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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2022


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: 814-00704

GLADSTONE INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)


DELAWARE						83-0423116
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1521 WESTBRANCH DRIVE, SUITE 100						22102
MCLEAN, VIRGINIA						(Zip Code)
(Address of principal executive offices)

(703) 287-5800

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year,

if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $0.001 par value per share

GAIN

The Nasdaq Stock Market LLC

5.00% Notes due 2026

GAINN

The Nasdaq Stock Market LLC

4.875% Notes due 2028

GAINZ

The Nasdaq Stock Market LLC

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of the issuer’s Common Stock, $0.001 par value per share, outstanding as of August 2, 2022 was 33,205,023.

Table of Contents

GLADSTONE INVESTMENT CORPORATION

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION:

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Assets and Liabilities as of June 30, 2022 and March 31, 2022	2

	Consolidated Statements of Operations for the three months ended June 30, 2022 and 2021	3
	Consolidated Statements of Changes in Net Assets for the three months ended June 30, 2022 and 2021	4
	Consolidated Statements of Cash Flows for the three months ended June 30, 2022 and 2021	5
	Consolidated Schedules of Investments as of June 30, 2022 and March 31, 2022	6
	Notes to Consolidated Financial Statements	16

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Overview	41
	Results of Operations	45
	Liquidity and Capital Resources	49

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57

Item 4.	Controls and Procedures	57

PART II.	OTHER INFORMATION:

Item 1.	Legal Proceedings	58

Item 1A.	Risk Factors	58

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 3.	Defaults Upon Senior Securities	58

Item 4.	Mine Safety Disclosures	58

Item 5.	Other Information	58

Item 6.	Exhibits	58

SIGNATURES		59

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)


	June 30, 2022		March 31, 2022
ASSETS
Investments at fair value
Non-Control/Non-Affiliate investments (Cost of $342,578 and $388,773, respectively)	$	410,917	$	442,124
Affiliate investments (Cost of $279,955 and $279,855, respectively)	256,883		271,559
Control investments (Cost of $21,620 and $620, respectively)	21,713		713
Cash and cash equivalents	43,880		14,190
Restricted cash and cash equivalents	396		305
Interest receivable	2,156		3,042
Due from administrative agent	4,712		6,406
Deferred financing costs, net	835		895
Other assets, net	1,404		1,178
TOTAL ASSETS	$	742,896	$	740,412

LIABILITIES
Borrowings:
Line of credit at fair value (Cost of $0 and $0, respectively)	$	—	$	—
Notes payable, net	256,565		256,252
Secured borrowing	5,096		5,096
Total borrowings	261,661		261,348
Accounts payable and accrued expenses	1,506		799
Interest payable	2,189		2,190
Fees due to Adviser(A)	29,984		29,288
Fee due to Administrator(A)	695		627
Other liabilities	452		330
TOTAL LIABILITIES	$	296,487	$	294,582
Commitments and contingencies(B)
NET ASSETS	$	446,409	$	445,830

ANALYSIS OF NET ASSETS
Common stock, $0.001 par value per share, 100,000,000 shares authorized, 33,205,023 shares issued and outstanding	$	33	$	33
Capital in excess of par value	397,021		397,948

Cumulative net unrealized appreciation (depreciation) of investments	45,360		45,148
(Overdistributed) underdistributed net investment income	(8,162)		(12,995)
Accumulated net realized gain in excess of distributions	12,157		15,696
Total distributable earnings	49,355		47,849
TOTAL NET ASSETS	$	446,409	$	445,830

NET ASSET VALUE PER SHARE	$	13.44	$	13.43

(A)Refer to Note 4 — Related Party Transactions in the accompanying Notes to Consolidated Financial Statements for additional information.

(B)Refer to Note 10 — Commitments and Contingencies 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 INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)


	Three Months Ended June 30,
	2022		2021
INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate investments	$	8,728	$	6,877
Affiliate investments	4,010		8,831
Control investments	—		284
Cash and cash equivalents	3		—
Total interest income	12,741		15,992
Dividend income
Non-Control/Non-Affiliate investments	4		2
Affiliate investments	1,552		—
Total dividend income	1,556		2
Success fee income
Non-Control/Non-Affiliate investments	5,000		—
Affiliate investments	—		2,032
Total success fee income	5,000		2,032
Total investment income	$	19,297	$	18,026

EXPENSES
Base management fee(A)	$	3,563	$	3,320
Loan servicing fee(A)	1,758		1,868
Incentive fee(A)	3,009		12,248
Administration fee(A)	380		399
Interest expense on borrowings	3,784		2,300
Dividends on mandatorily redeemable preferred stock	—		1,504
Amortization of deferred financing costs and discounts	448		456
Professional fees	295		306
Other general and administrative expenses	1,197		1,048
Expenses before credits from Adviser	14,434		23,449
Credits to base management fee – loan servicing fee(A)	(1,758)		(1,868)
Credits to fees from Adviser - other(A)	(750)		(1,251)
Total expenses, net of credits to fees	11,926		20,330
NET INVESTMENT INCOME (LOSS)	$	7,371	$	(2,304)

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss):
Non-Control/Non-Affiliate investments	$	4,729	$	143
Affiliate investments	—		1,786
Control investments	(277)		—
Total net realized gain	4,452		1,929
Net unrealized appreciation (depreciation):
Non-Control/Non-Affiliate investments	14,989		16,902
Affiliate investments	(14,777)		29,208
Control investments	—		1,404
Total net unrealized (depreciation) appreciation	212		47,514
Net realized and unrealized gain	4,664		49,443

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	12,035	$	47,139

BASIC AND DILUTED PER COMMON SHARE:
Net investment income (loss)	$	0.22	$	(0.07)
Net increase in net assets resulting from operations	$	0.36	$	1.42

WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted	33,205,023		33,205,023

(A)Refer to Note 4 — Related Party Transactions 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 INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(IN THOUSANDS)

(UNAUDITED)


	2022		2021
NET ASSETS, MARCH 31	$	445,830	$	382,364
OPERATIONS
Net investment income (loss)	7,371		(2,304)
Net realized gain on investments	4,452		1,929
Net unrealized appreciation (depreciation) of investments	212		47,514
Net increase in net assets from operations	12,035		47,139
DISTRIBUTIONS(A)
Distributions to common stockholders from net investment income ($0.10 and $0.20 per share, respectively)	(3,188)		(6,593)
Distributions to common stockholders from net realized gains ($0.25 and $0.07 per share, respectively)	(8,268)		(2,372)
Net decrease in net assets from distributions	(11,456)		(8,965)
CAPITAL ACTIVITY
Issuance of common stock	—		—
Discounts, commissions, and offering costs for issuance of common stock	—		—
Net increase in net assets from capital activity	—		—
NET INCREASE (DECREASE) IN NET ASSETS	579		38,174
NET ASSETS, JUNE 30	$	446,409	$	420,538

