glad-20240331

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024


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

FOR THE TRANSITION PERIOD FROM ______ TO _______

COMMISSION FILE NUMBER: 814-00237

GLADSTONE CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)


Maryland			54-2040781
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1521 WESTBRANCH DRIVE, SUITE 100			22102
McLean, Virginia			(Zip Code)
(Address of principal executive office)

(Registrant’s telephone number, including area code)

(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

GLAD

The Nasdaq Stock Market LLC

7.75% notes due 2028

GLADZ

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 ý 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 ý 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 ý

The number of shares of the issuer’s common stock, $0.001 par value per share, outstanding as of April 30, 2024 was 21,754,471.

GLADSTONE CAPITAL CORPORATION

Part I. Financial information

Item 1 Financial Statements (Unaudited)

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


	March 31, 2024		September 30, 2023
ASSETS
Investments, at fair value:
Non-Control/Non-Affiliate investments (Cost of $737,440 and $671,397, respectively)	$	744,180	$	663,544
Affiliate investments (Cost of $16,746 and $16,746, respectively)	10,382		10,421
Control investments (Cost of $36,356 and $34,126, respectively)	37,026		30,850
Cash and cash equivalents	5,284		1,306
Restricted cash and cash equivalents	128		95
Interest receivable, net	7,684		6,100
Due from administrative agent	2,640		2,936
Deferred financing costs, net	1,118		1,335
Other assets, net	3,612		2,911
TOTAL ASSETS	$	812,054	$	719,498
LIABILITIES
Line of credit at fair value (Cost of $117,200 and $47,800, respectively)	$	117,200	$	47,800
Notes payable, net of unamortized deferred financing costs of $3,385 and $3,886, respectively	253,615		253,114
Accounts payable and accrued expenses	1,009		1,006
Interest payable	3,011		2,956
Fees due to Adviser(A)	3,906		3,872
Fee due to Administrator(A)	705		479
Other liabilities	241		1,576
TOTAL LIABILITIES	$	379,687	$	310,803
Commitments and contingencies(B)
Preferred Stock, $0.001 par value per share, 6,000,000 and 6,000,000 shares authorized, respectively, and 70,044 and 0 shares issued and outstanding, respectively	$	1,576	$	—
NET ASSETS
Common stock, $0.001 par value per share, 44,000,000 and 44,000,000 shares authorized, respectively, and 43,508,897 and 43,508,897 shares issued and outstanding, respectively	$	44	$	44
Capital in excess of par value	481,478		481,480
Cumulative net unrealized appreciation (depreciation) of investments	1,046		(17,454)
Under (over) distributed net investment income	5,694		4,741
Accumulated net realized losses	(57,471)		(60,116)
Total distributable loss	(50,731)		(72,829)
TOTAL NET ASSETS	$	430,791	$	408,695
NET ASSET VALUE PER COMMON SHARE	$	9.90	$	9.39

(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.

