Annual report [Section 13 and 15(d), not S-K Item 405]

INVESTMENTS

v3.25.1
INVESTMENTS
 12 Months Ended
Mar. 31, 2025
Investments, Debt and Equity Securities [Abstract]  
INVESTMENTS INVESTMENTS
Fair Value
In accordance with ASC 820, the fair value of our investments is determined to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between willing market participants on the measurement date. This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument as of the measurement date.
•Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical financial instruments in active markets;
•Level 2 — inputs to the valuation methodology include quoted prices for similar financial instruments in active or inactive markets, and inputs that are observable for the financial instrument, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists, or instances where prices vary substantially over time or among brokered market makers; and
•Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs are those inputs that reflect assumptions that market participants would use when pricing the financial instrument and can include the Valuation Team’s assumptions based upon the best available information.
When a determination is made to classify our investments within Level 3 of the valuation hierarchy, such determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable, or Level 3, inputs, observable inputs (or components that are
actively quoted and can be validated to external sources). The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

As of March 31, 2025, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in Gladstone Alternative Income Fund ("Gladstone Alternative"), which was valued using NAV as a practical expedient.

As of March 31, 2024, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in Funko Acquisition Holdings, LLC (“Funko”), which was valued using Level 2 inputs.
We transfer investments in and out of Level 1, 2 and 3 of the valuation hierarchy as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period. There were no transfers in or out of Level 1, 2 and 3 during the years ended March 31, 2025 and 2024, respectively.
As of March 31, 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 March 31, 2025:
Secured first lien debt
 $ —  $ —  $ 514,334  $ 514,334 
Secured second lien debt
 —  —  103,580  103,580 
Preferred equity
 —  — 

302,163  302,163 
Common equity/equivalents
 —  — 

54,268  54,268 
Total
 —  —  974,345  974,345 
Investments measured at NAV (A)
—  —  —  4,975 
Total Investments at March 31, 2025
 $ —  $ —  $ 974,345  $ 979,320 
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 March 31, 2024:
Secured first lien debt
 $ —  $ —  $ 474,856  $ 474,856 
Secured second lien debt
 —  —  138,703  138,703 
Preferred equity
 —  —  213,480  213,480 
Common equity/equivalents
 —  18 
(B)
 93,447  93,465 
Total
 —  18  920,486  920,504 
Investments measured at NAV
 —  —  —  — 
Total Investments at March 31, 2024
 $ —  $ 18  $ 920,486  $ 920,504 
(A)Includes our investment in Gladstone Alternative as of March 31, 2025. 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.
(B)Fair value was determined based on the closing market price of shares of Funko, Inc. (our units in Funko can be converted into common shares of Funko, Inc.) at the reporting date less a discount for lack of marketability, as our investment was subject to certain restrictions.
The following table presents our investments, valued using Level 3 inputs within the ASC 820 fair value hierarchy, and carried at fair value as of March 31, 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
Valued Using Level 3 Inputs

March 31,

2025 2024
Non-Control/Non-Affiliate Investments
Secured first lien debt
 $ 300,751  $ 324,348 
Secured second lien debt
 92,964  93,340 
Preferred equity
 200,606  162,522 
Common equity/equivalents(A)
54,268  42,005 
Total Non-Control/Non-Affiliate Investments
 648,589  622,215 

Affiliate Investments
Secured first lien debt
 213,240  147,603 
Secured second lien debt
 10,616  45,363 
Preferred equity
 101,557  50,958 
Common equity/equivalents(B)
—  51,442 
Total Affiliate Investments
 325,413  295,366 

Control Investments
Secured first lien debt
 343  2,905 
Secured second lien debt
 —  — 
Preferred equity
 —  — 
Common equity/equivalents
 —  — 
Total Control Investments
 343  2,905 