(A)Refer to Note 9 — Distributions to Common Stockholders 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 INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)


	Three Months Ended June 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations	$	12,035	$	47,139
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchase of investments	(27,800)		(17,150)
Principal repayments of investments	48,000		14,060
Net proceeds from the sale of investments	9,352		7,775
Net realized gain on investments	(4,452)		(1,929)
Net unrealized appreciation of investments	(212)		(47,514)
Amortization of premiums, discounts, and acquisition costs, net	(5)		(5)
Amortization of deferred financing costs and discounts	448		456
Bad debt expense, net of recoveries	71		55
Changes in assets and liabilities:
Decrease in interest receivable	886		806
Decrease (increase) in due from administrative agent	1,694		(659)
Increase in other assets, net	(239)		(68)
Increase in accounts payable and accrued expenses	708		901
(Decrease) increase in interest payable	(1)		571
Increase in fees due to Adviser(A)	637		9,708
Increase in fee due to Administrator(A)	68		94
Increase in other liabilities	122		179
Net cash provided by operating activities	41,312		14,419

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit	—		29,800
Repayments on line of credit	—		(10,300)
Deferred financing and offering costs	(75)		(75)
Distributions paid to common stockholders	(11,456)		(8,965)
Net cash (used in) provided by financing activities	(11,531)		10,460

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS	29,781		24,879

CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF PERIOD	14,495		2,398

CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD	$	44,276	$	27,277

CASH PAID FOR INTEREST	$	3,330	$	1,339

(A)Refer to Note 4 — Related Party Transactions in the accompanying Notes to Consolidated Financial Statements for additional information.

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

Table of Contents

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

JUNE 30, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)


Company and Investment(A)(B)(D)(E)	Principal/Shares/ Units(F)(I)		Cost		Fair Value

NON-CONTROL/NON-AFFILIATE INVESTMENTS(M) – 92.0%
Secured First Lien Debt – 43.1%
Diversified/Conglomerate Manufacturing – 1.2%
Phoenix Door Systems, Inc – Line of Credit, $0 available (L+7.0%, 9.0% Cash (0.3% Unused Fee), Due 3/2024)(J)	$	2,350	$	2,350	$	2,233
Phoenix Door Systems, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 9/2024)(J)	3,200		3,200		3,040
			5,550		5,273
Diversified/Conglomerate Services – 18.0%
Counsel Press, Inc. – Term Debt (L+11.8%, 13.5% Cash, Due 3/2023)(K)	21,100		21,100		21,100
Counsel Press, Inc. – Term Debt (L+13.0%, 14.8% Cash, Due 3/2023)(K)	6,400		6,400		6,400
Horizon Facilities Services, Inc. – Term Debt (L+9.5%, 12.0% Cash, Due 6/2024)(K)	27,700		27,700		27,700
Mason West, LLC – Term Debt (L+10.0%, 12.5% Cash, Due 7/2025)(K)	25,250		25,250		25,250
			80,450		80,450
Healthcare, Education, and Childcare – 4.5%
Educators Resource, Inc. – Term Debt (L+10.5%, 13.0% Cash, Due 11/2023) (K)	20,000		20,000		20,000

Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.5%
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023) (K)	17,700		17,700		17,700
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023) (K)	6,850		6,850		6,850
			24,550		24,550
Hotels, Motels, Inns, and Gaming Total – 7.6%
Nocturne Villa Rentals, Inc. – Line of Credit, $2,000 available (L+8.0%, 10.0% Cash, Due 6/2023)(K)	—		—		—
Nocturne Villa Rentals, Inc. – Term Debt (L+10.5%, 12.5% Cash, Due 6/2026)(K)	34,050		34,050		34,050
			34,050		34,050
Leisure, Amusement, Motion Pictures, and Entertainment – 6.3%
Schylling, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 5/2025)(K)	27,981		27,981		27,981

Total Secured First Lien Debt			$	192,581	$	192,304

Secured Second Lien Debt – 15.2%
Aerospace and Defense – 5.7%
Galaxy Technologies Holdings, Inc. – Term Debt (L+4.1%, 7.1% Cash, Due 10/2026)(K)	$	6,500	$	6,500	$	6,500
Galaxy Technologies Holdings, Inc. – Term Debt (L+7.0%, 10.0% Cash, Due 10/2026)(K)	18,796		18,796		18,796
			25,296		25,296
Automobile – 0.3%
Country Club Enterprises, LLC – Term Debt (L+8.0%, 10.0% Cash, Due 7/2027)(J)	1,500		1,500		1,493
Country Club Enterprises, LLC – Guaranty ($1,000) (Q)	—		—		—
			1,500		1,493

Cargo Transport – 2.9%
Diligent Delivery Systems – Term Debt (L+9.0%, 11.0% Cash, Due 11/2022)(J)	13,000		12,992		12,983

Home and Office Furnishings, Housewares, and Durable Consumer Products – 3.0%
Ginsey Home Solutions, Inc. – Term Debt (L+10.0%, 13.5% Cash, Due 1/2025)(H)(K)	13,300		13,300		13,300

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 3.3%
SFEG Holdings, Inc. – Term Debt (L+7.0%, 9.0% Cash, Due 11/2024)(G)(K)	3,128		3,128		3,128
SFEG Holdings, Inc. – Term Debt (L+7.0%, 9.0% Cash, Due 11/2024)(G)(K)	11,736		11,736		11,736
			14,864		14,864

Total Secured Second Lien Debt			$	67,952	$	67,936

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GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

JUNE 30, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)


Company and Investment(A)(B)(D)(E)	Principal/Shares/ Units(F)(I)			Cost		Fair Value

Preferred Equity – 33.3%
Diversified/Conglomerate Services – 15.2%
Counsel Press, Inc. – Preferred Stock(C)(K)	6,995			$	6,995	$	29,364
Horizon Facilities Services, Inc. – Preferred Stock(C)(K)	10,080			10,080		33,311
Mason West, LLC – Preferred Stock(C)(K)	11,206			11,206		5,293
				28,281		67,968
Healthcare, Education, and Childcare – 4.1%
Educators Resource, Inc. – Preferred Stock(C)(K)	8,560			8,560		18,313

Home and Office Furnishings, Housewares, and Durable Consumer Products – 6.0%
Brunswick Bowling Products, Inc. – Preferred Stock(C)(K)	6,653			6,653		26,388
Ginsey Home Solutions, Inc. – Preferred Stock(C)(K)	19,280			9,583		413
				16,236		26,801
Hotels, Motels, Inns, and Gaming Total – 3.7%
Nocturne Villa Rentals, Inc. – Preferred Stock (C)(K)	6,600			6,600		16,371

Leisure, Amusement, Motion Pictures, and Entertainment – 3.8%
Schylling, Inc. – Preferred Stock(C)(K)	4,000			4,000		17,186

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.5%
SFEG Holdings, Inc. – Preferred Stock(C)(K)	29,577			4,643		2,068