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


	Three Months Ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023
INVESTMENT INCOME
Interest income
Non-Control/Non-Affiliate investments	$	22,020	$	17,082	$	42,830	$	32,868
Affiliate investments	—		968		—		1,842
Control investments	285		708		1,036		1,398
Cash and cash equivalents	25		45		52		64
Total interest income (excluding PIK interest income)	22,330		18,803		43,918		36,172
PIK interest income
Non-Control/Non-Affiliate investments	1,303		563		2,630		1,351
Affiliate investments	—		137		—		276
Control investments	82		75		163		146
Total PIK interest income	1,385		775		2,793		1,773
Total interest income	23,715		19,578		46,711		37,945
Success fee income
Non-Control/Non-Affiliate investments	—		600		—		600
Affiliate Investments	—		—		—		—
Total success fee income	—		600		—		600
Dividend income
Non-Control/Non-Affiliate investments	—		281		185		788
Control investments	—		—		—		329
Total dividend income	—		281		185		1,117
Other income	282		102		322		193
Total investment income	23,997		20,561		47,218		39,855
EXPENSES
Base management fee(A)	3,439		2,898		6,684		5,727
Loan servicing fee(A)	2,260		1,923		4,388		3,797
Incentive fee(A)	2,669		2,408		5,653		4,589
Administration fee(A)	469		417		923		820
Interest expense	5,732		4,909		10,764		9,538
Amortization of deferred financing costs	441		381		870		759
Professional fees	278		232		508		513
Other general and administrative expenses	638		404		1,133		708
Expenses, before credits from Adviser	15,926		13,572		30,923		26,451
Credit to base management fee - loan servicing fee(A)	(2,260)		(1,923)		(4,388)		(3,797)
Credits to fees from Adviser - other(A)	(446)		(720)		(2,028)		(1,156)
Total expenses, net of credits	13,220		10,929		24,507		21,498
NET INVESTMENT INCOME	10,777		9,632		22,711		18,357
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss):
Non-Control/Non-Affiliate investments	219		403		219		10,738
Affiliate investments	—		—		—		—
Control investments	—		—		259		(1,016)
Other	1,949		25		1,952		278
Total net realized gain (loss)	2,168		428		2,430		10,000
Net unrealized appreciation (depreciation):
Non-Control/Non-Affiliate investments	7,542		1,819		14,593		(13,406)
Affiliate investments	(334)		34		(39)		2,245
Control investments	3,487		(88)		3,946		327
Other	—		161		—		161
Total net unrealized appreciation (depreciation)	10,695		1,926		18,500		(10,673)
Net realized and unrealized gain (loss)	12,863		2,354		20,930		(673)
PREFERRED STOCK DIVIDENDS	8		—		8		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	23,632	$	11,986	$	43,633	$	17,684
BASIC AND DILUTED PER COMMON SHARE:
Net investment income	$	0.25	$	0.26	$	0.52	$	0.51
Net increase (decrease) in net assets resulting from operations	$	0.54	$	0.33	$	1.00	$	0.49
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic and Diluted	43,508,897		36,604,182		43,508,897		35,898,020

(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.

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(DOLLAR AMOUNTS IN THOUSANDS)


	2024		2023
NET ASSETS, SEPTEMBER 30	$	408,695	$	315,487
OPERATIONS
Net investment income	11,934		8,725
Net realized gain (loss) on investments	259		9,319
Net realized gain (loss) on other	3		253
Net unrealized appreciation (depreciation) of investments	7,805		(12,599)
Net increase (decrease) in net assets resulting from operations	20,001		5,698
DISTRIBUTIONS
Distributions to common stockholders from net investment income ($0.25 per share and $0.21 per share, respectively)(A)	(10,768)		(7,398)
Net decrease in net assets from distributions	(10,768)		(7,398)
CAPITAL TRANSACTIONS
Issuance of common stock	—		10,721
Discounts, commissions and offering costs for issuance of common stock	—		(182)
Net increase (decrease) in net assets resulting from capital transactions	—		10,539
NET INCREASE (DECREASE) IN NET ASSETS	9,233		8,839
NET ASSETS, DECEMBER 31	$	417,928	$	324,326
OPERATIONS
Net investment income	10,777		9,632
Net realized gain (loss) on investments	219		403
Net realized gain (loss) on other	1,949		25
Net unrealized appreciation (depreciation) of investments	10,695		1,765
Net unrealized depreciation of other	—		161
Preferred stock dividends	(8)		—
Net increase (decrease) in net assets resulting from operations	23,632		11,986
DISTRIBUTIONS
Distributions to common stockholders from net investment income ($0.25 per share and $0.23 per share, respectively)(A)	(10,769)		(8,257)
Net decrease in net assets from distributions	(10,769)		(8,257)
CAPITAL TRANSACTIONS
Issuance of common stock	—		13,993
Discounts, commissions and offering costs for issuance of common stock	—		(237)
Net increase (decrease) in net assets resulting from capital transactions	—		13,756
NET INCREASE (DECREASE) IN NET ASSETS	12,863		17,485
NET ASSETS, MARCH 31	$	430,791	$	341,811

(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.

