, we voluntarily redeemed all outstanding shares of our Series 2021 Term Preferred Stock and therefore had no Series 2021 Term Preferred Stock outstanding at September 30, 2017.
(6)In September 2017, we issued 2,070,000 shares of 6.0% Series 2024 Term Preferred Stock through a public offering and subsequent exercise of an overallotment option. In October 2019, we voluntarily redeemed all outstanding shares of our Series 2024 Term Preferred Stock.
(7)In November 2018, we completed a public debt offering of $57.5 million aggregate principal amount of the 2023 Notes, inclusive of the overallotment option. In January 2021, we voluntarily redeemed all of the 2023 Notes.
(8)In October 2019, we completed a public debt offering of $38.8 million aggregate principal amount of the 2024 Notes, inclusive of the overallotment option. In November 2021, we voluntarily redeemed all of the 2024 Notes.
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following analysis of our financial condition and results of operations should be read in conjunction with our accompanying Consolidated Financial Statements and the notes thereto contained elsewhere in this Annual Report. Historical financial condition and results of operations and percentage relationships among any amounts in the financial statements are not necessarily indicative of financial condition, results of operations or percentage relationships for any future periods. Except per share amounts, dollar amounts in the tables included herein are in thousands unless otherwise indicated.
OVERVIEW
General
We were incorporated under the Maryland General Corporation Law on May 30, 2001. We operate as an externally managed, closed-end, non-diversified management investment company, and have elected to be treated as a BDC under the 1940 Act. In addition, for federal income tax purposes we have elected to be treated as a RIC under the Code. To continue to qualify as a RIC for federal income tax purposes and obtain favorable RIC tax treatment, we must meet certain requirements, including certain minimum distribution requirements.
We were established for the purpose of investing in debt and equity securities of established private businesses operating in the U.S. Our investment objectives are to: (1) achieve and grow current income by investing in debt securities of established lower middle market companies in the U.S. that we believe will provide stable earnings and cash flow to pay expenses, make principal and interest payments on our outstanding indebtedness and make distributions to stockholders that grow over time; and (2) provide our stockholders with long-term capital appreciation in the value of our assets by investing in equity securities, in connection with our debt investments, that we believe can grow over time to permit us to sell our equity investments for capital gains. To achieve our investment objectives, our primary investment strategy is to invest in several categories of debt and equity securities, with each investment generally ranging from $8 million to $40
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million, although investment size may vary, depending upon our total assets or available capital at the time of investment. We expect that our investment portfolio over time will consist of approximately 90.0% debt investments and 10.0% equity investments, at cost. As of September 30, 2025, our investment portfolio was made up of approximately 90.9% debt investments and 9.1% equity investments, at cost.
We focus on investing in lower middle market companies (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization of $3 million to $25 million) in the U.S. that meet certain criteria, including the following: the sustainability of the business’ free cash flow and its ability to grow it over time, adequate assets for loan collateral, experienced management teams with a significant ownership interest in the borrower, reasonable capitalization of the borrower, including an ample equity contribution or cushion based on prevailing enterprise valuation multiples and, to a lesser extent, the potential to realize appreciation and gain liquidity in our equity position, if any. We lend to borrowers that need funds for growth capital or to finance acquisitions or recapitalize or refinance their existing debt facilities. We seek to avoid investing in high-risk, early-stage enterprises. Our targeted portfolio companies are generally considered too small for the larger capital marketplace.
We invest by ourselves or jointly with other funds and/or management of the portfolio company, depending on the opportunity. In July 2012, the SEC granted us the Co-Investment Order that expanded our ability to co-invest, under certain circumstances, with certain of our affiliates, including Gladstone Investment, a BDC also managed by the Adviser, Gladstone Alternative, an interval fund also managed by the Adviser, and any future BDC or registered closed-end management investment company that is advised (or sub-advised if it controls the fund) by the Adviser, or any combination of the foregoing, subject to the conditions in the Co-Investment Order. In September 2025, the SEC granted us a new Co-Investment Order that contains a more flexible requirement that allocations be “fair and equitable” to us and that the Adviser consider the interests of us in allocations and which minimizes certain board approval requirements from the prior Co-Investment Order. We believe the Co-Investment Order has enhanced and will continue to enhance our ability to further our investment objectives and strategies. If we are participating in an investment with one or more co-investors, whether or not an affiliate of ours, our investment is likely to be smaller than if we were investing alone.
Business
Portfolio and Investment Activity
In general, our investments in debt securities have a term of no more than seven years, accrue interest at variable rates (generally based on one-month Term SOFR), and, to a lesser extent, at fixed rates. We seek debt instruments that pay interest monthly or, at a minimum, quarterly, may have a success fee or deferred interest provision and are primarily interest only, with all principal and any accrued but unpaid interest due at maturity. Generally, success fees accrue at a set rate and are contractually due upon a change of control of a portfolio company, typically from an exit or sale. Some debt securities have deferred interest whereby some portion of the interest payment is added to the principal balance so that the interest is paid, together with the principal, at maturity. This form of deferred interest is often called PIK interest.
Typically, our equity investments consist of common stock, preferred stock, limited liability company interests, or warrants to purchase the foregoing. Often, these equity investments occur in connection with our original investment, recapitalizing a business, or refinancing existing debt.
From our initial public offering in August 2001 through September 30, 2025, we have made 705 different loans to, or investments in, 292 companies for a total of approximately $3.2 billion, before giving effect to principal repayments on investments and divestitures.
During the year ended September 30, 2025, we invested $310.7 million in 15 new portfolio companies and extended $86.1 million in investments to existing portfolio companies. In addition, we received a total of $352.3 million in combined net proceeds and principal repayments from portfolio company exits and principal repayments by existing portfolio companies during the year ended September 30, 2025.
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During the year ended September 30, 2025, the following significant transactions occurred:
Proprietary Investments
•In October 2024, our $15.0 million debt investment in Perimeter Solutions Group paid off at par. We also received a $0.5 million prepayment penalty in conjunction with the payoff.
•In October 2024, our investment in Antenna Research Associates, Inc. was sold, which resulted in a net realized gain on our common equity of approximately $59.3 million and the repayment of our debt investment of $31.3 million at par.
•In November 2024, we invested an additional $28.9 million in Giving Home Healthcare, LLC (“Giving Home”), an existing portfolio company, through secured first lien debt. In June 2025, we invested an additional $7.0 million in Giving Home through secured first lien debt.
•In November 2024, we invested $10.5 million in Wings ‘N More Restaurants, LLC (“Wings”) through secured first lien debt. We also extended Wings a $1.5 million secured first lien line of credit commitment and a $5.0 million secured first lien delayed draw term loan commitment, both of which were unfunded at close.
•In November 2024, our $22.3 million debt investment in ENET Holdings, LLC paid off at par.
•In December 2024, we invested $42.8 million in Vet’s Choice Radiology, LLC through secured first lien debt.
•In December 2024, we invested $28.9 million in Pan-Am Dental, LLC through secured second lien debt and preferred equity.
•In December 2024, we invested $15.0 million in Freedom Dental Management, Inc. through secured first lien debt.
•In December 2024, we invested $5.0 million in Tube Bending Technology, LLC through secured second lien debt.
•In December 2024, we invested $5.0 million in Gladstone Alternative, one of our affiliated funds, through common equity.
•In December 2024, our investment in Salt and Straw, LLC, paid off which resulted in a realized gain of approximately $2.5 million on our preferred equity and the repayment of our debt investment of $10.9 million at par. We also received a $0.1 million prepayment penalty in conjunction with the payoff. We continue to hold warrants for common equity in Salt and Straw, LLC.
•In December 2024, we sold our debt investments in DKI Ventures, LLC, which resulted in a net realized loss on our debt of approximately $4.1 million.
•In January 2025, our $20.6 million debt investment in Fix-It Group, LLC paid off at par. We also received a $0.1 million prepayment penalty.
•In January 2025, our $5.4 million debt investment in Sokol and Company, LLC (“Sokol”) paid off at par. Additionally, in February 2025, a portion of our common equity investment in Sokol was sold, representing a return of our equity cost basis of $1.1 million and a realized gain of $4.7 million.
•In February 2025, we invested $18.9 million in Dutch Gold Honey, Inc. through secured second lien debt and common equity.
•In February 2025, we invested $19.4 million in Viron International, LLC through secured first lien debt and common equity.
•In March 2025, we received a $6.0 million partial repayment on our debt investment in Viva Railings, LLC.
•In March 2025, we exited our investment in MCG Energy Solutions, LLC, which resulted in a realized gain on our preferred equity investment of approximately $3.0 million and the repayment of our debt investment of $20.4 million at par.
•In April 2025, our $42.2 million debt investment in SpaceCo Holdings, LLC paid off at par.
•In April 2025, our investment in Eegees, LLC was restructured as part of the bankruptcy process resulting in a new $12.8 million first lien debt investment and a new $8.5 million common equity investment in Eegee Acquisition Corporation. In conjunction with the restructuring, we recorded a net realized loss of approximately $4.4 million.
•In May 2025, we invested $46.0 million in Altior Healthcare, LLC through secured first lien debt.
•In June 2025, our $36.1 million debt investment in Cafe Zupas paid off at par. We also received a $0.4 million prepayment penalty in conjunction with the payoff.
•In June 2025, we invested $12.6 million in RF Technologies, LLC through secured first lien debt. We also extended RF Technologies, LLC a $3.5 million secured first lien line of credit commitment.
•In July 2025, we invested $25.0 million in MASSiv Brands, LLC through secured first lien debt.
•In July 2025, we invested $15.0 million in Alsay Incorporated through secured second lien debt and preferred equity.
•In July 2025, we invested $23.7 million in Snif-Snax, LLC through secured first lien debt and preferred equity.
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•In July 2025, we invested $13.0 million in Zero Case Holding Inc. through secured first lien debt and common equity. We also extended this business a $4.0 million secured first lien line of credit commitment, which was unfunded at close.
•In August 2025, we invested an additional $16.6 million in OCI, LLC, an existing portfolio company, through secured first lien debt and common equity.
•In August 2025, we invested $30.0 million in Foodservices Brand Group (“FBG”) through secured first lien debt. We also extended FBG a $10.0 million secured first lien line of credit commitment, which was unfunded at close.
•In September 2025, we recognized a realized loss of $6.4 million on our equity investment in FES Resources Holdings, LLC.
•In September 2025, our $15.4 million debt investment in Ohio Armor Holdings, LLC paid off at par. We continue to hold a common equity investment in Ohio Armor Holdings, LLC.
Syndicated Investments
•In July 2025, our $3.7 million debt investment in 8th Avenue Food & Provisions, Inc. paid off at par.
Refer to Note 14—Subsequent Events in the accompanying Consolidated Financial Statements included elsewhere in this Annual Report for portfolio activity occurring subsequent to September 30, 2025.
Capital Raising
We have been able to meet our capital needs through extensions of and increases to our line of credit under the Credit Facility and by accessing the capital markets in the form of public equity offerings of common and preferred stock and public and private debt offerings. We have successfully extended the Credit Facility’s revolving period multiple times, most recently to October 2027, and currently have a total commitment amount of $320.0 million. During the year ended September 30, 2025, we sold 362,482 common shares under our at-the-market program for gross proceeds of $9.6 million. Additionally, we sold 518,321 shares of Series A Preferred Stock for gross proceeds of $13.0 million during the year ended September 30, 2025. In September 2025, we completed an offering of $149.5 million aggregate principal amount of 2030 Convertible Notes. Refer to “Liquidity and Capital Resources — Revolving Line of Credit,” “Liquidity and Capital Resources — Equity — Common Stock,” and “Liquidity and Capital Resources — Notes Payable” for further discussion.
Although we were able to access the capital markets historically and in recent years, market conditions may affect the trading price of our common stock and thus may inhibit our ability to finance new investments through the issuance of common stock in the future. When our common stock trades below NAV per common share, our ability to issue common stock is constrained by provisions of the 1940 Act, which generally prohibits the issuance and sale of our common stock below NAV per common share without first obtaining approval from our stockholders and our independent directors, other than through sales to our then-existing stockholders pursuant to a rights offering. On September 30, 2025, the closing market price of our common stock was $21.87 per share, a 2.5% premium to our September 30, 2025 NAV per share of $21.34.
Regulatory Compliance
Our ability to seek external debt financing, to the extent that it is available under current market conditions, is further subject to the asset coverage limitations of the 1940 Act, which require us to have an asset coverage (as defined in Sections 18 and 61 of the 1940 Act) of at least 150% on our “senior securities representing indebtedness” and our “senior securities that are stock.”
On April 10, 2018, our Board of Directors, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) thereof, approved the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, the Company’s asset coverage requirements for senior securities changed from 200% to 150%, effective April 10, 2019.
As of September 30, 2025, our asset coverage on our “senior securities representing indebtedness” was 219.8% and our asset coverage on our “senior securities that are stock” was 208.8%.
Recent Developments
Debt Redemption
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On October 15, 2025, we voluntarily redeemed the 2028 Notes with an aggregate principal amount outstanding of $57.0 million. On October 31, 2025, we voluntarily redeemed the 2026 Notes with an aggregate principal outstanding of $150.0 million.
Distributions
On October 14, 2025, our Board of Directors declared the following distributions to common and preferred stockholders:

Record Date |  | Payment Date |  | Distribution per Common Share
October 24, 2025 |  | October 31, 2025 |  | $ | 0.15 |
November 17, 2025 |  | November 26, 2025 |  | 0.15 |
December 22, 2025 |  | December 31, 2025 |  | 0.15 |
|  | Total for the Quarter |  | $ | 0.45 |

Record Date |  | Payment Date |  | Distribution per Series A Preferred Stock
October 27, 2025 |  | November 5, 2025 |  | $ | 0.130208 |
November 25, 2025 |  | December 5, 2025 |  | 0.130208 |
December 29, 2025 |  | January 5, 2026 |  | 0.130208 |
|  | Total for the Quarter |  | $ | 0.390624 |

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RESULTS OF OPERATIONS
Comparison of the Year Ended September 30, 2025 to the Year Ended September 30, 2024

| For the Year Ended September 30,
| 2025 |  | 2024 |  | $ Change |  | % Change
INVESTMENT INCOME |  |  |  |  |  |  |
Interest income | $ | 87,281 |  |  | $ | 93,294 |  |  | $ | (6,013) |  |  | (6.4) | %
Other income | 1,841 |  |  | 3,327 |  |  | (1,486) |  |  | (44.7) |
Total investment income | 89,122 |  |  | 96,621 |  |  | (7,499) |  |  | (7.8) |
EXPENSES |  |  |  |  |  |  |
Base management fee | 13,910 |  |  | 13,609 |  |  | 301 |  |  | 2.2 |
Loan servicing fee | 8,888 |  |  | 8,862 |  |  | 26 |  |  | 0.3 |
Incentive fee | 10,486 |  |  | 11,410 |  |  | (924) |  |  | (8.1) |
Administration fee | 2,012 |  |  | 1,970 |  |  | 42 |  |  | 2.1 |
Interest expense | 19,986 |  |  | 21,715 |  |  | (1,729) |  |  | (8.0) |
Amortization of deferred financing costs | 2,293 |  |  | 1,864 |  |  | 429 |  |  | 23.0 |
Other expenses | 3,202 |  |  | 3,165 |  |  | 37 |  |  | 1.2 |
Expenses, before credits from Adviser | 60,777 |  |  | 62,595 |  |  | (1,818) |  |  | (2.9) |
Credit to base management fee – loan servicing fee | (8,888) |  |  | (8,862) |  |  | (26) |  |  | 0.3 |
Credit to fees from Adviser – other | (7,974) |  |  | (3,171) |  |  | (4,803) |  |  | NM
Total expenses, net of credits | 43,915 |  |  | 50,562 |  |  | (6,647) |  |  | (13.1) |
NET INVESTMENT INCOME | 45,207 |  |  | 46,059 |  |  | (852) |  |  | (1.8) |
NET REALIZED AND UNREALIZED GAIN (LOSS) |  |  |  |  |  |  |
Net realized gain (loss) on investments | 55,368 |  |  | 2,008 |  |  | 53,360 |  |  | NM
Net realized gain (loss) on other | 274 |  |  | 3,951 |  |  | (3,677) |  |  | (93.1) |
Net unrealized appreciation (depreciation) of investments | (42,739) |  |  | 42,703 |  |  | (85,442) |  |  | NM
Net gain (loss) from investments and other | 12,903 |  |  | 48,662 |  |  | (35,759) |  |  | (73.5) |
PREFERRED STOCK DIVIDENDS | 919 |  |  | 215 |  |  | 704 |  |  | 327.4 | %
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 57,191 |  |  | $ | 94,506 |  |  | $ | (37,315) |  |  | (39.5) | %
PER BASIC AND DILUTED COMMON SHARE |  |  |  |  |  |  |
Net investment income(A) | $ | 2.02 |  |  | $ | 2.11 |  |  | $ | (0.09) |  |  | (4.3) | %
Net increase (decrease) in net assets resulting from operations - basic(A) | $ | 2.56 |  |  | $ | 4.34 |  |  | $ | (1.78) |  |  | (41.0) | %
Net increase (decrease) in net assets resulting from operations - diluted(A) | $ | 2.55 |  |  | $ | 4.34 |  |  | $ | (1.79) |  |  | (41.2) | %

NM N ot Meaningful
(A) Per share amounts have been adjusted on a retroactive basis to reflect the Reverse Stock Split effected on April 4, 2024. Refer to Note 2—Summary of Significant Accounting Policies in the accompanying Notes to Consolidated Financial Statements for additional information.
Investment Income
Interest income decreased by 6.4% for the year ended September 30, 2025, as compared to the prior year. Generally, the level of interest income from investments is directly related to the principal balance of our interest-bearing investment portfolio outstanding during the period multiplied by the weighted-average yield. The weighted average principal balance of our interest-bearing investment portfolio for the year ended September 30, 2025 was $681.1 million, compared to $665.5 million for the year ended September 30, 2024, an increase of $15.6 million, or 2.3%. The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which decreased to 12.7% for the year ended September 30, 2025, compared to 13.9% for the year ended September 30, 2024, inclusive of any
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allowances on interest receivables made during those periods. The decrease in the weighted average yield was driven mainly by decreases in interest rates.
As of September 30, 2025, our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC were on non-accrual status with a cost basis of $28.8 million, or 3.6% of the cost basis of all debt investments in our portfolio, and a fair value of $13.0 million, or 1.7% of the fair value of all debt investments in our portfolio. As of September 30, 2024, our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC were on non-accrual status with a cost basis of $28.3 million, or 4.1% of the cost basis of all debt investments in our portfolio, and a fair value of $12.8 million, or 1.9% of the fair value of all debt investments in our portfolio.
Other income decreased by 44.7% during the year ended September 30, 2025, as compared to the prior year period primarily due to a $0.9 million decrease in dividend income and a $0.4 million decrease in success fees received year over year.
As of September 30, 2025, no single investment represented greater than 10% of the total investment portfolio at fair value. As of September 30, 2024, our investment in Antenna Research Associates, Inc. represented 11.4% of the total investment portfolio at fair value.
Expenses
Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, decreased $6.6 million, or 13.1%, for the year ended September 30, 2025 as compared to the prior year. This decrease was primarily due to a $3.1 million decrease in the net incentive fee, a $2.4 million decrease in the net base management fee, and a $1.7 million decrease in interest expense.
Total interest expense decreased by $1.7 million, or 8.0%, during the year ended September 30, 2025 as compared to the prior year due primarily to a decrease in the weighted average balance outstanding on our Credit Facility, partially offset by an increase in the effective interest rate and the issuance of the 2030 Convertible Notes in September 2025. Interest expense on our Credit Facility decreased by $2.2 million period over period due primarily to a decrease in the weighted average balance outstanding which was $40.2 million during the year ended September 30, 2025, as compared to $70.6 million in the prior year, a decrease of 43.1%. The effective interest rate on our Credit Facility, including unused commitment fees incurred, but excluding the impact of deferred financing costs, was 13.8% during the year ended September 30, 2025, compared to 11.0% during the prior year. The increase in the effective interest rate was driven primarily by a $0.9 million increase in unused commitment fees on the undrawn portion of the Credit Facility, partially offset by a decrease in interest rates on the drawn portion of the Credit Facility during the year ended September 30, 2025. Interest expense on our notes payable increased by $0.5 million period over period due to the issuance of the 2030 Convertible Notes in September 2025.
The net base management fee earned by the Adviser decreased by $2.4 million, or 22.2%, during the year ended September 30, 2025, as compared to the prior year, resulting from an increase in credits to the base management fee from the Adviser for new deal origination fees year over year, partially offset by.an increase in average total assets subject to the base management fee year over year.
The income-based incentive fee decreased by $0.9 million, or 8.1%, for the year ended September 30, 2025, as compared to the prior year, primarily due to a decrease in pre-incentive fee net investment income, partially offset by an increase in net assets, which drives the hurdle rate. During the years ended September 30, 2025 and 2024, our Board of Directors accepted non-contractual, unconditional and irrevocable credits from the Adviser of $2.3 million and $0.2 million, respectively, to reduce the income-based incentive fee to the extent net investment income did not cover 100.0% of distributions to common stockholders.
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The base management, loan servicing and incentive fees, and associated non-contractual, unconditional and irrevocable credits, are computed quarterly, as described under “Transactions with the Adviser” in Note 4— Related Party Transactions of the Notes to Consolidated Financial Statements and are summarized in the following table:

| Year Ended September 30,
| 2025 |  | 2024
Average total assets subject to base management fee(A)(B) | $ | 794,857 |  |  | $ | 777,657 |
Multiplied by annual base management fee of 1.75% | 1.75 | % |  | 1.75 | %
Base management fee(C) | 13,910 |  |  | 13,609 |
Portfolio company fee credit | (5,593) |  |  | (2,866) |
Syndicated loan fee credit | (37) |  |  | (101) |
Net Base Management Fee | $ | 8,280 |  |  | $ | 10,642 |
Loan servicing fee(C) | $ | 8,888 |  |  | $ | 8,862 |
Credit to base management fee - loan servicing fee(C) | (8,888) |  |  | (8,862) |
Net Loan Servicing Fee | $ | — |  |  | $ | — |
Incentive fee(C) | $ | 10,486 |  |  | $ | 11,410 |
Incentive fee credit | (2,344) |  |  | (204) |
Net Incentive Fee | $ | 8,142 |  |  | $ | 11,206 |
Portfolio company fee credit | $ | (5,593) |  |  | $ | (2,866) |
Syndicated loan fee credit | (37) |  |  | (101) |
Incentive fee credit | (2,344) |  |  | (204) |
Credit to Fees from Adviser—Other(C) | $ | (7,974) |  |  | $ | (3,171) |

(A)Average total assets subject to the base management fee is defined as total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings, valued at the end of the two most recently completed quarters within the respective years and adjusted appropriately for any share issuances or repurchases during the period.
(B)Excludes our investment in Gladstone Alternative valued at the end of the applicable periods.
(C)Reflected, on a gross basis, as a line item on our accompanying Consolidated Statement of Operations located elsewhere in this Annual Report.
Net Realized Gain (Loss) on Investments
For the year ended September 30, 2025, we recorded a net realized gain on investments of $55.4 million, which resulted primarily from a $59.3 million realized gain recognized on the sale of our investment in Antenna Research Associates, Inc., a $4.7 million realized gain recognized on the partial sale of our common equity investment in Sokol & Company Holdings, LLC, a $3.0 million realized gain recognized on our investment in MCG Energy Solutions, LLC, and a $2.5 million realized gain recognized on our investment in Salt & Straw, LLC. These gains were partially offset by a $6.4 million realized loss recognized on our equity investment in FES Resources Holdings LLC, a $4.4 million realized loss recognized on the restructure of our investment in Eegee’s LLC, and a $4.1 million realized loss recognized on the sale of our investment in DKI Ventures, LLC.
For the year ended September 30, 2024, we recorded a net realized gain on investments of $2.0 million, which resulted primarily from a $1.5 million realized gain recognized on our investment in Giving Home.
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Net Unrealized Appreciation (Depreciation) of Investments
During the year ended September 30, 2025, we recorded net unrealized depreciation of investments in the aggregate amount of $42.7 million. The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the year ended September 30, 2025 were as follows:

|  | Year Ended September 30, 2025
Portfolio Company |  | Realized Gain (Loss) |  | Unrealized Appreciation (Depreciation) |  | Reversal of Unrealized Depreciation (Appreciation) |  | Net Gain (Loss)
Sokol & Company Holdings, LLC |  | $ | 4,748 |  |  | $ | 5,433 |  |  | $ | (4,870) |  |  | $ | 5,311 |
Arc Drilling Holdings LLC |  | — |  |  | 4,440 |  |  | — |  |  | 4,440 |
Antenna Research Associates, Inc. |  | 59,348 |  |  | — |  |  | (55,140) |  |  | 4,208 |
Encore Dredging Holdings, LLC |  | — |  |  | 3,746 |  |  | — |  |  | 3,746 |
Dutch Gold Honey, Inc. |  | — |  |  | 2,617 |  |  | — |  |  | 2,617 |
Giving Home Health Care, LLC |  | 731 |  |  | 1,731 |  |  | — |  |  | 2,462 |
Torrent Photonics Holdco LLC |  | — |  |  | 1,809 |  |  | — |  |  | 1,809 |
TNCP Intermediate HoldCo, LLC |  | — |  |  | 1,497 |  |  | — |  |  | 1,497 |
NeoGraf Solutions, LLC |  | — |  |  | 1,382 |  |  | — |  |  | 1,382 |
Eegee's LLC |  | (4,439) |  |  | (737) |  |  | 6,205 |  |  | 1,029 |
Altior Healthcare, LLC |  | — |  |  | 920 |  |  | — |  |  | 920 |
Triple H Food Processors, LLC |  | — |  |  | 831 |  |  | — |  |  | 831 |
Canopy Safety Brands, LLC |  | — |  |  | 819 |  |  | — |  |  | 819 |
Pan-Am Dental, LLC |  | — |  |  | 505 |  |  | — |  |  | 505 |
8th Avenue Food & Provisions, Inc. |  | — |  |  | 146 |  |  | 296 |  |  | 442 |
B+T Group Acquisition Inc. |  | — |  |  | 440 |  |  | — |  |  | 440 |
Pansophic Learning Ltd. |  | — |  |  | 397 |  |  | — |  |  | 397 |
Vet's Choice Radiology LLC |  | — |  |  | 348 |  |  | — |  |  | 348 |
ENET Holdings, LLC |  | — |  |  | — |  |  | 316 |  |  | 316 |
Salt & Straw, LLC |  | 2,450 |  |  | 139 |  |  | (2,607) |  |  | (18) |
MCG Energy Solutions, LLC |  | 2,954 |  |  | (4) |  |  | (2,976) |  |  | (26) |
FES Resources Holdings LLC |  | (6,350) |  |  | (163) |  |  | 6,350 |  |  | (163) |
Café Zupas |  | — |  |  | (371) |  |  | (153) |  |  | (524) |
DKI Ventures, LLC |  | (4,074) |  |  | — |  |  | 3,422 |  |  | (652) |
Axios Industrial Group, LLC |  | — |  |  | (802) |  |  | — |  |  | (802) |
WB Xcel Holdings, LLC |  | — |  |  | (939) |  |  | — |  |  | (939) |
Quality Environmental Midco, Inc. |  | — |  |  | (991) |  |  | — |  |  | (991) |
Engineering Manufacturing Technologies, LLC |  | — |  |  | (2,921) |  |  | — |  |  | (2,921) |
Defiance Integrated Technologies, Inc. |  | — |  |  | (2,949) |  |  | — |  |  | (2,949) |
Technical Resource Management, LLC |  | — |  |  | (3,509) |  |  | — |  |  | (3,509) |
Eegee Acquisition Corp. |  | — |  |  | (3,642) |  |  | — |  |  | (3,642) |
Lonestar EMS, LLC |  | — |  |  | (4,012) |  |  | — |  |  | (4,012) |
Other, net (<$500) |  | — |  |  | 258 |  |  | — |  |  | 258 |
Total: |  | $ | 55,368 |  |  | $ | 6,418 |  |  | $ | (49,157) |  |  | $ | 12,629 |

The primary driver of net unrealized depreciation of $42.7 million for the year ended September 30, 2025 was the reversal of unrealized appreciation from the exit of our investment in Antenna Research Associates, Inc., partially offset by the improvement in the financial and operational performance of certain of our portfolio companies.
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During the year ended September 30, 2024, we recorded net unrealized appreciation of investments in the aggregate amount of $42.7 million. The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the year ended September 30, 2024 were as follows:

|  | Year Ended September 30, 2024
Portfolio Company |  | Realized Gain (Loss) |  | Unrealized Appreciation (Depreciation) |  | Reversal of Unrealized Depreciation (Appreciation) |  | Net Gain (Loss)
Antenna Research Associates, Inc. |  | $ | — |  |  | $ | 40,987 |  |  | $ | — |  |  | $ | 40,987 |
Lonestar EMS, LLC |  | — |  |  | 8,284 |  |  | — |  |  | 8,284 |
MCG Energy Solutions, LLC |  | — |  |  | 3,555 |  |  | — |  |  | 3,555 |
Salt & Straw, LLC |  | — |  |  | 3,041 |  |  | — |  |  | 3,041 |
Giving Home Health Care, LLC |  | 1,465 |  |  | 1,220 |  |  | — |  |  | 2,685 |
Sokol & Company Holdings, LLC |  | — |  |  | 1,520 |  |  | — |  |  | 1,520 |
TNCP Intermediate HoldCo, LLC |  | — |  |  | 1,239 |  |  | — |  |  | 1,239 |
Café Zupas |  | — |  |  | 996 |  |  | — |  |  | 996 |
Quality Environmental Midco, Inc. |  | — |  |  | 972 |  |  | — |  |  | 972 |
Ohio Armor Holdings, LLC |  | — |  |  | 850 |  |  | — |  |  | 850 |
NeoGraf Solutions, LLC |  | — |  |  | 839 |  |  | — |  |  | 839 |
Arc Drilling Holdings LLC |  | — |  |  | 784 |  |  | — |  |  | 784 |
8th Avenue Food & Provisions, Inc. |  | — |  |  | 746 |  |  | — |  |  | 746 |
Total Access Elevator, LLC |  | — |  |  | 679 |  |  | — |  |  | 679 |
Leadpoint Business Services, LLC |  | — |  |  | 636 |  |  | — |  |  | 636 |
Canopy Safety Brands, LLC |  | — |  |  | 629 |  |  | — |  |  | 629 |
ENET Holdings, LLC |  | — |  |  | 576 |  |  | — |  |  | 576 |
Tailwind Smith Cooper Intermediate Corporation |  | — |  |  | 683 |  |  | (121) |  |  | 562 |
OCI, LLC |  | — |  |  | 549 |  |  | — |  |  | 549 |
Trowbridge Chicago, LLC |  | 332 |  |  | (23) |  |  | 109 |  |  | 418 |
SpaceCo Holdings, LLC |  | — |  |  | 414 |  |  | — |  |  | 414 |
Axios Industrial Group, LLC |  | — |  |  | 367 |  |  | — |  |  | 367 |
ALS Education, LLC |  | — |  |  | 317 |  |  | — |  |  | 317 |
Viva Railings, L.L.C. |  | — |  |  | 311 |  |  | — |  |  | 311 |
Sea Link International IRB, Inc. |  | — |  |  | 252 |  |  | — |  |  | 252 |
DKI Ventures, LLC |  | — |  |  | (668) |  |  | — |  |  | (668) |
Technical Resource Management, LLC |  | — |  |  | (829) |  |  | — |  |  | (829) |
Defiance Integrated Technologies, Inc. |  | — |  |  | (1,000) |  |  | — |  |  | (1,000) |
Encore Dredging Holdings, LLC |  | — |  |  | (1,097) |  |  | — |  |  | (1,097) |
Engineering Manufacturing Technologies, LLC |  | — |  |  | (1,173) |  |  | — |  |  | (1,173) |
Edge Adhesives Holdings, Inc. |  | — |  |  | (2,515) |  |  | — |  |  | (2,515) |
HH-Inspire Acquisition, Inc. |  | — |  |  | (2,817) |  |  | — |  |  | (2,817) |
B+T Group Acquisition Inc. |  | — |  |  | (3,586) |  |  | — |  |  | (3,586) |
Eegee's LLC |  | — |  |  | (4,568) |  |  | — |  |  | (4,568) |
FES Resources Holdings LLC |  | — |  |  | (4,670) |  |  | — |  |  | (4,670) |
WB Xcel Holdings, LLC |  | — |  |  | (4,830) |  |  | — |  |  | (4,830) |
Other, net (<$500) |  | 211 |  |  | 257 |  |  | (212) |  |  | 256 |
Total: |  | $ | 2,008 |  |  | $ | 42,927 |  |  | $ | (224) |  |  | $ | 44,711 |

The primary driver of net unrealized appreciation of $42.7 million for the year ended September 30, 2024 was improvement in the financial and operational performance of certain of our portfolio companies, partially offset by the decrease in comparable transaction multiples used to estimate the fair value of certain of our other portfolio companies, and the decline in the financial and operational performance of certain of our other portfolio companies.
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As of September 30, 2025, the fair value of our investment portfolio was less than its cost basis by approximately $17.5 million and our entire investment portfolio was valued at 98.0% of cost, as compared to cumulative net unrealized appreciation of $25.2 million and a valuation of our entire portfolio at 103.3% of cost as of September 30, 2024.
Comparison of the Year Ended September 30, 2024 to the Year Ended September 30, 2023
The comparison of the fiscal year ended September 30, 2024 to the fiscal year ended September 30, 2023 can be found in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, as filed with the SEC on November 13, 2024, located within Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
Our cash flows from operating activities are primarily generated from the interest payments on debt securities that we receive from our portfolio companies, as well as net proceeds received through repayments or sales of our investments. We utilize this cash primarily to fund new investments, make interest payments on our Credit Facility and notes payable, make distributions to our stockholders, pay management and administrative fees to the Adviser and Administrator, and for other operating expenses.
Net cash used in operating activities for the year ended September 30, 2025 was $5.5 million as compared to net cash provided by operating activities of $3.2 million for the year ended September 30, 2024. The change was primarily due to an increase in purchases of investments year over year, partially offset by an increase in repayments and net proceeds from sales year over year. Purchases of investments were $396.8 million during the year ended September 30, 2025 compared to $177.6 million during the year ended September 30, 2024. Repayments and net proceeds from sales were $352.6 million during the year ended September 30, 2025 compared to $140.2 million during the year ended September 30, 2024.
As of September 30, 2025, we had loans to or equity investments in 55 companies, with an aggregate cost basis of approximately $876.6 million. As of September 30, 2024, we had loans to or equity investments in 49 companies, with an aggregate cost basis of approximately $771.0 million.
The following table summarizes our total portfolio investment activity during the years ended September 30, 2025 and 2024:

| Year Ended September 30,
| 2025 |  | 2024
Beginning investment portfolio, at fair value | $ | 796,260 |  |  | $ | 704,815 |
New investments | 310,724 |  |  | 53,250 |
Disbursements to existing portfolio companies | 86,072 |  |  | 124,399 |
Scheduled principal repayments | (10,057) |  |  | (9,288) |
Unscheduled principal repayments | (252,696) |  |  | (124,183) |
Net proceeds from sales of investments | (89,564) |  |  | (2,799) |
Net unrealized appreciation (depreciation) of investments | 6,418 |  |  | 42,927 |
Reversal of prior period net depreciation (appreciation) of investments | (49,157) |  |  | (224) |
Net realized gain (loss) on investments(A) | 55,368 |  |  | 2,008 |
Increase in investment balance due to PIK interest (B) | 4,910 |  |  | 5,525 |
Net change in premiums, discounts and amortization | 846 |  |  | (170) |
Ending Investment Portfolio, at Fair Value | $ | 859,124 |  |  | $ | 796,260 |

(A)Excludes net realized gain (loss) on other.
(B)PIK interest is a non-cash source of income and is calculated at the contractual rate stated in a loan agreement and added to the principal balance of a loan.
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The following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of September 30, 2025.