Total Preferred Equity				$	68,320	$	148,707

Common Equity/Equivalents – 0.4%
Aerospace and Defense – 0.0%
Galaxy Technologies Holdings, Inc. – Common Stock(C)(K)	16,957			$	11,513	$	—

Cargo Transport – 0.4%
Diligent Delivery Systems – Common Stock Warrants(C)(K)	8		%	500		1,882

Diversified/Conglomerate Manufacturing– 0.0%
Phoenix Door Systems, Inc. – Common Stock(C)(K)	3,195			1,452		—

Home and Office Furnishings, Housewares, and Durable Consumer Products – 0.0%
Ginsey Home Solutions, Inc. – Common Stock(C)(K)	63,747			8		—

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic)- 0.0%
SFEG Holdings, Inc. – Common Stock(C)(K)	221,500			222		—

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
Funko Acquisition Holdings, LLC(L) – Common Units(C)(P)	5,817			30		88

Total Common Equity/Equivalents				$	13,725	$	1,970

Total Non-Control/Non-Affiliate Investments				$	342,578	$	410,917

AFFILIATE INVESTMENTS(N) – 57.5%
Secured First Lien Debt – 41.4%
Chemicals, Plastics, and Rubber – 6.0%
PSI Molded Plastics, Inc. – Term Debt (L+5.5%, 7.3% Cash, Due 1/2024)(K)	$	26,618		$	26,618	$	26,618

Diversified/Conglomerate Manufacturing – 2.0%
Edge Adhesives Holdings, Inc.(L) – Term Debt (L+5.5%, 7.5% Cash, Due 8/2024)(J)	9,210			9,210		8,968

Table of Contents

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

JUNE 30, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)


Company and Investment(A)(B)(D)(E)	Principal/Shares/ Units(F)(I)		Cost		Fair Value

Diversified/Conglomerate Services – 19.3%
ImageWorks Display and Marketing Group, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 11/2022)(K)	22,000		22,000		22,000
J.R. Hobbs Co. - Atlanta, LLC - Term Debt (L+6.0%, 8.0% Cash, Due 10/2024) (G)(K)	16,500		16,500		13,129
J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+10.3%, 12.0% Cash, Due 10/2024) (G)(K)	26,000		26,000		20,688
J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+6.0%, 8.0% Cash, Due 3/2023) (G)(K)	2,438		2,438		1,940
The Maids International, LLC – Term Debt (L+10.5%, 12.3% Cash, Due 3/2025)(K)	28,560		28,560		28,560
			95,498		86,317
Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.6%
Old World Christmas, Inc. – Secured First Lien Term Loan (L+9.5%, 11.3% Cash, Due 12/2025)(K)	25,000		25,000		25,000

Mining, Steel, Iron and Non-Precious Metals Total – 4.1%
Utah Pacific Bridge & Steel, Ltd., $2,000 available (L+8.5%, 10.3% Cash, Due 7/2022)(K)	—		—		—
Utah Pacific Bridge & Steel, Ltd. (L+10.0%, 11.8% Cash, Due 7/2026)(K)	18,250		18,250		18,250
			18,250		18,250
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.6%
The Mountain Corporation – Line of Credit, $0 available (L+5.0%, 9.0% Cash, Due 5/2023)(G)(K)	3,400		3,400		2,495
The Mountain Corporation – Line of Credit, $0 available (L+5.0%, 9.0% Cash, Due 5/2023)(G)(K)	900		900		—
			4,300		2,495
Telecommunications – 3.8%
B+T Group Acquisition, Inc.(L) – Line of Credit, $0 available (L+11.0%, 13.0% Cash, Due 12/2024)(K)	2,800		2,800		2,800
B+T Group Acquisition, Inc.(L) – Term Debt (L+11.0%, 13.0% Cash, Due 12/2024)(K)	14,000		14,000		14,000
			16,800		16,800

Total Secured First Lien Debt			$	195,676	$	184,448

Secured Second Lien Debt – 0.0%
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Term Debt (L+4.0%, 7.0% Cash, Due 4/2024)(G)(K)	$	11,700	$	11,700	$	—
The Mountain Corporation – Delayed Draw Term Debt, $0 available (L+4.0%, 7.0% Cash, Due 4/2024)(G)(K)	1,500		1,500		—
			$	13,200	—

Total Secured Second Lien Debt			$	13,200	$	—

Preferred Equity – 15.3%
Chemicals, Plastics, and Rubber – 0.0%
PSI Molded Plastics, Inc. – Preferred Stock(C)(K)	158,598		$	19,730	$	—

Diversified/Conglomerate Manufacturing – 0.0%
Edge Adhesives Holdings, Inc.(L) – Preferred Stock(C)(K)	8,199		8,199		—

Diversified/Conglomerate Services – 3.7%
ImageWorks Display and Marketing Group, Inc. – Preferred Stock(C)(K)	67,490		6,749		15,273
J.R. Hobbs Co. – Atlanta, LLC – Preferred Stock(C)(K)	10,920		10,920		—
The Maids International, LLC – Preferred Stock(C)(K)	6,640		6,640		1,424
			24,309		16,697

Home and Office Furnishings, Housewares, and Durable Consumer Products – 8.3%
Old World Christmas, Inc. – Preferred Stock(C)(K)	6,180		—		37,168

Mining, Steel, Iron and Non-Precious Metals – 1.3%
Utah Pacific Bridge & Steel, Ltd. - Preferred Stock(C)(K)	6,000		6,000		6,000

Table of Contents

GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

JUNE 30, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)


Company and Investment(A)(B)(D)(E)	Principal/Shares/ Units(F)(I)		Cost		Fair Value

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Preferred Stock(C)(K)	6,899		6,899		—

Telecommunications – 2.0%
B+T Group Acquisition, Inc.(L) – Preferred Stock(C)(K)	14,304		4,722		9,093

Total Preferred Equity			$	69,859	$	68,958

Common Equity/Equivalents – 0.8%
Diversified/Conglomerate Services – 0.7%
Nth Degree Investment Group, LLC – Common Stock(C)(K)	14,360,000		$	1,219	$	3,136

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Common Stock(C)(K)	751		1		—

Telecommunications – 0.1%
B+T Group Acquisition, Inc.(L) – Common Stock Warrants(C)(K)	3.5	%	—		341

Total Common Equity/Equivalents			$	1,220	$	3,477

Total Affiliate Investments			$	279,955	$	256,883

CONTROL INVESTMENTS(O) – 4.9%:
Preferred Equity - 4.7%
Buildings and Real Estate Total - 4.7%
Dema/Mai Holdings, Inc - Preferred Equity	21,000		$	21,000	$	21,000
Total Preferred Equity			$	21,000	$	21,000

Common Equity/Equivalents – 0.2%
Leisure, Amusement, Motion Pictures, and Entertainment – 0.2%
Gladstone SOG Investments, Inc. - Common Stock(C)(K)	100		$	620	$	713
Total Common Equity/Equivalents			$	620	$	713

Total Control Investments			$	21,620	$	21,713

TOTAL INVESTMENTS – 154.4%			$	644,153	$	689,513

(A)Certain of the securities listed are issued by affiliate(s) of the indicated portfolio company. The majority of the securities listed, totaling $566.3 million at fair value, are pledged as collateral to our revolving line of credit, as described further in Note 5—Borrowings in the accompanying Notes to Consolidated Financial Statements. Additionally, under Section 55 of 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 June 30, 2022, our investment in Funko Acquisition Holdings, LLC ("Funko") was considered a non-qualifying asset under Section 55 of the 1940 Act and represented less than 0.1% of total investments, at fair value.