GLADSTONE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLAR AMOUNTS IN THOUSANDS)


	Six Months Ended March 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in net assets resulting from operations	$	43,633	$	17,684
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchase of investments	(102,733)		(77,469)
Principal repayments on investments	35,983		34,670
Net proceeds from sale of investments	3,182		14,552
Increase in investments due to PIK interest or other	(2,604)		(1,952)
Net change in premiums, discounts and amortization	330		221
Net realized loss (gain) on investments	(478)		(9,722)
Net realized loss (gain) on other	(1,952)		(278)
Net unrealized depreciation (appreciation) of investments	(18,500)		10,834
Net unrealized depreciation of other	—		(161)
Amortization of deferred financing costs	870		759
Changes in assets and liabilities:
Decrease (increase) in interest receivable, net	(1,584)		(305)
Decrease (increase) in funds due from administrative agent	296		(2,487)
Decrease (increase) in other assets, net	(702)		(294)
Increase (decrease) in accounts payable and accrued expenses	3		119
Increase (decrease) in interest payable	55		262
Increase (decrease) in fees due to Adviser(A)	34		1,053
Increase (decrease) in fee due to Administrator(A)	226		182
Increase (decrease) in other liabilities	(1,335)		16
Net cash provided by (used in) operating activities	(45,276)		(12,316)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit	134,300		100,400
Repayments on line of credit	(64,900)		(89,600)
Proceeds from issuance of notes payable	—		—
Redemption of notes payable	—		—
Financing costs	(152)		(203)
Proceeds from issuance of common stock	—		24,714
Proceeds from issuance of preferred stock	1,576		—
Discounts, commissions and offering costs for issuance of common stock	—		(398)
Distributions paid to common stockholders	(21,537)		(15,655)
Net cash provided by (used in) financing activities	49,287		19,258
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS	4,011		6,942
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF PERIOD	1,401		2,107
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD	$	5,412	$	9,049
CASH PAID FOR INTEREST	$	10,709	$	9,276
NON-CASH ACTIVITIES(B)	$	—	$	2,416

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

(B)Non-cash activities relate to the October 2022 exit of our investment in Targus Cayman HoldCo Ltd., which was sold for net proceeds of approximately $8.0 million, resulting in a realized gain of approximately $5.9 million. As part of the proceeds, we received an interest in B. Riley Financial, Inc. 6.75% senior notes in the amount of $2.4 million.