Year Ending September 30, |  | Amount
2026(A) |  | $ | 58,434 |
2027 |  | 157,554 |
2028 |  | 222,265 |
2029 |  | 139,336 |
2030 |  | 209,608 |
Thereafter |  | 10,000 |
Total contractual repayments |  | $ | 797,197 |
Adjustments to cost basis of debt investments |  | (574) |
Investments in equity securities |  | 79,991 |
Investments held as of September 30, 2025 at cost: |  | $ | 876,614 |

(A)Includes debt investments with contractual principal amounts totaling $0.5 million for which the maturity date has passed as of September 30, 2025.
Financing Activities
Net cash provided by financing activities for the year ended September 30, 2025 was $35.6 million, which consisted primarily of $149.5 million in gross proceeds from the issuance of the 2030 Convertible Notes, $11.5 million in net proceeds from the issuance of preferred stock, and $9.6 million in gross proceeds from the issuance of common stock, partially offset by $70.6 million in net repayments on our Credit Facility and $55.5 million in distributions to common shareholders.
Net cash used in financing activities for the year ended September 30, 2024 was $2.3 million, which consisted primarily of $43.1 million in distributions to common shareholders, partially offset by $22.8 million in net borrowings on our Credit Facility, $11.0 million in gross proceeds from the issuance of common stock, and $7.8 million in net proceeds from the issuance of preferred stock.
Net cash provided by financing activities for the year ended September 30, 2023 was $10.2 million, which consisted primarily of $87.4 million in gross proceeds from the issuance of common stock and $57.0 million in gross proceeds from the issuance of the 2028 Notes, partially offset by $94.0 million in net repayments on our Credit Facility and $35.4 million in distributions to common shareholders.
Distributions to Stockholders
Common Stock Distributions
To qualify to be taxed as a RIC and thus avoid corporate level federal income tax on the income we distribute to our stockholders, we are required to distribute to our stockholders on an annual basis at least 90.0% of our Investment Company Taxable Income. Additionally, our Credit Facility has a covenant that generally restricts the amount of distributions to stockholders that we can pay out to be no greater than our aggregate net investment income, net capital gains and amounts elected to have been paid during the prior year in accordance with Section 855(a) of the Code.
In accordance with these requirements, during the year ended September 30, 2025, we paid monthly cash distributions of $0.165 per common share, a supplemental distribution of $0.40 per common share in December 2024, and a supplemental distribution of $0.10 per common share in September 2025. These distributions totaled an aggregate of $55.5 million. In October 2025, our Board of Directors declared a monthly distribution of $0.15 per common share for each of October, November, and December 2025. Our Board of Directors declared these distributions to our stockholders based on our estimates of our Investment Company Taxable Income for the fiscal year ended September 30, 2026.
For the fiscal years ended September 30, 2025, September 30, 2024, and September 30, 2023, our Investment Company Taxable Income exceeded common stock distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $5.5 million, $6.6 million, and $5.0 million, respectively, of the first common distributions paid to common stockholders in the subsequent fiscal year as having been paid in the prior year. In addition, for the fiscal year
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ended September 30, 2025, net capital gains exceeded common stock distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $0.7 million of the first common distributions paid to common stockholders in the subsequent fiscal year as having been paid in the prior year. There were no such amounts for the fiscal years ended September 30, 2024 and 2023.
Preferred Stock Dividends
We paid monthly cash dividends of $0.130208 per share to holders of our Series A Preferred Stock for each month during the year ended September 30, 2025, which totaled an aggregate of $0.9 million. In October 2025, our Board of Directors declared monthly cash dividends of $0.130208 per share to holders of our Series A Preferred Stock for each of October, November, and December 2025. Dividend payments to our preferred stockholders are included in preferred stock dividends on our Consolidated Statements of Operations. For federal income tax purposes, the dividends paid by us to 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.
Dividend Reinvestment Plan
Our common stockholders who hold their shares through our transfer agent, Computershare, Inc. (“Computershare”), have the option to participate in a dividend reinvestment plan offered by Computershare, as the plan agent. This is an “opt in” dividend reinvestment plan, meaning that common stockholders may elect to have their cash distributions automatically reinvested in additional shares of our common stock. Common stockholders who do make such election will receive their distributions in cash. Common stockholders who receive distributions in the form of stock will be subject to the same federal, state and local tax consequences as stockholders who elect to receive their distributions in cash. The common stockholder will have an adjusted basis in the additional common shares purchased through the plan equal to the amount of the reinvested distribution. The additional shares will have a new holding period commencing on the day following the date on which the shares are credited to the common stockholder’s account. Computershare purchases shares in the open market in connection with the obligations under the plan.
Equity
Registration Statement
Our shelf registration statement permits us to issue, through one or more transactions, up to an aggregate of $700.0 million in securities, consisting of common stock, preferred stock, subscription rights, debt securities and warrants to purchase common stock or preferred stock. As of September 30, 2025, we had the ability to issue up to $519.3 million in securities under the registration statement.
Common Stock
In August 2024, we entered into an equity distribution agreement with Jefferies LLC and Huntington Securities, Inc, (the “2024 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 $150.0 million in an “at the market offering” (the “2024 ATM Program”). During the year ended September 30, 2025, we sold 362,482 shares of our common stock under the 2024 Sales Agreement, at a weighted-average price of $26.44 per share and raised $9.6 million of gross proceeds. Net proceeds, after deducting commissions and offering costs borne by us, were approximately $9.4 million. As of September 30, 2025, we had a remaining capacity to sell up to an additional $129.4 million of our common stock under the 2024 ATM Program.
We anticipate issuing equity securities to obtain additional capital in the future. However, we cannot determine the timing or terms of any future equity issuances or whether we will be able to issue equity on terms favorable to us, or at all. To the extent that our common stock trades at a market price below our NAV per share, we will generally be precluded from raising equity capital through public offerings of our common stock, other than pursuant to stockholder and independent director approval or a rights offering to existing common stockholders.
Revolving Line of Credit
On May 13, 2021, we, through Business Loan, entered into a sixth amended and restated credit agreement with KeyBank as administrative agent, lead arranger, managing agent and lender, the Adviser, as servicer, and certain other lenders party thereto (the “Credit Facility”). On June 23, 2025, we, through Business Loan, entered into Amendment No. 9 to the Credit Facility.
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As of September 30, 2025, our Credit Facility had a total commitment amount of $320.0 million with an “accordion” feature that permits us to increase the size of the facility to $400.0 million. The Credit Facility has a revolving period end date of October 31, 2027 and a final maturity date of October 31, 2029 (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). The interest rate margin is 2.60% during the revolving period and 3.10% thereafter.
Interest is payable monthly during the term of our Credit Facility. Available borrowings are subject to various constraints imposed under our Credit Facility, based on the aggregate loan balance pledged by Business Loan, which varies as loans are added and repaid, regardless of whether such repayments are prepayments or made as contractually required. Our Credit Facility also requires that any interest or principal payments on pledged loans be remitted directly by the borrower into a lockbox account with KeyBank and with The Bank of New York Mellon Trust Company, N.A. as custodian. KeyBank, which also serves as the trustee of the account, generally remits the collected funds to us once a month.
Our Credit Facility contains covenants that require Business Loan to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions), and restrict material changes to our credit and collection policies without the lenders’ consents. Our Credit Facility generally limits distributions to our stockholders on a fiscal year basis to the sum of our net investment income, net capital gains and amounts elected to have been paid during the prior year in accordance with Section 855(a) of the Code. Business Loan is also subject to certain limitations on the type of loan investments it can apply as collateral towards the borrowing base to receive additional borrowing availability under our Credit Facility, including restrictions on geographic concentrations, sector concentrations, loan size, payment frequency and status, average life, portfolio company leverage and lien property. Our Credit Facility further requires Business Loan to comply with other financial and operational covenants, which obligate Business Loan to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of 25 obligors required in the borrowing base.
Additionally, we are required to maintain (i) a minimum net worth (defined in our Credit Facility to include any outstanding mandatorily redeemable preferred stock) of $500.0 million plus 50.0% of all equity and subordinated debt raised after June 23, 2025 less 50% of any equity and subordinated debt retired or redeemed after June 23, 2025, which equates to $581.0 million as of September 30, 2025, (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, 2025, and as defined in our Credit Facility, we had a net worth of $877.9 million, asset coverage on our “senior securities representing indebtedness” of 219.8% and an active status as a BDC and RIC. In addition, as of September 30, 2025, we had 34 obligors in our Credit Facility’s borrowing base and we were in compliance with all of our Credit Facility covenants. Refer to Note 5—Borrowings of the notes to our Consolidated Financial Statements included elsewhere in this Annual Report for additional information regarding our Credit Facility.
Notes Payable
In September 2025, we completed an offering of $149.5 million aggregate principal amount of 2030 Convertible Notes for net proceeds of approximately $142.8 million after deducting underwriting discounts, commissions and offering expenses borne by us. The 2030 Convertible Notes will mature on October 1, 2030. We may redeem for cash all or any portion of the 2030 Convertible Notes (subject to the “partial redemption limitation”), at our option, on a redemption date on or after October 6, 2028 and on or before the 45th scheduled trading day immediately prior to the maturity date if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the 2030 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The 2030 Convertible Notes bear interest at a rate of 5.875% per year. Interest is payable semi-annually on April 1 and October 1 of each year beginning April 1, 2026 (which equates to approximately $8.8 million per year).
In August 2023, we completed an offering of $57.0 million aggregate principal amount of the 2028 Notes for net proceeds of approximately $55.1 million after deducting underwriting discounts, commissions and offering expenses borne by us. On October 15, 2025, we voluntarily redeemed 100% of the issued and outstanding 2028 Notes, following which they were delisted from the Nasdaq Global Select Market. The 2028 Notes would have otherwise matured on September 1, 2028.
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The 2028 Notes bore interest at a rate of 7.75% per year. Interest was payable quarterly on March 1, June 1, September 1, and December 1 of each year.
In November 2021, we completed an issuance of $50.0 million aggregate principal amount of 3.75% Notes due 2027 (the “2027 Notes”) for net proceeds of approximately $48.5 million after deducting initial purchasers’ 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 Company’s 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).
In December 2020, we completed an offering of $100.0 million aggregate principal amount of the 2026 Notes for net proceeds of approximately $97.7 million after deducting underwriting discounts, commissions and offering expenses borne by us. In March 2021, we completed an offering of an additional $50.0 million aggregate principal amount of the 2026 Notes for net proceeds of approximately $50.6 million after adding premiums and deducting underwriting costs, commissions and offering expenses borne by us. On October 31, 2025, we voluntarily redeemed 100% of the issued and outstanding 2026 Notes. The 2026 Notes would have otherwise matured on January 31, 2026. The 2026 Notes bore interest at a rate of 5.125% per year. Interest was payable semi-annually on January 31 and July 31 of each year.
The indenture relating to the 2027 Notes contains certain covenants, including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Company’s 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 Company’s 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 2027 Notes, as applicable, and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.
The indenture relating to the 2030 Convertible Notes similarly contains certain covenants including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Company’s asset coverage meets the threshold specified in the 1940 Act after such borrowing and (ii) that we will file with the trustee any documents or reports that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act within 15 days after the same are required to be filed with the SEC; provided that any documents filed by us with the SEC via the EDGAR system will be deemed to be filed with the trustee.
Off-Balance Sheet Arrangements
We generally recognize success fee income when the payment has been received. As of September 30, 2025 and 2024, we had off-balance sheet success fee receivables on our accruing debt investments of $6.0 million and $5.8 million (or approximately $0.27 per common share and $0.26 per common share), respectively, that would be owed to us, generally upon a change of control of the portfolio companies. Consistent with GAAP, we generally have not recognized our success fee receivables and related income in our Consolidated Financial Statements until earned. Due to the contingent nature of our success fees, there are no guarantees that we will be able to collect all of these success fees or know the timing of such collections.
Contractual Obligations
We have lines of credit, delayed draw term loans, and an uncalled capital commitment with certain of our portfolio companies that have not been fully drawn. Since these commitments have expiration dates and we expect many will never be fully drawn, the total commitment amounts do not necessarily represent future cash requirements. We estimate the fair value of the combined unused lines of credit, the unused delayed draw term loans, and the uncalled capital commitment as of September 30, 2025 and 2024 to be immaterial.
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The following table shows our contractual obligations as of September 30, 2025, at cost:

Contractual Obligations(A) |  | Payments Due by Period
| Less than 1 Year |  | 1-3 Years |  | 3-5 Years |  | More than 5 Years |  | Total
Credit Facility(B) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Notes Payable |  | 150,000 |  |  | 107,000 |  |  | — |  |  | 149,500 |  |  | 406,500 |
Interest expense on debt obligations(C) |  | 20,891 |  |  | 33,634 |  |  | 21,091 |  |  | — |  |  | 75,616 |
Total |  | $ | 170,891 |  |  | $ | 140,634 |  |  | $ | 21,091 |  |  | $ | 149,500 |  |  | $ | 482,116 |

(A)Excludes our unused line of credit commitments, unused delayed draw term loans, and uncalled capital commitments to our portfolio companies in an aggregate amount of $66.4 million, at cost, as of September 30, 2025.
(B)Principal balance of borrowings outstanding under our Credit Facility, based on the maturity date following the current contractual revolver period end date.
(C)Includes estimated interest payments on our Credit Facility, 2030 Notes, 2028 Notes, 2027 Notes, and 2026 Notes. The amount of interest expense calculated for purposes of this table was based upon rates and balances as of September 30, 2025.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported consolidated amounts of assets and liabilities, including disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period reported. Actual results could differ materially from those estimates under different assumptions or conditions. We have identified our investment valuation policy (which has been approved by our Board of Directors) as our most critical accounting policy, which is described in Note 2—Summary of Significant Accounting Policies in the accompanying notes to our Consolidated Financial Statements included elsewhere in this Annual Report. Additionally, refer to Note 3—Investments in our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information regarding fair value measurements and our application of Financial Accounting Standards Board Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures.” We have also identified our revenue recognition policy as a critical accounting policy, which is described in Note 2—Summary of Significant Accounting Policies in our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report.
Investment Valuation
Credit Monitoring and Risk Rating
The Adviser monitors a wide variety of key credit statistics that provide information regarding our portfolio companies to help us assess credit quality and portfolio performance and, in some instances, used as inputs in our valuation techniques. Generally, we, through the Adviser, participate in periodic board meetings of our portfolio companies in which we hold board seats and also require them to provide annual audited and monthly unaudited financial statements. Using these statements or comparable information and board discussions, the Adviser calculates and evaluates certain credit statistics.
The Adviser risk rates all of our investments in debt securities. The Adviser does not risk rate our equity securities. For syndicated loans that have been rated by an SEC registered Nationally Recognized Statistical Rating Organization (“NRSRO”), the Adviser generally uses the average of two corporate level NRSRO’s risk ratings for such security. For all other debt securities, the Adviser uses a proprietary risk rating system. While the Adviser seeks to mirror the NRSRO systems, we cannot provide any assurance that the Adviser’s risk rating system will provide the same risk rating as an NRSRO would for these securities. The Adviser’s risk rating system is used to estimate the probability of default on debt securities and the expected loss if there is a default. The Adviser’s risk rating system uses a scale of 0 to >10, with >10 being the lowest probability of default. It is the Adviser’s understanding that most debt securities of medium-sized companies do not exceed the grade of BBB on an NRSRO scale, so there would be no debt securities in the middle market that would meet the definition of AAA, AA or A. Therefore, the Adviser’s scale begins with the designation >10 as the best risk rating which may be equivalent to a BBB from an NRSRO; however, no assurance can be given that a >10 on the Adviser’s scale is equal to a BBB or Baa2 on an NRSRO scale. The Adviser’s risk rating system covers both qualitative and quantitative aspects of the business and the securities we hold.
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The following table reflects risk ratings for all proprietary loans in our portfolio as of September 30, 2025 and 2024, representing approximately 100.0% and 99.5%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:

|  | As of September 30,
Rating |  | 2025 |  | 2024
Highest |  | 10.0 |  | 10.0
Average |  | 7.4 |  | 7.8
Weighted Average |  | 8.0 |  | 8.1
Lowest |  | 3.0 |  | 3.0

The following table reflects the risk ratings for all syndicated loans in our portfolio that were rated by an NRSRO as of September 30, 2024, representing approximately 0.5% of the principal balance of all debt investments in our portfolio at the end of the period:

Rating |  | As of September 30, 2024
Highest |  | 3.0
Average |  | 3.0
Weighted Average |  | 3.0
Lowest |  | 3.0

There were no syndicated loans in our portfolio that were rated by an NRSRO as of September 30, 2025. There were no syndicated loans in our portfolio that were not rated by an NRSRO as of September 30, 2025 and 2024.
Tax Status
We intend to continue to maintain our qualification as a RIC under Subchapter M of the Code for federal income tax purposes and also to limit certain federal excise taxes imposed on RICs. Refer to Note 10—Federal and State Income Taxes in our accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information regarding our tax status.
Recent Accounting Pronouncements
Refer to Note 2—Summary of Significant Accounting Policies in the notes to our accompanying Consolidated Financial Statements included elsewhere in this Annual Report for a description of recent accounting pronouncements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. The prices of securities held by us may decline in response to certain events, including those directly involving the companies whose securities are owned by us; conditions affecting the general economy; overall market changes, including due to inflation; local, regional or global political, social or economic instability; and interest rate fluctuations.
The primary risk we believe we are exposed to is interest rate risk. Because we borrow money to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. We use a combination of debt and equity capital to finance our investing activities. We may use interest rate risk management techniques from time to time to limit our exposure to interest rate fluctuations. Such techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act.
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All of our variable-rate debt investments have rates generally associated with the current SOFR rate. As of September 30, 2025, our portfolio of debt investments on a principal basis consisted of the following:

Variable rates |  | 86.9 | %
Fixed rates |  | 13.1 |
Total |  | 100.0 | %

Advances under the Credit Facility generally bear interest at 30-day Term SOFR, subject to a floor of 0.35%, plus a margin of 2.60% per annum until October 31, 2027, with the margin then increasing to 3.10% thereafter. The Credit Facility has an unused commitment fee on the daily unused commitment amount ranging from 0.45% to 1.00% per annum, based on utilization. We had no borrowings outstanding under our Credit Facility as of September 30, 2025. The interest rates on the 2026 Notes, the 2027 Notes, the 2028 Notes, and 2030 Convertible Notes are fixed for the life of such debt.
To illustrate the potential impact of changes in market interest rates on our net increase in net assets resulting from operations, we have performed the following hypothetical analysis, which assumes that our balance sheet and contractual interest rates remain constant as of September 30, 2025 and no further actions are taken to alter our existing interest rate sensitivity. We had no borrowings outstanding under our Credit Facility as of September 30, 2025.

Basis Point Change(A) |  | Increase (Decrease) in Interest Income |  | Increase (Decrease) in Interest Expense |  | Net Increase (Decrease) in Net Assets Resulting from Operations(B)
Up 200 basis points |  | $ | 13,787 |  |  | $ | — |  |  | $ | 13,787 |
Up 100 basis points |  | 6,860 |  |  | — |  |  | 6,860 |
Up 50 basis points |  | 3,425 |  |  | — |  |  | 3,425 |
Down 50 basis points |  | (3,425) |  |  | — |  |  | (3,425) |
Down 100 basis points |  | (6,850) |  |  | — |  |  | (6,850) |
Down 200 basis points |  | (13,193) |  |  | — |  |  | (13,193) |

(A)Illustrates the potential impact of changes in market rates as compared to one-month SOFR of 4.13% as of September 30, 2025.
(B)Excludes the potential impact of changes in incentive fees.
Although management believes that this analysis is indicative of our existing interest rate sensitivity, it does not adjust for potential changes in credit quality, size and composition of our loan portfolio on the balance sheet and other business developments, that could affect net increase in net assets resulting from operations or otherwise impact our results or operations. Accordingly, actual results could differ significantly from those in the hypothetical analysis in the table above.
We may also experience risk associated with investing in securities of companies with foreign operations. Some of our portfolio companies have operations located outside the U.S. These risks include fluctuations in foreign currency exchange rates, imposition of foreign taxes, changes in exportation regulations and political and social instability.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements

Management’s Annual Report on Internal Control over Financial Reporting | 78
Report of Independent Registered Public Accounting Firm (PCAOB ID 238) | 79
Consolidated Statements of Assets and Liabilities as of September 30, 202 5 and 2024 | 81
Consolidated Statements of Operations for the years ended September 30, 202 5, 202 4 and 2023 | 82
Consolidated Statements of Changes in Net Assets for the years ended September 30, 202 5, 202 4 and 2023 | 84
Consolidated Statements of Cash Flows for the years ended September 30, 202 5, 202 4 and 2023 | 85
Consolidated Schedules of Investments as of September 30, 202 5 and 2024 | 86
Notes to Consolidated Financial Statements | 98

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Management’s Annual Report on Internal Control over Financial Reporting
To the Stockholders and Board of Directors of Gladstone Capital Corporation:
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and include those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets; (2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with appropriate authorizations; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Under the supervision and with the participation of our management, we assessed the effectiveness of our internal control over financial reporting as of September 30, 2025, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Based on its assessment, management has concluded that our internal control over financial reporting was effective as of September 30, 2025.
November 17, 2025
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Gladstone Capital Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Gladstone Capital Corporation and its subsidiary (the “Company”) as of September 30, 2025 and 2024, 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, 2025, 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, 2025 and 2024, 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, 2025 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, 2023, 2022 and 2021, and the related consolidated statements of operations, changes in net assets and cash flows for the years ended September 30, 2022 and 2021 (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 five years in the period ended September 30, 2025 is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 audits 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 Company's 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. Our procedures included confirmation of securities owned as of September 30, 2025 and 2024 by correspondence with the custodian, agent banks and portfolio company investees. 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 judgments. 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.
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Valuation of Level 3 Investments
As described in Notes 2 and 3 to the consolidated financial statements, the Company held $854 million of total level 3 investments at fair value as of September 30, 2025. 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 management’s process for determining the fair value estimate, including testing the completeness and accuracy of data provided by management, evaluating the appropriateness of management’s 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 management’s 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 management’s estimate to the independently developed estimate. 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 and the EBITDA and EBITDA multiples or revenue and revenue multiples for those investments valued using a total enterprise value.
/s/ PricewaterhouseCoopers LLP
Washington, District of Columbia
November 17, 2025
We have served as the Company’s auditor since 2002.
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GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

| September 30, 2025 |  | September 30, 2024
ASSETS |  |  |
Investments, at fair value: |  |  |
Non-Control/Non-Affiliate investments (Cost of $685,195 and $716,481, respectively) | $ | 696,317 |  |  | $ | 750,904 |
Affiliate investments (Cost of $58,446 and $16,746, respectively) | 53,911 |  |  | 7,438 |
Control investments (Cost of $132,973 and $37,784, respectively) | 108,896 |  |  | 37,918 |
Cash | 596 |  |  | 15 |
Cash equivalents | 31,774 |  |  | 2,157 |
Restricted cash | — |  |  | 132 |
Interest receivable, net | 5,702 |  |  | 5,923 |
Due from administrative agent | 4,791 |  |  | 2,802 |
Deferred financing costs, net | 1,951 |  |  | 1,053 |
Other assets, net | 3,659 |  |  | 4,126 |
TOTAL ASSETS | $ | 907,597 |  |  | $ | 812,468 |
LIABILITIES |  |  |
Line of credit at fair value (Cost of $0 and $70,600, respectively) | $ | — |  |  | $ | 70,600 |
Notes payable, net of unamortized deferred financing costs and discounts of $8,644 and $2,990, respectively | 397,856 |  |  | 254,010 |
Accounts payable and accrued expenses | 1,188 |  |  | 1,230 |
Interest payable | 3,141 |  |  | 2,916 |
Fees due to Adviser(A) | 2,921 |  |  | 3,889 |
Fee due to Administrator(A) | 610 |  |  | 569 |
Other liabilities | 459 |  |  | 513 |
TOTAL LIABILITIES | $ | 406,175 |  |  | $ | 333,727 |
Commitments and contingencies(B) |  |  |
Preferred stock, $0.001 par value per share, 6,000,000 and 6,000,000 shares authorized, respectively, and 865,452 and 349,931 shares issued and outstanding, respectively | $ | 19,387 |  |  | $ | 7,846 |
NET ASSETS |  |  |
Common stock, $0.001 par value per share, 44,000,000 and 44,000,000 shares authorized, respectively, and 22,593,069 and 22,230,587 shares issued and outstanding, respectively(C) | $ | 45 |  |  | $ | 44 |
Capital in excess of par value | 501,628 |  |  | 492,305 |
Cumulative net unrealized appreciation (depreciation) of investments | (17,490) |  |  | 25,249 |
Under distributed net investment income | 5,198 |  |  | 6,144 |
Accumulated net realized losses | (7,346) |  |  | (52,847) |
Total distributable loss | (19,638) |  |  | (21,454) |
TOTAL NET ASSETS | $ | 482,035 |  |  | $ | 470,895 |
NET ASSET VALUE PER COMMON SHARE(C) | $ | 21.34 |  |  | $ | 21.18 |