(B)Unless indicated otherwise, all cash interest rates are indexed to 30-day London Interbank Offered Rate ("LIBOR" or "L"), which was 1.8% as of June 30, 2022. 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 30-day LIBOR plus a spread. Due dates represent the contractual maturity date.

(C)Security is non-income producing.

(D)Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of June 30, 2022

(E)Unless indicated otherwise, all of our investments are valued using Level 3 inputs within the Financial Accounting Standards Board ("FASB") Accounting Standards 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.

(F)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.

(G)Debt security is on non-accrual status.

(H)$5.1 million of the debt security was participated to a third-party, but is accounted for as collateral for a secured borrowing under accounting principles generally accepted in the U.S. and presented as Secured borrowing on our accompanying Consolidated Statements of Assets and Liabilities as of June 30, 2022.

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GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

JUNE 30, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

(UNAUDITED)

(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)Fair value was based on internal yield analysis or on estimates of value submitted by ICE Data Pricing and Reference Data, LLC. Refer to Note 3—Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

(K)Fair value was based on the total enterprise value of the portfolio company, which is generally allocated to the portfolio company’s securities in order of their relative priority in the capital structure. Refer to Note 3—Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

(L)One of our affiliated funds, Gladstone Capital Corporation, co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S. Securities and Exchange Commission.

(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 that are not Control investments and 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)Our investment in Funko was valued using Level 2 inputs within the ASC 820 fair value hierarchy. Our common units in Funko are convertible into class A common stock in Funko, Inc. upon meeting certain requirements. Fair value was based on the closing market price of shares of Funko, Inc. as of the reporting date, less a discount for lack of marketability. Funko, Inc. is traded on the Nasdaq Global Select Market under the trading symbol “FNKO.” Refer to Note 3—Investments in the accompanying Notes to Consolidated Financial Statements for additional information.

(Q)Refer to Note 10—Commitments and Contingencies in the accompanying Notes to Consolidated Financial Statements for additional information regarding this guaranty.

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

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GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

MARCH 31, 2022

(DOLLAR AMOUNTS IN THOUSANDS)


Company and Investment(A)(B)(D)(E)	Principal/Shares/ Units(F)(I)		Cost		Fair Value

NON-CONTROL/NON-AFFILIATE INVESTMENTS(M) – 99.2%
Secured First Lien Debt – 52.4%
Diversified/Conglomerate Manufacturing – 1.1%
Phoenix Door Systems, Inc – Line of Credit, $150 available (L+7.0%, 9.0% Cash (0.3% Unused Fee), Due 3/2024)(J)	$	2,000	$	2,000	$	1,920
Phoenix Door Systems, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 9/2024)(J)	3,200		3,200		3,072
			5,200		4,992
Diversified/Conglomerate Services – 28.8%
Bassett Creek Services, Inc. – Term Debt(L+10.0%, 12.0% Cash, Due 4/2023)(K)	48,000		48,000		48,000
Counsel Press, Inc. – Term Debt (L+11.8%, 12.8% Cash, Due 3/2023)(K)	21,100		21,100		21,100
Counsel Press, Inc. – Term Debt (L+13.0%, 14.0% Cash, Due 3/2023)(K)	6,400		6,400		6,400
Horizon Facilities Services, Inc. – Term Debt (L+9.5%, 12.0% Cash, Due 6/2024)(K)	27,700		27,700		27,700
Mason West, LLC – Term Debt (L+10.0%, 12.5% Cash, Due 7/2025)(K)	25,250		25,250		25,250
			128,450		128,450
Healthcare, Education, and Childcare – 4.5%
Educators Resource, Inc. – Term Debt (L+10.5%, 13.0% Cash, Due 11/2023) (K)	20,000		20,000		20,000

Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.5%
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023) (K)	17,700		17,700		17,700
Brunswick Bowling Products, Inc. – Term Debt (L+10.0%, 12.0% Cash, Due 1/2023) (K)	6,850		6,850		6,850
			24,550		24,550
Hotels, Motels, Inns, and Gaming Total – 6.2%
Nocturne Villa Rentals, Inc. – Line of Credit, $2,000 available (L+8.0%, 10.0% Cash, Due 6/2023)(K)	—		—		—
Nocturne Villa Rentals, Inc. – Term Debt (L+10.5%, 12.5% Cash, Due 6/2026)(K)	27,700		27,700		27,700
			27,700		27,700
Leisure, Amusement, Motion Pictures, and Entertainment – 6.3%
Schylling, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 5/2025)(K)	27,981		27,981		27,981

Total Secured First Lien Debt			$	233,881	$	233,673

Secured Second Lien Debt – 15.0%
Aerospace and Defense – 5.7%
Galaxy Technologies Holdings, Inc. – Term Debt (L+4.1%, 7.1% Cash, Due 10/2026)(K)	$	6,500	$	6,500	$	6,500
Galaxy Technologies Holdings, Inc. – Term Debt (L+7.0%, 10.0% Cash, Due 10/2026)(K)	18,796		18,796		18,796
			25,296		25,296
Automobile – 0.3%
Country Club Enterprises, LLC – Term Debt (L+8.0%, 10.0% Cash, Due 7/2027)(J)	1,500		1,500		1,498
Country Club Enterprises, LLC - Guaranty ($1,000) (Q)	—		—		—
			1,500		1,498

Cargo Transport – 2.9%
Diligent Delivery Systems – Term Debt (L+9.0%, 11.0% Cash, Due 11/2022)(J)	13,000		12,987		13,000

Home and Office Furnishings, Housewares, and Durable Consumer Products – 3.0%
Ginsey Home Solutions, Inc. – Term Debt (L+10.0%, 13.5% Cash, Due 1/2025)(H)(L)	13,300		13,300		13,300

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 3.1%
SFEG Holdings, Inc. – Term Debt (L+7.0%, 9.0% Cash, Due 11/2024)(G)(J)	3,128		3,128		2,909
SFEG Holdings, Inc. – Term Debt (L+7.0%, 9.0% Cash, Due 11/2024)(G)(J)	11,736		11,736		10,914
			14,864		13,823

Total Secured Second Lien Debt			$	67,947	$	66,917

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GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

MARCH 31, 2022

(DOLLAR AMOUNTS IN THOUSANDS)


