Quarterly report [Sections 13 or 15(d)]

INVESTMENTS

v3.25.2
INVESTMENTS
9 Months Ended
Jun. 30, 2025
Investments, Debt and Equity Securities [Abstract]  
INVESTMENTS INVESTMENTS
Fair Value
In accordance with ASC 820, the fair value of each investment is determined to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between willing market participants on the measurement date. This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument as of the measurement date.
Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical financial instruments in active markets;
Level 2 — inputs to the valuation methodology include quoted prices for similar financial instruments in active or inactive markets, and inputs that are observable for the financial instrument, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are in those 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 June 30, 2025, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investments in Gladstone Alternative Income Fund (“Gladstone Alternative”) and Leeds Novamark Capital I, L.P. (“Leeds”), which were valued using NAV as a practical expedient. As of September 30, 2024, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investment in Leeds, which was valued using NAV as a practical expedient.
We transfer investments in and out of Level 1, 2, and 3 of the valuation hierarchy as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period. During the nine months ended June 30, 2025 and 2024, there were no investments transferred into or out of Levels 1, 2 or 3 of the valuation hierarchy.
As of June 30, 2025 and September 30, 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 June 30, 2025:
Secured first lien debt
$ —  $ —  $ 529,149  $ 529,149 
Secured second lien debt
—  —  144,299  144,299 
Unsecured debt
—  —  354 

354 
Preferred equity
—  —  25,717 

25,717 
Common equity/equivalents
— 

—  46,695  46,695 
Total
$   $   $ 746,214  $ 746,214 
Investments measured at NAV(A)
—  —  —  5,046 
Total Investments as of June 30, 2025
$   $   $ 746,214  $ 751,260 
Fair Value Measurements
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value
As of September 30, 2024:
Secured first lien debt
$ —  $ —  $ 554,937  $ 554,937 
Secured second lien debt
—  —  113,716  113,716 
Unsecured debt
—  — 

32 

32 
Preferred equity
—  — 

31,346 

31,346 
Common equity/equivalents
— 

—  96,191  96,191 
Total
$   $   $ 796,222  $ 796,222 
Investments measured at NAV(A)
—  —  —  38 
Total Investments as of September 30, 2024
$   $   $ 796,222  $ 796,260 
(A)Includes our investments in Gladstone Alternative and Leeds as of June 30, 2025 and our investment in Leeds as of September 30, 2024. Investments that are measured at fair value using NAV as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented elsewhere in this quarterly report.
The following table presents our portfolio investments, valued using Level 3 inputs within the ASC 820 fair value hierarchy and carried at fair value as of June 30, 2025 and September 30, 2024, by caption on our accompanying Consolidated Statements of Assets and Liabilities and by security type:
Total Recurring Fair Value Measurements Reported in
Consolidated Statements of Assets and Liabilities
Using Significant Unobservable Inputs (Level 3)
June 30, 2025 September 30, 2024
Non-Control/Non-Affiliate Investments
Secured first lien debt $ 458,578  $ 540,661 
Secured second lien debt 135,507  105,169 
Unsecured debt 20  32 
Preferred equity 18,126  27,247 
Common equity/equivalents 26,736 
(A)
77,757 
(B)
Total Non-Control/Non-Affiliate Investments
$ 638,967  $ 750,866 
Affiliate Investments
Secured first lien debt $ 245  $ 380 
Preferred equity 7,591  4,099 
Common equity/equivalents 3,748  2,959 
Total Affiliate Investments $ 11,584  $ 7,438 
Control Investments
Secured first lien debt $ 70,326  $ 13,896 
Secured second lien debt 8,792  8,547 
Unsecured debt 334  — 
Common equity/equivalents 16,211  15,475 
Total Control Investments
$ 95,663  $ 37,918 
Total Investments at Fair Value Using Level 3 Inputs $ 746,214  $ 796,222 
In accordance with ASC 820, the following table provides quantitative information about our Level 3 fair value measurements of our investments as of June 30, 2025 and September 30, 2024. The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements.
The weighted average calculations in the table below are based on the principal balances for all debt related calculations and on the cost basis for all equity related calculations for the particular input.
Quantitative Information about Level 3 Fair Value Measurements

Range / Weighted Average as of

June 30,
2025
September 30,
2024
Valuation
Techniques/
Methodologies
Unobservable
Input
June 30,
2025
September 30,
2024


Secured first lien debt
$ 455,368  $ 464,090 
Yield Analysis
Discount Rate
10.5% - 18.0%
/ 12.0%
10.8% - 17.3%
/ 12.6%