(A)Refer to Note 4—Related Party Transactions for additional information.
(B)Refer to Note 11—Commitments and Contingencies for additional information.
(C)Issued and outstanding shares of common stock and net asset value per share have been adjusted on a retroactive basis to reflect the 1-for-2 reverse stock split (the “Reverse Stock Split”) effected on April 4, 2024. Refer to Note 2—Summary of Significant Accounting Policies for additional information.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

| Year ended September 30,
| 2025 |  | 2024 |  | 2023
INVESTMENT INCOME |  |  |  |  |
Interest income |  |  |  |  |
Non-Control/Non-Affiliate investments | $ | 76,084 |  |  | $ | 85,698 |  |  | $ | 72,656 |
Affiliate investments | 698 |  |  | — |  |  | 3,799 |
Control investments | 5,047 |  |  | 1,784 |  |  | 2,889 |
Cash and cash equivalents | 462 |  |  | 136 |  |  | 136 |
Total interest income (excluding PIK interest income) | 82,291 |  |  | 87,618 |  |  | 79,480 |
PIK interest income |  |  |  |  |
Non-Control/Non-Affiliate investments | 3,885 |  |  | 5,429 |  |  | 2,737 |
Affiliate investments | — |  |  | — |  |  | 510 |
Control investments | 1,105 |  |  | 247 |  |  | 303 |
Total PIK interest income | 4,990 |  |  | 5,676 |  |  | 3,550 |
Total interest income | 87,281 |  |  | 93,294 |  |  | 83,030 |
Dividend income |  |  |  |  |
Non-Control/Non-Affiliate investments | 290 |  |  | 1,417 |  |  | 830 |
Affiliate investments | 191 |  |  | — |  |  | — |
Control investments | — |  |  | — |  |  | 691 |
Total dividend income | 481 |  |  | 1,417 |  |  | 1,521 |
Prepayment fee income |  |  |  |  |
Non-Control/Non-Affiliate investments | 1,054 |  |  | 1,310 |  |  | 200 |
Affiliate investments | — |  |  | — |  |  | 444 |
Total prepayment fee income | 1,054 |  |  | 1,310 |  |  | 644 |
Other income | 306 |  |  | 600 |  |  | 1,239 |
Total investment income | 89,122 |  |  | 96,621 |  |  | 86,434 |
EXPENSES |  |  |  |  |
Base management fee(A) | 13,910 |  |  | 13,609 |  |  | 11,998 |
Loan servicing fee(A) | 8,888 |  |  | 8,862 |  |  | 8,053 |
Incentive fee(A) | 10,486 |  |  | 11,410 |  |  | 10,255 |
Administration fee(A) | 2,012 |  |  | 1,970 |  |  | 1,716 |
Interest expense on line of credit and notes payable | 19,986 |  |  | 21,715 |  |  | 20,847 |
Amortization of deferred financing costs | 2,293 |  |  | 1,864 |  |  | 1,529 |
Professional fees | 1,054 |  |  | 948 |  |  | 980 |
Other general and administrative expenses | 2,148 |  |  | 2,217 |  |  | 1,478 |
Expenses, before credits from Adviser | 60,777 |  |  | 62,595 |  |  | 56,856 |
Credit to base management fee - loan servicing fee(A) | (8,888) |  |  | (8,862) |  |  | (8,053) |
Credit to fees from Adviser - other(A) | (7,974) |  |  | (3,171) |  |  | (3,389) |
Total expenses, net of credits | 43,915 |  |  | 50,562 |  |  | 45,414 |
NET INVESTMENT INCOME | 45,207 |  |  | 46,059 |  |  | 41,020 |
NET REALIZED AND UNREALIZED GAIN (LOSS) |  |  |  |  |
Net realized gain (loss): |  |  |  |  |
Non-Control/Non-Affiliate investments | 55,368 |  |  | 1,749 |  |  | 9,661 |
Control investments | — |  |  | 259 |  |  | 2,684 |
Other | 274 |  |  | 3,951 |  |  | 319 |
Total net realized gain (loss) | 55,642 |  |  | 5,959 |  |  | 12,664 |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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Net unrealized appreciation (depreciation): |  |  |  |  |
Non-Control/Non-Affiliate investments | (23,301) |  |  | 42,276 |  |  | (10,928) |
Affiliate investments | 4,773 |  |  | (2,983) |  |  | 3,996 |
Control investments | (24,211) |  |  | 3,410 |  |  | (4,084) |
Total net unrealized appreciation (depreciation) | (42,739) |  |  | 42,703 |  |  | (11,016) |
Net realized and unrealized gain (loss) | 12,903 |  |  | 48,662 |  |  | 1,648 |
PREFERRED STOCK DIVIDENDS | 919 |  |  | 215 |  |  | — |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 57,191 |  |  | $ | 94,506 |  |  | $ | 42,668 |
BASIC AND DILUTED PER COMMON SHARE: |  |  |  |  |
Net investment income - basic(B) | $ | 2.02 |  |  | $ | 2.11 |  |  | $ | 2.20 |
Net increase (decrease) in net assets from operations - basic(B) | $ | 2.56 |  |  | $ | 4.34 |  |  | $ | 2.29 |
Net increase (decrease) in net assets from operations - diluted(B) | $ | 2.55 |  |  | $ | 4.34 |  |  | $ | 2.29 |
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: |  |  |  |  |
Basic(B) | 22,357,574 |  | 21,781,074 |  | 18,657,961
Diluted(B) | 22,662,197 |  | 21,781,074 |  | 18,657,961

(A)Refer to Note 4—Related Party Transactions for additional information.
(B)Per share amounts and weighted average common shares outstanding have been adjusted on a retroactive basis to reflect the Reverse Stock Split effected on April 4, 2024. Refer to Note 2—Summary of Significant Accounting Policies for additional information.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(DOLLAR AMOUNTS IN THOUSANDS)

| Year ended September 30,
| 2025 |  | 2024 |  | 2023
OPERATIONS |  |  |  |  |
Net investment income | $ | 45,207 |  |  | $ | 46,059 |  |  | $ | 41,020 |
Net realized gain (loss) on investments | 55,368 |  |  | 2,008 |  |  | 12,345 |
Net realized gain (loss) on other | 274 |  |  | 3,951 |  |  | 319 |
Net unrealized appreciation (depreciation) of investments | (42,739) |  |  | 42,703 |  |  | (11,016) |
Preferred stock dividends | (919) |  |  | (215) |  |  | — |
Net increase (decrease) in net assets from operations | 57,191 |  |  | 94,506 |  |  | 42,668 |
DISTRIBUTIONS |  |  |  |  |
Distributions to common stockholders from net investment income ($1.98, $1.98, and $1.89 per share, respectively)(A)(B) | (44,289) |  |  | (43,141) |  |  | (35,407) |
Distributions to common stockholders from realized gains ($0.50, $0.00, and $0.00 per share, respectively)(A)(B) | (11,191) |  |  | — |  |  | — |
Net decrease in net assets from distributions | (55,480) |  |  | (43,141) |  |  | (35,407) |
CAPITAL TRANSACTIONS |  |  |  |  |
Issuance of common stock | 9,583 |  |  | 10,998 |  |  | 87,394 |
Offering costs for issuance of common stock | (154) |  |  | (163) |  |  | (1,447) |
Net increase (decrease) in net assets from capital transactions | 9,429 |  |  | 10,835 |  |  | 85,947 |
NET INCREASE (DECREASE) IN NET ASSETS | 11,140 |  |  | 62,200 |  |  | 93,208 |
NET ASSETS, BEGINNING OF YEAR | 470,895 |  |  | 408,695 |  |  | 315,487 |
NET ASSETS, END OF YEAR | $ | 482,035 |  |  | $ | 470,895 |  |  | $ | 408,695 |

(A)Refer to Note 9 – Distributions to Common Stockholders for additional information.
(B)Per share amounts have been adjusted on a retroactive basis to reflect the Reverse Stock Split effected on April 4, 2024. Refer to Note 2—Summary of Significant Accounting Policies for additional information.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)

| Year ended September 30,
| 2025 |  | 2024 |  | 2023
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |  |  |
Net increase (decrease) in net assets resulting from operations | $ | 57,191 |  |  | $ | 94,506 |  |  | $ | 42,668 |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: |  |  |  |  |
Purchase of investments | (396,796) |  |  | (177,649) |  |  | (175,477) |
Principal repayments on investments | 262,753 |  |  | 133,471 |  |  | 107,505 |
Proceeds from sale of investments | 89,838 |  |  | 6,750 |  |  | 18,005 |
Increase in investments due to paid-in-kind interest or other | (4,910) |  |  | (5,525) |  |  | (3,699) |
Net change in premiums, discounts and amortization | (846) |  |  | 170 |  |  | 114 |
Net realized gain on investments | (55,368) |  |  | (2,008) |  |  | (12,345) |
Net unrealized depreciation (appreciation) of investments | 42,739 |  |  | (42,703) |  |  | 11,016 |
Net realized loss (gain) on other | (274) |  |  | (3,951) |  |  | (319) |
Amortization of deferred financing costs | 2,293 |  |  | 1,864 |  |  | 1,529 |
Changes in assets and liabilities: |  |  |  |  |
Decrease (increase) in interest receivable, net | 221 |  |  | 177 |  |  | (3,363) |
Decrease (increase) in funds due from administrative agent | (1,989) |  |  | 134 |  |  | 263 |
Decrease (increase) in other assets, net | 457 |  |  | (1,224) |  |  | (572) |
Increase (decrease) in accounts payable and accrued expenses | (42) |  |  | 224 |  |  | 506 |
Increase (decrease) in interest payable | 225 |  |  | (40) |  |  | 439 |
Increase (decrease) in fees due to Adviser(A) | (968) |  |  | 17 |  |  | 1,768 |
Increase (decrease) in fee due to Administrator(A) | 41 |  |  | 90 |  |  | 56 |
Increase (decrease) in other liabilities | (54) |  |  | (1,063) |  |  | 1,046 |
Net cash provided by (used in) operating activities | (5,489) |  |  | 3,240 |  |  | (10,860) |
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |  |  |
Proceeds from line of credit | 332,000 |  |  | 221,200 |  |  | 149,000 |
Repayments on line of credit | (402,600) |  |  | (198,400) |  |  | (243,000) |
Proceeds from issuance of notes payable | 147,258 |  |  | — |  |  | 57,000 |
Financing costs | (6,603) |  |  | (686) |  |  | (3,522) |
Proceeds from issuance of common stock | 9,583 |  |  | 10,998 |  |  | 87,394 |
Proceeds from issuance of preferred stock | 11,541 |  |  | 7,846 |  |  | — |
Offering costs for issuance of common stock | (144) |  |  | (154) |  |  | (1,311) |
Distributions paid to common stockholders | (55,480) |  |  | (43,141) |  |  | (35,407) |
Net cash provided by (used in) financing activities | 35,555 |  |  | (2,337) |  |  | 10,154 |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS | 30,066 |  |  | 903 |  |  | (706) |
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF YEAR | 2,304 |  |  | 1,401 |  |  | 2,107 |
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, END OF YEAR | $ | 32,370 |  |  | $ | 2,304 |  |  | $ | 1,401 |
CASH PAID DURING YEAR FOR INTEREST | $ | 19,761 |  |  | $ | 21,755 |  |  | $ | 20,408 |
NON-CASH ACTIVITIES(B) | — |  |  | — |  |  | 2,416 |

(A)Refer to Note 4—Related Party Transactions for additional information.
(B)Non-cash activities relate to estimated tax liabilities and escrows associated with portfolio company exits and the following transactions:
•In October 2022, our investment in Targus Cayman HoldCo Ltd. was sold for net proceeds of approximately $8.0 million, resulting in a realized gain of approximately $5.9 million. As part of the proceeds, we received an interest in B. Riley Financial, Inc. 6.75% senior notes in the amount of $2.4 million.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2025 (DOLLAR AMOUNTS IN THOUSANDS)
Company and Investment(A)(B)(K)(Q) |  | Principal/ Shares/ Units(I)(J) |  | Cost |  | Fair Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS(M) – 144.5% |  |  |  |  |  |
Secured First Lien Debt – 107.4% |  |  |  |  |  |
Beverage, Food, and Tobacco – 2.2% |  |  |  |  |  |
Wings ‘N More Restaurants LLC – Line of Credit, $1,500 available (S + 6.8%, 10.9% Cash, Due 11/2029)(C) |  | $ | — |  |  | $ | — |  |  | $ | — |
Wings ‘N More Restaurants LLC – Term Debt (S + 6.8%, 10.9% Cash, Due 11/2029)(C) |  | 10,500 |  |  | 10,500 |  |  | 10,710 |
Wings ‘N More Restaurants LLC – Delayed Draw Term Loan, $5,000 available (S + 6.8%, 10.9% Cash, Due 11/2029)(C) |  | — |  |  | — |  |  | — |
|  |  |  | 10,500 |  |  | 10,710 |
Buildings and Real Estate – 0.5% |  |  |  |  |  |
GFRC 360, LLC – Line of Credit, $95 available (S + 8.0%, 12.1% Cash, Due 9/2026)(C) |  | 1,355 |  |  | 1,355 |  |  | 1,355 |
GFRC 360, LLC – Term Debt (S + 8.0%, 12.1% Cash, Due 9/2026)(C) |  | 1,000 |  |  | 1,000 |  |  | 1,000 |
|  |  |  | 2,355 |  |  | 2,355 |
Diversified/Conglomerate Manufacturing – 24.9% |  |  |  |  |  |
NeoGraf Solutions LLC – Line of Credit, $4,500 available (S + 7.0%, 11.0% Cash, 0.1% PIK, Due 1/2028)(C) |  | — |  |  | — |  |  | — |
NeoGraf Solutions LLC – Term Debt (S + 7.0%, 11.0% Cash, 0.1% PIK, Due 1/2028)(C) |  | 27,456 |  |  | 27,456 |  |  | 27,456 |
OCI, LLC – Term Debt (S + 7.5%, 11.6% Cash, Due 5/2028)(C) |  | 32,000 |  |  | 32,000 |  |  | 32,000 |
Torrent Photonics Holdco LLC – Term Debt (S + 9.5%, 13.6% Cash, Due 4/2027)(C) |  | 11,529 |  |  | 11,529 |  |  | 11,645 |
Torrent Photonics Holdco LLC – Term Debt (S + 9.5%, 13.6% Cash, Due 4/2026)(C) |  | 500 |  |  | 500 |  |  | 505 |
Unirac Holdings, Inc. – Line of Credit, $1,633 available (S + 6.5%, 10.6% Cash, Due 9/2027)(C) |  | 589 |  |  | 589 |  |  | 589 |
Unirac Holdings, Inc. – Delayed Draw Term Loan, $0 available (S + 6.5%, 10.6% Cash, Due 9/2027)(C) |  | 1,067 |  |  | 1,067 |  |  | 1,067 |
Unirac Holdings, Inc. – Term Debt (S + 6.5%, 10.6% Cash, Due 9/2027)(C) |  | 14,325 |  |  | 14,106 |  |  | 14,325 |
Viron International Corp.(S) – Term Debt (S + 7.0%, 11.1% Cash, Due 2/2030)(C) |  | 18,383 |  |  | 18,383 |  |  | 18,475 |
Viva Railings, LLC – Line of Credit, $4,000 available (S + 6.4%, 10.5% Cash, Due 5/2027)(C) |  | — |  |  | — |  |  | — |
Viva Railings, LLC – Term Debt (S + 6.4%, 10.5% Cash, Due 5/2027)(C) |  | 13,875 |  |  | 13,875 |  |  | 13,875 |
|  |  |  | 119,505 |  |  | 119,937 |
Diversified/Conglomerate Service – 26.0% |  |  |  |  |  |
Axios Industrial Group, LLC – Term Debt (S + 11.6%, 0.0% Cash, 15.7% PIK, Due 10/2027)(C) |  | 16,771 |  |  | 16,771 |  |  | 16,197 |
Axios Industrial Group, LLC – Term Debt (18.0% PIK, Due 10/2027)(C)(F) |  | 2,598 |  |  | 2,598 |  |  | 2,509 |
Leadpoint Business Services, LLC – Term Debt (S + 8.5%, 12.6% Cash, Due 2/2028)(C)(U) |  | 28,117 |  |  | 28,117 |  |  | 28,398 |
MASSiv Brands, LLC – Term Debt (10.0% Cash, 5.0% PIK, Due 7/2030)(C)(F) |  | 25,313 |  |  | 25,313 |  |  | 25,313 |
Quality Environmental Midco, Inc. – Line of Credit, $3,000 available (12.0% Cash, 0.8% PIK, Due 11/2028)(C)(F) |  | — |  |  | — |  |  | — |
Quality Environmental Midco, Inc. – Term Debt (12.0% Cash, 0.8% PIK, Due 11/2028)(C)(F) |  | 13,008 |  |  | 13,008 |  |  | 13,269 |
RF Technologies, LLC – Line of Credit, $3,500 available (S + 6.3%, 10.4% Cash, Due 6/2030)(C) |  | — |  |  | — |  |  | — |
RF Technologies, LLC – Term Debt (S + 6.3%, 10.4% Cash, Due 6/2030)(C) |  | 12,600 |  |  | 12,600 |  |  | 12,735 |
Total Access Elevator, LLC – Line of Credit, $3,000 available (S + 6.5%, 10.6% Cash, Due 4/2029)(C) |  | — |  |  | — |  |  | — |
Total Access Elevator, LLC – Term Debt (S + 6.5%, 10.6% Cash, Due 4/2029)(C) |  | 6,500 |  |  | 6,500 |  |  | 6,500 |
Total Access Elevator, LLC – Delayed Draw Term Loan, $0 available (S + 6.5%, 10.6% Cash, Due 4/2029)(C) |  | 1,600 |  |  | 1,600 |  |  | 1,600 |
WorkforceQA, LLC – Line of Credit, $900 available (S + 6.5%, 10.6% Cash, Due 12/2026)(C) |  | 1,100 |  |  | 1,100 |  |  | 1,100 |
WorkforceQA, LLC – Term Debt (S + 6.5%, 10.6% Cash, Due 12/2026)(C) |  | 17,813 |  |  | 17,777 |  |  | 17,813 |
|  |  |  | 125,384 |  |  | 125,434 |
Healthcare, Education, and Childcare – 43.3% |  |  |  |  |  |
ALS Education, LLC – Line of Credit, $3,000 available (S + 6.0%, 10.1% Cash, Due 12/2028)(C) |  | — |  |  | — |  |  | — |
ALS Education, LLC – Term Debt (S + 6.0%, 10.1% Cash, Due 12/2028)(C) |  | 30,360 |  |  | 30,310 |  |  | 30,360 |
ALS Education, LLC – Delayed Draw Term Loan, $6,000 available (S + 6.0%, 10.1% Cash, Due 12/2028)(C) |  | — |  |  | — |  |  | — |
Altior Healthcare, LLC – Term Debt (S + 6.5%, 10.6% Cash, Due 5/2030)(C) |  | 46,000 |  |  | 46,000 |  |  | 46,920 |
Freedom Dental Management, Inc. – Term Debt (S + 7.3%, 11.4% Cash, Due 6/2030)(C) |  | 15,000 |  |  | 15,000 |  |  | 15,300 |
Giving Home Health Care, LLC – Term Debt (S + 6.3%, 10.4% Cash, Due 4/2029)(C) |  | 34,924 |  |  | 34,859 |  |  | 35,252 |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2025 (DOLLAR AMOUNTS IN THOUSANDS)
Company and Investment(A)(B)(K)(Q) |  | Principal/ Shares/ Units(I)(J) |  | Cost |  | Fair Value
HH-Inspire Acquisition, Inc. – Line of Credit, $0 available (S + 10.0%, 12.1% Cash, 2.0% PIK, Due 4/2028)(C) |  | 1,861 |  |  | 1,861 |  |  | 1,739 |
HH-Inspire Acquisition, Inc. – Term Debt (S + 10.0%, 12.1% Cash, 2.0% PIK, Due 4/2028)(C) |  | 19,890 |  |  | 19,805 |  |  | 18,580 |
Turn Key Health Clinics, LLC – Line of Credit, $4,000 available (S + 7.3%, 11.4% Cash, Due 6/2026)(C) |  | — |  |  | — |  |  | — |
Turn Key Health Clinics, LLC – Term Debt (S + 7.3%, 11.4% Cash, Due 6/2026)(C) |  | 17,500 |  |  | 17,500 |  |  | 17,500 |
Vet's Choice Radiology LLC(S) – Term Debt (S + 8.0%, 12.1% Cash, Due 12/2027)(C) |  | 42,750 |  |  | 42,750 |  |  | 43,098 |
|  |  |  | 208,085 |  |  | 208,749 |
Home and Office Furnishings, Housewares and Durable Consumer Products – 6.2% |  |  |  |  |  |
Foodservices Brand Group, LLC – Line of Credit, $10,000 available (S + 6.5%, 10.6% Cash, Due 8/2029)(C) |  | — |  |  | — |  |  | — |
Foodservices Brand Group, LLC – Term Debt (S + 6.5%, 10.6% Cash, Due 8/2029)(C) |  | 30,000 |  |  | 30,000 |  |  | 30,000 |
|  |  |  | 30,000 |  |  | 30,000 |
Machinery – 3.6% |  |  |  |  |  |
Arc Drilling Holdings LLC – Line of Credit, $3,875 available (S + 6.8%, 10.9% Cash, Due 9/2029)(C) |  | 1,125 |  |  | 1,125 |  |  | 1,125 |
Arc Drilling Holdings LLC – Term Debt (S + 6.8%, 10.9% Cash, Due 9/2029)(C) |  | 16,000 |  |  | 16,000 |  |  | 16,160 |
|  |  |  | 17,125 |  |  | 17,285 |
Oil and Gas – 0.0% |  |  |  |  |  |
FES Resources Holdings LLC – Term Debt (4.5% Cash, Due 12/2024)(E)(F) |  | 325 |  |  | 325 |  |  | — |
Telecommunications – 0.7% |  |  |  |  |  |
B+T Group Acquisition, Inc.(S) – Line of Credit, $0 available (S + 2.0%, 7.0% Cash, Due 12/2026)(E) |  | 1,320 |  |  | 1,320 |  |  | 559 |
B+T Group Acquisition, Inc.(S) – Line of Credit, $0 available (S + 2.0%, 7.0% Cash, Due 12/2026)(E) |  | 450 |  |  | 450 |  |  | 191 |
B+T Group Acquisition, Inc.(S) – Term Debt (S + 2.0%, 7.0% Cash, Due 12/2026)(E) |  | 6,000 |  |  | 6,000 |  |  | 2,542 |
|  |  |  | 7,770 |  |  | 3,292 |
Total Secured First Lien Debt |  |  |  | $ | 521,049 |  |  | $ | 517,762 |
Secured Second Lien Debt – 27.3% |  |  |  |  |  |
Automobile – 3.7% |  |  |  |  |  |
Sea Link International IRB, Inc. – Term Debt (11.3% Cash, 2.0% PIK, Due 12/2025)(C)(F) |  | $ | 13,723 |  |  | $ | 13,723 |  |  | $ | 13,868 |
Sea Link International IRB, Inc. – Term Debt (12.0% Cash, 2.0% PIK, Due 12/2025)(C)(F) |  | 4,163 |  |  | 4,163 |  |  | 4,163 |
|  |  |  | 17,886 |  |  | 18,031 |
Beverage, Food, and Tobacco – 3.8% |  |  |  |  |  |
Dutch Gold Honey, Inc.(S) – Term Debt (S + 7.5%, 11.6% Cash, Due 8/2030)(C) |  | 18,000 |  |  | 18,000 |  |  | 18,184 |
Cargo Transportation – 4.1% |  |  |  |  |  |
RPM Freight Systems, LLC – Term Debt (S + 7.7%, 11.8% Cash, Due 11/2029)(C) |  | 20,000 |  |  | 20,000 |  |  | 20,000 |
Diversified/Conglomerate Manufacturing – 7.8% |  |  |  |  |  |
OCI, LLC – Term Debt (7.0% Cash, 7.0% PIK, Due 11/2028)(C)(F) |  | 2,316 |  |  | 2,316 |  |  | 2,436 |
Springfield, Inc. – Term Debt (S + 11.1%, 15.2% Cash, Due 12/2026)(C) |  | 30,000 |  |  | 30,000 |  |  | 30,000 |
Tube Bending Technology, LLC – Term Debt (12.5% Cash, Due 6/2026)(C)(F) |  | 5,000 |  |  | 5,000 |  |  | 4,955 |
|  |  |  | 37,316 |  |  | 37,391 |
Healthcare, Education, and Childcare – 4.8% |  |  |  |  |  |
Pan-Am Dental, LLC – Term Debt (12.0% Cash, Due 6/2030)(C)(F) |  | 23,000 |  |  | 23,000 |  |  | 23,129 |
Oil and Gas – 3.1% |  |  |  |  |  |
Imperative Holdings Corporation – Term Debt (S + 9.8%, 13.9% Cash, Due 8/2028)(C) |  | 15,015 |  |  | 14,943 |  |  | 15,015 |
Total Secured Second Lien Debt |  |  |  | $ | 131,145 |  |  | $ | 131,750 |
Unsecured Debt – 0.0% |  |  |  |  |  |
Diversified/Conglomerate Service – 0.0% |  |  |  |  |  |
Frontier Financial Group Inc. – Convertible Debt (6.0%, Due 6/2022)(E)(F) |  | $ | 198 |  |  | $ | 198 |  |  | $ | 17 |
Preferred Equity – 3.5% |  |  |  |  |  |
Automobile – 0.1% |  |  |  |  |  |
Sea Link International IRB, Inc. – Preferred Stock(E)(G) |  | 98,039 |  |  | $ | 98 |  |  | $ | 261 |
Beverage, Food, and Tobacco – 0.0% |  |  |  |  |  |
Triple H Food Processors, LLC – Preferred Stock(E)(G) |  | 75 |  |  | 75 |  |  | 197 |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2025 (DOLLAR AMOUNTS IN THOUSANDS)
Company and Investment(A)(B)(K)(Q) |  | Principal/ Shares/ Units(I)(J) |  | Cost |  | Fair Value
Buildings and Real Estate – 0.0% |  |  |  |  |  |
GFRC 360, LLC – Preferred Stock(E)(G) |  | 1,000 |  |  | 1,025 |  |  | 214 |
Diversified/Conglomerate Manufacturing – 0.5% |  |  |  |  |  |
Torrent Photonics Holdco LLC – Preferred Stock(E)(G) |  | 2,650 |  |  | 2,650 |  |  | 2,377 |
Diversified/Conglomerate Service – 0.6% |  |  |  |  |  |
Frontier Financial Group Inc. – Preferred Stock(E)(G) |  | 766 |  |  | 500 |  |  | — |
Frontier Financial Group Inc. – Preferred Stock Warrant(E)(G) |  | 168 |  |  | — |  |  | — |
Quality Environmental Midco, Inc. – Preferred Equity(E)(G) |  | 3,000,000 |  |  | 3,000 |  |  | 2,720 |
|  |  |  | 3,500 |  |  | 2,720 |
Healthcare, Education, and Childcare – 1.8% |  |  |  |  |  |
HH-Inspire Acquisition, Inc. – Preferred Stock(E)(G) |  | 1,681,949 |  |  | 2,604 |  |  | 2,290 |
Pan-Am Dental, LLC – Preferred Stock(E)(G) |  | 5,909,091 |  |  | 5,909 |  |  | 6,285 |
|  |  |  | 8,513 |  |  | 8,575 |
Oil and Gas – 0.5% |  |  |  |  |  |
Imperative Holdings Corporation – Preferred Equity Units(E)(G) |  | 972,569 |  |  | 488 |  |  | 2,450 |
Telecommunications – 0.0% |  |  |  |  |  |
B+T Group Acquisition, Inc.(S) – Preferred Stock(E)(G) |  | 6,130 |  |  | 2,024 |  |  | — |
Total Preferred Equity |  |  |  | $ | 18,373 |  |  | $ | 16,794 |
Common Equity – 6.2% |  |  |  |  |  |
Aerospace and Defense – 0.2% |  |  |  |  |  |
Ohio Armor Holdings, LLC – Common Equity(E)(G) |  | 100 |  |  | $ | 1,000 |  |  | $ | 1,184 |
Automobile – 0.1% |  |  |  |  |  |
Sea Link International IRB, Inc.– Common Equity Units(E)(G) |  | 823,333 |  |  | 823 |  |  | 277 |
Beverage, Food, and Tobacco – 1.6% |  |  |  |  |  |
Dutch Gold Honey, Inc.(S) – Common Stock(E)(G) |  | 900,000 |  |  | 900 |  |  | 3,333 |
Salt & Straw, LLC – Common Warrant(E)(G) |  | 0.5 | % |  | — |  |  | 186 |
Sokol & Company Holdings, LLC – Common Stock(E)(G)(U) |  | 450,000 |  |  | 450 |  |  | 2,240 |
Triple H Food Processors, LLC – Common Stock(E)(G) |  | 250,000 |  |  | 250 |  |  | 2,147 |
|  |  |  | 1,600 |  |  | 7,906 |
Buildings and Real Estate – 0.0% |  |  |  |  |  |
GFRC 360, LLC – Common Stock Warrants(E)(G) |  | 45 | % |  | — |  |  | — |
Diversified/Conglomerate Manufacturing – 0.5% |  |  |  |  |  |
OCI, LLC – Common Units (E)(G) |  | 555 |  |  | 1,111 |  |  | 1,111 |
NeoGraf Solutions LLC – Common Stock(E)(G) |  | 2,000,000 |  |  | 2,000 |  |  | 1,067 |
Viron International Corp.(S) – Common Stock(E)(G) |  | 447 |  |  | 15 |  |  | — |
|  |  |  | 3,126 |  |  | 2,178 |
Diversified/Conglomerate Service – 0.4% |  |  |  |  |  |
Total Access Elevator, LLC – Common Stock(E)(G) |  | 750,000 |  |  | 750 |  |  | 1,500 |
WorkforceQA, LLC – Common Stock(E)(G) |  | 529 |  |  | 532 |  |  | 457 |
|  |  |  | 1,282 |  |  | 1,957 |
Healthcare, Education, and Childcare – 1.5% |  |  |  |  |  |
Giving Home Health Care, LLC – Common Stock(E)(G) |  | 10,667 |  |  | — |  |  | 5,333 |
GSM MidCo LLC – Common Stock(E)(G) |  | 767 |  |  | 767 |  |  | 1,980 |
Leeds Novamark Capital I, L.P. – Limited Partnership Interest ($843 uncalled capital commitment)(D)(G)(L) |  | 3.5 | % |  | — |  |  | 36 |
|  |  |  | 767 |  |  | 7,349 |
Machinery – 1.9% |  |  |  |  |  |
Arc Drilling Holdings LLC – Common Stock(E)(G) |  | 53,333 |  |  | 5,333 |  |  | 9,096 |
Oil and Gas – 0.0% |  |  |  |  |  |
Total Safety Holdings, LLC – Common Equity(E)(G) |  | 435 |  |  | 499 |  |  | 47 |
Telecommunications – 0.0% |  |  |  |  |  |
B+T Group Acquisition, Inc.(S) – Common Stock Warrant(E)(G) |  | 1.5 | % |  | — |  |  | — |
Total Common Equity |  |  |  | $ | 14,430 |  |  | $ | 29,994 |
Total Non-Control/Non-Affiliate Investments |  |  |  | $ | 685,195 |  |  | $ | 696,317 |
AFFILIATE INVESTMENTS(N) – 11.2% |  |  |  |  |  |
Secured First Lien Debt – 7.2% |  |  |  |  |  |
Diversified/Conglomerate Manufacturing – 2.6% |  |  |  |  |  |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2025 (DOLLAR AMOUNTS IN THOUSANDS)
Company and Investment(A)(B)(K)(Q) |  | Principal/ Shares/ Units(I)(J) |  | Cost |  | Fair Value
Edge Adhesives Holdings, Inc.(S) – Term Debt (S + 5.5%, 9.6% Cash, Due 8/2026)(E)(P) |  | $ | 6,140 |  |  | $ | 6,140 |  |  | $ | 513 |
Zero Case Holding Inc. – Line of Credit, $4,000 available (S + 6.4%, 10.5% Cash, Due 7/2030)(E) |  | — |  |  | — |  |  | — |
Zero Case Holding Inc. – Term Debt (S + 6.4%, 10.5% Cash, Due 7/2030)(E) |  | 12,000 |  |  | 12,000 |  |  | 12,000 |
|  |  |  | 18,140 |  |  | 12,513 |
Personal, Food, and Miscellaneous Services – 4.6% |  |  |  |  |  |
Snif-Snax, LLC – Term Debt (S + 6.7%, 10.8% Cash, Due 7/2030)(C)(H) |  | 22,200 |  |  | 22,200 |  |  | 22,200 |
Total Secured First Lien Debt |  |  |  | $ | 40,340 |  |  | $ | 34,713 |
Preferred Equity – 2.0% |  |  |  |  |  |
Diversified/Conglomerate Manufacturing – 0.0% |  |  |  |  |  |
Edge Adhesives Holdings, Inc.(S) – Preferred Stock(E)(G) |  | 5,466 |  |  | $ | 5,466 |  |  | $ | — |
Diversified/Conglomerate Service – 1.4% |  |  |  |  |  |
Encore Dredging Holdings, LLC – Preferred Stock(E)(G) |  | 3,840,000 |  |  | 3,840 |  |  | 6,914 |
Personal, Food, and Miscellaneous Services – 0.3% |  |  |  |  |  |
Snif-Snax, LLC – Preferred Stock(E)(G) |  | 1,500,000 |  |  | 1,500 |  |  | 1,500 |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.2% |  |  |  |  |  |
Canopy Safety Brands, LLC – Preferred Stock(E)(G) |  | 500,000 |  |  | 500 |  |  | 1,006 |
Total Preferred Equity |  |  |  | $ | 11,306 |  |  | $ | 9,420 |
Common Equity – 2.0% |  |  |  |  |  |
Diversified/Conglomerate Manufacturing – 0.2% |  |  |  |  |  |
Zero Case Holding Inc. – Common Stock(E)(G) |  | 1,000 |  |  | $ | 1,000 |  |  | $ | 1,000 |
Finance – 1.1% |  |  |  |  |  |
Gladstone Alternative Income Fund – Common Stock(D)(G) |  | 500,000 |  |  | 5,000 |  |  | 5,075 |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.8% |  |  |  |  |  |
Canopy Safety Brands, LLC – Common Stock(E)(G) |  | 1,170,370 |  |  | 800 |  |  | 3,703 |
Total Common Equity |  |  |  | $ | 6,800 |  |  | $ | 9,778 |
Total Affiliate Investments |  |  |  | $ | 58,446 |  |  | $ | 53,911 |
CONTROL INVESTMENTS(O) – 22.6% |  |  |  |  |  |
Secured First Lien Debt – 14.5% |  |  |  |  |  |
Beverage, Food, and Tobacco – 2.6% |  |  |  |  |  |
Eegee Acquisition Corp. – Line of Credit, $3,250 available (S + 7.0%, 11.1% Cash, Due 4/2028)(E) |  | $ | 12,750 |  |  | $ | 12,750 |  |  | $ | 12,750 |
Diversified/Conglomerate Manufacturing – 4.7% |  |  |  |  |  |
Engineering Manufacturing Technologies, LLC – Line of Credit, $1,900 available (S + 8.3%, 12.4% Cash, Due 10/2026)(E) |  | 1,100 |  |  | 1,100 |  |  | 834 |
Engineering Manufacturing Technologies, LLC – Term Debt (S + 8.3%, 8.0% Cash, 4.4% PIK, Due 10/2026)(E) |  | 23,163 |  |  | 23,163 |  |  | 17,561 |
Lonestar EMS, LLC – Term Debt (12.0% Cash, Due 6/2027)(E)(F) |  | 4,450 |  |  | 4,403 |  |  | 4,450 |
|  |  |  | 28,666 |  |  | 22,845 |
Healthcare, Education, and Childcare – 5.2% |  |  |  |  |  |
Technical Resource Management, LLC – Line of Credit, $0 available (S + 10.5%, 10.1% Cash, 4.5% PIK, Due 4/2028)(E) |  | 3,076 |  |  | 3,076 |  |  | 2,723 |
Technical Resource Management, LLC – Line of Credit, $400 available (S + 10.5%, 10.1% Cash, 4.5% PIK, Due 4/2028)(E) |  | 1,214 |  |  | 1,214 |  |  | 1,074 |
Technical Resource Management, LLC – Term Debt (S + 10.5%, 10.1% Cash, 4.5% PIK, Due 4/2028)(E) |  | 24,111 |  |  | 24,111 |  |  | 21,347 |
|  |  |  | 28,401 |  |  | 25,144 |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 1.9% |  |  |  |  |  |
WB Xcel Holdings, LLC – Line of Credit, $0 available (S + 10.5%, 14.6% Cash, Due 11/2026)(E) |  | 5,150 |  |  | 5,150 |  |  | 3,160 |
WB Xcel Holdings, LLC – Term Debt (S + 10.5%, 14.6% Cash, Due 11/2026)(E) |  | 9,775 |  |  | 9,775 |  |  | 5,997 |
|  |  |  | 14,925 |  |  | 9,157 |
Printing and Publishing – 0.0% |  |  |  |  |  |
TNCP Intermediate HoldCo, LLC – Line of Credit, $2,000 available (11.0% Cash, Due 10/2027)(E)(F) |  | — |  |  | — |  |  | — |
Total Secured First Lien Debt |  |  |  | $ | 84,742 |  |  | $ | 69,896 |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2025 (DOLLAR AMOUNTS IN THOUSANDS)
Company and Investment(A)(B)(K)(Q) |  | Principal/ Shares/ Units(I)(J) |  | Cost |  | Fair Value
Secured Second Lien Debt – 3.9% |  |  |  |  |  |
Automobile – 1.8% |  |  |  |  |  |
Defiance Integrated Technologies, Inc. – Term Debt (S + 9.6%, 13.7% Cash, Due 1/2027)(E) |  | $ | 8,792 |  |  | $ | 8,792 |  |  | $ | 8,792 |
Diversified/Conglomerate Service – 2.1% |  |  |  |  |  |
Alsay Incorporated – Term Debt (12.8% Cash, Due 12/2030)(E)(F) |  | 10,000 |  |  | 10,000 |  |  | 10,000 |
Total Secured Second Lien Debt |  |  |  | $ | 18,792 |  |  | $ | 18,792 |
Unsecured Debt – 0.1% |  |  |  |  |  |
Healthcare, Education, and Childcare – 0.1% |  |  |  |  |  |
Technical Resource Management, LLC – Term Debt (14.0% PIK, Due 10/2028)(E)(F) |  | $ | 357 |  |  | $ | 357 |  |  | $ | 316 |
Preferred Equity – 1.0% |  |  |  |  |  |
Diversified/Conglomerate Service – 1.0% |  |  |  |  |  |
Alsay Incorporated – Preferred Stock(E)(G) |  | 5,000,000 |  |  | $ | 5,000 |  |  | $ | 5,000 |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0% |  |  |  |  |  |
WB Xcel Holdings, LLC – Preferred Stock(E)(G) |  | 333 |  |  | 2,750 |  |  | — |
Total Preferred Equity |  |  |  | $ | 7,750 |  |  | $ | 5,000 |
Common Equity – 3.1% |  |  |  |  |  |
Automobile– 0.0% |  |  |  |  |  |
Defiance Integrated Technologies, Inc. – Common Stock(E)(G) |  | 33,321 |  |  | $ | 581 |  |  | $ | — |
Beverage, Food, and Tobacco – 1.0% |  |  |  |  |  |
Eegee Acquisition Corp. – Common Stock(E)(G) |  | 1,000 |  |  | 8,500 |  |  | 4,858 |
Diversified/Conglomerate Manufacturing – 0.9% |  |  |  |  |  |
Engineering Manufacturing Technologies, LLC – Common Stock(E)(G) |  | 16,000 |  |  | 3,000 |  |  | — |
Lonestar EMS, LLC – Common Units(E)(G) |  | 100 | % |  | 6,750 |  |  | 4,225 |
|  |  |  | 9,750 |  |  | 4,225 |
Healthcare, Education, and Childcare – 0.0% |  |  |  |  |  |
Technical Resource Management, LLC – Common Stock(E)(G) |  | 2,000,000 |  |  | 2,000 |  |  | — |
Technical Resource Management, LLC – Common Warrants(E)(G) |  | 4,558,041 |  |  | — |  |  | — |
|  |  |  | 2,000 |  |  | — |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0% |  |  |  |  |  |
WB Xcel Holdings, LLC – Common Units(E)(G) |  | 12,340 |  |  | 1 |  |  | — |
Printing and Publishing – 1.2% |  |  |  |  |  |
TNCP Intermediate HoldCo, LLC – Common Equity Units(E)(G) |  | 790,000 |  |  | 500 |  |  | 5,809 |
Total Common Equity |  |  |  | $ | 21,332 |  |  | $ | 14,892 |
Total Control Investments |  |  |  | $ | 132,973 |  |  | $ | 108,896 |
TOTAL INVESTMENTS(T) – 178.2% |  |  |  | $ | 876,614 |  |  | $ | 859,124 |
CASH EQUIVALENTS - 6.6% |  |  |  |  |  |
Dreyfus Treasury Obligations Cash Management Fund (3.77% market yield)(R) |  | $ | 30,523 |  |  | $ | 30,523 |  |  | $ | 30,523 |
First Citizens Premium Money Market Savings (0.40% market yield)(R) |  | 1,251 |  |  | 1,251 |  |  | 1,251 |
Total Cash Equivalents |  |  |  | $ | 31,774 |  |  | $ | 31,774 |
TOTAL INVESTMENTS AND CASH EQUIVALENTS - 184.8% |  |  |  | $ | 908,388 |  |  | $ | 890,898 |