Company and Investment(A)(B)(D)(E)	Principal/Shares/ Units(F)(I)			Cost		Fair Value

Preferred Equity – 31.4%
Diversified/Conglomerate Services – 15.2%
Bassett Creek Services, Inc. – Preferred Stock(C)(K)	4,900			$	4,900	$	17,150
Counsel Press, Inc. – Preferred Stock(C)(K)	6,995			6,995		25,374
Horizon Facilities Services, Inc. – Preferred Stock(C)(K)	10,080			10,080		17,807
Mason West, LLC – Preferred Stock(C)(K)	11,206			11,206		7,553
				33,181		67,884
Healthcare, Education, and Childcare – 4.3%
Educators Resource, Inc. – Preferred Stock(C)(K)	8,560			8,560		19,252

Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.6%
Brunswick Bowling Products, Inc. – Preferred Stock(C)(K)	6,653			6,653		21,485
Ginsey Home Solutions, Inc. – Preferred Stock(C)(K)	19,280			9,583		3,263
				16,236		24,748
Hotels, Motels, Inns, and Gaming Total – 2.3%
Nocturne Villa Rentals, Inc. – Preferred Stock (C)(K)	6,600			6,600		10,223

Leisure, Amusement, Motion Pictures, and Entertainment – 4.0%
Schylling, Inc. – Preferred Stock(C)(K)	4,000			4,000		17,820

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.0%
SFEG Holdings, Inc. – Preferred Stock(C)(K)	29,577			4,643		—

Total Preferred Equity				$	73,220	$	139,927

Common Equity/Equivalents – 0.4%
Aerospace and Defense – 0.0%
Galaxy Technologies Holdings, Inc. – Common Stock(C)(K)	16,957			$	11,513	$	—

Cargo Transport – 0.4%
Diligent Delivery Systems – Common Stock Warrants(C)(K)	8		%	500		1,533

Diversified/Conglomerate Manufacturing– 0.0%
Phoenix Door Systems, Inc. – Common Stock(C)(K)	3,195			1,452		—

Home and Office Furnishings, Housewares, and Durable Consumer Products – 0.0%
Ginsey Home Solutions, Inc. – Common Stock(C)(K)	63,747			8		—

Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) – 0.0%
SFEG Holdings, Inc. – Common Stock(C)(K)	221,500			222		—

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
Funko Acquisition Holdings, LLC(L) – Common Units(C)(P)	6,290			30		74

Total Common Equity/Equivalents				$	13,725	$	1,607

Total Non-Control/Non-Affiliate Investments				$	388,773	$	442,124

AFFILIATE INVESTMENTS(N) – 60.8%
Secured First Lien Debt – 42.9%
Chemicals, Plastics, and Rubber – 6.0%
PSI Molded Plastics, Inc. – Term Debt (L+5.5%, 7.0% Cash, Due 1/2024)(K)	$	26,618		$	26,618	$	26,618

Diversified/Conglomerate Manufacturing – 2.0%
Edge Adhesives Holdings, Inc.(L) – Term Debt (L+5.5%, 7.5% Cash, Due 8/2024)(J)	9,210			9,210		9,072

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GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

MARCH 31, 2022

(DOLLAR AMOUNTS IN THOUSANDS)


Company and Investment(A)(B)(D)(E)	Principal/Shares/ Units(F)(I)		Cost		Fair Value

Diversified/Conglomerate Services – 20.5%
ImageWorks Display and Marketing Group, Inc. – Term Debt (L+11.0%, 13.0% Cash, Due 11/2022)(K)	22,000		22,000		22,000
J.R. Hobbs Co. - Atlanta, LLC - Term Debt (L+6.0%, 8.0% Cash, Due 10/2024) (G)(K)	16,500		16,500		15,023
J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+10.3%, 11.8% Cash, Due 10/2024) (G)(K)	26,000		26,000		23,672
J.R. Hobbs Co. - Atlanta, LLC – Term Debt (L+6.0%, 8.0% Cash, Due 3/2023) (G)(K)	2,438		2,438		2,219
J.R. Hobbs Co. - Atlanta, LLC - Guaranty ($9,250)(Q)	—		—		—
The Maids International, LLC – Term Debt (L+10.5%, 12.0% Cash, Due 3/2025)(K)	28,560		28,560		28,560
			95,498		91,474
Home and Office Furnishings, Housewares, and Durable Consumer Products – 5.6%
Old World Christmas, Inc. – Secured First Lien Term Loan (L+9.5%, 11.0% Cash, Due 12/2025)(K)	25,000		25,000		25,000

Mining, Steel, Iron and Non-Precious Metals Total – 4.1%
Utah Pacific Bridge & Steel, Ltd., $2,000 available (L+8.5%, 10.0% Cash, Due 7/2022)(K)	—		—		—
Utah Pacific Bridge & Steel, Ltd. (L+10.0%, 11.5% Cash, Due 7/2026)(K)	18,250		18,250		18,250
			18,250		18,250
Personal and Non-Durable Consumer Products (Manufacturing Only) – 1.0%
The Mountain Corporation – Line of Credit, $0 available (L+5.0%, 9.0% Cash, Due 5/2022)(G)(K)	3,400		3,400		3,400
The Mountain Corporation – Line of Credit, $100 available (L+5.0%, 9.0% Cash, Due 5/2023)(G)(K)	800		800		800
			4,200		4,200
Telecommunications – 3.7%
B+T Group Acquisition, Inc.(L) – Line of Credit, $0 available (L+11.0%, 13.0% Cash, Due 12/2024)(K)	2,800		2,800		2,800
B+T Group Acquisition, Inc.(L) – Term Debt (L+11.0%, 13.0% Cash, Due 12/2024)(K)	14,000		14,000		14,000
			16,800		16,800

Total Secured First Lien Debt			$	195,576	$	191,414

Secured Second Lien Debt – 0.2%
Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.2%
The Mountain Corporation – Term Debt (L+4.0%, 7.0% Cash, Due 4/2024)(G)(K)	$	11,700	$	11,700	$	923
The Mountain Corporation – Delayed Draw Term Debt, $0 available (L+4.0%, 7.0% Cash, Due 4/2024)(G)(K)	1,500		1,500		118
			$	13,200	$	1,041

Total Secured Second Lien Debt			$	13,200	$	1,041

Preferred Equity – 17.4%
Chemicals, Plastics, and Rubber – 0.0%
PSI Molded Plastics, Inc. – Preferred Stock(C)(K)	158,598		$	19,730	$	—

Diversified/Conglomerate Manufacturing – 0.0%
Edge Adhesives Holdings, Inc.(L) – Preferred Stock(C)(K)	8,199		8,199		—

Diversified/Conglomerate Services – 4.3%
ImageWorks Display and Marketing Group, Inc. – Preferred Stock(C)(K)	67,490		6,749		16,405
J.R. Hobbs Co. – Atlanta, LLC – Preferred Stock(C)(K)	10,920		10,920		—
The Maids International, LLC – Preferred Stock(C)(K)	6,640		6,640		2,679
			24,309		19,084