Total investments at fair value using Level 3 inputs
 $ 974,345  $ 920,486 
(A)Excludes our investment in Funko with a fair value of $18 thousand as of March 31, 2024, which was valued using Level 2 inputs.
(B)Excludes our investment in Gladstone Alternative as of March 31, 2025 with a fair value of $5.0 million, which was valued using NAV as a practical expedient.
In accordance with ASC 820, the following table provides quantitative information about our investments valued using Level 3 fair value measurements as of March 31, 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
Fair Value as of
Valuation
Technique/
Methodology
 Unobservable
Input		 Range / Weighted-Average as of
March 31, 2025 March 31, 2024 March 31, 2025 March 31, 2024
Secured first lien debt $ 514,334  $ 474,856  TEV EBITDA multiple
3.7x – 7.9x /
6.0x
4.2x – 8.8x /
6.4x
EBITDA
$1,208 – $25,038 /
$12,162
$1,091 – $23,547 /
$10,509
Revenue multiple
0.3x – 0.6x /
0.4x
0.3x – 0.6x /
0.4x
Revenue
$6,690 – $102,791 /
$72,303
$31,586 – $93,916 / $77,580
Secured second lien debt 90,956  113,703  TEV EBITDA multiple
6.1x – 7.2x /
6.8x
5.1x – 15.0x /
7.0x
EBITDA
$3,637 – $24,234 /
$16,900
$5,648 – $23,003 /
$14,192
12,624  25,000  Yield Analysis Discount Rate
20.7% – 20.7% /
20.7%
13.8% – 13.8% /
 13.8%
Preferred equity 302,163  213,480  TEV EBITDA multiple
3.7x – 7.9x /
6.1x
4.2x – 8.8x /
6.1x
EBITDA
$2,153 – $25,038 /
$11,029
$1,091 – $23,547 /
$9,502
Revenue multiple
0.3x – 0.6x /
0.4x
0.3x – 0.6x /
0.4x
Revenue
$6,690 – $102,791 /
$53,604
$31,586 – $93,916 /
$75,099
Common equity/equivalents(A)(B)
54,268  93,447  TEV EBITDA multiple
5.5x – 7.2x /
6.8x
5.0x – 15.0x /
6.4x
EBITDA
$1,208 – $24,234 /
$18,562
$1,154 – $63,269 /
$23,615
Total $ 974,345  $ 920,486 
(A)Fair value as of March 31, 2025 excludes our investment in Gladstone Alternative with a fair value of $5.0 million, which was valued using NAV as a practical expedient.
(B)Fair value as of March 31, 2024 excludes our investment in Funko with a fair value of $18 thousand, which was valued using Level 2 inputs.
Fair value measurements can be sensitive to changes in one or more of the valuation inputs. Changes in discount rates, EBITDA, or EBITDA multiples (or revenue or revenue multiples), each in isolation, may change the fair value of certain of our investments. Generally, an increase/(decrease) in market yields, discount rates or a (decrease)/increase in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a (decrease)/increase in the fair value of certain of our investments.
Changes in Level 3 Fair Value Measurements of Investments
The following tables provide our portfolio’s changes in fair value, broken out by security type, during the years ended March 31, 2025 and 2024 for all investments for which the Adviser determines fair value using unobservable (Level 3) inputs.
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

 Secured
First Lien
Debt		 Secured
Second Lien
Debt		 Preferred
Equity		 Common
Equity/
Equivalents		 Total
Year ended March 31, 2025:
Fair value as of March 31, 2024
 $ 474,856  $ 138,703  $ 213,480  $ 93,447  $ 920,486 
Total gain (loss):
Net realized gain (loss)(A)
—  —  19,790  43,373  63,163 
Net unrealized (depreciation)
appreciation(B)
(31,122) (733) 63,210  5,068  36,423 
Reversal of previously recorded (appreciation) depreciation upon realization(B)
—  —  (24,334) (38,028) (62,362)
New investments, repayments and settlements(C):
Issuances / originations
 169,200  400  46,617  —  216,217 
Settlements / repayments
 (98,600) (25,000) —  —  (123,600)
Sales
 —  —  (26,390) (49,592) (75,982)
Transfers(E)
—  (9,790) 9,790  —  — 
Fair value as of March 31, 2025
 $ 514,334  $ 103,580  $ 302,163  $ 54,268  $ 974,345 