(A)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 $754.6 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, 2025, our investments in Leeds Novamark Capital I, L.P. (“Leeds”) and Gladstone Alternative Income Fund (“Gladstone Alternative”) are considered non-qualifying assets under Section 55 of the 1940 Act. Such non-qualifying assets represent 0.6% of total investments, at fair value, as of September 30, 2025.
(B)Unless indicated otherwise, all cash interest rates are indexed to one-month Secured Overnight Financing Rate (“SOFR” or “S”), which was 4.13% as of September 30, 2025. If applicable, paid-in-kind (“PIK”) interest rates are noted separately from the cash interest rate. Certain securities are subject to an interest rate floor. The cash interest rate is the greater of the floor or SOFR plus a spread. Due dates represent the contractual maturity date.
(C)Fair value was based on an internal yield analysis or on estimates of value submitted by a third party valuation firm.
(D)Fair value was based on net asset value provided by the fund as a practical expedient.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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(E)Fair value was based on the total enterprise value of the portfolio company, which was then allocated to the portfolio company’s securities in order of their relative priority in the capital structure.
(F)Debt security has a fixed interest rate.
(G)Security is non-income producing.
(H)The Company has entered into an agreement that entitles it to the “last out” tranche of the first lien secured loan, whereby the “first out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder.
(I)Represents the principal balance for debt investments and the number of shares/units held for equity investments. Warrants are represented as a percentage of ownership, as applicable.
(J)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.
(K)Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of September 30, 2025.
(L)There are certain limitations on our ability to withdraw our partnership interest prior to dissolution of the entity, which must occur no later than May 9, 2024 or two years after all outstanding leverage has matured.
(M)Non-Control/Non-Affiliate investments, as defined by the 1940 Act, are those that are neither Control nor Affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.
(N)Affiliate investments, as defined by the 1940 Act, are those in which we own, with the power to vote, between and inclusive of 5.0% and 25.0% of the issued and outstanding voting securities.
(O)Control investments, as defined by the 1940 Act, 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.
(P)Debt security is on non-accrual status.
(Q)Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) fair value hierarchy. Refer to Note 3—Investments in the accompanying Notes to Consolidated Financial Statements for additional information.
(R)Valued using Level 1 inputs within the FASB ASC 820 fair value hierarchy. Refer to Note 3—Investments in the accompanying Notes to Consolidated Financial Statements for additional information.
(S)One or more of our affiliated funds, Gladstone Investment Corporation or Gladstone Alternative, co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S. Securities and Exchange Commission.
(T)Cumulative gross unrealized depreciation for federal income tax purposes is $59.7 million; cumulative gross unrealized appreciation for federal income tax purposes is $34.1 million. Cumulative net unrealized depreciation is $25.5 million, based on a tax cost of $884.7 million.
(U)Investment was exited subsequent to September 30, 2025. Refer to Note 14 – Subsequent Events for additional information.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2024 (DOLLAR AMOUNTS IN THOUSANDS)
Company and Investment(A)(B)(K)(Q) |  | Principal/ Shares/ Units(I)(J) |  | Cost |  | Fair Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS(M) – 159.5% |  |  |  |  |  |
Secured First Lien Debt – 114.8% |  |  |  |  |  |
Aerospace and Defense – 19.7% |  |  |  |  |  |
Antenna Research Associates, Inc. – Term Debt (S + 10.0%, 14.8% Cash, 4.0% PIK, Due 11/2026)(E)(U) |  | $ | 31,267 |  |  | $ | 31,267 |  |  | $ | 31,267 |
Ohio Armor Holdings, LLC – Term Debt (S + 8.0%, 12.8% Cash, Due 2/2026)(C) |  | 16,563 |  |  | 16,563 |  |  | 16,563 |
SpaceCo Holdings, LLC – Line of Credit, $0 available (S + 6.4%, 11.0% Cash, Due 12/2025)(C)(H) |  | 2,000 |  |  | 2,000 |  |  | 2,000 |
SpaceCo Holdings, LLC – Term Debt (S + 6.4%, 11.0% Cash, Due 12/2025)(C)(H) |  | 42,757 |  |  | 42,376 |  |  | 42,757 |
|  |  |  | 92,206 |  |  | 92,587 |
Beverage, Food, and Tobacco – 15.2% |  |  |  |  |  |
Café Zupas – Line of Credit, $700 available (S + 7.5%, 12.3% Cash, Due 12/2027)(C) |  | 1,050 |  |  | 1,050 |  |  | 1,061 |
Café Zupas – Delayed Draw Term Loan, $3,150 available (S + 7.5%, 12.3% Cash, Due 12/2027)(C) |  | 7,350 |  |  | 7,350 |  |  | 7,424 |
Café Zupas – Term Debt (S + 7.5%, 12.3% Cash, Due 12/2027)(C) |  | 26,250 |  |  | 26,074 |  |  | 26,513 |
Eegee’s LLC – Line of Credit, $500 available (S + 7.8%, 12.6% Cash, Due 6/2026)(C) |  | 1,500 |  |  | 1,500 |  |  | 1,135 |
Eegee’s LLC – Delayed Draw Term Loan, $0 available (S + 7.8%, 8.0% Cash, 4.6% PIK, Due 6/2026)(C) |  | 3,145 |  |  | 3,145 |  |  | 2,380 |
Eegee’s LLC – Term Debt (S + 7.8%, 8.0% Cash, 4.6% PIK, Due 6/2026)(C) |  | 17,824 |  |  | 17,824 |  |  | 13,486 |
Salt & Straw, LLC – Line of Credit, $2,000 available (S + 9.1%, 13.9% Cash, Due 9/2027)(C) |  | — |  |  | — |  |  | — |
Salt & Straw, LLC – Delayed Draw Term Loan, $3,500 available (S + 9.1%, 13.9% Cash, Due 9/2027)(C) |  | 10,850 |  |  | 10,693 |  |  | 10,850 |
Sokol & Company Holdings, LLC – Term Debt (S + 6.8%, 11.6% Cash, Due 8/2027)(C) |  | 8,500 |  |  | 8,500 |  |  | 8,500 |
|  |  |  | 76,136 |  |  | 71,349 |
Buildings and Real Estate – 0.5% |  |  |  |  |  |
GFRC 360, LLC – Line of Credit, $95 available (S + 8.0%, 12.8% Cash, Due 9/2025)(C) |  | 1,355 |  |  | 1,355 |  |  | 1,355 |
GFRC 360, LLC – Term Debt (S + 8.0%, 12.8% Cash, Due 9/2025)(C) |  | 1,000 |  |  | 1,000 |  |  | 1,000 |
|  |  |  | 2,355 |  |  | 2,355 |
Diversified/Conglomerate Manufacturing – 24.2% |  |  |  |  |  |
Engineering Manufacturing Technologies, LLC – Line of Credit, $3,000 available (S + 8.3%, 13.1% Cash, Due 10/2026)(E) |  | — |  |  | — |  |  | — |
Engineering Manufacturing Technologies, LLC – Term Debt (S + 8.3%, 10.0% Cash, 3.1% PIK, Due 10/2026)(E) |  | 22,230 |  |  | 22,230 |  |  | 19,283 |
NeoGraf Solutions LLC – Line of Credit, $4,500 available (S + 7.0%, 11.0% Cash, 0.8% PIK, Due 1/2028)(C) |  | — |  |  | — |  |  | — |
NeoGraf Solutions LLC – Term Debt (S + 7.0%, 11.0% Cash, 0.8% PIK, Due 1/2028)(C) |  | 27,524 |  |  | 27,524 |  |  | 26,350 |
OCI, LLC – Term Debt (S + 7.5%, 12.3% Cash, Due 5/2028)(C) |  | 18,500 |  |  | 18,500 |  |  | 18,685 |
Torrent Photonics Holdco LLC – Term Debt (S + 9.5%, 14.3% Cash, Due 4/2027)(C) |  | 12,149 |  |  | 12,128 |  |  | 12,265 |
Unirac Holdings, Inc. – Line of Credit, $1,244 available (S + 6.5%, 11.3% Cash, Due 9/2027)(C) |  | 978 |  |  | 978 |  |  | 978 |
Unirac Holdings, Inc. – Delayed Draw Term Loan, $0 available (S + 6.5%, 11.3% Cash, Due 9/2027)(C) |  | 1,097 |  |  | 1,097 |  |  | 1,108 |
Unirac Holdings, Inc. – Term Debt (S + 6.5%, 11.3% Cash, Due 9/2027)(C) |  | 14,738 |  |  | 14,494 |  |  | 14,885 |
Viva Railings, LLC – Line of Credit, $4,000 available (S + 7.1%, 11.9% Cash, Due 5/2027)(C) |  | — |  |  | — |  |  | — |
Viva Railings, LLC – Term Debt (S + 7.1%, 11.9% Cash, Due 5/2027)(C) |  | 20,202 |  |  | 20,202 |  |  | 20,202 |
|  |  |  | 117,153 |  |  | 113,756 |
Diversified/Conglomerate Service – 30.9% |  |  |  |  |  |
Axios Industrial Group, LLC – Term Debt (S + 9.6%, 14.4% Cash, Due 10/2027)(C) |  | 11,325 |  |  | 11,301 |  |  | 11,357 |
Axios Industrial Group, LLC – Term Debt (S + 12.6%, 17.4% Cash, Due 10/2027)(C) |  | 3,000 |  |  | 2,925 |  |  | 3,008 |
DKI Ventures, LLC – Line of Credit, $25 available (9.0% Cash, Due 12/2025)(E)(F) |  | 350 |  |  | 350 |  |  | 159 |
DKI Ventures, LLC – Term Debt (9.0% Cash, Due 12/2025)(E)(F) |  | 5,915 |  |  | 5,915 |  |  | 2,684 |
ENET Holdings, LLC – Line of Credit, $2,500 available (S + 7.3%, 12.1% Cash, Due 4/2025)(C) |  | — |  |  | — |  |  | — |
ENET Holdings, LLC – Term Debt (S + 7.3%, 12.1% Cash, Due 4/2028)(C) |  | 22,289 |  |  | 22,289 |  |  | 21,973 |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2024 (DOLLAR AMOUNTS IN THOUSANDS)
Company and Investment(A)(B)(K)(Q) |  | Principal/ Shares/ Units(I)(J) |  | Cost |  | Fair Value
Fix-It Group, LLC – Line of Credit, $3,000 available (S + 7.1%, 11.9% Cash, Due 12/2026)(C) |  | — |  |  | — |  |  | — |
Fix-It Group, LLC – Term Debt (S + 7.1%, 11.9% Cash, Due 12/2026)(C) |  | 13,324 |  |  | 13,324 |  |  | 13,457 |
Fix-It Group, LLC – Delayed Draw Term Loan, $0 available (S + 7.1%, 11.9% Cash, Due 12/2026)(C) |  | 6,781 |  |  | 6,781 |  |  | 6,781 |
Leadpoint Business Services, LLC – Term Debt (S + 8.5%, 13.3% Cash, Due 2/2028)(C) |  | 25,500 |  |  | 25,475 |  |  | 26,010 |
MCG Energy Solutions, LLC – Term Debt (S + 7.6%, 12.4% Cash, 3.5% PIK, Due 3/2026)(E) |  | 20,290 |  |  | 20,264 |  |  | 20,290 |
Quality Environmental Midco, Inc. – Line of Credit, $3,000 available (12.0% Cash, Due 11/2028)(C)(F) |  | — |  |  | — |  |  | — |
Quality Environmental Midco, Inc. – Term Debt (12.0% Cash, Due 11/2028)(C)(F) |  | 13,000 |  |  | 13,000 |  |  | 13,390 |
Total Access Elevator, LLC – Line of Credit, $3,000 available (S + 6.9%, 11.7% Cash, Due 4/2029)(C) |  | — |  |  | — |  |  | — |
Total Access Elevator, LLC – Term Debt (S + 6.9%, 11.7% Cash, Due 4/2029)(C) |  | 6,500 |  |  | 6,500 |  |  | 6,695 |
Total Access Elevator, LLC – Delayed Draw Term Loan, $2,500 available (S + 6.9%, 11.7% Cash, Due 4/2029)(C) |  | — |  |  | — |  |  | — |
WorkforceQA, LLC – Line of Credit, $800 available (S + 6.5%, 11.3% Cash, Due 12/2026)(C) |  | 1,200 |  |  | 1,200 |  |  | 1,200 |
WorkforceQA, LLC – Term Debt (S + 6.5%, 11.3% Cash, Due 12/2026)(C) |  | 16,306 |  |  | 16,286 |  |  | 16,306 |
WorkforceQA, LLC – Term Debt (S + 7.5%, 12.3% Cash, Due 12/2026)(C) |  | 2,406 |  |  | 2,403 |  |  | 2,406 |
|  |  |  | 148,013 |  |  | 145,716 |
Healthcare, Education, and Childcare – 20.2% |  |  |  |  |  |
ALS Education, LLC – Line of Credit, $3,000 available (S + 6.8%, 11.6% Cash, Due 12/2028)(C) |  | — |  |  | — |  |  | — |
ALS Education, LLC – Term Debt (S + 6.8%, 11.6% Cash, Due 12/2028)(C) |  | 31,680 |  |  | 31,680 |  |  | 31,997 |
HH-Inspire Acquisition, Inc. – Line of Credit, $110 available (S + 8.0%, 12.8% Cash, Due 4/2028)(C)(H) |  | 1,727 |  |  | 1,727 |  |  | 1,677 |
HH-Inspire Acquisition, Inc. – Term Debt (S + 8.0%, 12.8% Cash, Due 4/2028)(C)(H) |  | 15,852 |  |  | 15,852 |  |  | 15,399 |
HH-Inspire Acquisition, Inc. – Term Debt (S + 8.0%, 12.8% Cash, Due 4/2028)(C)(H) |  | 3,193 |  |  | 3,193 |  |  | 3,102 |
Technical Resource Management, LLC – Line of Credit, $1,000 available (S + 8.0%, 12.8% Cash, Due 4/2028)(C) |  | 2,000 |  |  | 2,000 |  |  | 2,008 |
Technical Resource Management, LLC – Term Debt (S + 8.0%, 12.8% Cash, 2.5% PIK, Due 4/2028)(C) |  | 23,234 |  |  | 23,158 |  |  | 23,327 |
Turn Key Health Clinics, LLC – Line of Credit, $4,000 available (S + 7.3%, 12.1% Cash, Due 6/2026)(C) |  | — |  |  | — |  |  | — |
Turn Key Health Clinics, LLC – Term Debt (S + 7.3%, 12.1% Cash, Due 6/2026)(C) |  | 17,500 |  |  | 17,500 |  |  | 17,500 |
|  |  |  | 95,110 |  |  | 95,010 |
Machinery – 3.6% |  |  |  |  |  |
Arc Drilling Holdings LLC – Line of Credit, $4,000 available (S + 7.0%, 11.8% Cash, Due 9/2029)(C) |  | 1,000 |  |  | 1,000 |  |  | 1,000 |
Arc Drilling Holdings LLC – Term Debt (S + 7.0%, 11.8% Cash, Due 9/2029)(C) |  | 16,000 |  |  | 16,000 |  |  | 16,000 |
|  |  |  | 17,000 |  |  | 17,000 |
Oil and Gas – 0.0% |  |  |  |  |  |
FES Resources Holdings LLC – Term Debt (4.5% Cash, Due 12/2024)(E)(F) |  | 325 |  |  | 325 |  |  | 163 |
Telecommunications – 0.5% |  |  |  |  |  |
B+T Group Acquisition, Inc.(S) – Line of Credit, $0 available (S + 2.0%, 7.0% Cash, Due 12/2026)(E)(P) |  | 1,320 |  |  | 1,320 |  |  | 471 |
B+T Group Acquisition, Inc.(S) – Line of Credit, $127 available (S + 2.0%, 7.0% Cash, Due 6/2025)(E)(P) |  | 323 |  |  | 323 |  |  | 115 |
B+T Group Acquisition, Inc.(S) – Term Debt (S + 2.0%, 7.0% Cash, Due 12/2026)(E)(P) |  | 6,000 |  |  | 6,000 |  |  | 2,139 |
|  |  |  | 7,643 |  |  | 2,725 |
Total Secured First Lien Debt |  |  |  | $ | 555,941 |  |  | $ | 540,661 |
Secured Second Lien Debt – 22.3% |  |  |  |  |  |
Automobile – 3.4% |  |  |  |  |  |
Sea Link International IRB, Inc. – Term Debt (11.3% Cash, 2.0% PIK, Due 12/2025)(C)(F) |  | 12,331 |  |  | 12,314 |  |  | 12,331 |
Sea Link International IRB, Inc. – Term Debt (12.0% Cash, 2.0% PIK, Due 12/2025)(C)(F) |  | 4,079 |  |  | 4,079 |  |  | 4,079 |
|  |  |  | 16,393 |  |  | 16,410 |
Beverage, Food, and Tobacco – 0.7% |  |  |  |  |  |
8th Avenue Food & Provisions, Inc. – Term Debt (S + 7.9%, 12.7% Cash, Due 10/2026)(D) |  | 3,683 |  |  | 3,683 |  |  | 3,241 |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2024 (DOLLAR AMOUNTS IN THOUSANDS)
Company and Investment(A)(B)(K)(Q) |  | Principal/ Shares/ Units(I)(J) |  | Cost |  | Fair Value
Cargo Transportation – 4.3% |  |  |  |  |  |
RPM Freight Systems, LLC – Term Debt (S + 7.7%, 12.5% Cash, Due 11/2029)(C) |  | 20,000 |  |  | 20,000 |  |  | 20,200 |
RPM Freight Systems, LLC – Delayed Draw Term Loan, $5,000 available (S + 7.7% 12.5% Cash, Due 11/2029)(C) |  | — |  |  | — |  |  | — |
|  |  |  | 20,000 |  |  | 20,200 |
Diversified/Conglomerate Manufacturing – 6.9% |  |  |  |  |  |
OCI, LLC – Term Debt (7.0% Cash, 7.0% PIK, Due 11/2028)(C)(F) |  | 2,159 |  |  | 2,159 |  |  | 2,303 |
Springfield, Inc. – Term Debt (S + 11.1%, 15.9% Cash, Due 12/2026)(C) |  | 30,000 |  |  | 30,000 |  |  | 30,000 |
|  |  |  | 32,159 |  |  | 32,303 |
Diversified/Conglomerate Service – 3.2% |  |  |  |  |  |
Perimeter Solutions Group – Term Debt (S + 8.5%, 13.3% Cash, Due 2/2029)(C)(U) |  | 15,000 |  |  | 15,000 |  |  | 15,000 |
Oil and Gas – 3.8% |  |  |  |  |  |
Imperative Holdings Corporation – Term Debt (S + 9.8%, 14.6% Cash, Due 8/2028)(C) |  | 18,015 |  |  | 17,909 |  |  | 18,015 |
Total Secured Second Lien Debt |  |  |  | $ | 105,144 |  |  | $ | 105,169 |
Unsecured Debt – 0.1% |  |  |  |  |  |
Diversified/Conglomerate Service – 0.1% |  |  |  |  |  |
Frontier Financial Group Inc. – Convertible Debt (6.0% Cash, Due 6/2022)(E)(F) |  | 198 |  |  | 198 |  |  | 32 |
Preferred Equity – 5.8% |  |  |  |  |  |
Automobile – 0.1% |  |  |  |  |  |
Sea Link International IRB, Inc. – Preferred Stock(E)(G) |  | 98,039 |  |  | 98 |  |  | 220 |
Beverage, Food, and Tobacco – 2.0% |  |  |  |  |  |
Salt & Straw, LLC – Preferred Equity(E)(G) |  | 7,000,000 |  |  | 7,000 |  |  | 9,450 |
Triple H Food Processors, LLC – Preferred Stock(E)(G) |  | 75 |  |  | 75 |  |  | 167 |
|  |  |  | 7,075 |  |  | 9,617 |
Buildings and Real Estate – 0.0% |  |  |  |  |  |
GFRC 360, LLC – Preferred Stock(E)(G) |  | 1,000 |  |  | 1,025 |  |  | — |
Diversified/Conglomerate Manufacturing – 0.1% |  |  |  |  |  |
Torrent Photonics Holdco LLC – Preferred Stock(E)(G) |  | 2,650 |  |  | 2,650 |  |  | 552 |
Diversified/Conglomerate Service – 2.9% |  |  |  |  |  |
Frontier Financial Group Inc. – Preferred Stock(E)(G) |  | 766 |  |  | 500 |  |  | — |
Frontier Financial Group Inc. – Preferred Stock Warrant(E)(G) |  | 168 |  |  | — |  |  | — |
MCG Energy Solutions, LLC – Preferred Stock(E)(G) |  | 7,000,000 |  |  | 7,000 |  |  | 9,954 |
Quality Environmental Midco, Inc. – Preferred Equity(E)(G) |  | 3,000,000 |  |  | 3,000 |  |  | 3,582 |
|  |  |  | 10,500 |  |  | 13,536 |
Healthcare, Education, and Childcare – 0.2% |  |  |  |  |  |
HH-Inspire Acquisition, Inc. – Preferred Stock(E)(G) |  | 1,329,054 |  |  | 2,251 |  |  | 1,047 |
Oil and Gas – 0.5% |  |  |  |  |  |
FES Resources Holdings LLC – Preferred Equity Units(E)(G) |  | 6,350 |  |  | 6,350 |  |  | — |
Imperative Holdings Corporation – Preferred Equity Units(E)(G) |  | 972,569 |  |  | 488 |  |  | 2,275 |
|  |  |  | 6,838 |  |  | 2,275 |
Telecommunications – 0.0% |  |  |  |  |  |
B+T Group Acquisition, Inc.(S) – Preferred Stock(E)(G) |  | 6,130 |  |  | 2,024 |  |  | — |
Total Preferred Equity |  |  |  | $ | 32,461 |  |  | $ | 27,247 |
Common Equity – 16.5% |  |  |  |  |  |
Aerospace and Defense – 12.8% |  |  |  |  |  |
Antenna Research Associates, Inc. – Common Equity Units(E)(G)(U) |  | 4,283 |  |  | 4,283 |  |  | 59,423 |
Ohio Armor Holdings, LLC – Common Equity(E)(G) |  | 100 |  |  | 1,000 |  |  | 1,086 |
|  |  |  | 5,283 |  |  | 60,509 |
Automobile – 0.1% |  |  |  |  |  |
Sea Link International IRB, Inc.– Common Equity Units(E)(G) |  | 823,333 |  |  | 823 |  |  | 160 |
Beverage, Food, and Tobacco – 0.9% |  |  |  |  |  |
Salt & Straw, LLC – Common Warrant(E)(G) |  | 0.4 | % |  | — |  |  | 47 |
Sokol & Company Holdings, LLC – Common Stock(E)(G) |  | 1,500,000 |  |  | 1,500 |  |  | 2,727 |
Triple H Food Processors, LLC – Common Stock(E)(G) |  | 250,000 |  |  | 250 |  |  | 1,346 |
|  |  |  | 1,750 |  |  | 4,120 |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2024 (DOLLAR AMOUNTS IN THOUSANDS)
Company and Investment(A)(B)(K)(Q) |  | Principal/ Shares/ Units(I)(J) |  | Cost |  | Fair Value
Buildings and Real Estate – 0.0% |  |  |  |  |  |
GFRC 360, LLC – Common Stock Warrants(E)(G) |  | 45.0 | % |  | — |  |  | — |
Diversified/Conglomerate Manufacturing – 0.2% |  |  |  |  |  |
Engineering Manufacturing Technologies, LLC – Common Stock(E)(G) |  | 6,000 |  |  | 3,000 |  |  | — |
OCI, LLC – Common Units (E)(G) |  | 306 |  |  | — |  |  | — |
NeoGraf Solutions LLC – Common Stock(E)(G) |  | 2,000,000 |  |  | 2,000 |  |  | 859 |
|  |  |  | 5,000 |  |  | 859 |
Diversified/Conglomerate Service – 0.3% |  |  |  |  |  |
Total Access Elevator, LLC – Common Equity(E)(G) |  | 750,000 |  |  | 750 |  |  | 1,234 |
WorkforceQA, LLC – Common Stock(E)(G) |  | 532 |  |  | 532 |  |  | 346 |
|  |  |  | 1,282 |  |  | 1,580 |
Healthcare, Education, and Childcare – 1.2% |  |  |  |  |  |
Giving Home Health Care, LLC – Warrant(E)(G) |  | 10,667 |  |  | — |  |  | 3,995 |
GSM MidCo LLC – Common Stock(E)(G) |  | 767 |  |  | 767 |  |  | 1,583 |
Leeds Novamark Capital I, L.P. – Limited Partnership Interest ($843 uncalled capital commitment)(G)(L)(R) |  | 3.5 | % |  | — |  |  | 38 |
Technical Resource Management, LLC – Common Stock(E)(G) |  | 2,000,000 |  |  | 2,000 |  |  | 34 |
|  |  |  | 2,767 |  |  | 5,650 |
Machinery – 1.0% |  |  |  |  |  |
Arc Drilling Holdings LLC – Common Stock(E)(G) |  | 53,333 |  |  | 5,333 |  |  | 4,816 |
Oil and Gas – 0.0% |  |  |  |  |  |
FES Resources Holdings LLC – Common Equity Units(E)(G) |  | 6,233 |  |  | — |  |  | — |
Total Safety Holdings, LLC – Common Equity(E)(G) |  | 435 |  |  | 499 |  |  | 101 |
|  |  |  | 499 |  |  | 101 |
Telecommunications – 0.0% |  |  |  |  |  |
B+T Group Acquisition, Inc.(S) – Common Stock Warrant(E)(G) |  | 1.5 | % |  | — |  |  | — |
Total Common Equity |  |  |  | $ | 22,737 |  |  | $ | 77,795 |
Total Non-Control/Non-Affiliate Investments |  |  |  | $ | 716,481 |  |  | $ | 750,904 |
AFFILIATE INVESTMENTS(N) – 1.6% |  |  |  |  |  |
Secured First Lien Debt – 0.1% |  |  |  |  |  |
Diversified/Conglomerate Manufacturing – 0.1% |  |  |  |  |  |
Edge Adhesives Holdings, Inc. (S) – Term Debt (S + 5.5%, 10.3% Cash, Due 8/2026)(E)(P) |  | 6,140 |  |  | 6,140 |  |  | 380 |
Preferred Equity – 0.9% |  |  |  |  |  |
Diversified/Conglomerate Manufacturing – 0.0% |  |  |  |  |  |
Edge Adhesives Holdings, Inc.(S) – Preferred Stock(E)(G) |  | 5,466 |  |  | 5,466 |  |  | $ | — |
Diversified/Conglomerate Service– 0.7% |  |  |  |  |  |
Encore Dredging Holdings, LLC – Preferred Stock(E)(G) |  | 3,840,000 |  |  | 3,840 |  |  | 3,168 |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.2% |  |  |  |  |  |
Canopy Safety Brands, LLC – Preferred Stock(E)(G) |  | 500,000 |  |  | 500 |  |  | 931 |
Total Preferred Equity |  |  |  | $ | 9,806 |  |  | $ | 4,099 |
Common Equity – 0.6% |  |  |  |  |  |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.6% |  |  |  |  |  |
Canopy Safety Brands, LLC – Common Stock(E)(G) |  | 1,170,370 |  |  | 800 |  |  | 2,959 |
Total Affiliate Investments |  |  |  | $ | 16,746 |  |  | $ | 7,438 |
CONTROL INVESTMENTS(O) – 8.0% |  |  |  |  |  |
Secured First Lien Debt – 3.0% |  |  |  |  |  |
Diversified/Conglomerate Manufacturing – 0.9% |  |  |  |  |  |
Lonestar EMS, LLC – Term Debt (12.0% Cash, Due 6/2027)(E)(F) |  | 4,200 |  |  | 4,130 |  |  | 4,200 |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 2.1% |  |  |  |  |  |
WB Xcel Holdings, LLC – Line of Credit, $0 available (S + 10.5%, 15.3% Cash, Due 11/2026)(E)(P) |  | 4,750 |  |  | 4,750 |  |  | 3,171 |
WB Xcel Holdings, LLC – Term Debt (S + 10.5%, 15.3% Cash, Due 11/2026)(E)(P) |  | 9,775 |  |  | 9,775 |  |  | 6,525 |
|  |  |  | 14,525 |  |  | 9,696 |