Home and Office Furnishings, Housewares, and Durable Consumer Products – 8.5%
Old World Christmas, Inc. – Preferred Stock(C)(K)	6,180		—		37,842

Mining, Steel, Iron and Non-Precious Metals –1.3%
Utah Pacific Bridge & Steel, Ltd. - Preferred Stock(C)(K)	6,000		6,000		6,000

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GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

MARCH 31, 2022

(DOLLAR AMOUNTS IN THOUSANDS)


Company and Investment(A)(B)(D)(E)	Principal/Shares/ Units(F)(I)		Cost		Fair Value

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Preferred Stock(C)(K)	6,899		6,899		—

Telecommunications – 3.3%
B+T Group Acquisition, Inc.(L) – Preferred Stock(C)(K)	14,304		4,722		14,746

Total Preferred Equity			$	69,859	$	77,672

Common Equity/Equivalents – 0.3%
Diversified/Conglomerate Services – 0.1%
Nth Degree Investment Group, LLC – Common Stock(C)(K)	14,360,000		$	1,219	$	511

Personal and Non-Durable Consumer Products (Manufacturing Only) – 0.0%
The Mountain Corporation – Common Stock(C)(K)	751		1		—

Telecommunications – 0.2%
B+T Group Acquisition, Inc.(L) – Common Stock Warrants(C)(K)	3.5	%	—		921

Total Common Equity/Equivalents			$	1,220	$	1,432

Total Affiliate Investments			$	279,855	$	271,559

CONTROL INVESTMENTS(O) – 0.2%:
Common Equity/Equivalents – 0.2%
Leisure, Amusement, Motion Pictures, and Entertainment – 0.2%
Gladstone SOG Investments, Inc. - Common Stock(C)(K)	100		$	620	$	713
Total Common Equity/Equivalents			$	620	$	713

Total Control Investments			$	620	$	713

TOTAL INVESTMENTS – 160.2%(R)			$	669,248	$	714,396

(A)Certain of the securities listed are issued by affiliate(s) of the indicated portfolio company. The majority of the securities listed, totaling $537.5 million at fair value, are pledged as collateral to our revolving line of credit, as described further in Note 5—Borrowings in the accompanying Notes to Consolidated Financial Statements. Additionally, under Section 55 of 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 March 31, 2022, our investment in Funko was considered a non-qualifying asset under Section 55 of the 1940 Act and represented less than 0.1% of total investments, at fair value.

(B)Unless indicated otherwise, all cash interest rates are indexed to 30-day LIBOR, which was 0.5% as of March 31, 2022. 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 30-day LIBOR plus a spread. Due dates represent the contractual maturity date.

(C)Security is non-income producing.

(D)Category percentages represent the fair value of each category and subcategory as a percentage of net assets as of March 31, 2022.

(E)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.

(G)Debt security is on non-accrual status.

(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.

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GLADSTONE INVESTMENT CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

MARCH 31, 2022

(DOLLAR AMOUNTS IN THOUSANDS)

(L)One of our affiliated funds, Gladstone Capital Corporation, co-invested with us in this portfolio company pursuant to an exemptive order granted by the U.S. Securities and Exchange Commission.

(Q)Refer to Note 10—Commitments and Contingencies in the accompanying Notes to Consolidated Financial Statements for additional information regarding this guaranty.

(R)Cumulative gross unrealized appreciation for federal income tax purposes is $140.8 million; cumulative gross unrealized depreciation for federal income tax purposes is $97.1 million. Cumulative net unrealized appreciation is $43.8 million, based on a tax cost of $670.6 million.

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GLADSTONE INVESTMENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA AND AS OTHERWISE INDICATED)

(UNAUDITED)

NOTE 1. ORGANIZATION

Gladstone Investment Corporation (“Gladstone Investment”) was incorporated under the General Corporation Law of the State of Delaware on February 18, 2005, and completed an initial public offering on June 22, 2005. The terms “the Company,” “we,” “our” and “us” all refer to Gladstone Investment and its consolidated subsidiaries. We are an externally advised, 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 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 in the United States (“U.S.”). Debt investments primarily take the form of two types of loans: secured first lien loans and secured second lien loans. Equity investments primarily take the form of preferred or common equity (or warrants or options to acquire the foregoing), often in connection with buyouts and other recapitalizations. Our investment objectives are to: (i) achieve and grow current income by investing in debt securities of established businesses 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 (ii) provide our stockholders with long-term capital appreciation in the value of our assets by investing in equity securities of established businesses, generally in combination with the aforementioned debt securities, that we believe can grow over time to permit us to sell our equity investments for capital gains. We intend that our investment portfolio over time will consist of approximately 75.0% in debt investments and 25.0% in equity investments, at cost. As of June 30, 2022, our investment portfolio was comprised of 72.9% in debt investments and 27.1% in equity investments, at cost.

Gladstone Business Investment, LLC (“Business Investment”), a wholly-owned subsidiary of ours, was established on August 11, 2006 for the sole purpose of holding certain investments pledged as collateral under our line of credit. The financial statements of Business Investment are consolidated with those of Gladstone Investment.

We are externally managed by Gladstone Management Corporation (the “Adviser”), an affiliate of ours and a U.S. Securities and Exchange Commission (“SEC”) registered investment adviser, pursuant to an investment advisory and management agreement (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 more information regarding these arrangements.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Statements and Basis of Presentation

We prepare our interim financial statements in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of SEC Regulation S-X. Accordingly, we have not included in this quarterly report all of the information and notes required by GAAP for annual financial statements. The accompanying Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. 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. In our opinion, all adjustments, consisting solely of normal recurring accruals, necessary for the fair statement of financial statements for the interim periods have been included. The results of operations for the three months ended June 30, 2022 are not necessarily indicative of results that ultimately may be achieved for the fiscal year ending March 31, 2023 or any future interim period. The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes

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thereto included in our annual report on Form 10-K for the fiscal year ended March 31, 2022, as filed with the SEC on May 11, 2022.

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.

Investment Valuation Policy

Accounting Recognition

We record our investments at fair value in accordance with the FASB ASC Topic 820, “Fair Value Measurements and Disclosures” (“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

In accordance with the 1940 Act, our board of directors (“Board of Directors”) has the ultimate responsibility for reviewing and determining, in good faith, the fair value of our investments for which market quotations are not readily available based on our investment valuation policy (which has been approved by our Board of Directors) (the “Policy”). Such review occurs in three phases. First, prior to its quarterly meetings, the Board of Directors receives written valuation recommendations and supporting materials provided by professionals of the Adviser and Administrator with oversight and direction from the chief valuation officer (the “Valuation Team”). Second, the Valuation Committee of our Board of Directors (comprised entirely of independent directors) meets to review the valuation recommendations and supporting materials, discusses the information provided by the Valuation Team, determines whether the Valuation Team has followed the Policy, determines whether the Valuation Team’s recommended fair value is reasonable in light of the Policy, and reviews other facts and circumstances. Third, after the Valuation Committee concludes its meeting, it and the chief valuation officer present the Valuation Committee’s findings to the entire Board of Directors so that the full Board of Directors may review and determine in good faith the fair value of such investments in accordance with the Policy.