Secured
First Lien
Debt		 Secured
Second Lien
Debt		 Preferred
Equity		 Common
Equity/
Equivalents		 Total
Year ended March 31, 2024:
Fair value as of March 31, 2023
 $ 437,517  $ 75,734  $ 222,585  $ 17,680  $ 753,516 
Total gain (loss):
Net realized (loss) gain(A)
(4,550) (3,200) 36,833  881  29,964 
Net unrealized (depreciation) appreciation(B)
(7,859) (1,031) 34,050  37,159  62,319 
Reversal of previously recorded depreciation (appreciation) upon realization(B)
3,212  3,200  (35,329) (92) (29,009)
New investments, repayments and settlements(C):
Issuances / originations
 74,536  64,000  14,688  30,700  183,924 
Settlements / repayments
 (28,000) —  —  —  (28,000)
Sales(D)
—  —  (50,726) (1,502) (52,228)
Transfers(E)
—  —  (8,621) 8,621  — 
Fair value as of March 31, 2024
 $ 474,856  $ 138,703  $ 213,480  $ 93,447  $ 920,486 
(A)Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the respective years ended March 31, 2025 and 2024.
(B)Included in net unrealized (depreciation) appreciation of investments on our accompanying Consolidated Statements of Operations for the respective years ended March 31, 2025 and 2024.
(C)Includes increases in the cost basis of investments resulting from new portfolio investments, the amortization of discounts, and other non-cash disbursements to portfolio companies, as well as decreases in the cost basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs, and other cost-basis adjustments.
(D)2024: Includes $0.3 million of proceeds from the recapitalization of Old World Christmas, Inc.
(E)2025: Transfers represent secured second lien debt of PSI Molded Plastics, Inc. ("PSI Molded") with a total cost basis of $16.4 million and $9.8 million, which was converted to preferred equity in January 2025.
2024: Transfers represent preferred equity of SFEG Holdings, Inc. ("SFEG") with a total cost basis and fair value of $4.8 million and $8.6 million, respectively, which was converted to common equity in October 2023.
Investment Activity

During the fiscal year ended March 31, 2025, the following significant transactions occurred:

•In May 2024, our remaining shares in Funko were sold representing an exit of our investment in Funko, and resulting in a return of our equity cost basis of $21 thousand and a realized gain of $2 thousand.
•In July 2024, we invested an additional $18.5 million through secured first lien debt in Nocturne Luxury Villas, Inc. ("Nocturne") to fund an add-on acquisition.

•In September 2024, we exited our investment in Nth Degree Investment Group, LLC, which resulted in success fee income of $0.1 million, a realized gain on our preferred equity of $42.3 million and the repayment of our debt investment of $25.0 million at par.

•In November 2024, we invested $27.2 million in a new portfolio company, Pyrotek Special Effects, Inc. ("Pyrotek"), in the form of $20.1 million of secured first lien debt and $7.1 million of preferred equity. Pyrotek, headquartered in Ontario, Canada, is a leading provider of special effects services and solutions for the live entertainment industry.

•In December 2024, we invested $5.0 million in Gladstone Alternative, one of our affiliated funds, through common equity. Gladstone Alternative is a registered, non-diversified, closed-end management investment company that operates as an interval fund.

•In December 2024, we invested $71.3 million in a new portfolio company, Nielsen-Kellerman Acquisition Corp. ("Nielsen-Kellerman"), in the form of $49.1 million of secured first lien debt and $22.2 million of preferred equity. Nielsen-Kellerman, headquartered in Boothwyn, Pennsylvania, designs, manufactures, and distributes a wide range of rugged, waterproof environmental measurement and sports performance instruments.

•In December 2024, we invested $78.7 million in a new portfolio company, Ricardo Defense, Inc. ("Ricardo"), in the form of $61.3 million of secured first lien debt and $17.4 million of preferred equity. Ricardo, headquartered in Troy, Michigan, with operations in California, Texas and Alabama and overseas, develops engineering and product solutions for U.S. Army vehicle and logistics programs.

•In January 2025, we restructured our investment in PSI Molded. As a result of the restructuring, we converted debt with a cost basis of $16.4 million into preferred equity.

•In February 2025, we invested an additional $3.0 million through secured first lien debt in Pyrotek to fund an add-on acquisition.

•In February 2025, we recapitalized our existing investment in Educators Resource, Inc. and invested an additional $10.0 million in the form of secured first lien debt. In connection with this recapitalization, we received dividend income of $1.8 million.