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2024 (DOLLAR AMOUNTS IN THOUSANDS)
Company and Investment(A)(B)(K)(Q) |  | Principal/ Shares/ Units(I)(J) |  | Cost |  | Fair Value
Printing and Publishing – 0.0% |  |  |  |  |  |
TNCP Intermediate HoldCo, LLC – Line of Credit, $2,000 available (11.0% Cash, Due 10/2027)(E)(F) |  | — |  |  | — |  |  | — |
Total Secured First Lien Debt |  |  |  | $ | 18,655 |  |  | $ | 13,896 |
Secured Second Lien Debt – 1.8% |  |  |  |  |  |
Automobile – 1.8% |  |  |  |  |  |
Defiance Integrated Technologies, Inc. – Term Debt (S + 9.6%, 14.4% Cash, Due 1/2027)(E) |  | 8,547 |  |  | 8,547 |  |  | 8,547 |
Preferred Equity – 0.0% |  |  |  |  |  |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0% |  |  |  |  |  |
WB Xcel Holdings, LLC – Preferred Stock(E)(G) |  | 333 |  |  | 2,750 |  |  | $ | — |
Common Equity – 3.2% |  |  |  |  |  |
Automobile – 0.6% |  |  |  |  |  |
Defiance Integrated Technologies, Inc. – Common Stock(E)(G) |  | 33,321 |  |  | 581 |  |  | 2,949 |
Diversified/Conglomerate Manufacturing – 1.7% |  |  |  |  |  |
Lonestar EMS, LLC – Common Units(E)(G) |  | 100.0 | % |  | 6,750 |  |  | 8,214 |
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0% |  |  |  |  |  |
WB Xcel Holdings, LLC – Common Warrant(E)(G) |  | 1 |  |  | 1 |  |  | $ | — |
Printing and Publishing – 0.9% |  |  |  |  |  |
TNCP Intermediate HoldCo, LLC – Common Equity Units(E)(G) |  | 790,000 |  |  | 500 |  |  | 4,312 |
Total Common Equity |  |  |  | $ | 7,832 |  |  | $ | 15,475 |
Total Control Investments |  |  |  | $ | 37,784 |  |  | $ | 37,918 |
TOTAL INVESTMENTS(T) – 169.1% |  |  |  | $ | 771,011 |  |  | $ | 796,260 |
CASH EQUIVALENTS - 0.5% |  |  |  |  |  |
Dreyfus Treasury Obligations Cash Management Fund (4.58% market yield)(V) |  | $ | 2,157 |  |  | $ | 2,157 |  |  | $ | 2,157 |
Total Cash Equivalents |  |  |  | $ | 2,157 |  |  | $ | 2,157 |
TOTAL INVESTMENTS AND CASH EQUIVALENTS - 169.6% |  |  |  | $ | 773,168 |  |  | $ | 798,417 |

(A)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 $714.4 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 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, 2024, our investment in Leeds is considered a non-qualifying asset under Section 55 of the 1940 Act. Such non-qualifying assets represent less than 0.1% of total investments, at fair value, as of September 30, 2024.
(B)Unless indicated otherwise, all cash interest rates are indexed to one-month SOFR, which was 4.85% as of September 30, 2024. If applicable, PIK interest rates are noted separately from the cash interest rate. Certain securities are subject to an interest rate floor. The cash interest rate is the greater of the floor or SOFR plus a spread. Due dates represent the contractual maturity date.
(C)Fair value was based on an internal yield analysis or on estimates of value submitted by a third party valuation firm.
(D)Fair value was based on the indicative bid price on or near September 30, 2024, offered by the respective syndication agent’s trading desk.
(E)Fair value was based on the total enterprise value of the portfolio company, which was then allocated to the portfolio company’s securities in order of their relative priority in the capital structure.
(F)Debt security has a fixed interest rate.
(G)Security is non-income producing.
(H)The cash interest rate on this investment was indexed to 90-day SOFR, which was 4.59% as of September 30, 2024.
(I)Represents the principal balance for debt investments and the number of shares/units held for equity investments. Warrants are represented as a percentage of ownership, as applicable.
(J)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.
(K)Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of September 30, 2024.
(L)There are certain limitations on our ability to withdraw our partnership interest prior to dissolution of the entity, which must occur no later than May 9, 2024 or two years after all outstanding leverage has matured.
(M)Non-Control/Non-Affiliate investments, as defined by the 1940 Act, are those that are neither Control nor Affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.
(N)Affiliate investments, as defined by the 1940 Act, are those in which we own, with the power to vote, between and inclusive of 5.0% and 25.0% of the issued and outstanding voting securities.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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(O)Control investments, as defined by the 1940 Act, 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.
(P)Debt security is on non-accrual status.
(Q)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.
(R)Fair value was based on net asset value provided by the fund as a practical expedient.
(S)One of our affiliated funds, Gladstone Investment Corporation, co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S. Securities and Exchange Commission.
(T)Cumulative gross unrealized depreciation for federal income tax purposes is $66.1 million; cumulative gross unrealized appreciation for federal income tax purposes is $85.8 million. Cumulative net unrealized appreciation is $19.7 million, based on a tax cost of $776.5 million.
(U)Investment was exited subsequent to September 30, 2024.
(V)Valued using Level 1 inputs within the FASB ASC 820 fair value hierarchy. Refer to Note 3—Investments in the accompanying Notes to Consolidated Financial Statements for additional information.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
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GLADSTONE CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2025
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA AND AS OTHERWISE
INDICATED)
NOTE 1. ORGANIZATION
Gladstone Capital Corporation was incorporated under the Maryland General Corporation Law on May 30, 2001 and completed an initial public offering on August 24, 2001. The terms “the Company,” “we,” “our” and “us” all refer to Gladstone Capital Corporation and its consolidated subsidiary. We are an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), and are applying the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 “Financial Services-Investment Companies” (“ASC 946”). In addition, we have elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”). We were established for the purpose of investing in debt and equity securities of established private businesses operating in the United States (“U.S.”). Our investment objectives are to: (1) achieve and grow current income by investing in debt securities of established lower middle market companies (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $3 million to $25 million) in the U.S. that we believe will provide stable earnings and cash flow to pay expenses, make principal and interest payments on our outstanding indebtedness and make distributions to stockholders that grow over time; and (2) provide our stockholders with long-term capital appreciation in the value of our assets by investing in equity securities, in connection with our debt investments, that we believe can grow over time to permit us to sell our equity investments for capital gains.
Gladstone Business Loan, LLC (“Business Loan”), a wholly-owned subsidiary of ours, was established on February 3, 2003, for the sole purpose of holding certain investments pledged as collateral under our line of credit. The financial statements of Business Loan are consolidated with those of Gladstone Capital Corporation.
We are externally managed by Gladstone Management Corporation (the “Adviser”), an affiliate of ours and an SEC registered investment adviser, pursuant to an investment advisory and management agreement (as amended and/or restated from time to time, the “Advisory Agreement”). Administrative services are provided by Gladstone Administration, LLC (the “Administrator”), an affiliate of ours and the Adviser, pursuant to an administration agreement (the “Administration Agreement”). Refer to Note 4—Related Party Transactions for additional information regarding these arrangements.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
We prepare our Consolidated Financial Statements and the accompanying notes in accordance with accounting principles generally accepted in the U.S. (“GAAP”) and conform to Regulation S-X. Management believes it has made all necessary adjustments so that our accompanying Consolidated Financial Statements are presented fairly and that all such adjustments are of a normal recurring nature. Our accompanying Consolidated Financial Statements include our accounts and the accounts of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Consolidation
In accordance with Article 6 of Regulation S-X, we do not consolidate portfolio company investments. Under the investment company rules and regulations pursuant to the American Institute of Certified Public Accountants Audit and Accounting Guide for Investment Companies, codified in ASC 946, we are precluded from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries.
Retroactive Adjustments for Reverse Stock Split
The outstanding shares and per share amounts of the Company’s common stock in this Annual Report have been retroactively adjusted for the 1-for-2 reverse stock split (the “Reverse Stock Split”) effected on April 4, 2024 (effective April 5, 2024 for trading purposes) for all activity prior to that date, unless stated otherwise.
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Use of Estimates
Preparing financial statements requires management to make estimates and assumptions that affect the amounts reported in our accompanying Consolidated Financial Statements and these Notes to Consolidated Financial Statements. Actual results may differ from those estimates.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation in the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements. Reclassifications did not impact net increase in net assets resulting from operations, total assets, total liabilities, or total net assets, or Consolidated Statements of Cash Flows classifications.
Classification of Investments
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 of such portfolio company;
•Affiliate Investments—Affiliate investments are those in which we own, with the power to vote, between 5.0% and 25.0% of the issued and outstanding voting securities that are not classified as Control investments; and
•Non-Control/Non-Affiliate Investments—Non-Control/Non-Affiliate investments are those that are neither control nor affiliate investments and in which we own less than 5.0% of the issued and outstanding voting securities.
Cash and cash equivalents
We consider all short-term, highly liquid investments that are both readily convertible to cash and have a maturity of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value. We place our funds with financial institutions, and at times, cash held in checking accounts may exceed the Federal Deposit Insurance Corporation insured limit. We seek to mitigate this concentration of credit risk by depositing funds with major financial institutions. Investments in money market funds represent Level 1 investments within the FASB ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) fair value hierarchy.
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.
Investment Valuation Policy
Accounting Recognition
We record our investments at fair value in accordance with ASC 820 and the 1940 Act. Investment transactions are recorded on the trade date. Realized gains or losses are generally measured by the difference between the net proceeds from the repayment or sale and the cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, and include investments charged off during the period, net of recoveries. Unrealized appreciation or depreciation primarily reflects the change in investment fair values, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.
Board Responsibility
Our board of directors (the “Board of Directors”) has approved investment valuation policies and procedures pursuant to Rule 2a-5 under the 1940 Act (the “Policy”) and, in July 2022, designated the Adviser to serve as the Board of Directors’ valuation designee (“Valuation Designee”) under the 1940 Act.
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In accordance with the 1940 Act, our Board of Directors has the ultimate responsibility for reviewing the good faith fair value determination of our investments for which market quotations are not readily available based on our Policy and for overseeing the Valuation Designee. Such review and oversight includes receiving written fair value determinations and supporting materials provided by the Valuation Designee, in coordination with the Administrator and with the oversight by the Company's chief valuation officer (collectively, the “Valuation Team”). The Valuation Committee of our Board of Directors (comprised entirely of independent directors) meets to review the valuation determinations and supporting materials, discusses the information provided by the Valuation Team, determines whether the Valuation Team has followed the Policy, and reviews other facts and circumstances, including current valuation risks, conflicts of interest, material valuation matters, appropriateness of valuation methodologies, back-testing results, price challenges/overrides, and ongoing monitoring and oversight of pricing services. After the Valuation Committee concludes its meeting, it and the chief valuation officer, representing the Valuation Designee, present the Valuation Committee’s findings on the Valuation Designee's determinations to the entire Board of Directors so that the full Board of Directors may review the Valuation Designee's determined fair values 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 circumstances of each individual investment. In determining the fair value of our investments, the Valuation Team, led by the chief valuation officer, uses the Policy, and each quarter the Valuation Committee and Board of Directors review the Policy to determine if changes thereto are advisable and whether the Valuation Team has applied the Policy consistently.
Use of Third Party Valuation Firms
The Valuation Team engages third-party valuation firms to provide independent assessments of fair value of certain of our investments.
A third-party valuation firm generally provides estimates of fair value on our debt investments. The Valuation Team generally assigns the third-party valuation firm’s estimates of fair value to our debt investments where we do not have the ability to effectuate a sale of the applicable portfolio company. The Valuation Team corroborates this third-party valuation firm’s estimates of fair value using one or more of the valuation techniques discussed below. The Valuation Team’s estimate of value on a specific debt investment may significantly differ from the third-party valuation firm’s. When this occurs, our Valuation Committee and Board of Directors review whether the Valuation Team has followed the Policy and the Valuation Committee reviews whether the Valuation Designee’s determined fair value is reasonable in light of the Policy and other relevant facts and circumstances.
We may engage other independent valuation firms to provide earnings multiple ranges, as well as other information, and evaluate such information for incorporation into the total enterprise value (“TEV”) of certain of our investments. 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. 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 presents a determination to our Valuation Committee as to the fair value. Our Valuation Committee reviews the determined fair value and whether it is reasonable in light of the Policy and other relevant facts and circumstances.
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: the portfolio company’s 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 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 company’s 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. When there is equity value or sufficient TEV to cover the principal balance of our debt securities, the fair value of our senior secured debt generally equals or approximates cost.
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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.
•Yield Analysis — The Valuation Team generally determines the fair value of our debt investments for which we do not have the ability to effectuate a sale of the applicable portfolio company using the yield analysis, which includes a DCF calculation and assumptions that the Valuation Team believes market participants would use, including, estimated remaining life, current market yield, current leverage, and interest rate spreads. This technique develops a modified discount rate that incorporates risk premiums including increased probability of default, increased loss upon default and increased liquidity risk. Generally, the Valuation Team uses the yield analysis to corroborate both estimates of value provided by our third party valuation firm 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 described above). In addition, the Valuation Team assesses trading activity for similar investments and evaluates variances in quotations and other market insights to determine if any available quoted prices are reliable. Typically, the Valuation Team uses the lower indicative bid price (“IBP”) in the bid-to-ask price range obtained from the respective originating syndication agent’s trading desk on or near the valuation date. The Valuation Team may take further steps to consider additional information to validate that price in accordance with the Policy. For securities that are publicly traded, the Valuation Team generally bases fair value on the closing market price of the securities we hold as of the reporting date. For restricted securities that are publicly traded, the Valuation Team generally bases 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 and the lack of marketability of the security.
•Investments in Funds — For equity investments in other funds for which we cannot effectuate a sale of the fund, the Valuation Team generally determines the fair value of our invested capital at the net asset value (“NAV”) provided by the fund. ASC Topic 820 permits an entity holding investments in certain entities that either are investment companies, or have attributes similar to an investment company, and calculate NAV per share or its equivalent for which the fair value is not readily determinable, to measure the fair value of such investments on the basis of that NAV per share, or its equivalent, without adjustment.
In addition to the valuation techniques listed above, the Valuation Team may also consider other factors when determining the fair value of our investments, including: the nature and realizable value of the collateral, including external parties’ guaranties, any relevant offers or letters of intent to acquire the portfolio company, timing of expected loan repayments, and the markets in which the portfolio company operates.
Fair value measurements of our investments may involve subjective judgments and estimates and due to the uncertainty inherent in valuing these securities, the determinations of fair value may fluctuate from period to period and may differ materially from the values that could be obtained if a ready market for these securities existed. Our NAV could be materially affected if the determinations regarding the fair value of our investments are materially different from the values that we ultimately realize upon our disposal of such securities. Additionally, changes in the market environment and other events that may occur over the life of the investment may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which it is recorded.
Refer to Note 3—Investments for additional information regarding fair value measurements and our application of ASC 820.
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Revenue Recognition
Interest Income Recognition
Interest income, including the amortization of premiums, acquisition costs and amendment fees, the accretion of original issue discounts (“OID”), and paid-in-kind (“PIK”) interest, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Generally, when a loan becomes 90 days or more past due or if our qualitative assessment indicates that the debtor is unable to service its debt or other obligations, we will place the loan on non-accrual status and cease recognizing interest income on that loan for financial reporting purposes until the borrower has demonstrated the ability and intent to pay contractual amounts due. However, we remain contractually entitled to this interest. Interest payments received on non-accrual loans may be recognized as income or applied to the cost basis depending upon management's judgment. Generally, non-accrual loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to remain current, or due to a restructuring such that the interest income is deemed to be collectible. As of September 30, 2025, our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC were on non-accrual status with a cost basis of $28.8 million, or 3.6% of the cost basis of all debt investments in our portfolio, and a fair value of $13.0 million, or 1.7% of the fair value of all debt investments in our portfolio. As of September 30, 2024, our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC were on non-accrual status with a cost basis of $28.3 million, or 4.1% of the cost basis of all debt investments in our portfolio, and a fair value of $12.8 million, or 1.9% 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. To 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 each of September 30, 2025 and 2024, we held two OID loans. We recorded OID income of $0.4 million, $0.4 million, and $0.2 million during the years ended September 30, 2025, 2024, and 2023, respectively. The unamortized balance of OID investments as of September 30, 2025 and 2024 totaled $0.2 million and $0.6 million, respectively. As of September 30, 2025 and 2024, we had nine and eight investments which had a PIK interest component, respectively. We recorded PIK interest income of $5.0 million, $5.7 million, and $3.6 million during the years ended September 30, 2025, 2024, and 2023, respectively. We collected $7.2 million, $0.2 million, and $1.1 million of PIK interest in cash during the years ended September 30, 2025, 2024, and 2023, respectively.
Success Fee Income Recognition
We record success fees as income when earned, which often occurs upon receipt of cash. Success fees are generally contractually due upon a change of control in a portfolio company, typically resulting from an exit or sale, and are non-recurring.
Dividend Income Recognition
We accrue dividend income on preferred and common equity securities to the extent that such amounts are expected to be collected and if we have the option to collect such amounts in cash or other consideration.
Deferred Financing and Offering Costs
Deferred financing and offering costs consist of costs incurred to obtain financing, including lender fees and legal fees. Certain costs associated with our 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 Facility’s 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. Refer to Note 5 — Borrowings for further discussion.
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Related Party Fees
We are party to the Advisory Agreement with the Adviser, which is indirectly owned by our chairman and chief executive officer. In accordance with the Advisory Agreement, we pay the Adviser fees as compensation for its services, consisting of a base management fee and an incentive fee. Additionally, we pay the Adviser a loan servicing fee as compensation for its services as servicer under the terms of our revolving line of credit 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.
We are also party to the Administration Agreement with the Administrator, which is indirectly owned and controlled by our chairman and chief executive officer, whereby we pay separately for administrative services. Refer to Note 4— Related Party Transactions for additional information regarding these related party fees and agreements.
Income Taxes
We intend to continue to qualify for treatment as a RIC under subchapter M of the Code, which generally allows us to avoid paying corporate income taxes on any income or gains that we distribute to our stockholders. We intend to continue to distribute sufficient dividends to eliminate taxable income. Refer to Note 10— Federal and State Income Taxes for additional information regarding our RIC requirements.
ASC 740, “Income Taxes” requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authorities. Tax positions not deemed to satisfy the “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current fiscal year. We have evaluated the implications of ASC 740, for all open tax years and in all major tax jurisdictions, and determined that there is no material impact on our accompanying Consolidated Financial Statements. Our federal tax returns for fiscal years 2022 to 2024 remain subject to examination by the Internal Revenue Service (“IRS”).
Distributions
Distributions to stockholders are recorded on the ex-dividend date. We are required to pay out at least 90.0% of our Investment Company Taxable Income (as defined below), which is generally our net ordinary income plus the excess of our net short-term capital gains over net long-term capital losses for each taxable year as a distribution to our stockholders in order to maintain our ability to be taxed as a RIC under Subchapter M of the Code. It is our policy to pay out as a distribution up to 100.0% of those amounts. The amount to be paid is determined by our Board of Directors each quarter and is based on the annual earnings estimated by our management. Based on that estimate, a distribution is declared each quarter and is paid out monthly over the course of the respective quarter. Refer to Note 9—Distributions to Common Stockholders for further information.
Our transfer agent, Computershare, Inc., offers a dividend reinvestment plan for our common stockholders. This is an “opt in” dividend reinvestment plan, meaning that common stockholders may elect to have their cash distributions automatically reinvested in additional shares of our common stock. Common stockholders who do not make such election will receive their distributions in cash. Common stockholders who receive distributions in the form of stock will be subject to the same federal, state and local tax consequences as stockholders who elect to receive their distributions in cash. As plan agent, Computershare, Inc. purchases shares in the open market in connection with the obligations under the plan.
Segment Reporting
In November 2023, the FASB issued Accounting Standards Update 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures” (“ASU 2023-07”) to improve reportable segments disclosure requirements. The ASU requires existing annual segment disclosures to also be disclosed on an interim basis and also requires additional disclosures around significant segment expenses and disclosures to identify the title and position of the chief operating decision maker (“CODM”). The standard is effective for fiscal years beginning after December 15, 2023, and interim periods thereafter. We adopted ASU 2023-07 as of September 30, 2025.
Our current business strategy includes one reporting segment which derives investment income from our portfolio companies. Our CODM is our Chief Executive Officer. The CODM assesses performance based on net investment income, net realized and unrealized gains (losses) and net increase (decrease) in net assets resulting from operations, which are reported on the Consolidated Statement of Operations. The expense categories included on the Consolidated Statement of
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Operations reflect our significant expense categories and are provided to the CODM on a regular basis.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” which was issued to enhance the transparency and decision usefulness of income tax disclosures. The new guidance is effective for annual periods beginning after December 15, 2024. The Company evaluated the impact of the new standard on the Company’s consolidated financial statements and related disclosures and does not believe it will have a material impact on its consolidated financial statements or its disclosure.
NOTE 3. INVESTMENTS
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 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. Investments in funds measured using NAV as a practical expedient are not categorized within the fair value hierarchy.
As of September 30, 2025, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investments in money market funds, which were valued using Level 1 inputs and our investments in Gladstone Alternative Income Fund (“Gladstone Alternative”) and Leeds Novamark Capital I, L.P. (“Leeds”), which were valued using NAV as a practical expedient. As of September 30, 2024, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investments in money market funds, which were valued using Level 1 inputs and our investment in Leeds, which was valued using NAV as a practical expedient.
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. During the years ended September 30, 2025 and 2024, there were no investments transferred into or out of Levels 1, 2 or 3 of the valuation hierarchy.
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As of September 30, 2025 and 2024, our investments, by security type, at fair value were categorized as follows within the ASC 820 fair value hierarchy:

|  | Fair Value Measurements |  |
|  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Fair Value
As of September 30, 2025: |  |  |  |  |  |  |  |
Secured first lien debt |  | $ | — |  |  | $ | — |  |  | $ | 622,371 |  |  | $ | 622,371 |
Secured second lien debt |  | — |  |  | — |  |  | 150,542 |  |  | 150,542 |
Unsecured debt |  | — |  |  | — |  |  | 333 |  |  | 333 |
Preferred equity |  | — |  |  | — |  |  | 31,214 |  |  | 31,214 |
Common equity/equivalents |  | — |  |  | — |  |  | 49,553 |  |  | 49,553 |
Total |  | $ | — |  |  | $ | — |  |  | $ | 854,013 |  |  | $ | 854,013 |
Investments measured at NAV(A) |  | — |  |  | — |  |  | — |  |  | 5,111 |
Total Investments |  | $ | — |  |  | $ | — |  |  | $ | 854,013 |  |  | $ | 859,124 |
Cash Equivalents |  | 31,774 |  |  | — |  |  | — |  |  | 31,774 |
Total Investments and Cash Equivalents as of September 30, 2025 |  | $ | 31,774 |  |  | $ | — |  |  | $ | 854,013 |  |  | $ | 890,898 |

|  | Fair Value Measurements |  |
|  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Fair Value
As of September 30, 2024: |  |  |  |  |  |  |  |
Secured first lien debt |  | $ | — |  |  | $ | — |  |  | $ | 554,937 |  |  | $ | 554,937 |
Secured second lien debt |  | — |  |  | — |  |  | 113,716 |  |  | 113,716 |
Unsecured debt |  | — |  |  | — |  |  | 32 |  |  | 32 |
Preferred equity |  | — |  |  | — |  |  | 31,346 |  |  | 31,346 |
Common equity/equivalents |  | — |  |  | — |  |  | 96,191 |  |  | 96,191 |
Total |  | $ | — |  |  | $ | — |  |  | $ | 796,222 |  |  | $ | 796,222 |
Investments measured at NAV(A) |  | — |  |  | — |  |  | — |  |  | 38 |
Total Investments |  | $ | — |  |  | $ | — |  |  | $ | 796,222 |  |  | $ | 796,260 |
Cash Equivalents |  | 2,157 |  |  | — |  |  | — |  |  | 2,157 |
Total Investments and Cash Equivalents as of September 30, 2024 |  | $ | 2,157 |  |  | $ | — |  |  | $ | 796,222 |  |  | $ | 798,417 |

(A)Includes our investments in Gladstone Alternative and Leeds as of September 30, 2025 and our investment in Leeds as of September 30, 2024. Investments that are measured at fair value using NAV as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented elsewhere in this annual report.
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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, 2025 and 2024 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 Using Significant Unobservable Inputs (Level 3) |
| September 30, 2025 |  | September 30, 2024 |
Non-Control/Non-Affiliate Investments |  |  |  |
Secured first lien debt | $ | 517,762 |  |  | $ | 540,661 |  |
Secured second lien debt | 131,750 |  |  | 105,169 |  |
Unsecured debt | 17 |  |  | 32 |  |
Preferred equity | 16,794 |  |  | 27,247 |  |
Common equity/equivalents | 29,958 |  | (A) | 77,757 |  | (B)
Total Non-Control/Non-Affiliate Investments | $ | 696,281 |  |  | $ | 750,866 |  |
Affiliate Investments |  |  |  |
Secured first lien debt | $ | 34,713 |  |  | $ | 380 |  |
Preferred equity | 9,420 |  |  | 4,099 |  |
Common equity/equivalents | 4,703 |  |  | 2,959 |  |
Total Affiliate Investments | $ | 48,836 |  |  | $ | 7,438 |  |
Control Investments |  |  |  |
Secured first lien debt | $ | 69,896 |  |  | $ | 13,896 |  |
Secured second lien debt | 18,792 |  |  | 8,547 |  |
Unsecured debt | 316 |  |  | — |  |
Preferred equity | 5,000 |  |  | — |  |
Common equity/equivalents | 14,892 |  |  | 15,475 |  |
Total Control Investments | $ | 108,896 |  |  | $ | 37,918 |  |
Total Investments at Fair Value Using Level 3 Inputs | $ | 854,013 |  |  | $ | 796,222 |  |