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

ICE Data Pricing and Reference Data, LLC (“ICE”), a valuation specialist, generally provides estimates of fair value on our debt investments. The Valuation Team generally assigns ICE’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 ICE’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 ICE’s. When this occurs, our Valuation Committee and Board of Directors review whether the Valuation Team has followed the Policy and whether the Valuation Team’s recommended fair value is reasonable in light of the Policy and other facts and circumstances before determining fair value.

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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 makes a recommendation to our Valuation Committee and Board of Directors as to the fair value. Our Board of Directors reviews the recommended fair value and whether it is reasonable in light of the Policy and other relevant facts and circumstances before determining fair value.

Valuation Techniques

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

•Total Enterprise Value — In determining the fair value using a TEV, the Valuation Team first calculates the TEV of the portfolio company by incorporating some or all of the following factors: 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 earnings before interest, taxes, depreciation and amortization (“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.

TEV is primarily calculated using EBITDA and EBITDA multiples; however, TEV may also be calculated using revenue and revenue multiples or a discounted cash flow (“DCF”) analysis whereby future expected cash flows of the portfolio company are discounted to determine a net present value using estimated risk-adjusted discount rates, which incorporate adjustments for nonperformance and liquidity risks. Generally, the Valuation Team uses a DCF analysis to calculate TEV to corroborate estimates of value for our equity investments where we do not have the ability to effectuate a sale of a portfolio company or for debt of credit-impaired portfolio companies.

•Yield Analysis — The Valuation Team generally determines the fair value of our debt investments for 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, among other things, 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 ICE and market quotes.

•Market Quotes — For our investments for which a limited market exists, we generally base fair value on readily available and reliable market quotations, which are corroborated by the Valuation Team (generally by using the yield analysis 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 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, we generally base fair value on the closing market price of the securities we hold as of the reporting date. For restricted securities that are publicly traded, we generally base fair value on the closing market price of the securities we hold as of the reporting date less a discount for the restriction, which includes consideration of the nature and term to expiration of the restriction.

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•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. Any invested capital that is not yet reflected in the NAV provided by the fund is valued at par value. The Valuation Team may also determine fair value of our investments in other investment funds based on the capital accounts of the underlying entity.

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.

Revenue Recognition

Interest Income Recognition

Interest income, adjusted for amortization of premiums, amendment fees and acquisition costs and the accretion of discounts, 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 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, the interest income is deemed to be collectible. As of June 30, 2022, our loans to J.R. Hobbs Co. – Atlanta, LLC (“J.R. Hobbs”), The Mountain Corporation (“The Mountain”), and SFEG Holdings, Inc. ("SFEG") were on non-accrual status, with an aggregate debt cost basis of $77.3 million, or 16.5% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of $53.1 million, or 11.9% of the fair value of all debt investments in our portfolio. As of March 31, 2022, our loans to J.R. Hobbs, The Mountain, and SFEG were on non-accrual status, with an aggregate debt cost basis of $77.2 million, or 15.1% of the cost basis of all debt investments in our portfolio, and an aggregate fair value of $60.0 million, or 12.2% of the fair value of all debt investments in our portfolio.

Paid-in-kind (“PIK”) interest, computed at the contractual rate specified in the loan agreement, is added to the principal balance of the loan and recorded as interest income. As of June 30, 2022 and March 31, 2022, we did not have any loans with a PIK interest component.

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.

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Related Party Fees

We are party to the Advisory Agreement with the Adviser, which is owned and controlled 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 the Fifth Amended and Restated Credit Agreement dated April 30, 2013, as amended (the "Credit Facility").

We are also party to the Administration Agreement with the Administrator, which is 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.

NOTE 3. INVESTMENTS

Fair Value

In accordance with ASC 820, we determine the fair value of our investments to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between willing market participants on the measurement date. This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument as of the measurement date.

•Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical financial instruments in active markets;

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

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

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

As of June 30, 2022 and March 31, 2022, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in Funko Acquisition Holdings, LLC (“Funko”), which was valued using Level 2 inputs.

We transfer investments in and out of Level 1, 2 and 3 of the valuation hierarchy as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period. There were no transfers in or out of Level 1, 2 and 3 during the three months ended June 30, 2022 and 2021, respectively.

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As of June 30, 2022 and March 31, 2022, our investments, by security type, at fair value were categorized as follows within the ASC 820 fair value hierarchy:


			Fair Value Measurements

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
As of June 30, 2022:
Secured first lien debt	$	376,752	$	—	$	—		$	376,752
Secured second lien debt	67,936		—		—			67,936
Preferred equity	238,665		—		—			238,665
Common equity/equivalents	6,160		—		88		(A)	6,072
Total Investments as of June 30, 2022	$	689,513	$	—	$	88		$	689,425


			Fair Value Measurements

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

(A)Fair value was determined based on the closing market price of shares of Funko, Inc. (our units in Funko can be converted into common shares of Funko, Inc.) at the reporting date less a discount for lack of marketability, as our investment was subject to certain restrictions.

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The following table presents our investments, valued using Level 3 inputs within the ASC 820 fair value hierarchy, and carried at fair value as of June 30, 2022 and March 31, 2022, by caption on our accompanying Consolidated Statements of Assets and Liabilities, and by security type:


	Total Recurring Fair Value Measurements Reported in Consolidated Statements of Assets and Liabilities Valued Using Level 3 Inputs
	June 30, 2022		March 31, 2022
Non-Control/Non-Affiliate Investments
Secured first lien debt	$	192,304	$	233,673
Secured second lien debt	67,936		66,917
Preferred equity	148,707		139,927
Common equity/equivalents(A)	1,882		1,533
Total Non-Control/Non-Affiliate Investments	410,829		442,050

Affiliate Investments
Secured first lien debt	184,448		191,414
Secured second lien debt	—		1,041
Preferred equity	68,958		77,672
Common equity/equivalents	3,477		1,432
Total Affiliate Investments	256,883		271,559

Control Investments
Secured first lien debt	—		—
Secured second lien debt	—		—
Preferred equity	21,000		—
Common equity/equivalents	713		713
Total Control Investments	21,713		713

Total investments at fair value using Level 3 inputs	$	689,425	$	714,322

(A)Excludes our investment in Funko with a fair value of $88 thousand and $74 thousand as of June 30, 2022 and March 31, 2022, respectively, which was valued using Level 2 inputs.

In accordance with ASC 820, the following table provides quantitative information about our investments valued using Level 3 fair value measurements as of June 30, 2022 and March 31, 2022. The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements. The weighted-average calculations in the table below are based on the principal balances for all debt-related calculations and on the cost basis for all equity-related calculations for the particular input.