•In March 2025, we exited our investment in Nocturne, which resulted in success fee income of $3.5 million, a realized gain on our preferred equity of $19.8 million and the repayment of our debt investment of $85.6 million at par.
Investment Concentrations
As of March 31, 2025, our investment portfolio consisted of investments in 25 portfolio companies located in 19 states or countries across 16 different industries with an aggregate fair value of $979.3 million. Our investments in SFEG, Ricardo, Brunswick Bowling Products, Inc., Nielsen-Kellerman and The E3 Company, LLC represented our five largest portfolio investments at fair value, and collectively comprised $401.7 million, or 41.0%, of our total investment portfolio at fair value as of March 31, 2025.
The following table summarizes our investments by security type as of March 31, 2025 and 2024:
March 31, 2025 March 31, 2024
Cost Fair Value Cost Fair Value
Secured first lien debt $ 584,026  62.2  % $ 514,334  52.5  % $ 513,425  60.1  % $ 474,856  51.6  %
Secured second lien debt 103,956  11.1  % 103,580  10.6  % 144,958  16.9  % 138,703  15.0  %
Total debt 687,982  73.3  % 617,914  63.1  % 658,383  77.0  % 613,559  66.6  %
Preferred equity 201,487  21.5  % 302,163  30.9  % 145,070  17.0  % 213,480  23.2  %
Common equity/equivalents 49,597  5.2  % 59,243  6.0  % 50,837  6.0  % 93,465  10.2  %
Total equity/equivalents 251,084  26.7  % 361,406  36.9  % 195,907  23.0  % 306,945  33.4  %
Total investments
 $ 939,066  100.0  % $ 979,320  100.0  % $ 854,290  100.0  % $ 920,504  100.0  %
Investments at fair value consisted of the following industry classifications as of March 31, 2025 and 2024:
March 31, 2025 March 31, 2024
Fair Value
Percentage of
Total Investments
 Fair Value Percentage of
Total Investments
Diversified/Conglomerate Services $ 170,360  17.4  % $ 264,535  28.7  %
Home and Office Furnishings, Housewares, and Durable Consumer Products 159,236  16.3  % 160,038  17.3  %
Aerospace and Defense 107,869  10.9  % 29,064  3.2  %
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) 105,432  10.8  % 92,781  10.1  %
Leisure, Amusement, Motion Pictures, and Entertainment 78,460  8.0  % 39,350  4.3  %
Electronics 71,573  7.2  % —  —  %
Oil and Gas 69,589  7.1  % 51,171  5.6  %
Buildings and Real Estate 69,320  7.1  % 60,431  6.6  %
Healthcare, Education, and Childcare 51,501  5.3  % 49,638  5.4  %
Mining, Steel, Iron and Non-Precious Metals 41,010  4.2  % 30,537  3.3  %
Cargo Transport 12,624  1.3  % 13,500  1.5  %
Printing and Publishing 11,681  1.2  % 14,238  1.5  %
Chemicals, Plastics, and Rubber 11,612  1.2  % 20,363  2.2  %
Hotels, Motels, Inns, and Gaming —  —  % 77,366  8.4  %
Other < 2.0% 19,053  2.0  % 17,492  1.9  %
Total investments
 $ 979,320  100.0  % $ 920,504  100.0  %
Investments at fair value were included in the following geographic regions of the U.S. and Canada as of March 31, 2025 and 2024:

 March 31, 2025 March 31, 2024
Location
 Fair Value
Percentage of
Total Investments
 Fair Value
Percentage of
Total Investments
United States
South $ 317,294  32.4  % $ 346,838  37.7  %
Midwest 227,415  23.2  % 141,925  15.4  %
West 222,062  22.7  % 223,871  24.3  %
Northeast 182,669  18.7  % 207,870  22.6  %
Canada 29,880  3.0  % —  —  %
Total investments
 $ 979,320  100.0  % $ 920,504  100.0  %
The geographic region indicates the location of the headquarters for our portfolio companies. A portfolio company may have additional business locations in other geographic regions.
Investment Principal Repayments
The following table summarizes the contractual principal repayment and maturity of our investment portfolio for the next five fiscal years and thereafter, assuming no voluntary prepayments, as of March 31, 2025:

 Amount
For the fiscal years ending March 31:
 2026 $ 104,787 
2027 133,336 
2028 105,409 
2029 184,944 
2030 159,506 
Thereafter — 
Total contractual repayments $ 687,982 
Investments in equity securities 251,084 
Total cost basis of investments held as of March 31, 2025:
 $ 939,066 
Receivables from Portfolio Companies

Receivables from portfolio companies represent non-recurring costs that we incurred on behalf of portfolio companies. Such receivables, net of any allowance for uncollectible receivables, are included in Other assets, net on our accompanying Consolidated Statements of Assets and Liabilities. We generally maintain an allowance for uncollectible receivables from portfolio companies when the receivable balance becomes 90 days or more past due or if it is determined, based upon management’s judgment, that the portfolio company is unable to pay its obligations. We write-off accounts receivable when we have exhausted collection efforts and have deemed the receivables uncollectible. As of March 31, 2025 and 2024, we had gross receivables from portfolio companies of $2.3 million and $2.2 million, respectively. As of March 31, 2025 and 2024, the allowance for uncollectible receivables was $1.7 million and $1.4 million, respectively.