(A)Excludes our investments in Gladstone Alternative and Leeds with fair values of $5.1 million and $36 thousand, respectively, as of September 30, 2025, which were valued using NAV as a practical expedient.
(B)Excludes our investment in Leeds with a fair value of $38 thousand as of September 30, 2024, which was valued using NAV as a practical expedient.
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In accordance with ASC 820, the following table provides quantitative information about our Level 3 fair value measurements of our investments as of September 30, 2025 and 2024. 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
|  |  |  |  |  |  |  |  | Range / Weighted Average as of
| September 30, 2025 |  | September 30, 2024 |  | Valuation Techniques/ Methodologies |  | Unobservable Input |  | September 30, 2025 |  | September 30, 2024
Secured first lien debt | $ | 548,670 |  |  | $ | 464,090 |  |  | Yield Analysis |  | Discount Rate |  | 9.4%–19.8% / 11.7% |  | 10.8%–17.3% / 12.6%
| 73,701 |  |  | 90,847 |  |  | TEV |  | EBITDA multiple |  | 3.5x–8.0x / 6.0x |  | 4.1x–13.9x / 10.0x
|  |  |  |  |  |  | EBITDA |  | $538–$4,655 / $3,540 |  | $3,020–$16,211 / $10,309
|  |  |  |  |  |  | Revenue multiple |  | 0.6x–0.8x / 0.7x |  | 0.2x–4.6x / 2.1x
|  |  |  |  |  |  | Revenue |  | $10,844–$21,649 / $15,090 |  | $6,336–$21,118 / $13,981
Secured second lien debt | 141,750 |  |  | 101,928 |  |  | Yield Analysis |  | Discount Rate |  | 11.4%–15.2% / 13.1% |  | 12.2%—16.0% / 14.1%
| — |  |  | 3,241 |  |  | Market Quote |  | IBP |  | N/A |  | 88.0%–88.0% / 88.0%
| 8,792 |  |  | 8,547 |  |  | TEV |  | EBITDA multiple |  | 5.4x–5.4x / 5.4x |  | 5.4x–5.4x / 5.4x
|  |  |  |  |  |  | EBITDA |  | $2,345–$2,345 / $2,345 |  | $3,343–$3,343 / $3,343
Unsecured debt | 333 |  |  | 32 |  |  | TEV |  | EBITDA multiple |  | 8.0x–8.0x / 8.0x |  | 0.0x–0.0x / 0.0x
|  |  |  |  |  |  | EBITDA |  | $3,804–$3,804 / $3,804 |  | $0–$0 / $0
|  |  |  |  |  |  | Revenue multiple |  | 0.9x–0.9x / 0.9x |  | 1.0x–1.0x / 1.0x
|  |  |  |  |  |  | Revenue |  | $4,846–$4,846 / $4,846 |  | $7,834–$7,834 / $7,834
Preferred and common equity / equivalents(A) | 80,767 |  |  | 127,537 |  |  | TEV |  | EBITDA multiple |  | 3.5x–14.6x / 6.8x |  | 4.1x–13.9x / 8.0x
|  |  |  |  |  |  | EBITDA |  | $538–$142,549 / $10,222 |  | $1,182–$144,458 / $10,847
|  |  |  |  |  |  | Revenue multiple |  | 0.6x–0.9x / 0.7x |  | 0.2x–4.6x / 2.0x
|  |  |  |  |  |  | Revenue |  | $4,846–$21,649 / $12,394 |  | $4,672–$21,118 / $12,587
Total Level 3 Investments, at Fair Value | $ | 854,013 |  |  | $ | 796,222 |  |  |  |  |  |  |  |  |

(A)Fair value as of September 30, 2025 includes one proprietary equity investment totaling $2.2 million, which was valued using the payoff amount as the unobservable input. Fair value as of September 30, 2025 excludes our investments in Gladstone Alternative and Leeds with fair values of $5.1 million and $36 thousand, respectively, which were valued using NAV as a practical expedient. Fair value as of September 30, 2024 excludes our investment in Leeds with a fair value of $38 thousand, which was valued using NAV as a practical expedient.
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 market yields, discount rates, or a (decrease)/increase in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a (decrease)/increase, respectively, in the fair value of certain of our investments.
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Changes in Level 3 Fair Value Measurements of Investments
The following tables provide the changes in fair value, broken out by security type, during the years ended September 30, 2025 and 2024 for all investments for which we determine fair value using unobservable (Level 3) inputs.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Year Ended September 30, 2025 |  | Secured First Lien Debt |  | Secured Second Lien Debt |  | Unsecured Debt |  | Preferred Equity |  | Common Equity/ Equivalents |  | Total
Fair Value as of September 30, 2024 |  | $ | 554,937 |  |  | $ | 113,716 |  |  | $ | 32 |  |  | $ | 31,346 |  |  | $ | 96,191 |  |  | $ | 796,222 |
Total gains (losses): |  |  |  |  |  |  |  |  |  |  |  |
Net realized gain (loss)(A) |  | (8,513) |  |  | — |  |  | — |  |  | (946) |  |  | 64,827 |  |  | 55,368 |
Net unrealized appreciation (depreciation)(B) |  | (7,573) |  |  | 285 |  |  | (56) |  |  | 6,510 |  |  | 7,179 |  |  | 6,345 |
Reversal of prior period net depreciation (appreciation) on realization(B) |  | 9,612 |  |  | 295 |  |  | — |  |  | 946 |  |  | (60,010) |  |  | (49,157) |
New investments, repayments and settlements:(C) |  |  |  |  |  |  |  |  |  |  |  |
Issuances/originations |  | 322,603 |  |  | 57,958 |  |  | 357 |  |  | 12,762 |  |  | 3,026 |  |  | 396,706 |
Settlements/repayments |  | (240,195) |  |  | (21,712) |  |  | — |  |  | — |  |  | — |  |  | (261,907) |
Net proceeds from sales |  | — |  |  | — |  |  | — |  |  | (19,404) |  |  | (70,160) |  |  | (89,564) |
Transfers |  | (8,500) |  |  | — |  |  | — |  |  | — |  |  | 8,500 |  |  | — |
Fair Value as of September 30, 2025 |  | $ | 622,371 |  |  | $ | 150,542 |  |  | $ | 333 |  |  | $ | 31,214 |  |  | $ | 49,553 |  |  | $ | 854,013 |

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Year Ended September 30, 2024 |  | Secured First Lien Debt |  | Secured Second Lien Debt |  | Unsecured Debt |  | Preferred Equity |  | Common Equity/ Equivalents |  | Total
Fair Value as of September 30, 2023 |  | $ | 510,701 |  |  | $ | 127,854 |  |  | $ | 24 |  |  | $ | 26,855 |  |  | $ | 39,128 |  |  | $ | 704,562 |
Total gains (losses): |  |  |  |  |  |  |  |  |  |  |  |
Net realized gain (loss)(A) |  | (50) |  |  | — |  |  | — |  |  | 332 |  |  | 1,724 |  |  | 2,006 |
Net unrealized appreciation (depreciation)(B) |  | (7,071) |  |  | 2,445 |  |  | 8 |  |  | (5,039) |  |  | 52,781 |  |  | 43,124 |
Reversal of prior period net depreciation (appreciation) on realization(B) |  | (53) |  |  | (22) |  |  | — |  |  | 130 |  |  | (283) |  |  | (228) |
New investments, repayments and settlements:(C) |  |  |  |  |  |  |  |  |  |  |  |
Issuances/originations |  | 131,462 |  |  | 36,978 |  |  | — |  |  | 10,150 |  |  | 4,585 |  |  | 183,175 |
Settlements/repayments |  | (80,102) |  |  | (53,539) |  |  | — |  |  | — |  |  | — |  |  | (133,641) |
Net proceeds from sales |  | 50 |  |  | — |  |  | — |  |  | (1,082) |  |  | (1,744) |  |  | (2,776) |
Transfers |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Fair Value as of September 30, 2024 |  | $ | 554,937 |  |  | $ | 113,716 |  |  | $ | 32 |  |  | $ | 31,346 |  |  | $ | 96,191 |  |  | $ | 796,222 |

(A)Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the corresponding period.
(B)Included in net unrealized appreciation (depreciation) on investments on our accompanying Consolidated Statements of Operations for the corresponding period.
(C)Includes increases in the cost basis of investments resulting from new portfolio investments, accretion of discounts, PIK, and other non-cash disbursements to portfolio companies, as well as decreases in the cost basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs and other cost-basis adjustments.
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Investment Activity
Proprietary Investments
As of September 30, 2025 and 2024, we held 54 and 47 proprietary investments with an aggregate fair value of $859.1 million and $792.9 million, or 100.0% and 99.6% of the total portfolio at fair value, respectively. The following significant proprietary investment transactions occurred during the year ended September 30, 2025:
•In October 2024, our $15.0 million debt investment in Perimeter Solutions Group paid off at par. We also received a $0.5 million prepayment penalty in conjunction with the payoff.
•In October 2024, our investment in Antenna Research Associates, Inc. was sold, which resulted in a net realized gain on our common equity of approximately $59.3 million and the repayment of our debt investment of $31.3 million at par.
•In November 2024, we invested an additional $28.9 million in Giving Home Healthcare, LLC (“Giving Home”), an existing portfolio company, through secured first lien debt. In June 2025, we invested an additional $7.0 million in Giving Home through secured first lien debt.
•In November 2024, we invested $10.5 million in Wings ‘N More Restaurants, LLC (“Wings”) through secured first lien debt. We also extended Wings a $1.5 million secured first lien line of credit commitment and a $5.0 million secured first lien delayed draw term loan commitment, both of which were unfunded at close.
•In November 2024, our $22.3 million debt investment in ENET Holdings, LLC paid off at par.
•In December 2024, we invested $42.8 million in Vet’s Choice Radiology, LLC through secured first lien debt.
•In December 2024, we invested $28.9 million in Pan-Am Dental, LLC through secured second lien debt and preferred equity.
•In December 2024, we invested $15.0 million in Freedom Dental Management, Inc. through secured first lien debt.
•In December 2024, we invested $5.0 million in Tube Bending Technology, LLC through secured second lien debt.
•In December 2024, we invested $5.0 million in Gladstone Alternative, one of our affiliated funds, through common equity.
•In December 2024, our investment in Salt and Straw, LLC, paid off which resulted in a realized gain of approximately $2.5 million on our preferred equity and the repayment of our debt investment of $10.9 million at par. We also received a $0.1 million prepayment penalty in conjunction with the payoff. We continue to hold warrants for common equity in Salt and Straw, LLC.
•In December 2024, we sold our debt investments in DKI Ventures, LLC, which resulted in a net realized loss on our debt of approximately $4.1 million.
•In January 2025, our $20.6 million debt investment in Fix-It Group, LLC paid off at par. We also received a $0.1 million prepayment penalty.
•In January 2025, our $5.4 million debt investment in Sokol and Company, LLC (“Sokol”) paid off at par. Additionally, in February 2025, a portion of our common equity investment in Sokol was sold, representing a return of our equity cost basis of $1.1 million and a realized gain of $4.7 million.
•In February 2025, we invested $18.9 million in Dutch Gold Honey, Inc. through secured second lien debt and common equity.
•In February 2025, we invested $19.4 million in Viron International, LLC through secured first lien debt and common equity.
•In March 2025, we received a $6.0 million partial repayment on our debt investment in Viva Railings, LLC.
•In March 2025, we exited our investment in MCG Energy Solutions, LLC, which resulted in a realized gain on our preferred equity investment of approximately $3.0 million and the repayment of our debt investment of $20.4 million at par.
•In April 2025, our $42.2 million debt investment in SpaceCo Holdings, LLC paid off at par.
•In April 2025, our investment in Eegees, LLC was restructured as part of the bankruptcy process resulting in a new $12.8 million first lien debt investment and a new $8.5 million common equity investment in Eegee Acquisition Corporation. In conjunction with the restructuring, we recorded a net realized loss of approximately $4.4 million.
•In May 2025, we invested $46.0 million in Altior Healthcare, LLC through secured first lien debt.
•In June 2025, our $36.1 million debt investment in Cafe Zupas paid off at par. We also received a $0.4 million prepayment penalty in conjunction with the payoff.
•In June 2025, we invested $12.6 million in RF Technologies, LLC through secured first lien debt. We also extended RF Technologies, LLC a $3.5 million secured first lien line of credit commitment.
•In July 2025, we invested $25.0 million in MASSiv Brands, LLC through secured first lien debt.
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•In July 2025, we invested $15.0 million in Alsay Incorporated through secured second lien debt and preferred equity.
•In July 2025, we invested $23.7 million in Snif-Snax, LLC through secured first lien debt and preferred equity.
•In July 2025, we invested $13.0 million in Zero Case Holding Inc. through secured first lien debt and common equity. We also extended this business a $4.0 million secured first lien line of credit commitment, which was unfunded at close.
•In August 2025, we invested an additional $16.6 million in OCI, LLC, an existing portfolio company, through secured first lien debt and common equity.
•In August 2025, we invested $30.0 million in Foodservices Brand Group (“FBG”) through secured first lien debt. We also extended FBG a $10.0 million secured first lien line of credit commitment, which was unfunded at close.
•In September 2025, we recorded a realized loss of $6.4 million on our equity investment in FES Resources Holdings, LLC.
•In September 2025, our $15.4 million debt investment in Ohio Armor Holdings, LLC paid off at par. We continue to hold a common equity investment in Ohio Armor Holdings, LLC.
Syndicated Investments
As of September 30, 2025 and 2024, we held one and two syndicated investments with an aggregate fair value of less than $0.1 million and $3.3 million, or less than 0.1% and 0.4% of the total portfolio at fair value, respectively. The following significant syndicated investment transaction occurred during the year ended September 30, 2025:
•In July 2025, our $3.7 million debt investment in 8th Avenue Food & Provisions, Inc. paid off at par.
Investment Concentrations
As of September 30, 2025, our investment portfolio consisted of investments in 55 portfolio companies located in 22 states in 16 different industries, with an aggregate fair value of $859.1 million. The five largest investments at fair value as of September 30, 2025 totaled $196.5 million, or 22.9% of our total investment portfolio, as compared to the five largest investments at fair value as of September 30, 2024 totaling $232.7 million, or 29.2% of our total investment portfolio. As of September 30, 2025 and 2024, our average investment by obligor was $15.9 million and $15.7 million at cost, respectively.
The following table outlines our investments by security type as of September 30, 2025 and 2024:

| September 30, 2025 |  | September 30, 2024
| Cost |  | Fair Value |  | Cost |  | Fair Value
Secured first lien debt | $ | 646,131 |  |  | 73.7 | % |  | $ | 622,371 |  |  | 72.4 | % |  | $ | 580,736 |  |  | 75.3 | % |  | $ | 554,937 |  |  | 69.7 | %
Secured second lien debt | 149,937 |  |  | 17.1 |  |  | 150,542 |  |  | 17.5 |  |  | 113,691 |  |  | 14.8 |  |  | 113,716 |  |  | 14.3 |
Unsecured debt | 555 |  |  | 0.1 |  |  | 333 |  |  | 0.1 |  |  | 198 |  |  | 0.0 |  |  | 32 |  |  | 0.0 |
Total debt investments | 796,623 |  |  | 90.9 |  |  | 773,246 |  |  | 90.0 |  |  | 694,625 |  |  | 90.1 |  |  | 668,685 |  |  | 84.0 |
Preferred equity | 37,429 |  |  | 4.3 |  |  | 31,214 |  |  | 3.6 |  |  | 45,017 |  |  | 5.8 |  |  | 31,346 |  |  | 3.9 |
Common equity/equivalents | 42,562 |  |  | 4.8 |  |  | 54,664 |  |  | 6.4 |  |  | 31,369 |  |  | 4.1 |  |  | 96,229 |  |  | 12.1 |
Total equity investments | 79,991 |  |  | 9.1 |  |  | 85,878 |  |  | 10.0 |  |  | 76,386 |  |  | 9.9 |  |  | 127,575 |  |  | 16.0 |
Total Investments | $ | 876,614 |  |  | 100.0 | % |  | $ | 859,124 |  |  | 100.0 | % |  | $ | 771,011 |  |  | 100.0 | % |  | $ | 796,260 |  |  | 100.0 | %

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Our investments at fair value consisted of the following industry classifications as of September 30, 2025 and 2024:

Industry Classification |  | September 30, 2025 |  | September 30, 2024
| Fair Value |  | Percentage of Total Investments |  | Fair Value |  | Percentage of Total Investments
Healthcare, Education, and Childcare |  | $ | 273,262 |  |  | 31.8 | % |  | $ | 101,707 |  |  | 12.8 | %
Diversified/Conglomerate Manufacturing |  | 202,466 |  |  | 23.6 |  |  | 160,264 |  |  | 20.1 |
Diversified/Conglomerate Service |  | 152,042 |  |  | 17.7 |  |  | 179,032 |  |  | 22.5 |
Beverage, Food, and Tobacco |  | 54,605 |  |  | 6.4 |  |  | 88,327 |  |  | 11.1 |
Home and Office Furnishings, Housewares and Durable Consumer Products |  | 30,000 |  |  | 3.5 |  |  | — |  |  | — |
Automobile |  | 27,361 |  |  | 3.2 |  |  | 28,286 |  |  | 3.6 |
Machinery |  | 26,381 |  |  | 3.1 |  |  | 21,816 |  |  | 2.7 |
Personal, Food, and Miscellaneous Services |  | 23,700 |  |  | 2.7 |  |  | — |  |  | — |
Cargo Transportation |  | 20,000 |  |  | 2.3 |  |  | 20,200 |  |  | 2.5 |
Oil and Gas |  | 17,512 |  |  | 2.0 |  |  | 20,554 |  |  | 2.6 |
Personal and Non-Durable Consumer Products |  | 13,866 |  |  | 1.6 |  |  | 13,586 |  |  | 1.7 |
Printing and Publishing |  | 5,809 |  |  | 0.7 |  |  | 4,312 |  |  | 0.5 |
Aerospace and Defense |  | 1,184 |  |  | 0.1 |  |  | 153,096 |  |  | 19.2 |
Other, < 2.0% |  | 10,936 |  |  | 1.3 |  |  | 5,080 |  |  | 0.7 |
Total Investments |  | $ | 859,124 |  |  | 100.0 | % |  | $ | 796,260 |  |  | 100.0 | %

Our investments at fair value were included in the following U.S. geographic regions as of September 30, 2025 and 2024:

Location |  | September 30, 2025 |  | September 30, 2024
| Fair Value |  | Percentage of Total Investments |  | Fair Value |  | Percentage of Total Investments
South |  | $ | 287,371 |  |  | 33.5 | % |  | $ | 314,010 |  |  | 39.4 | %
Midwest |  | 237,417 |  |  | 27.6 |  |  | 192,897 |  |  | 24.2 |
West |  | 233,564 |  |  | 27.2 |  |  | 249,082 |  |  | 31.3 |
Northeast |  | 100,772 |  |  | 11.7 |  |  | 40,271 |  |  | 5.1 |
Total Investments |  | $ | 859,124 |  |  | 100.0 | % |  | $ | 796,260 |  |  | 100.0 | %

The geographic composition indicates the location of the headquarters for our portfolio companies. A portfolio company may have additional locations in other geographic regions.
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Investment Principal Repayments
The following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of September 30, 2025:

Year Ending September 30, |  | Amount
2026(A) |  | $ | 58,434 |
2027 |  | 157,554 |
2028 |  | 222,265 |
2029 |  | 139,336 |
2030 |  | 209,608 |
Thereafter |  | 10,000 |
Total contractual repayments |  | $ | 797,197 |
Adjustments to cost basis of debt investments |  | (574) |
Investments in equity securities |  | 79,991 |
Investments held as of September 30, 2025 at cost: |  | $ | 876,614 |

(A)Includes debt investments with contractual principal amounts totaling $0.5 million for which the maturity date has passed as of September 30, 2025.
Receivables from Portfolio Companies
Receivables from portfolio companies represent non-recurring costs incurred on behalf of such portfolio companies and are included in other assets 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 September 30, 2025 and 2024, we had gross receivables from portfolio companies of $2.4 million and $1.7 million, respectively. The allowance for uncollectible receivables was $52 thousand and $75 thousand as of September 30, 2025 and 2024, respectively.
NOTE 4. RELATED PARTY TRANSACTIONS
Transactions with the Adviser
We have been externally managed by the Adviser pursuant to the Advisory Agreement since October 1, 2004 pursuant to which we pay the Adviser a base management fee and an incentive fee for its services. On July 10, 2025, our Board of Directors, including a majority of the directors who are not parties to the Advisory Agreement or interested persons of us or the Adviser, unanimously approved the renewal of the Advisory Agreement through August 31, 2026.
We also pay the Adviser a loan servicing fee for its role of servicer pursuant to our Credit Facility. The entire loan servicing fee paid to the Adviser by Business Loan is non-contractually, unconditionally and irrevocably credited against the base management fee otherwise payable to the Adviser, since Business Loan is a consolidated subsidiary of ours, and overall, the base management fee (including any loan servicing fee) cannot exceed 1.75% of total assets (including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings) during any given fiscal year pursuant to the Advisory Agreement.
David Gladstone (our chairman and chief executive officer) serves as a director and executive officer of the Adviser, which, as of September 30, 2025, is 100% indirectly owned by Mr. Gladstone. Robert Marcotte (our president) also serves as executive vice president of private equity of the Adviser. Michael LiCalsi, our chief administrative officer, co-general counsel, and co-secretary, also serves in the same roles for our Adviser and Administrator (in addition to serving as president of our Administrator). Erich Hellmold, our co-general counsel and co-secretary, also serves in the same roles for our Adviser and Administrator.
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The following table summarizes the base management fee, incentive fee, and loan servicing fee and associated non-contractual, unconditional and irrevocable credits reflected in our accompanying Consolidated Statements of Operations:

| Year Ended September 30,
| 2025 |  | 2024 |  | 2023
Average total assets subject to base management fee(A)(B) | $ | 794,857 |  |  | $ | 777,657 |  |  | $ | 685,600 |
Multiplied by annual base management fee of 1.75% | 1.75 | % |  | 1.75 | % |  | 1.75 | %
Base management fee(C) | 13,910 |  |  | 13,609 |  |  | 11,998 |
Portfolio company fee credit | (5,593) |  |  | (2,866) |  |  | (3,263) |
Syndicated loan fee credit | (37) |  |  | (101) |  |  | (126) |
Net Base Management Fee | $ | 8,280 |  |  | $ | 10,642 |  |  | $ | 8,609 |
Loan servicing fee(C) | $ | 8,888 |  |  | $ | 8,862 |  |  | $ | 8,053 |
Credit to base management fee - loan servicing fee(C) | (8,888) |  |  | (8,862) |  |  | (8,053) |
Net Loan Servicing Fee | $ | — |  |  | $ | — |  |  | $ | — |
Incentive fee(C) | $ | 10,486 |  |  | $ | 11,410 |  |  | $ | 10,255 |
Incentive fee credit | (2,344) |  |  | (204) |  |  | — |
Net Incentive Fee | $ | 8,142 |  |  | $ | 11,206 |  |  | $ | 10,255 |
Portfolio company fee credit | $ | (5,593) |  |  | $ | (2,866) |  |  | $ | (3,263) |
Syndicated loan fee credit | (37) |  |  | (101) |  |  | (126) |
Incentive fee credit | (2,344) |  |  | (204) |  |  | — |
Credit to Fees from Adviser—Other(C) | $ | (7,974) |  |  | $ | (3,171) |  |  | $ | (3,389) |

(A)Average total assets subject to the base management fee is defined in the Advisory Agreement as total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings, valued at the end of the two most recently completed quarters within the respective years and adjusted appropriately for any share issuances or repurchases during the period.
(B)Excludes our investment in Gladstone Alternative valued at the end of the applicable periods.
(C)Reflected as a line item on our accompanying Consolidated Statements of Operations.
Base Management Fee
The base management fee is payable quarterly to the Adviser pursuant to our Advisory Agreement and is assessed at an annual rate of 1.75%, computed on the basis of the value of our average total assets at the end of the two most recently-completed quarters (inclusive of the current quarter), which are total assets, including investments made with proceeds of borrowings, less any uninvested cash or cash equivalents resulting from borrowings and adjusted appropriately for any share issuances or repurchases during the period.
Additionally, pursuant to the requirements of the 1940 Act, the Adviser makes available significant managerial assistance to our portfolio companies. The Adviser may also provide other services to our portfolio companies under certain agreements and may receive fees for services other than managerial assistance. Such services may include: (i) assistance obtaining, sourcing or structuring credit facilities, long term loans or additional equity from unaffiliated third parties; (ii) negotiating important contractual financial relationships; (iii) consulting services regarding restructuring of the portfolio company and financial modeling as it relates to raising additional debt and equity capital from unaffiliated third parties; and (iv) 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.
Our Board of Directors accepted a non-contractual, unconditional, and irrevocable credit from the Adviser to reduce the annual base management fee on syndicated loan participations to 0.5%, to the extent that proceeds resulting from
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borrowings were used to purchase such syndicated loan participations, for each of the years ended September 30, 2025 and 2024.
Loan Servicing Fee
The Adviser also services the loans held by Business Loan (the borrower under the Credit Facility), in return for which the Adviser receives a 1.5% annual fee payable monthly based on the aggregate outstanding balance of loans pledged under our Credit Facility. As discussed in the notes to the table above, we treat payment of the loan servicing fee pursuant to the Credit Facility as a pre-payment of the base management fee under the Advisory Agreement. Accordingly, these loan servicing fees are 100% non-contractually, unconditionally and irrevocably credited back to us by the Adviser.
Incentive Fee
The incentive fee consists of two parts: 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 period from April 1, 2020 through March 31, 2023) 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 pre-incentive fee net investment income is generally payable quarterly to the Adviser and is computed as follows:
•no incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the hurdle rate;
•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% (2.50% from April 1, 2022 through March 31, 2023) of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter; and
•20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.1875% (2.50% from April 1, 2022 through March 31, 2023) of our net assets, adjusted appropriately for any share issuances or repurchases during the period, in any calendar quarter.
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 portfolio’s 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 portfolio’s 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 portfolio’s 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, 2025, 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. 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
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appreciation will be realized in the future. No GAAP accrual for a capital gains-based incentive fee has been recorded from our inception through September 30, 2025.
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, 2025 and 2024, which credits totaled $2.3 million and $0.2 million, respectively. There were no such credits during the year ended September 30, 2023.
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 Administrator’s expenses are primarily rent and the salaries, benefits and expenses of the Administrator’s employees, including: our chief financial officer and treasurer, chief compliance officer, chief valuation officer, and co-general counsels and co-secretaries and their respective staffs. David Gladstone (our chairman and chief executive officer) serves as a member of the board of managers and executive officer of the Administrator, which, as of September 30, 2025, is 100% indirectly owned and controlled by Mr. Gladstone. Mr. LiCalsi, our chief administrative officer, co-general counsel and co-secretary, also serves in the same roles for our Adviser and Administrator (in addition to serving as president of our Administrator). Mr. Hellmold, our co-general counsel and co-secretary also serves in the same roles for our Adviser and Administrator.
Our allocable portion of the Administrator’s expenses is generally derived by multiplying the Administrator’s total expenses by the approximate percentage of time during the current quarter the Administrator’s employees performed services for us in relation to their time spent performing services for all companies serviced by the Administrator. On July 10, 2025, 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, 2026.
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 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 $1.1 million, $0.4 million, and $0.8 million during the years ended September 30, 2025, 2024, and 2023, respectively.
We entered into a dealer manager agreement (the “Dealer Manager Agreement”) with Gladstone Securities pursuant to which Gladstone Securities serves as our exclusive dealer manager in connection with the offering of our Series A Preferred Stock (as defined in Note 6—Cumulative Redeemable Preferred Stock Offering). Under the Dealer Manager Agreement, Gladstone Securities provides certain sales, promotional and marketing services to us in connection with the offering of the Series A Preferred Stock (the “Series A Offering”), and we pay Gladstone Securities (i) selling commissions of up to 7.0% of the gross proceeds from sales of Series A Preferred Stock in the offering, and (ii) a dealer manager fee of up to 3.0% of the gross proceeds from sales of Series A Preferred Stock in the offering. Gladstone Securities may, in its sole discretion, reallow a portion of the dealer manager fee to participating broker-dealers in support of the Series A Offering. The terms of the Dealer Manager Agreement were approved by our board of directors, including its independent directors. During the years ended September 30, 2025, and 2024, respectively, we paid Gladstone Securities selling commissions and dealer manager fees totaling $1.3 million and $0.9 million related to the offering of Series A Preferred Stock, which are netted against gross proceeds from the sales. There were no such fees paid during the year ended September 30, 2023.
Investment in Affiliated Fund
In December 2024, we invested in Gladstone Alternative, one of our affiliated funds, that is a registered, non-diversified, closed-end management investment company that operates as an interval fund. The fair value of the investment in Gladstone Alternative is excluded from the average total assets subject to base management fee for the purposes of calculating the base management fee we pay to the Adviser.
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Related Party Fees Due
Amounts due to related parties on our accompanying Consolidated Statements of Assets and Liabilities were as follows:

| September 30, 2025 |  | September 30, 2024
Base management fee due to (from) Adviser | $ | (408) |  |  | $ | 809 |
Loan servicing fee due to Adviser | 551 |  |  | 509 |
Incentive fee due to (from) Adviser | 2,778 |  |  | 2,571 |
Total fees due to (from) Adviser | 2,921 |  |  | 3,889 |
Fee due to Administrator | 610 |  |  | 569 |
Total Related Party Fees Due | $ | 3,531 |  |  | $ | 4,458 |

In addition to the above fees, other operating expenses due to the Adviser as of September 30, 2025 and 2024 totaled $0.1 million and $52 thousand, respectively. In addition, net expenses payable to Gladstone Investment Corporation (for reimbursement purposes), which includes certain co-investment expenses, totaled $52 thousand and $75 thousand as of September 30, 2025 and 2024, 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, 2025 and 2024.
NOTE 5. BORROWINGS
Revolving Line of Credit
On May 13, 2021, we, through Business Loan, entered into a sixth amended and restated credit agreement with KeyBank as administrative agent, lead arranger, managing agent and lender, the Adviser, as servicer, and certain other lenders party thereto (the “Credit Facility”). On June 23, 2025, we, through Business Loan, entered into Amendment No. 9 to the Credit Facility.
As of September 30, 2025, our Credit Facility had a total commitment amount of $320.0 million with an “accordion” feature that permits us to increase the size of the facility to $400.0 million. The Credit Facility has a revolving period end date of October 31, 2027 and a final maturity date of October 31, 2029 (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). The interest rate margin is 2.60% during the revolving period and 3.10% thereafter.
The following tables summarize noteworthy information related to our Credit Facility:

| As of September 30,
2025 |  | 2024
Commitment amount | $ | 320,000 |  |  | $ | 293,659 |
Borrowings outstanding, at cost | — |  |  | 70,600 |
Availability(A) | 307,467 |  |  | 200,381 |

| Year Ended September 30,
2025 |  | 2024 |  | 2023
Weighted average borrowings outstanding, at cost | $ | 40,212 |  |  | $ | 70,572 |  |  | $ | 133,692 |
Weighted average interest rate(B) | 13.8 | % |  | 11.0 | % |  | 8.0 | %
Commitment (unused) fees incurred | $ | 2,575 |  |  | $ | 1,696 |  |  | $ | 624 |

(A)Available borrowings are subject to various constraints imposed under our Credit Facility, based on the aggregate loan balance pledged by Business Loan, which varies as loans are added and repaid, regardless of whether such repayments are prepayments or made as contractually required.
(B)Includes unused commitment fees and excludes the impact of deferred financing costs.
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Our Credit Facility also requires that any interest or principal payments on pledged loans be remitted directly by the borrower into a lockbox account with KeyBank. KeyBank is also the trustee of the account and generally remits the collected funds to us once each month. Amounts collected in the lockbox account with KeyBank are presented as Due from administrative agent on the accompanying Consolidated Statement of Assets and Liabilities as of September 30, 2025 and 2024.
Our Credit Facility contains covenants that require Business Loan to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions), and restrict material changes to our credit and collection policies without the lenders’ consent. Our Credit Facility also generally limits distributions to our stockholders on a fiscal year basis to the sum of our net investment income, net capital gains and amounts elected to have been paid during the prior year in accordance with Section 855(a) of the Code. Business Loan is also subject to certain limitations on the type of loan investments it can apply as collateral towards the borrowing base to receive additional borrowing availability under our Credit Facility, including restrictions on geographic concentrations, sector concentrations, loan size, payment frequency and status, average life and lien property. Our Credit Facility further requires Business Loan to comply with other financial and operational covenants, which obligate Business Loan to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of 25 obligors required in the borrowing base.
Additionally, we are required to maintain (i) a minimum net worth (defined in our Credit Facility to include any outstanding mandatorily redeemable preferred stock) of $500.0 million plus 50.0% of all equity and subordinated debt raised after June 23, 2025 less 50% of any equity and subordinated debt retired or redeemed after June 23, 2025, which equates to $581.0 million as of September 30, 2025, (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, 2025, and as defined in our Credit Facility, we had a net worth of $877.9 million, asset coverage on our “senior securities representing indebtedness” of 219.8%, 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 34 obligors in our Credit Facility’s borrowing base as of September 30, 2025. As of September 30, 2025, we were in compliance with all of our Credit Facility covenants.
Fair Value
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, 2025, the discount rate used to determine the fair value of our Credit Facility was one-month Term SOFR, plus 2.60% per annum, plus a 1.00% unused commitment fee. As of September 30, 2024, the discount rate used to determine the fair value of our Credit Facility was one-month Term SOFR, plus 3.10% per annum, plus a 1.00% 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, 2025 and 2024, 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, 2025 and 2024, 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, 2025 and 2024:

| Total Recurring Fair Value Measurement Reported in Consolidated Statements of Assets and Liabilities Using Significant Unobservable Inputs (Level 3) As of September 30,
| 2025 |  | 2024
Credit Facility | $ | — |  |  | $ | 70,600 |

