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

INVESTMENTS

v3.26.1
INVESTMENTS
 12 Months Ended
Mar. 31, 2026
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. Investments in funds measured using NAV as a practical expedient are not categorized within the fair value hierarchy.

As of March 31, 2026 and 2025, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in money market funds, which was valued using Level 1 inputs, and our investment in Gladstone Alternative Income Fund ("Gladstone Alternative"), which was valued using NAV as a practical expedient.
We transfer investments in and out of Level 1, 2 and 3 of the valuation hierarchy as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period. There were no transfers in or out of Level 1, 2 and 3 during the years ended March 31, 2026 and 2025, respectively.
As of March 31, 2026 and 2025, 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, 2026:
Secured first lien debt
 $ —  $ —  $ 570,602  $ 570,602 
Secured second lien debt
 —  —  99,197  99,197 
Preferred equity
 —  — 

426,949  426,949 
Common equity/equivalents
 —  — 

207,495  207,495 
Total
 $ —  $ —  $ 1,304,243  $ 1,304,243 
Investments measured at NAV(A)
—  —  —  5,005 
Total Investments
 $ —  $ —  $ 1,304,243  $ 1,309,248 
Cash equivalents
 25  —  —  25 
Total Investments and Cash Equivalents as of March 31, 2026
 $ 25  $ —  $ 1,304,243  $ 1,309,273 
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
 —  —  974,345  979,320 
Cash equivalents
 1,354  1,354 
Total Investments and Cash Equivalents as of March 31, 2025
 $ 1,354  $ —  $ 974,345  $ 980,674 
(A)Includes our investment in Gladstone Alternative as of March 31, 2026 and 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.
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, 2026 and 2025, 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,

2026 2025
Non-Control/Non-Affiliate Investments
Secured first lien debt
 $ 374,285  $ 300,751 
Secured second lien debt
 97,397  92,964 
Preferred equity
 304,782  200,606 
Common equity/equivalents
 207,495  54,268 
Total Non-Control/Non-Affiliate Investments
 983,959  648,589 

Affiliate Investments
Secured first lien debt
 195,704  213,240 
Secured second lien debt
 1,800  10,616 
Preferred equity
 122,167  101,557 
Common equity/equivalents(A)
—  — 
Total Affiliate Investments
 319,671  325,413 

Control Investments
Secured first lien debt
 613  343 
Secured second lien debt
 —  — 
Preferred equity
 —  — 
Common equity/equivalents
 —  — 
Total Control Investments
 613  343 

Total investments at fair value using Level 3 inputs
 $ 1,304,243  $ 974,345 
(A)Excludes our investment in Gladstone Alternative as of March 31, 2026 and 2025 with a fair value of $5.0 million and $5.0 million, respectively, 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, 2026 and 2025. 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, 2026 March 31, 2025 March 31, 2026 March 31, 2025
Secured first lien debt $ 570,602  $ 514,334  TEV EBITDA multiple
3.6x – 8.7x /
6.4x
3.7x – 7.9x /
6.0x
EBITDA
$430 – $28,973 /
$11,991
$1,208 – $25,038 /
$12,162
Revenue multiple
0.3x – 0.6x /
0.5x
0.3x – 0.6x /
0.4x
Revenue
$21,768 – $99,974 /
$62,789
$6,690 – $102,791 / $72,303
Secured second lien debt 99,197  90,956  TEV EBITDA multiple
5.0x – 10.3x /
7.6x
6.1x – 7.2x /
6.8x
EBITDA
$3,000 – $44,315 /
$19,510
$3,637 – $24,234 /
$16,900
—  12,624  Yield Analysis Discount Rate N/A
20.7% – 20.7% /
 20.7%
Preferred equity 426,949  302,163  TEV EBITDA multiple
3.6x – 8.7x /
6.4x
3.7x – 7.9x /
6.1x
EBITDA
$430 – $28,973 /
$9,870
$2,153 – $25,038 /
$11,029
Revenue multiple
0.3x – 0.6x /
0.4x
0.3x – 0.6x /
0.4x
Revenue
$21,768 – $99,974 /
$76,364
$6,690 – $102,791 /
$53,604
Common equity/equivalents
 207,495  54,268  TEV EBITDA multiple
5.0x – 10.3x /
9.0x
5.5x – 7.2x /
6.8x
EBITDA
$1,210 – $44,315 /
$32,353
$1,208 – $24,234 /
$18,562
Total $ 1,304,243  $ 974,345 
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 or 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, 2026 and 2025 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, 2026:
Fair value as of March 31, 2025
 $ 514,334  $ 103,580  $ 302,163  $ 54,268  $ 974,345 
Total gain (loss):
Net realized (loss) gain(A)
(29,938) —  3,481  —  (26,457)
Net unrealized (depreciation)
appreciation(B)
(3,127) (21,958) 68,870  153,227  197,012 
Reversal of previously recorded depreciation upon realization(B)
19,104  —  —  —  19,104 
New investments, repayments and settlements(C):
Issuances / originations
 126,516  1,800  45,300  —  173,616 
Settlements / repayments
 (29,896) —  —  —  (29,896)
Sales(D)
—  —  (3,481) —  (3,481)
Transfers(E)
(26,391) 15,775  10,616  —  — 
Fair value as of March 31, 2026
 $ 570,602  $ 99,197  $ 426,949  $ 207,495  $ 1,304,243 