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


GLADSTONE CAPITAL CORPORATION CONSOLIDATED SCHEDULE OF INVESTMENTS MARCH 31, 2024 (UNAUDITED) (DOLLAR AMOUNTS IN THOUSANDS)
Company and Investment(A)(B)(K)(Q)	Principal/ Shares/ Units(J)(I)		Cost		Fair Value
NON-CONTROL/NON-AFFILIATE INVESTMENTS(M) – 172.8%
Secured First Lien Debt – 126.9%
Aerospace and Defense – 21.6%
Antenna Research Associates, Inc. – Term Debt (S + 10.0%, 15.3% Cash, 4.0% PIK, Due 11/2026)(E)	$	30,635	$	30,635	$	30,635
Ohio Armor Holdings, LLC – Term Debt (S + 8.0%, 13.3% Cash, Due 2/2026)(C)	17,150		17,150		17,150
SpaceCo Holdings, LLC – Line of Credit, $0 available (S + 6.9%, 12.2% Cash, Due 12/2025)(C)(U)	2,000		2,000		2,000
SpaceCo Holdings, LLC – Term Debt (S + 6.9%, 12.2% Cash, Due 12/2025)(C)(U)	43,351		42,830		43,351
			92,615		93,136
Beverage, Food, and Tobacco – 16.2%
Café Zupas – Line of Credit, $1,750 available (S + 7.0%, 12.3% Cash, Due 12/2027)(C)	—		—		—
Café Zupas – Delayed Draw Term Loan, $7,700 available (S + 7.0%, 12.3% Cash, Due 12/2027)(C)	2,800		2,800		2,828
Café Zupas – Term Debt (S + 7.0%, 12.3% Cash, Due 12/2027)(C)	26,250		26,250		26,513
Eegee’s LLC – Line of Credit, $500 available (S + 7.8%, 13.1% Cash, Due 6/2026)(C)	1,500		1,500		1,443
Eegee’s LLC – Delayed Draw Term Loan, $4,500 available (S + 7.8%, 8.0% Cash, 5.1% PIK, Due 6/2026)(C)	3,065		3,065		2,948
Eegee’s LLC – Term Debt (S + 7.8%, 8.0% Cash, 5.1% PIK, Due 6/2026)(C)	17,368		17,368		16,708
Salt & Straw, LLC – Line of Credit, $2,000 available (S + 9.1%, 14.4% Cash, Due 9/2027)(C)	—		—		—
Salt & Straw, LLC – Delayed Draw Term Loan, $3,500 available (S + 9.1%, 14.4% Cash, Due 9/2027)(C)	10,850		10,672		10,769
Sokol & Company Holdings, LLC – Term Debt (S + 6.8%, 12.1% Cash, Due 8/2027)(C)	8,500		8,500		8,500
			70,155		69,709
Buildings and Real Estate – 0.5%
GFRC 360, LLC – Line of Credit, $175 available (S + 8.0%, 13.3% Cash, Due 9/2024)(C)	1,275		1,275		1,286
GFRC 360, LLC – Term Debt (S + 8.0%, 13.3% Cash, Due 9/2024)(C)	1,000		1,000		1,009
			2,275		2,295
Diversified/Conglomerate Manufacturing – 26.9%
Engineering Manufacturing Technologies, LLC – Line of Credit, $3,000 available (S + 8.3%, 13.6% Cash, Due 10/2026)(C)	—		—		—
Engineering Manufacturing Technologies, LLC – Term Debt (S + 8.3%, 10.0% Cash, 3.6% PIK, Due 10/2026)(C)	21,827		21,827		22,046
NeoGraf Solutions LLC – Line of Credit, $4,500 available (S + 7.0%, 11.0% Cash, 1.3% PIK, Due 1/2028)(C)	—		—		—
NeoGraf Solutions LLC – Term Debt (S + 7.0%, 11.0% Cash, 1.3% PIK, Due 1/2028)(C)	27,338		27,338		25,662
OCI, LLC – Term Debt (S + 7.5%, 12.8% Cash, Due 5/2028)(C)	18,500		18,500		18,870
Salvo Technologies, Inc. – Term Debt (S + 9.5%, 14.8% Cash, Due 4/2027)(C)	11,708		11,684		11,774
Unirac Holdings, Inc. – Line of Credit, $1,467 available (S + 6.5%, 11.8% Cash, Due 9/2027)(C)	756		756		763
Unirac Holdings, Inc. – Delayed Draw Term Loan, $1,675 available (S + 6.5%, 11.8% Cash, Due 9/2027)(C)	1,103		1,103		1,114
Unirac Holdings, Inc. – Term Debt (S + 6.5%, 11.8% Cash, Due 9/2027)(C)	14,813		14,535		14,961
Viva Railings, LLC – Line of Credit, $4,000 available (S + 7.1%, 12.4% Cash, Due 5/2027)(C)	—		—		—
Viva Railings, LLC – Term Debt (S + 7.1%, 12.4% Cash, Due 5/2027)(C)	20,420		20,420		20,813
			116,163		116,003
Diversified/Conglomerate Service – 30.8%
Axios Industrial Group, LLC – Term Debt (S + 9.6%, 14.9% Cash, Due 10/2027)(C)	11,324		11,297		11,519
DKI Ventures, LLC – Line of Credit, $25 available (9.0% Cash, Due 12/2025)(E)(F)	350		350		180
DKI Ventures, LLC – Term Debt (9.0% Cash, Due 12/2025)(E)(F)	5,915		5,915		3,046
ENET Holdings, LLC – Line of Credit, $0 available (S + 8.3%, 13.6% Cash, Due 4/2025)(C)	2,500		2,378		2,500
ENET Holdings, LLC – Term Debt (S +


PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Assets and Liabilities as of March 31 , 202 4 and September 30, 2023	2
	Consolidated Statements of Operations for the three and six months ended March 31, 202 4 and 2023	3
	Consolidated Statements of Changes in Net Assets for the six months ended March 31 , 202 4 and 2023	4
	Consolidated Statements of Cash Flows for the six months ended March 31 , 202 4 and 2023	5
	Consolidated Schedules of Investments as of March 31, 202 4 and September 30, 2023	6
	Notes to Consolidated Financial Statements	18

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
	Overview	43
	Results of Operations	47
	Liquidity and Capital Resources	54

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61

Item 4.	Controls and Procedures	62

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	63

Item 1A.	Risk Factors	63

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63

Item 3.	Defaults Upon Senior Securities	63

Item 4.	Mine Safety Disclosures	63

Item 5.	Other Information	63

Item 6.	Exhibits	63

SIGNATURES		66