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Fair Value Measurements Using Significant Unobservable Data Inputs (Level 3)

| Year Ended September 30,
| 2025 |  | 2024
Fair value as of September 30, 2024 and 2023, respectively | $ | 70,600 |  |  | $ | 47,800 |
Borrowings | 332,000 |  |  | 221,200 |
Repayments | (402,600) |  |  | (198,400) |
Net unrealized (appreciation) depreciation (A) | — |  |  | — |
Fair Value as of September 30, 2025 and 2024, respectively | $ | — |  |  | $ | 70,600 |

(A)Included in net unrealized (appreciation) depreciation of other on our accompanying Consolidated Statements of Operations for the years ended September 30, 2025 and 2024.
The fair value of the collateral under our Credit Facility totaled approximately $754.6 million and $714.4 million as of September 30, 2025 and 2024, respectively.
Notes Payable
The indenture relating to the 7.75% Notes due 2028 (the “2028 Notes”), 3.75% Notes due 2027 (the “2027 Notes”), and 5.125% Notes due 2026 (the “2026 Notes”) contains certain covenants, including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Company’s 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 Company’s 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 2028 Notes, the 2027 Notes, and the 2026 Notes, as applicable, and the trustee with audited annual consolidated financial statements and unaudited interim consolidated financial statements.
The indenture relating to the 5.875% Convertible Notes due 2030 (the “2030 Convertible Notes”) similarly contains certain covenants including (i) an inability to incur additional debt or issue additional debt or preferred securities unless the Company’s asset coverage meets the threshold specified in the 1940 Act after such borrowing and (ii) that we will file with the trustee any documents or reports that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act within 15 days after the same are required to be filed with the SEC; provided that any documents filed by us with the SEC via the EDGAR system will be deemed to be filed with the trustee.
The 2030 Convertible Notes, 2028 Notes, 2027 Notes, and 2026 Notes are recorded at the aggregate principal amount, plus applicable premiums, less discounts and offering costs, on our Consolidated Statements of Assets and Liabilities.
2030 Convertible Notes
In September 2025, we completed an offering of $149.5 million aggregate principal amount of 2030 Convertible Notes for net proceeds of approximately $142.8 million after deducting underwriting discounts, commissions and offering expenses borne by us. The 2030 Notes will mature on October 1, 2030, unless earlier converted, redeemed or repurchased. The 2030 Notes bear interest at a rate of 5.875% per year. Interest is payable semi-annually on April 1 and October 1 of each year beginning April 1, 2026 (which equates to approximately $8.8 million per year).
At any time prior to the close of business on the business day immediately preceding October 1, 2030, holders may convert all or any portion of their 2030 Convertible Notes. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company's election. The conversion rate was initially 38.4394 shares of common stock per $1,000 principal amount of 2030 Convertible Notes (equivalent to an initial conversion price of $26.02 per share of common stock). The conversion rate is subject to adjustment upon certain events, such as share splits and combinations, mergers, tender or exchange offers, increases in dividends per share and certain changes in control. In no event will the total number of shares of common stock issuable upon conversion exceed 42.2834 per $1,000 principal amount of the 2030 Convertible Notes. The Company has
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determined that the embedded conversion option in the 2030 Convertible Notes is not required to be separately accounted for as a derivative under GAAP.
The following table summarizes certain key terms related to the convertible features of the 2030 Convertible Notes as of September 30, 2025.

|  | 2030 Convertible Notes
Conversion Premium |  | 10.0 | %
Closing stock price at issuance |  | $ | 23.65 |
Closing stock price date |  | September 9, 2025
Conversion price(A) |  | $ | 25.90 |
Conversion rate (shares per $1,000 principal amount)(A) |  | 38.61 |
Last conversion price calculation date |  | September 22, 2025

(A)Represents conversion price and conversion rate, as applicable, as of September 30, 2025.
We may redeem for cash all or any portion of the 2030 Convertible Notes (subject to the partial redemption limitation), at our option, on a redemption date on or after October 6, 2028 and on or before the 45th scheduled trading day immediately prior to the maturity date if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the 2030 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The issuance of the 2030 Convertible Notes is considered part of the if-converted method for calculation of diluted earnings per share as reflected in Note 8—Net Increase (Decrease) in Net Assets Resulting From Operations per Common Share.
The fair value of the 2030 Convertible Notes, based on the indicative bid price offered by a recognized independent data provider was $146.9 million on September 30, 2025, which we consider to be a Level 2 input within the ASC 820 hierarchy.
2028 Notes
In August 2023, we completed an offering of $57.0 million aggregate principal amount of 2028 Notes for net proceeds of approximately $55.1 million after deducting underwriting discounts, commissions and offering expenses borne by us. On October 15, 2025, we voluntarily redeemed 100% of the issued and outstanding 2028 Notes, following which they were delisted from the Nasdaq Global Select Market. The 2028 Notes would have otherwise matured on September 1, 2028. The 2028 Notes bore interest at a rate of 7.75% per year. Interest was payable quarterly on March 1, June 1, September 1, and December 1 of each year.
The fair value, based on the last quoted closing price, of the 2028 Notes as of September 30, 2025 was $57.3 million. We consider the trading price of the 2028 Notes to be a Level 1 input within the ASC 820 hierarchy.
2027 Notes
In November 2021, we completed an issuance of $50.0 million aggregate principal amount of 2027 Notes for net proceeds of approximately $48.5 million after deducting initial purchasers’ 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 Company’s 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).
In April 2022, pursuant to the registration rights agreement we entered into in connection with the 2027 Notes, we conducted an exchange offer through which we offered to exchange all of our then outstanding 2027 Notes (the “Restricted Notes”) that were issued on November 4, 2021, for an equal aggregate principal amount of our new 3.75% Notes due 2027 (the “Exchange Notes”) that had been registered with the SEC under the Securities Act of 1933, as amended. The terms of
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the Exchange Notes are identical to those of the Restricted Notes, except that the transfer restrictions and registration rights relating to the Restricted Notes do not apply to the Exchange Notes, and the Exchange Notes do not provide for the payment of additional interest in the event of a registration default.
The fair value, based on a DCF analysis, of the 2027 Notes as of September 30, 2025 was $48.0 million. We consider the 2027 Notes to be Level 3 within the ASC 820 fair value hierarchy.
2026 Notes
In December 2020, we completed an offering of $100.0 million aggregate principal amount of the 2026 Notes for net proceeds of approximately $97.7 million after deducting underwriting discounts, commissions and offering expenses borne by us. In March 2021, we completed an offering of an additional $50.0 million aggregate principal amount of the 2026 Notes for net proceeds of approximately $50.6 million after adding premiums and deducting underwriting costs, commissions and offering expenses borne by us. On October 31, 2025, we voluntarily redeemed 100% of the issued and outstanding 2026 Notes. The 2026 Notes would have otherwise matured on January 31, 2026. The 2026 Notes bore interest at a rate of 5.125% per year. Interest was payable semi-annually on January 31 and July 31 of each year.
The fair value, based on a DCF analysis, of the 2026 Notes as of September 30, 2025 was $149.4 million. We consider the 2026 Notes to be Level 3 within the ASC 820 fair value hierarchy.
NOTE 6. CUMULATIVE REDEEMABLE PREFERRED STOCK OFFERING
In May 2023, we entered into a Dealer Manager Agreement pursuant to which we may sell a maximum of 6,000,000 shares of 6.25% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”), par value $0.001 per share, on a “reasonable best efforts” basis through our affiliated dealer manager, Gladstone Securities, at a public offering price of $25.00 per share. Pursuant to the Dealer Manager Agreement, the offering will terminate on the date that is the earlier of (1) December 31, 2026 (unless earlier terminated or extended by our Board of Directors) and (2) the date on which all 6,000,000 shares of Series A Preferred Stock offered are sold. See Note 4, “Related-Party Transactions—Other Transactions,” for a discussion of the commissions and fees to be paid to Gladstone Securities in connection with the Series A Offering.
The Series A Preferred Stock is being sold pursuant to our shelf registration statement on Form N-2 (File No. 333-275934), under the Securities Act of 1933, as amended, and a prospectus supplement, dated November 22, 2024, and a base prospectus dated January 17, 2024. As of September 30, 2025, we had a remaining capacity to sell up to an additional 5,134,548 shares of Series A Preferred Stock under the Dealer Manager Agreement.
During the year ended September 30, 2025, we sold 518,321 shares of Series A Preferred Stock for gross proceeds of $13.0 million and net proceeds of $11.6 million. During the year ended September 30, 2024, we sold 349,931 shares of Series A Preferred Stock for gross proceeds of $8.7 million and net proceeds of $7.8 million. During the year ended September 30, 2025, we redeemed 2,800 shares of Series A Preferred Stock for a total gross cost of $70 thousand. There were no redemptions of Series A Preferred Stock during the year ended September 30, 2024. There were 865,452 and 349,931 shares of Series A Preferred Stock outstanding as of September 30, 2025 and September 30, 2024, respectively.
In accordance with ASC 480-10-S99-3A, the Company’s Series A Preferred Stock has been classified in temporary equity on the Consolidated Statements of Assets and Liabilities. The Series A Preferred Stock is recorded net of offering and issuance costs. Dividend payments to our preferred stockholders are included in preferred stock dividends on our Consolidated Statements of Operations, which totaled $0.9 million and $0.2 million during the years ended September 30, 2025 and 2024, respectively.
We may be required to mandatorily redeem some or all of the shares of our Series A Preferred Stock if we fail to maintain asset coverage of at least the minimum amount required by Sections 18 and 61 of the 1940 Act (which is currently 150%). The asset coverage on our “senior securities that are stock” as of September 30, 2025 was 208.8%, calculated in accordance with Sections 18 and 61 of the 1940 Act.
We paid monthly cash dividends of $0.130208 per share to holders of our Series A Preferred Stock for each month during the year ended September 30, 2025 and each month from January through September during the year ended September 30, 2024.
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NOTE 7. REGISTRATION STATEMENT AND COMMON EQUITY OFFERINGS
Reverse Stock Split
On April 4, 2024, we completed a 1-for-2 Reverse Stock Split of the Company’s issued and outstanding common stock, by the filing of Articles of Amendment with the State Department of Assessments and Taxation of Maryland pursuant to the Maryland General Corporation Law. The Reverse Stock Split became effective at 4:05 p.m. Eastern Time on April 4, 2024. The Reverse Stock Split was effective for purposes of trading as of the opening of business on the Nasdaq Global Select Market on April 5, 2024.
As a result of the Reverse Stock Split, every two shares of common stock issued and outstanding were automatically combined into one new share of common stock. The Reverse Stock Split did not modify any rights or preferences of the shares of common stock. The common stock issued pursuant to the Reverse Stock Split remains fully paid and non-assessable. The Reverse Stock Split did not affect the number of authorized shares of common stock or the par value of the common stock.
Common Stock At-the-Market Offerings
In August 2024, we entered into an equity distribution agreement with Jefferies LLC and Huntington Securities, Inc, (the “2024 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 $150.0 million in an “at the market offering” (the “2024 ATM Program”). During the year ended September 30, 2025, we sold 362,482 shares of our common stock under the 2024 Sales Agreement, at a weighted-average price of $26.44 per share and raised $9.6 million of gross proceeds. Net proceeds, after deducting commissions and offering costs borne by us, were approximately $9.4 million. During the year ended September 30, 2024, we sold 476,138 shares of our common stock under the 2024 Sales Agreement, at a weighted-average price of $23.10 per share and raised $11.0 million of gross proceeds. Net proceeds, after deducting commissions and offering costs borne by us, were approximately $10.8 million. As of September 30, 2025, we had a remaining capacity to sell up to an additional $129.4 million of our common stock under the 2024 ATM Program.
Shelf Registration Statement
Our registration statement, which was declared effective on January 17, 2024, permits us to issue, through one or more transactions, up to an aggregate of $700.0 million in securities, consisting of common stock, preferred stock, subscription rights, debt securities and warrants to purchase common stock or preferred stock. As of September 30, 2025, we had the ability to issue up to $519.3 million in securities under the registration statement.
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NOTE 8. 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, 2025, 2024, and 2023:

| Year Ended September 30,
2025 |  | 2024 |  | 2023
Numerator for basic net increase (decrease) in net assets resulting from operations per common share | $ | 57,191 |  |  | $ | 94,506 |  |  | $ | 42,668 |
Denominator for basic weighted average common shares(A) | 22,357,574 |  | 21,781,074 |  | 18,657,961
Basic net increase (decrease) in net assets resulting from operations per common share(A) | $ | 2.56 |  |  | $ | 4.34 |  |  | $ | 2.29 |
Numerator for basic net increase (decrease) in net assets resulting from operations per common share | $ | 57,191 |  |  | $ | 94,506 |  |  | $ | 42,668 |
Adjustment for interest and amortization on 2030 Convertible Notes(A) | 517 |  |  | — |  |  | — |
Numerator for diluted net increase (decrease) in net assets resulting from operations per common share(A) | $ | 57,708 |  |  | $ | 94,506 |  |  | $ | 42,668 |
Denominator for basic weighted average common shares(A) | 22,357,574 |  | 21,781,074 |  | 18,657,961
Adjustment for dilutive effect of 2030 Convertible Notes | 304,623 |  | — |  |  | — |
Denominator for diluted weighted average common shares(A) | 22,662,197 |  | 21,781,074 |  | 18,657,961
Diluted net increase (decrease) in net assets resulting from operations per common share(A)(B) | $ | 2.55 |  |  | $ | 4.34 |  |  | $ | 2.29 |

(A) Per share data and shares outstanding have been adjusted on a retroactive basis to reflect the Reverse Stock Split effected on April 4, 2024, as described in Note 2— Summary of Significant Accounting Policies.
(B) In applying the if-converted method, conversion is not assumed for purposes of computing diluted earnings per share if the effect would be anti-dilutive. For the years ended September 30, 2025, 2024, and 2023, there was no anti-dilution.
NOTE 9. DISTRIBUTIONS TO COMMON STOCKHOLDERS
To qualify to be taxed as a RIC under Subchapter M of the Code, we must generally distribute to our stockholders, for each taxable year, at least 90% of our taxable ordinary income plus the excess of our net short- term capital gains over net long-term capital losses (“Investment Company Taxable Income”). The amount to be paid out as distributions to our stockholders is determined by our Board of Directors quarterly and is based on management’s estimate of Investment Company Taxable Income. Based on that estimate, our Board of Directors declares three monthly distributions to common stockholders each quarter.
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. 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, 2024, 83.1% of distributions to common stockholders were deemed to be paid from ordinary income and 16.9% were deemed to be paid from capital gains for Form 1099 reporting purposes. For the calendar year ended December 31, 2023, 100.0% of distributions to common stockholders were deemed to be paid from ordinary income for Form 1099 reporting purposes.
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We paid the following monthly distributions to common stockholders for the years ended September 30, 2025 and 2024:

Fiscal Year |  | Declaration Date |  | Record Date |  | Payment Date |  | Distribution per Common Share(A)
2025 |  | October 8, 2024 |  | October 22, 2024 |  | October 31, 2024 |  | $ | 0.165 |
|  | October 8, 2024 |  | November 20, 2024 |  | November 29, 2024 |  | 0.165 |
|  | November 12, 2024 |  | December 4, 2024 |  | December 18, 2024(B) |  | 0.400 |
|  | October 8, 2024 |  | December 20, 2024 |  | December 31, 2024 |  | 0.165 |
|  | January 14, 2025 |  | January 24, 2025 |  | January 31, 2025 |  | 0.165 |
|  | January 14, 2025 |  | February 19, 2025 |  | February 28, 2025 |  | 0.165 |
|  | January 14, 2025 |  | March 19, 2025 |  | March 31, 2025 |  | 0.165 |
|  | April 8, 2025 |  | April 21, 2025 |  | April 30, 2025 |  | 0.165 |
|  | April 8, 2025 |  | May 21, 2025 |  | May 30, 2025 |  | 0.165 |
|  | April 8, 2025 |  | June 20, 2025 |  | June 30, 2025 |  | 0.165 |
|  | July 10, 2025 |  | July 21, 2025 |  | July 31, 2025 |  | 0.165 |
|  | July 10, 2025 |  | August 20, 2025 |  | August 29, 2025 |  | 0.165 |
|  | September 12, 2025 |  | September 23, 2025 |  | September 29, 2025(B) |  | 0.100 |
|  | July 10, 2025 |  | September 22, 2025 |  | September 30, 2025 |  | 0.165 |
|  | Year Ended September 30, 2025: |  | $ | 2.48 |
2024 |  | October 10, 2023 |  | October 20, 2023 |  | October 31, 2023 |  | $ | 0.165 |
|  | October 10, 2023 |  | November 20, 2023 |  | November 30, 2023 |  | 0.165 |
|  | October 10, 2023 |  | December 18, 2023 |  | December 29, 2023 |  | 0.165 |
|  | January 9, 2024 |  | January 23, 2024 |  | January 31, 2024 |  | 0.165 |
|  | January 9, 2024 |  | February 21, 2024 |  | February 29, 2024 |  | 0.165 |
|  | January 9, 2024 |  | March 21, 2024 |  | March 29, 2024 |  | 0.165 |
|  | April 9, 2024 |  | April 19, 2024 |  | April 30, 2024 |  | 0.165 |
|  | April 9, 2024 |  | May 17, 2024 |  | May 31, 2024 |  | 0.165 |
|  | April 9, 2024 |  | June 19, 2024 |  | June 28, 2024 |  | 0.165 |
|  | July 9, 2024 |  | July 22, 2024 |  | July 31, 2024 |  | 0.165 |
|  | July 9, 2024 |  | August 21, 2024 |  | August 30, 2024 |  | 0.165 |
|  | July 9, 2024 |  | September 20, 2024 |  | September 30, 2024 |  | 0.165 |
|  | Year Ended September 30, 2024: |  | $ | 1.98 |

(A) Per share data has been adjusted on a retroactive basis to reflect the Reverse Stock Split effected on April 4, 2024, as described in Note 2— Summary of Significant Accounting Policies.
(B) Represents a supplemental distribution to common stockholders.
Aggregate distributions declared and paid to our common stockholders were approximately $55.5 million and $43.1 million for the years ended September 30, 2025 and 2024, respectively, and were declared based on estimates of Investment Company Taxable Income. For the fiscal years ended September 30, 2025, 2024, and 2023, Investment Company Taxable Income exceeded common stock distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $5.5 million, $6.6 million, and $5.0 million, respectively, of the first common distributions paid to common stockholders in the subsequent fiscal year as having been paid in the prior year. In addition, for the fiscal year ended September 30, 2025, net capital gains exceeded common stock distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $0.7 million of the first common distributions paid to common stockholders in the subsequent fiscal year as having been paid in the prior year. There were no such amounts for the fiscal years ended September 30, 2024 and 2023.
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The components of our net assets on a tax basis were as follows:

| Year Ended September 30,
2025 |  | 2024
Common stock | $ | 45 |  |  | $ | 44 |
Capital in excess of par value | 501,628 |  |  | 492,305 |
Cumulative net unrealized appreciation (depreciation) of investments | (17,490) |  |  | 25,249 |
Undistributed ordinary income | 5,481 |  |  | 6,590 |
Undistributed capital gain | 717 |  |  | — |
Capital loss carryforward | — |  |  | (47,435) |
Other temporary differences | (8,346) |  |  | (5,858) |
Net Assets | $ | 482,035 |  |  | $ | 470,895 |

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.”
For the years ended September 30, 2025 and 2024, we recorded the following adjustments for permanent book-tax differences to reflect tax character. Results of operations, total net assets, and cash flows were not affected by these adjustments.

| Year Ended September 30,
| 2025 |  | 2024
Undistributed net investment income | $ | (946) |  |  | $ | (1,299) |
Accumulated net realized losses | 1,053 |  |  | 1,310 |
Capital in excess of par value | (107) |  |  | (11) |

NOTE 10. FEDERAL AND STATE INCOME TAXES
We intend to continue to maintain our qualifications as a RIC for federal income tax purposes. As a RIC, we are generally not subject to federal income tax on the portion of our taxable income and gains that we distribute to stockholders. To maintain our qualification as a RIC, we must meet certain source-of-income and asset diversification requirements. In addition, to qualify to be taxed as a RIC, we must also meet certain annual stockholder distribution requirements. To satisfy the RIC annual distribution requirement, we must distribute to stockholders at least 90.0% of our Investment Company Taxable Income. Our policy generally is to make distributions to our stockholders in an amount up to 100.0% of our Investment Company Taxable Income. Because we have distributed more than 90.0% of our Investment Company Taxable Income, no income tax provisions have been recorded for the years ended September 30, 2025, 2024, and 2023.
In an effort to limit certain federal excise taxes imposed on RICs, a RIC has to distribute to stockholders, during each calendar year, an amount close to the sum of (1) 98.0% of our ordinary income for the calendar year, (2) 98.2%, of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (3) any ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. We incurred an excise tax of $0.1 million and $0 for the calendar years ended December 31, 2024 and 2023, respectively, which is included in Other general and administrative expenses on the accompanying Consolidated Statement of Operations.
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.
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NOTE 11. 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, 2025 and 2024, 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. Reserves and holdbacks against escrow amounts were $1.5 million and $0.1 million as of September 30, 2025 and September 30, 2024, respectively.
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, 2025 and 2024 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, 2025 and 2024, which are not reflected as liabilities in the accompanying Consolidated Statements of Assets and Liabilities:

| As of September 30,
2025 |  | 2024
Unused line of credit commitments(A) | $ | 54,553 |  |  | $ | 42,601 |
Delayed draw term loans(A) | 11,000 |  |  | 14,150 |
Uncalled capital commitment | 843 |  |  | 843 |
Total | $ | 66,396 |  |  | $ | 57,594 |

(A)There may be specific covenant requirements that temporarily limit a portfolio company’s availability to draw on an unused line of credit commitment or a delayed draw term loan.
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NOTE 12. FINANCIAL HIGHLIGHTS

| As of and for the Year Ended September 30,
2025 |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016
Per Common Share Data(A): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net asset value at beginning of year(B) | $ | 21.18 |  |  | $ | 18.79 |  |  | $ | 18.16 |  |  | $ | 18.56 |  |  | $ | 14.80 |  |  | $ | 16.44 |  |  | $ | 16.64 |  |  | $ | 16.80 |  |  | $ | 17.24 |  |  | $ | 18.12 |
Income from operations(C) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net investment income | 2.02 |  |  | 2.11 |  |  | 2.20 |  |  | 1.88 |  |  | 1.58 |  |  | 1.62 |  |  | 1.68 |  |  | 1.70 |  |  | 1.68 |  |  | 1.68 |
Net realized and unrealized gain (loss) on investments | 0.57 |  |  | 2.05 |  |  | 0.07 |  |  | (0.70) |  |  | 3.58 |  |  | (1.68) |  |  | (0.30) |  |  | (0.32) |  |  | (0.24) |  |  | (0.70) |
Net realized and unrealized gain (loss) on other | 0.01 |  |  | 0.18 |  |  | 0.02 |  |  | (0.02) |  |  | (0.08) |  |  | (0.06) |  |  | (0.02) |  |  | — |  |  | (0.10) |  |  | — |
Preferred stock dividends | (0.04) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total from operations | 2.56 |  |  | 4.34 |  |  | 2.29 |  |  | 1.16 |  |  | 5.08 |  |  | (0.12) |  |  | 1.36 |  |  | 1.38 |  |  | 1.34 |  |  | 0.98 |
Distributions to common stockholders from(C)(D) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net Investment Income | (1.98) |  |  | (1.98) |  |  | (1.89) |  |  | (1.52) |  |  | (1.50) |  |  | (1.60) |  |  | (1.64) |  |  | (1.68) |  |  | (1.68) |  |  | (1.40) |
Realized gains | (0.50) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.28) |
Return of capital | — |  |  | — |  |  | — |  |  | (0.08) |  |  | (0.06) |  |  | (0.02) |  |  | (0.04) |  |  | — |  |  | — |  |  | — |
Total distributions | (2.48) |  |  | (1.98) |  |  | (1.89) |  |  | (1.60) |  |  | (1.56) |  |  | (1.62) |  |  | (1.68) |  |  | (1.68) |  |  | (1.68) |  |  | (1.68) |
Capital share transactions(C) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discounts, commissions, and offering costs | — |  |  | — |  |  | — |  |  | — |  |  | (0.02) |  |  | — |  |  | (0.02) |  |  | (0.02) |  |  | (0.08) |  |  | (0.10) |
Repurchase of common stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.04 |
Net anti-dilutive (dilutive) effect of equity offering(E) | 0.08 |  |  | 0.05 |  |  | 0.26 |  |  | 0.04 |  |  | 0.30 |  |  | 0.10 |  |  | 0.14 |  |  | 0.16 |  |  | (0.04) |  |  | (0.10) |
Total capital share transactions | 0.08 |  |  | 0.05 |  |  | 0.26 |  |  | 0.04 |  |  | 0.28 |  |  | 0.10 |  |  | 0.12 |  |  | 0.14 |  |  | (0.12) |  |  | (0.16) |
Other, net(C)(F) | — |  |  | (0.02) |  |  | (0.03) |  |  | — |  |  | (0.04) |  |  | — |  |  | — |  |  | — |  |  | 0.02 |  |  | (0.02) |
Net asset value at end of period / year(B) | $ | 21.34 |  |  | $ | 21.18 |  |  | $ | 18.79 |  |  | $ | 18.16 |  |  | $ | 18.56 |  |  | $ | 14.80 |  |  | $ | 16.44 |  |  | $ | 16.64 |  |  | $ | 16.80 |  |  | $ | 17.24 |
Per common share market value at beginning of year | $ | 24.05 |  |  | $ | 19.28 |  |  | $ | 16.98 |  |  | $ | 22.60 |  |  | $ | 14.82 |  |  | $ | 19.50 |  |  | $ | 19.00 |  |  | $ | 19.00 |  |  | $ | 16.26 |  |  | $ | 16.26 |
Per common share market value at end of year | 21.87 |  |  | 24.05 |  |  | 19.28 |  |  | 16.98 |  |  | 22.60 |  |  | 14.82 |  |  | 19.50 |  |  | 19.00 |  |  | 19.00 |  |  | 16.26 |
Total return(G) | (0.17) | % |  | 36.61 | % |  | 24.85 | % |  | (19.16) | % |  | 64.93 | % |  | (15.75) | % |  | 12.55 | % |  | 9.53 | % |  | 27.90 | % |  | 11.68 | %
Common stock outstanding at end of year(B) | 22,593,069 |  | 22,230,587 |  | 21,754,449 |  | 17,367,398 |  | 17,152,186 |  | 15,783,425 |  | 15,172,962 |  | 14,250,990 |  | 13,080,342 |  | 11,672,211
Statement of Assets and Liabilities Data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net assets at end of year | $ | 482,035 |  |  | $ | 470,895 |  |  | $ | 408,695 |  |  | $ | 315,487 |  |  | $ | 318,439 |  |  | $ | 233,743 |  |  | $ | 249,330 |  |  | $ | 237,092 |  |  | $ | 219,650 |  |  | $ | 201,207 |
Average net assets(H) | 479,038 |  |  | 431,796 |  |  | 349,518 |  |  | 320,838 |  |  | 275,509 |  |  | 235,266 |  |  | 239,851 |  |  | 234,092 |  |  | 215,421 |  |  | 193,228 |
Senior Securities Data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Borrowings under line of credit, at cost | $ | — |  |  | $ | 70,600 |  |  | $ | 47,800 |  |  | $ | 141,800 |  |  | $ | 50,500 |  |  | $ | 128,000 |  |  | $ | 66,900 |  |  | $ | 110,000 |  |  | $ | 93,000 |  |  | $ | 71,300 |
Preferred Stock | 21,636 |  |  | 8,748 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 51,750 |  |  | 51,750 |  |  | 51,750 |  |  | 61,000 |
Notes Payable | 406,500 |  |  | 257,000 |  |  | 257,000 |  |  | 200,000 |  |  | 188,813 |  |  | 96,313 |  |  | 57,500 |  |  | — |  |  | — |  |  | — |
Ratios/Supplemental Data: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ratio of net expenses to average net assets(I)(J) | 9.17 | % |  | 11.71 | % |  | 12.99 | % |  | 9.62 | % |  | 10.04 | % |  | 9.69 | % |  | 10.61 | % |  | 9.61 | % |  | 8.26 | % |  | 10.16 | %
Ratio of net investment income to average net assets(K) | 9.44 |  |  | 10.67 |  |  | 11.74 |  |  | 10.06 |  |  | 9.48 |  |  | 10.70 |  |  | 10.25 |  |  | 9.86 |  |  | 9.95 |  |  | 10.08 |