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 (loss) gain(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 depreciation (appreciation) 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 
(A)Included in net realized (loss) gain on investments on our accompanying Consolidated Statements of Operations for the respective years ended March 31, 2026 and 2025.
(B)Included in net unrealized (depreciation) appreciation of investments on our accompanying Consolidated Statements of Operations for the respective years ended March 31, 2026 and 2025.
(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)2026: Includes $3.5 million of proceeds from the equity distribution recognized as realized gain from Old World Christmas, Inc.
(E)2026: Transfers include (1) secured second lien debt of PSI Molded Plastics, Inc. ("PSI Molded") with a total cost basis of $10.6 million, which was converted to preferred equity in June 2025 and (2) secured first lien debt of Horizon Facilities Services, Inc. with a total cost basis of $57.7 million and fair value of $26.4 million, which was converted to secured second lien debt in March 2026.
2025: Transfers represent secured second lien debt of PSI Molded with a total cost basis of $16.4 million and $9.8 million, which was converted to preferred equity in January 2025.
Investment Concentrations
As of March 31, 2026, our investment portfolio consisted of investments in 29 portfolio companies located in 20 states and Canada across 16 different industries with an aggregate fair value of approximately $1.3 billion. Our investments in SFEG Holdings, Inc., The E3 Company, LLC, Schylling, Inc., Brunswick Bowling Products, Inc., and Detroit Defense, Inc., represented our five largest portfolio investments at fair value, and collectively comprised $582.6 million, or 44.5%, of our total investment portfolio at fair value as of March 31, 2026.
The following table summarizes our investments by security type as of March 31, 2026 and 2025:
March 31, 2026 March 31, 2025
Cost Fair Value Cost Fair Value
Secured first lien debt $ 593,008  56.3  % $ 570,602  43.6  % $ 584,026  62.2  % $ 514,334  52.5  %
Secured second lien debt 152,840  14.5  % 99,197  7.6  % 103,956  11.1  % 103,580  10.6  %
Total debt 745,848  70.8  % 669,799  51.2  % 687,982  73.3  % 617,914  63.1  %
Preferred equity 257,403  24.5  % 426,949  32.6  % 201,487  21.5  % 302,163  30.9  %
Common equity/equivalents 49,597  4.7  % 212,500  16.2  % 49,597  5.2  % 59,243  6.0  %
Total equity/equivalents 307,000  29.2  % 639,449  48.8  % 251,084  26.7  % 361,406  36.9  %
Total investments
 $ 1,052,848  100.0  % $ 1,309,248  100.0  % $ 939,066  100.0  % $ 979,320  100.0  %
Investments at fair value consisted of the following industry classifications as of March 31, 2026 and 2025:
March 31, 2026 March 31, 2025
Fair Value
Percentage of
Total Investments
 Fair Value Percentage of
Total Investments
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic) $ 258,692  19.8  % $ 105,432  10.8  %
Diversified/Conglomerate Services 189,148  14.4  % 170,360  17.4  %
Aerospace and Defense 174,542  13.4  % 107,869  10.9  %
Home and Office Furnishings, Housewares, and Durable Consumer Products 166,553  12.7  % 159,236  16.3  %
Oil and Gas 125,605  9.6  % 69,589  7.1  %
Leisure, Amusement, Motion Pictures, and Entertainment 105,339  8.0  % 78,460  8.0  %
Buildings and Real Estate 68,987  5.3  % 69,320  7.1  %
Electronics 62,723  4.8  % 71,573  7.2  %
Chemicals, Plastics, and Rubber 49,715  3.8  % 11,612  1.2  %
Healthcare, Education, and Childcare 41,630  3.2  % 51,501  5.3  %
Mining, Steel, Iron and Non-Precious Metals 37,713  2.9  % 41,010  4.2  %
Printing and Publishing 8,379  0.6  % 11,681  1.2  %
Telecommunications 7,942  0.6  % 7,585  0.8  %
Diversified/Conglomerate Manufacturing 6,763  0.5  % 6,493  0.7  %
Other < 2.0% 5,517  0.4  % 17,599  1.8  %
Total investments
 $ 1,309,248  100.0  % $ 979,320  100.0  %
Investments at fair value were included in the following geographic regions of the U.S. and Canada as of March 31, 2026 and 2025:

 March 31, 2026 March 31, 2025
Location
 Fair Value
Percentage of
Total Investments
 Fair Value
Percentage of
Total Investments
United States
South $ 649,436  49.6  % $ 317,294  32.4  %
West 227,294  17.3  % 222,062  22.7  %
Midwest 216,726  16.6  % 227,415  23.2  %
Northeast 193,837  14.8  % 182,669  18.7  %
Canada 21,955  1.7  % 29,880  3.0  %
Total investments
 $ 1,309,248  100.0  % $ 979,320  100.0  %
The geographic region indicates the location of the headquarters for our portfolio companies. A portfolio company may have additional business locations or investments 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, 2026:

 Amount
For the fiscal years ending March 31:
 2027 $ 46,490 
2028 110,842 
2029 291,540 
2030 159,506 
2031 137,470 
Thereafter — 
Total contractual repayments $ 745,848 
Investments in equity securities 307,000 
Total cost basis of investments held as of March 31, 2026:
 $ 1,052,848 
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, 2026 and 2025, we had gross receivables from portfolio companies of $2.6 million and $2.3 million, respectively. As of March 31, 2026 and 2025, the allowance for uncollectible receivables was $1.4 million and $1.7 million, respectively.