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Quantitative Information about Level 3 Fair Value Measurements

Fair Value as of

Valuation
Technique/
Methodology

Unobservable
Input

Range / Weighted-Average as of

June 30,
2022

March 31,
2022

June 30,
2022

March 31,
2022

Secured first
lien debt

362,511

411,023

TEV

EBITDA multiple

3.4x – 8.0x /

6.7x

3.4x – 9.3x /

7.0x

EBITDA

$3,963–$15,692 /

$8,655

$3,990 – $13,707/$8,221

Revenue multiple

0.25x –0.5x /

0.27x

0.7x – 0.7x /

0.7x

Revenue

$13,357 – $87,718 /

$81,224

$14,072 – $14,072 /$14,072

14,241

14,064

Yield Analysis

Discount Rate

12.4% – 15.9% / 15.3%

11.3% – 15.2% / 14.6%

Secured second
lien debt

53,459

39,637

TEV

EBITDA multiple

5.4x – 6.5x /

5.8x

5.6x – 6.8x /

6.0x

EBITDA

$3,767 – $5,319 /

$4,881

$3,953 – $5,488 /$4,959

Revenue multiple

0.5x –0.5x /

0.5x

0.7x – 0.7x /

0.7x

Revenue

$13,357 – $13,357 /

$13,357

$14,072 – $14,072 /$14,072

14,477

28,321

Yield Analysis

Discount Rate

10.1% –11.3% /

11.2%

10.0% – 12.2% /11.6%

Preferred

equity(A)

238,665

217,599

TEV

EBITDA multiple

2.9x – 8.0x /

6.1x

3.4x – 9.3x /

6.8 x

EBITDA

$796 – $15,692 /

$7,065

$1,210– $13,707 / $6,926

Revenue multiple

0.25x – 0.5x /

0.35x

0.7x – 0.7x /

0.7x

Revenue

$13,357 – $87,718 /

$58,927

$14,072 – $14,072 /$14,072

Common equity/

equivalents(B)

6,072

3,678

TEV

EBITDA multiple

4.6x – 8.0x /

5.6x

4.8x – 8.4x /

5.8 x

EBITDA

$838 – $15,692 /

$5,944

$829 – $13,707 /$5,709

Revenue multiple

0.5x – 0.5x /

0.5x

0.7x – 0.7x /

0.7 x

Revenue

$13,357 – $13,357 /

$13,357

$14,072 – $14,072 /$14,072

Total

689,425

714,322

(A)Fair value as of June 30, 2022 includes one new proprietary equity investment for $21.0 million, which was valued at cost using the transaction price as the unobservable input.

(B)Fair value as of both June 30, 2022 and March 31, 2022 excludes our investment in Funko with a fair value of $88 thousand and $74 thousand, respectively, which was valued using Level 2 inputs.

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

Changes in Level 3 Fair Value Measurements of Investments

The following tables provide our portfolio’s changes in fair value, broken out by security type, during the three months ended June 30, 2022 and 2021 for all investments for which the Adviser determines fair value using unobservable (Level 3) inputs.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)


	Secured First Lien Debt		Secured Second Lien Debt		Preferred Equity		Common Equity/ Equivalents		Total
Three Months ended June 30, 2022:
Fair value as of March 31, 2022	$	425,087	$	67,958	$	217,599	$	3,678	$	714,322
Total gain (loss):
Net realized gain (loss)(A)	—		—		4,728		—		4,728
Net unrealized appreciation (depreciation)(B)	(7,135)		(27)		17,216		2,394		12,448
Reversal of previously recorded (appreciation) depreciation upon realization(B)	—		—		(12,250)		—		(12,250)
New investments, repayments and settlements(C):
Issuances / originations	6,800		5		21,000				27,805
Settlements / repayments	(48,000)		—		—		—		(48,000)
Sales	—		—		(9,628)		—		(9,628)
Transfers(D)	—		—		—		—		—
Fair value as of June 30, 2022	$	376,752	$	67,936	$	238,665	$	6,072	$	689,425


	Secured First Lien Debt		Secured Second Lien Debt		Preferred Equity		Common Equity/ Equivalents		Total
Three Months ended June 30, 2021:
Fair value as of March 31, 2021	$	368,688	$	102,897	$	159,478	$	2,671	$	633,734
Total gain (loss):
Net realized gain (loss)(A)	—		—		1,786		—		1,786
Net unrealized appreciation (depreciation)(B)	5,850		27		42,855		(650)		48,082
Reversal of previously recorded (appreciation) depreciation upon realization(B)	60		—		(628)		—		(568)
New investments, repayments and settlements(C):
Issuances / originations	4,050		6,505		6,600		—		17,155
Settlements / repayments	(14,060)		—		—		—		(14,060)
Sales	—		—		(7,626)		—		(7,626)
Transfers(D)	52,385		(52,385)		—		—		—
Fair value as of June 30, 2021	$	416,973	$	57,044	$	202,465	$	2,021	$	678,503

(A)Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the respective periods ended June 30, 2022 and 2021.

(B)Included in net unrealized appreciation (depreciation) of investments on our accompanying Consolidated Statements of Operations for the respective periods ended June 30, 2022 and 2021.

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

(D)2021: Transfers represent secured second lien debt of J.R. Hobbs with a total cost basis and fair value of $52.5 million and $52.4 million, respectively, which was converted into secured first lien debt during the three months ended June 30, 2021.

Investment Activity

During the three months ended June 30, 2022, the following significant transactions occurred:

•In May 2022, we invested an additional $6.4 million in the form of secured first lien debt in Nocturne Villa Rentals, Inc. ("Nocturne") to fund an add-on acquisition.

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

•In June 2022, we invested $21.0 million in a new portfolio company, Dema/Mai Holdings, Inc. (“Dema/Mai”), in the form of preferred equity to acquire Mai Mechanical, LLC, a leading provider of plumbing and mechanical services focused on multi-family residential construction headquartered in Denver, Colorado, from J.R. Hobbs, an existing portfolio company. Refer to Note 13 – Subsequent Events for discussion of add-on investment activity in Dema/Mai that occurred subsequent to June 30, 2022.

Investment Concentrations

As of June 30, 2022, our investment portfolio consisted of investments in 26 portfolio companies located in 18 states across 15 different industries with an aggregate fair value of $689.5 million. Our investments in Old World Christmas, Inc., Horizon Facilities Services, Inc. ("Horizon"), Counsel Press, Inc., Brunswick Bowling Products, Inc., and Nocturne represented our five largest portfolio investments at fair value and collectively comprised $281.4 million, or 40.8%, of our total investment portfolio at fair value as of June 30, 2022.

The following table summarizes our investments by security type as of June 30, 2022 and March 31, 2022:


	June 30, 2022								March 31, 2022
	Cost				Fair Value				Cost			Fair Value
Secured first lien debt	$	388,257	60.3	%	$	376,752	54.6	%	$	429,457	64.2