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(A)Financial Highlights data presented for the fiscal years ended September 30, 2020, 2019, 2018, 2017, and 2016 are not covered by the report of the independent registered public accounting firm.
(B)Based on actual shares outstanding at the beginning or end of the corresponding year, as appropriate. Per share data and shares outstanding have been adjusted on a retroactive basis to reflect the 1-for-2 Reverse Stock Split effected on April 4, 2024, as described in Note 2— Summary of Significant Accounting Policies.
(C)Based on weighted average basic per share data.
(D)The tax character of distributions is determined based on taxable income calculated in accordance with income tax regulations, which may differ from amounts determined under GAAP.
(E)During the fiscal years ended September 30, 2025, 2024, 2023, 2022, 2021, 2020, 2019, and 2018, the anti-dilution was a result of 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.
(F)Represents the impact of the different share amounts (weighted average shares outstanding during the fiscal year and shares outstanding at the end of the fiscal year) in the per share data calculations and rounding impacts.
(G)Total return equals the change in the ending market value of our common stock from the beginning of the fiscal year, taking into account distributions reinvested in accordance with the terms of our dividend reinvestment plan. Total return does not take into account distributions that may be characterized as a return of capital or any sales load paid by a stockholder. For further information on the estimated character of our distributions to common stockholders, refer to Note 9—Distributions to Common Stockholders.
(H)Computed using the average of the balance of net assets at the end of each month of the fiscal year.
(I)Ratio of net expenses to average net assets is computed using total expenses, net of credits from the Adviser, to the base management, loan servicing, and incentive fees.
(J)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 12.72%, 14.53%, 16.31%, 13.13%, 13.17%, 14.36%, 14.18%, 13.12%, 12.14%, and 13.40% for the fiscal years ended September 30, 2025, 2024, 2023, 2022, 2021, 2020, 2019, 2018, 2017, and 2016, respectively.
(K)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 5.93%, 7.90%, 8.49%, 6.61%, 6.40%, 6.11%, 6.74%, 6.41%, 6.13%, and 6.90% for the fiscal years ended September 30, 2025, 2024, 2023, 2022, 2021, 2020, 2019, 2018, 2017, and 2016, respectively.
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NOTE 13. UNCONSOLIDATED SIGNIFICANT SUBSIDIARIES
In accordance with the SEC’s Regulation S-X, we do not consolidate portfolio company investments. Further, in accordance with ASC 946, we are precluded from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries.
We did not have any unconsolidated subsidiaries that met any of the significance conditions under Rule l-02(w)(2) of the SEC’s Regulation S-X as of or during at least one of the years ended September 30, 2025, 2024, and 2023.
NOTE 14. SUBSEQUENT EVENTS
Portfolio Activity
In October 2025, we invested an additional $11.0 million in Total Access Elevator, LLC (“Total Access”), an existing portfolio company, through secured first lien debt. We also extended Total Access a new $9.85 million delayed draw term loan commitment, which was unfunded at close.
In October 2025, our $28.1 million debt investment in Leadpoint Business Services, LLC paid off at par. We also received a $0.3 million prepayment penalty in conjunction with the payoff.
In October 2025, the sale of our remaining common equity investment in Sokol was completed, representing a return of our equity cost basis of $0.5 million and a realized gain of approximately $1.8 million.
In October 2025, our $17.8 million debt investment in Sea Link International IRB, Inc. (“Sea Link”) paid off at par. We also received a $0.2 million exit fee in conjunction with the payoff. We continue to hold common and preferred equity in Sea Link.
In November 2025, we invested $15.0 million in Turn Key Health Clinics, LLC (“Turn Key”), an existing portfolio company, through secured first lien debt. We also increased our existing line of credit commitment to Turn Key by $1.0 million to $5.0 million, which was unfunded at close.
In November 2025, we invested $26.6 million in Sicilian Oven Restaurants LLC through secured first lien debt and preferred equity.
Debt Redemption
On October 15, 2025, we voluntarily redeemed the 2028 Notes with an aggregate principal amount outstanding of $57.0 million. On October 31, 2025, we voluntarily redeemed the 2026 Notes with an aggregate principal amount outstanding of $150.0 million.
Distributions
On October 14, 2025, our Board of Directors declared the following distributions to common and preferred stockholders:

Record Date |  | Payment Date |  | Distribution per Common Share
October 24, 2025 |  | October 31, 2025 |  | $ | 0.15 |
November 17, 2025 |  | November 26, 2025 |  | 0.15 |
December 22, 2025 |  | December 31, 2025 |  | 0.15 |
|  | Total for the Quarter |  | $ | 0.45 |

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Record Date |  | Payment Date |  | Distribution per Series A Preferred Stock
October 27, 2025 |  | November 5, 2025 |  | $ | 0.130208 |
November 25, 2025 |  | December 5, 2025 |  | 0.130208 |
December 29, 2025 |  | January 5, 2026 |  | 0.130208 |
|  | Total for the Quarter |  | $ | 0.390624 |

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
a) Disclosure Controls and Procedures
As of September 30, 2025 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness and design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective in timely alerting management, including the Chief Executive Officer and Chief Financial Officer, of material information about us required to be included in periodic SEC filings. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
b) Management’s Annual Report on Internal Control Over Financial Reporting
Refer to the Management’s Annual Report on Internal Control over Financial Reporting located in Item 8 of this Form 10-K.
c) Attestation Report of the Registered Public Accounting Firm
Not Applicable.
d) Change in Internal Control over Financial Reporting
There were no changes in internal controls for the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
During the three months ended September 30, 2025, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) (“Rule 10b5-1 trading arrangement”) or any “non-Rule 10b5-1 trading arrangement.” In addition, during the three months ended September 30, 2025, we did not adopt or terminate any Rule 10b5-1 trading arrangement.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
We will file a definitive Proxy Statement for our 2026 Annual Meeting of Stockholders (the “2026 Proxy Statement”) with the SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of the 2026 Proxy Statement that specifically address the items set forth herein are incorporated herein by reference.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 is hereby incorporated by reference from our 2026 Proxy Statement.
We have adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) that applies to all of our officers and directors and to the employees of our Adviser and our Administrator. The Code of Conduct is available in the Investors section of our website under “Governance – Governance Documents” at www.GladstoneCapital.com.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is hereby incorporated by reference from our 2026 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 is hereby incorporated by reference from our 2026 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Item 13 is hereby incorporated by reference from our 2026 Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 is hereby incorporated by reference from our 2026 Proxy Statement.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
a.DOCUMENTS FILED AS PART OF THIS ANNUAL REPORT ON FORM 10-K
1.The following financial statements are filed herewith:

Management’s Annual Report on Internal Controls over Financial Reporting | 78
Report of Independent Registered Public Accounting Firm | 79
Consolidated Statements of Assets and Liabilities as of September 30, 202 5 and 2024 | 81
Consolidated Statements of Operations for the years ended September 30, 202 5, 202 4 and 2023 | 82
Consolidated Statements of Changes in Net Assets for the years ended September 30, 202 5, 202 4 and 2023 | 84
Consolidated Statements of Cash Flows for the years ended September 30, 202 5, 202 4 and 2023 | 85
Consolidated Schedules of Investments as of September 30, 202 5 and 2024 | 86
Notes to Consolidated Financial Statements | 98

2.The following financial statement schedule is filed herewith:

Schedule 12-14 Investments in and Advances to Affiliates as of September 30, 202 5 and 2024 | 137

No other financial statement schedules are filed herewith because (1) such schedules are not required or (2) the information has been presented in the aforementioned financial statements.
3.Exhibits
The following exhibits are filed as part of this report or are hereby incorporated by reference to exhibits previously filed with the SEC:

3.1 | Articles of Amendment and Restatement to the Articles of Incorporation, incorporated by reference to Exhibit 99.a.2 to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-63700), filed July 27, 2001.
3.2 | Articles Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, including Appendix A thereto relating to the Term Preferred Shares, 7.125% Series 2016, incorporated by reference to Exhibit 2.a.2 to Post-Effective Amendment No. 5 to the Registration Statement on Form N-2 (File No. 333-162592), filed October 31, 2011.
3.3 | Certificate of Correction to Articles Supplementary Establishing and Fixing the Rights and Preferences of Term Preferred Shares, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00237), filed October 29, 2015.
3.4 | Articles Supplementary, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00237), filed September 21, 2017.
3.5 | Articles Supplementary for 6.25% Series A Cumulative Redeemable Preferred Stock, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00237), filed on June 1, 2023.
3.6 | Articles of Amendment to the Articles of Incorporation, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00237), filed April 5, 2024.
3.7 | Articles of Amendment to the Articles of Incorporation, incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K (File No. 814-00237), filed April 5, 2024.
3.8 | Bylaws, incorporated by reference to Exhibit 99.b to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-63700), filed July 27, 2001.
3.9 | Amendment to Bylaws, incorporated by reference to Exhibit 3.3 to the Quarterly Report on Form 10-Q (File No. 814-00237), filed February 17, 2004.

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3.10 | Second Amendment to Bylaws, incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K (File No. 814-00237), filed July 10, 2007.
3.11 | Third Amendment to Bylaws, incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K (File No. 814-00237), filed June 10, 2011.
3.12 | Fourth Amendment to Bylaws, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00237), filed November 29, 2016.
3.13 | Fifth Amendment to Bylaws, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 814-00237), filed October 10, 2023.
4.1 | Form of Certificate for Common Stock, incorporated by reference to Exhibit 99.d.2 to Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-63700), filed August 23, 2001.
4.2 | Form of Certificate for 6.25% Series A Cumulative Redeemable Preferred Stock, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 814-00237), filed on June 1, 2023.
4.3 | Indenture between the Registrant and U.S. Bank National Association, dated as of November 6, 2018, incorporated by reference to Exhibit 2.d.l0 to Post-Effective Amendment No. 7 to the Registration Statement on Form N-2 (File No. 333-208637), filed November 6, 2018.
4.4 | Fourth Supplemental Indenture between Gladstone Capital Corporation and U.S. Bank National Association, dated as of November 4, 2021, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 814-00237), filed November 4, 2021.
4.5 | Sixth Supplemental Indenture between Gladstone Capital Corporation and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), dated as of September 12, 2025, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 814-00237), filed on September 12, 2025.
4.6* | Description of Securities
10.1 | Stock Transfer Agency Agreement between the Registrant and The Bank of New York, incorporated by reference to Exhibit 99.k.1 to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-63700), filed July 27, 2001.
10.2 | Custody Agreement between the Registrant and The Bank of New York, dated as of May 5, 2006, incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q (File No. 814-00237), filed August 1, 2006.
10.3 | Administration Agreement between the Registrant and Gladstone Administration, LLC, dated as of October 1, 2006, incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K (File No. 814-00237), filed October 5, 2006.
10.4 | Custodial Agreement, incorporated by reference to Exhibit 2.j.2 to Post-Effective Amendment No. 1 to Form N-2 (File No. 333-185191), filed December 23, 2013.
10.5 | Amendment No. 1 to Custodial Agreement, incorporated by reference to Exhibit 2.j.3 to Post-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-185191), filed December 23, 2013.
10.6 | Amendment No. 2 to Custodial Agreement, incorporated by reference to Exhibit 2.j.4 to Post-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-185191), filed December 23, 2013.
10.7 | Fifth Amended and Restated Investment Advisory and Management Agreement between the Registrant and Gladstone Management Corporation, dated as of January 24, 2 025, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00237), filed on January 24, 2025.
10.8 | Sixth Amended and Restated Credit Agreement dated as of May 13, 2021 by and among Gladstone Business Loan, LLC as Borrower, Gladstone Management Corporation as Servicer, KeyBank National Association, as Administrative Agent and the financial institutions from the time to time party thereto, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00237), filed May 13, 2021.

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10.9 | Amendment No. 1 to the Sixth Amended and Restated Credit Agreement dated as of September 12, 2022 by and among Gladstone Business Loan, LLC as Borrower, Gladstone Management Corporation as Servicer, KeyBank National Association, as Administrative Agent and the financial institutions from the time to time party thereto, incorporated by reference to Exhibit 10.9 to the Annual Report on Form 10-K (File No. 814-00237), filed November 11, 2022.
10.10 | Amendment No. 2 to the Sixth Amended and Restated Credit Agreement dated as of September 20, 2022 by and among Gladstone Business Loan, LLC as Borrower, Gladstone Management Corporation as Servicer, KeyBank National Association, as Administrative Agent and the financial institutions from the time to time party thereto, incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K (File No. 814-00237), filed November 11, 2022.
10.11 | Amendment No. 3 to the Sixth Amended and Restated Credit Agreement dated as of October 31, 2022 by and among Gladstone Business Loan, LLC as Borrower, Gladstone Management Corporation as Servicer, KeyBank National Association, as Administrative Agent and the financial institutions from the time to time party thereto, incorporated by reference to Exhibit 10.11 to the Annual Report on Form 10-K (File No. 814-00237), filed November 11, 2022.
10.12 | Amendment No. 4 to Sixth Amended and Restated Credit Agreement, dated as of June 16, 2023 by and among Gladstone Business Loan, LLC, as Borrower, Gladstone Management Corporation, as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00237), filed on June 22, 2023.
10.13 | Amendment No. 5 to the Sixth Amended and Restated Credit Agreement dated as of December 13, 2023 by and among Gladstone Business Loan, LLC as Borrower, Gladstone Management Corporation as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto, incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q (File No. 814-00237), filed February 5, 2024.
10.14 | Amendment No. 6 to Sixth Amended and Restated Credit Agreement dated as of March 28, 2024 by and among Gladstone Business Loan, LLC as Borrower, Gladstone Management Corporation as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto, incorporated by reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q (File No. 814-00237), filed May 1, 2024.
10.15 | Amendment No. 7 to Sixth Amended and Restated Credit Agreement dated as of June 27, 2024 by and among Gladstone Business Loan, LLC as Borrower, Gladstone Management Corporation as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00237), filed June 27, 2024.
10.16 | Amendment No. 8 to Sixth Amended and Restated Credit Agreement dated as of August 12, 2024 by and among Gladstone Business Loan, LLC as Borrower, Gladstone Management Corporation as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00237), filed August 12, 2024.
10.17 | Amendment No. 9 to Sixth Amended and Restated Credit Agreement, dated as of June 23, 2025 by and among Gladstone Business Loan, LLC, as Borrower, Gladstone Management Corporation, as Servicer, KeyBank National Association, as administrative agent, swingline lender, managing agent and lead arranger and certain other lenders party thereto, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 814-00237), filed June 25, 2025.
14* | Code of Ethics
19 | Insider Trading Policy For Gladstone Capital Corporation, incorporated by reference to Exhibit 14 filed herewith.
21* | Subsidiaries of the Registrant.
23.1* | Consent of PricewaterhouseCoopers LLP.
31.1* | Certification of Chief Executive Officer pursuant to section 302 of The Sarbanes-Oxley Act of 2002.

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31.2* | Certification of Chief Financial Officer pursuant to section 302 of The Sarbanes-Oxley Act of 2002.
32.1** | Certification of Chief Executive Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.
32.2** | Certification of Chief Financial Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.
97.1* | Clawback Policy
99.1* | Estimated Value methodology for Series A Cumulative Redeemable Preferred Stock at September 30, 20 25
101.INS | XBRL Instance Document
101.SCH | XBRL Taxonomy Extension Schema Document
101.LAB | XBRL Taxonomy Extension Label Linkbase Document
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF | XBRL Definition Linkbase
104 | Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)

* Filed herewith
** Furnished herewith
Attached as Exhibit 101 to this Annual Report on Form 10-K are the following materials, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) the Consolidated Statements of Assets and Liabilities as of September 30, 2025 and 2024, (ii) the Consolidated Statements of Operations for the years ended September 30, 2025, 2024 and 2023, (iii) the Consolidated Statements of Changes in Net Assets for the years ended September 30, 2025, 2024 and 2023, (iv) the Consolidated Statements of Cash Flows for the years ended September 30, 2025, 2024 and 2023, (v) the Consolidated Schedules of Investments as of September 30, 2025 and 2024 and (vi) the Notes to Consolidated Financial Statements.
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| GLADSTONE CAPITAL CORPORATION
Date: November 17, 2025 | By: | /s/ NICOLE SCHALTENBRAND
|  | Nicole Schaltenbrand
|  | Chief Financial Officer and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: November 17, 2025 | By: | /s/ DAVID GLADSTONE
|  | David Gladstone
|  | Chief Executive Officer and Chairman of the Board of Directors (principal executive officer)
Date: November 17, 2025 | By: | /s/ NICOLE SCHALTENBRAND
|  | Nicole Schaltenbrand
|  | Chief Financial Officer and Treasurer (principal financial and accounting officer)
Date: November 17, 2025 | By: | /s/ ANTHONY W. PARKER
|  | Anthony W. Parker
|  | Director
Date: November 17, 2025 | By: | /s/ JOHN OUTLAND
|  | John Outland
|  | Director
Date: November 17, 2025 | By: | /s/ MICHELA A. ENGLISH
|  | Michela A. English
|  | Director
Date: November 17, 2025 | By: | /s/ WALTER H. WILKINSON, JR.
|  | Walter H. Wilkinson, Jr.
|  | Director
Date: November 17, 2025 | By: | /s/ PAULA NOVARA
|  | Paula Novara
|  | Director
Date: November 17, 2025 | By: | /s/ KATHARINE CORNELL GORKA
|  | Katharine Cornell Gorka
|  | Director

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SCHEDULE 12-14
GLADSTONE CAPITAL CORPORATION
INVESTMENTS IN AND ADVANCES TO AFFILIATES
(AMOUNTS IN THOUSANDS)

Company and Investment(A)(B)(I)(L)(M) |  | Principal/ Shares/Units(K) |  | Net Realized Gain (Loss) for Period |  | Amount of Investment Income(C) |  | Value as of September 30, 2024 |  | Gross Additions(D) |  | Gross Reductions(E) |  | Net Unrealized Appreciation (Depreciation) |  | Value as of September 30, 2025 |  |
AFFILIATE INVESTMENTS—11.2% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured First Lien Debt—7.2% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Diversified/Conglomerate Manufacturing—2.6% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Edge Adhesives Holdings, Inc.—Term Debt (S + 5.5%. 9.6% Cash, Due 8/2026) |  | $ | 6,140 |  |  | — |  |  | — |  |  | $ | 380 |  |  | — |  |  | — |  |  | $ | 133 |  |  | $ | 513 |  |  |
Zero Case Holding Inc. – Line of Credit, $4,000 available (S + 6.4%, 10.5% Cash, Due 7/2030) |  | — |  |  | — |  |  | 4 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Zero Case Holding Inc. – Term Debt (S + 6.4%, 10.5% Cash, Due 7/2030) |  | 12,000 |  |  | — |  |  | 232 |  |  | — |  |  | 12,000 |  |  | — |  |  | — |  |  | 12,000 |  |  |
|  |  |  | $ | — |  | — |  | $ | 236 |  | — |  | $ | 380 |  | — |  | $ | 12,000 |  | — |  | $ | — |  | — |  | $ | 133 |  | — |  | $ | 12,513 |  |  |
Personal, Food, and Miscellaneous Services – 4.6% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Snif-Snax, LLC – Term Debt (S + 6.7%, 10.8% Cash, Due 7/2030) |  | 22,200 |  |  | — |  |  | 487 |  |  | — |  |  | 22,200 |  |  | — |  |  | — |  |  | 22,200 |  |  |
|  |  |  | $ | — |  |  | $ | 723 |  |  | $ | 380 |  |  | $ | 34,200 |  |  | $ | — |  |  | $ | 133 |  |  | $ | 34,713 |  |  |
Preferred Equity —2.0% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Diversified/Conglomerate Manufacturing —0.0% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Edge Adhesives Holdings, Inc.—Preferred Stock |  | 5,466 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Diversified/Conglomerate Service—1.4% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Encore Dredging Holdings, LLC—Preferred Stock |  | 3,840,000 |  |  | — |  |  | 40 |  |  | 3,168 |  |  | — |  |  | — |  |  | 3,746 |  |  | 6,914 |  |  |
Personal, Food, and Miscellaneous Services – 0.3% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Snif-Snax, LLC – Preferred Stock |  | 1,500,000 |  |  | — |  |  | — |  |  | — |  |  | 1,500 |  |  | — |  |  | — |  |  | 1,500 |  |  |
Personal and Non-Durable Consumer Products (Manufacturing Only)—0.2% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Canopy Safety Brands, LLC—Preferred Stock |  | 500,000 |  |  | — |  |  | — |  |  | 931 |  |  | — |  |  | — |  |  | 75 |  |  | 1,006 |  |  |
Total Preferred Equity |  |  |  | $ | — |  |  | $ | 40 |  |  | $ | 4,099 |  |  | $ | 1,500 |  |  | $ | — |  |  | $ | 3,821 |  |  | $ | 9,420 |  |  |

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Company and Investment(A)(B)(I)(L)(M) |  | Principal/ Shares/Units(K) |  | Net Realized Gain (Loss) for Period |  | Amount of Investment Income(C) |  | Value as of September 30, 2024 |  | Gross Additions(D) |  | Gross Reductions(E) |  | Net Unrealized Appreciation (Depreciation) |  | Value as of September 30, 2025 |  |
Common Equity—2.0% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Diversified/Conglomerate Manufacturing – 0.2% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Zero Case Holding Inc. – Common Stock |  | 1,000 |  |  | — |  |  | — |  |  | — |  |  | 1,000 |  |  | — |  |  | — |  |  | 1,000 |  |  |
Finance – 1.1% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gladstone Alternative Income Fund – Common Stock |  | 500,000 |  |  | — |  |  | 191 |  |  | — |  |  | 5,000 |  |  | — |  |  | 75 |  |  | 5,075 |  |  |
Personal and Non-Durable Consumer Products (Manufacturing Only)—0.8% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Canopy Safety Brands, LLC—Common Stock |  | 1,170,370 |  |  | — |  |  | — |  |  | $ | 2,959 |  |  | — |  |  | — |  |  | $ | 744 |  |  | $ | 3,703 |  |  |
Total Common Equity |  |  |  | $ | — |  |  | $ | 191 |  |  | $ | 2,959 |  |  | $ | 6,000 |  |  | $ | — |  |  | $ | 819 |  |  | $ | 9,778 |  |  |
TOTAL AFFILIATE INVESTMENTS |  |  |  | $ | — |  |  | $ | 954 |  |  | $ | 7,438 |  |  | $ | 41,700 |  |  | $ | — |  |  | $ | 4,773 |  |  | $ | 53,911 |  |  |
CONTROL INVESTMENTS—22.6% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured First Lien Debt—14.5% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beverage, Food, and Tobacco – 2.6% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Eegee Acquisition Corp. – Line of Credit, $3,250 available (S + 7.0%, 11.1% Cash, Due 4/2028) |  | 12,750 |  |  | $ | — |  |  | $ | 646 |  |  | $ | — |  |  | $ | 12,750 |  |  | $ | — |  |  | $ | — |  |  | $ | 12,750 |  |  |
Diversified/Conglomerate Manufacturing – 4.7% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Engineering Manufacturing Technologies, LLC – Line of Credit, $1,900 available (S + 8.3%, 12.4% Cash, Due 10/2026) |  | 1,100 |  |  | — |  |  | 62 |  |  | — |  |  | 1,100 |  |  | — |  |  | (266) |  |  | 834 |  |  |
Engineering Manufacturing Technologies, LLC – Term Debt (S + 8.3%, 8.0% Cash, 4.4% PIK, Due 10/2026) |  | 23,163 |  |  | — |  |  | 1,257 |  |  | — |  |  | 23,163 |  |  | — |  |  | (5,602) |  |  | 17,561 |  |  |
Lonestar EMS, LLC – Term Debt (12.0% Cash, Due 6/2027)(F) |  | 4,450 |  |  | — |  |  | 588 |  |  | 4,200 |  |  | 273 |  |  | — |  |  | (23) |  |  | 4,450 |  |  |
|  |  |  | $ | — |  |  | $ | 1,907 |  |  | $ | 4,200 |  |  | $ | 24,536 |  |  | $ | — |  |  | $ | (5,891) |  |  | $ | 22,845 |  |  |
Healthcare, Education, and Childcare – 5.2% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Technical Resource Management, LLC – Line of Credit, $0 available (S + 10.5%, 10.1% Cash, 4.5% PIK, Due 4/2028) |  | 3,076 |  |  | — |  |  | 230 |  |  | — |  |  | 3,076 |  |  | — |  |  | (353) |  |  | 2,723 |  |  |
Technical Resource Management, LLC – Line of Credit, $400 available (S + 10.5%, 10.1% Cash, 4.5% PIK, Due 4/2028) |  | 1,214 |  |  | — |  |  | 60 |  |  | — |  |  | 1,214 |  |  | — |  |  | (140) |  |  | 1,074 |  |  |
Technical Resource Management, LLC – Term Debt (S + 10.5%, 10.1% Cash, 4.5% PIK, Due 4/2028) |  | 24,111 |  |  | — |  |  | 1,800 |  |  | — |  |  | 24,111 |  |  | — |  |  | (2,764) |  |  | 21,347 |  |  |
|  |  |  | $ | — |  |  | $ | 2,090 |  |  | $ | — |  |  | $ | 28,401 |  |  | $ | — |  |  | $ | (3,257) |  |  | $ | 25,144 |  |  |
Personal and Non-Durable Consumer Products (Manufacturing Only) — 1.9% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
WB Xcel Holdings, LLC—Line of Credit, $0 available (S + 10.5%, 14.6% Cash, Due 11/2026) |  | 5,150 |  |  | — |  |  | $ | — |  |  | $ | 3,171 |  |  | $ | 400 |  |  | — |  |  | $ | (411) |  |  | $ | 3,160 |  |  |
WB Xcel Holdings, LLC—Term Loan (S + 10.5%, 14.6% Cash, Due 11/2026) |  | 9,775 |  |  | — |  |  | — |  |  | 6,525 |  |  | — |  |  | $ | — |  |  | (528) |  |  | 5,997 |  |  |
|  |  |  | $ | — |  |  | $ | — |  |  | $ | 9,696 |  |  | $ | 400 |  |  | $ | — |  |  | $ | (939) |  |  | $ | 9,157 |  |  |

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Company and Investment(A)(B)(I)(L)(M) |  | Principal/ Shares/Units(K) |  | Net Realized Gain (Loss) for Period |  | Amount of Investment Income(C) |  | Value as of September 30, 2024 |  | Gross Additions(D) |  | Gross Reductions(E) |  | Net Unrealized Appreciation (Depreciation) |  | Value as of September 30, 2025 |  |
Printing and Publishing — 0.0% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
TNCP Intermediate HoldCo, LLC—-Line of Credit, $2,000 available (11.0% Cash, Due 10/2027)(F) |  | — |  |  | — |  |  | $ | 70 |  |  | $ | — |  |  | — |  |  | $ | — |  |  | — |  |  | — |  |  |
Total Secured First Lien Debt |  |  |  | $ | — |  |  | $ | 4,713 |  |  | $ | 13,896 |  |  | $ | 66,087 |  |  | $ | — |  |  | $ | (10,087) |  |  | $ | 69,896 |  |  |
Secured Second Lien Debt—3.9% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Automobile—1.8% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Defiance Integrated Technologies, Inc.—Term Debt (S + 9.6%, 13.7% Cash, Due 1/2027) |  | 8,792 |  |  | — |  |  | $ | 1,236 |  |  | $ | 8,547 |  |  | $ | 325 |  |  | $ | (80) |  |  | — |  |  | $ | 8,792 |  |  |
Diversified/Conglomerate Service – 2.1% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Alsay Incorporated – Term Debt (12.8% Cash, Due 12/2030)(F) |  | 10,000 |  |  | — |  |  | 319 |  |  | — |  |  | 10,000 |  |  | — |  |  | — |  |  | 10,000 |  |  |
Total Secured Second Lien Debt |  |  |  | $ | — |  |  | $ | 1,555 |  |  | $ | 8,547 |  |  | $ | 10,325 |  |  | $ | (80) |  |  | $ | — |  |  | $ | 18,792 |  |  |
Unsecured Debt—0.1% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Healthcare, Education, and Childcare – 0.1% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Technical Resource Management, LLC – Term Debt (14.0% PIK, Due 10/2028)(F) |  | 357 |  |  | $ | — |  |  | $ | 24 |  |  | $ | — |  |  | $ | 357 |  |  | $ | — |  |  | $ | (41) |  |  | $ | 316 |  |  |
Preferred Equity—1.0% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Diversified/Conglomerate Service – 1.0% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Alsay Incorporated – Preferred Stock |  | 5,000,000 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 5,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,000 |  |  |
Personal and Non-Durable Consumer Products (Manufacturing Only) —0.0% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
WB Xcel Holdings, LLC - Preferred Stock |  | 333 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Total Preferred Equity |  |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 5,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,000 |  |  |
Common Equity—3.1% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Automobile– 0.0% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Defiance Integrated Technologies, Inc.—Common Stock |  | 33,321 |  |  | — |  |  | — |  |  | 2,949 |  |  | — |  |  | — |  |  | $ | (2,949) |  |  | — |  |  |
Beverage, Food, and Tobacco – 1.0% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Eegee Acquisition Corp. – Common Stock |  | 1,000 |  |  | — |  |  | — |  |  | — |  |  | 8,500 |  |  | — |  |  | (3,642) |  |  | 4,858 |  |  |
Diversified/Conglomerate Manufacturing—0.9% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Engineering Manufacturing Technologies, LLC – Common Stock |  | 16,000 |  |  | — |  |  | — |  |  | — |  |  | 3,000 |  |  | — |  |  | (3,000) |  |  | — |  |  |
Lonestar EMS, LLC - Common Units |  | 100 | % |  | — |  |  | — |  |  | 8,214 |  |  | — |  |  | — |  |  | (3,989) |  |  | 4,225 |  |  |
|  |  |  | $ | — |  |  | $ | — |  |  | $ | 8,214 |  |  | $ | 3,000 |  |  | $ | — |  |  | $ | (6,989) |  |  | $ | 4,225 |  |  |
Healthcare, Education, and Childcare – 0.0% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Technical Resource Management, LLC – Common Stock |  | 2,000,000 |  |  | — |  |  | — |  |  | — |  |  | 2,000 |  |  | — |  |  | (2,000) |  |  | — |  |  |
Technical Resource Management, LLC – Common Warrants |  | 4,558,041 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
|  |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,000 |  |  | $ | — |  |  | $ | (2,000) |  |  | $ | — |  |  |
Personal and Non-Durable Consumer Products (Manufacturing Only) —0.0% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
WB Xcel Holdings, LLC - Common Warrant |  | 12,340 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |

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Company and Investment(A)(B)(I)(L)(M) |  | Principal/ Shares/Units(K) |  | Net Realized Gain (Loss) for Period |  | Amount of Investment Income(C) |  | Value as of September 30, 2024 |  | Gross Additions(D) |  | Gross Reductions(E) |  | Net Unrealized Appreciation (Depreciation) |  | Value as of September 30, 2025 |  |
Printing and Publishing—1.2% |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
TNCP Intermediate HoldCo, LLC—Common Equity Units |  | 790,000 |  |  | — |  |  | — |  |  | 4,312 |  |  | — |  |  | — |  |  | 1,497 |  |  | 5,809 |  |  |
Total Common Equity |  |  |  | $ | — |  |  | $ | — |  |  | $ | 15,475 |  |  | $ | 13,500 |  |  | $ | — |  |  | $ | (14,083) |  |  | $ | 14,892 |  |  |
TOTAL CONTROL INVESTMENTS |  |  |  | $ | — |  |  | $ | 6,292 |  |  | $ | 37,918 |  |  | $ | 95,269 |  |  | $ | (80) |  |  | $ | (24,211) |  |  | $ | 108,896 |  |  |

(A)Certain of the securities listed in this schedule are issued by affiliate(s) of the indicated portfolio company.
(B)Common stock, warrants, options, membership units and, in some cases, preferred stock are generally non-income producing and restricted.
(C)Represents the total amount of interest, dividends and other income credited to investment income for the portion of the fiscal year an investment was a control or affiliate investment, as appropriate.
(D)Gross additions include increases in investments resulting from new portfolio investments, paid-in-kind interest or dividends, the amortization of discounts and fees, and the exchange of one or more existing securities for one or more new securities.
(E)Gross reductions include decreases in investments resulting from principal collections related to investment repayments or sales, the amortization of premiums and acquisition costs, and the exchange of one or more existing securities for one or more new securities.
(F)Debt security has a fixed interest rate.
(G)Reserved.
(H)Reserved.
(I)Interest rate percentages represent cash interest rates in effect at September 30, 2025, and due dates represent the contractual maturity date. Unless indicated otherwise, all cash interest rates are indexed to one-month Secured Overnight Financing Rate (“SOFR” or “S”), which was 4.13% as of September 30, 2025. If applicable, paid-in-kind interest rates are noted separately from the cash interest rate. Certain securities are subject to an interest rate floor. The cash interest rate is the greater of the floor or SOFR plus a spread. Due dates represent the contractual maturity date.
(J)Reserved.
(K)Represents the principal balance for debt investments and the number of shares/units held for equity investments as of September 30, 2025. Warrants are represented as a percentage of ownership, as applicable.
(L)Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the FASB Accounting Standard Codification Topic 820, “Fair Value Measurements and Disclosures” fair value hierarchy. Refer to Note 3—Investments in the accompanying Notes to Consolidated Financial Statements for additional information.
(M)Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of September 30, 2025.
** Information related to the amount of equity in the net profit and loss for the year for the investments listed has not been included in this schedule. This information is not considered to be meaningful due to the complex capital structures of the portfolio companies, with different classes of equity securities outstanding with different preferences in liquidation. These investments are not consolidated, nor are they accounted for under the equity method of accounting.
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