73,781  90,847 
TEV
EBITDA multiple
4.5x – 7.2x
/ 6.3x
4.1x – 13.9x
/ 10.0x


EBITDA
$408 - $4,591
/ $3,330
$3,020 - $16,211
/ $10,309


Revenue multiple
0.6x – 0.7x
/ 0.7x
0.2x – 4.6x
/ 2.1x


Revenue
$11,320 - $21,248
/ $14,719
$6,336 - $21,118
/ $13,981


Secured second lien debt
131,824  101,928 
Yield Analysis
Discount Rate
11.9% - 15.4%
/ 13.4%
12.2% - 16.0%
/ 14.1%

3,683  3,241 
Market Quote
IBP
100.0% - 100.0%
/ 100.0%
88.0% - 88.0%
/ 88.0%

8,792  8,547 
TEV
EBITDA multiple
5.4x – 5.4x
/ 5.4x
5.4x – 5.4x
/ 5.4x


EBITDA
$2,463 - $2,463
/ $2,463
$3,343 - $3,343
/ $3,343


Unsecured debt
354  32 
TEV
EBITDA multiple
7.2x – 7.2x
/ 7.2x
0.0x – 0.0x
/ 0.0x
EBITDA
$4,591 - $4,591
/ $4,591
$0 - $0
/ $0
Revenue multiple
1.0x – 1.0x
/ 1.0x
1.0x – 1.0x
/ 1.0x


Revenue
$5,202 - $5,202
/ $5,202
$7,834 - $7,834
/ $7,834


Preferred and common equity / equivalents(A)
72,412  127,537 
TEV
EBITDA multiple
4.1x – 14.7x
/ 7.3x
4.1x – 13.9x
/ 8.0x


EBITDA
$408 -$143,118
/ $8,787
$1,182 -$144,458
/ $10,847


Revenue multiple
0.6x – 1.0x
/ 0.7x
0.2x– 4.6x
/ 2.0x


Revenue
$5,202 -$21,248
/ $13,175
$4,672 -$21,118
/ $12,587
Total Level 3 Investments, at Fair Value
$ 746,214  $ 796,222 

Fair value measurements can be sensitive to changes in one or more of the valuation inputs. Changes in discount rates, EBITDA or EBITDA multiples (or revenue or revenue multiples), each in isolation, may change the fair value of certain of our investments. Generally, an increase/(decrease) in market yields, discount rates, or a (decrease)/increase in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a (decrease)/increase, respectively, in the fair value of certain of our investments.
Changes in Level 3 Fair Value Measurements of Investments
The following tables provide the changes in fair value, broken out by security type, during the three and nine months ended June 30, 2025 and 2024 for all investments for which we determine fair value using unobservable (Level 3) inputs.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Three months ended June 30, 2025 Secured
First Lien
Debt
Secured
Second Lien
Debt
Unsecured
Debt
Preferred
Equity
Common
Equity/
Equivalents
Total
Fair Value as of March 31, 2025 $ 541,524  $ 144,970  $ 335  $ 25,031  $ 45,765  $ 757,625 
Total gains (losses):
Net realized gain (loss)(A)
(4,439) —  —  —  731  (3,708)
Net unrealized appreciation (depreciation)(B)
815  (355) 686  (7,570) (6,417)
Reversal of prior period net depreciation (appreciation) on realization(B)
6,053  295  —  —  —  6,348 
New investments, repayments and settlements: (C)
Issuances/originations
73,889  130  12  —  —  74,031 
Settlements/repayments
(80,193) (741) —  —  —  (80,934)
Net proceeds from sales
—  —  —  —  (731) (731)
Transfers
(8,500) —  —  —  8,500  — 
Fair Value as of June 30, 2025
$ 529,149  $ 144,299  $ 354  $ 25,717  $ 46,695  $ 746,214 

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Nine months ended June 30, 2025 Secured
First Lien
Debt
Secured
Second
Lien Debt
Unsecured
Debt
Preferred
Equity
Common
Equity/
Equivalents
Total
Fair Value as of September 30, 2024 $ 554,937  $ 113,716  $ 32  $ 31,346  $ 96,191  $ 796,222 
Total gains (losses):
Net realized gain (loss)(A)
(8,513) —  —  5,404  64,827  61,718 
Net unrealized appreciation (depreciation)(B)
(10,011) (252) (23) 7,513  6,432  3,659 
Reversal of prior period net depreciation (appreciation) on realization(B)
9,612  295  —  (5,404) (60,010) (55,507)
New investments, repayments and settlements: (C)
Issuances/originations
212,754  47,827  345  6,262  915  268,103 
Settlements/repayments
(221,130) (17,287) —  —  —  (238,417)
Net proceeds from sales
—  —  —  (19,404) (70,160) (89,564)
Transfers (8,500) —  —  —  8,500  — 
Fair Value as of June 30, 2025
$ 529,149  $ 144,299  $ 354  $ 25,717  $ 46,695  $ 746,214 
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Three months ended June 30, 2024 Secured
First Lien
Debt
Secured
Second Lien
Debt
Unsecured
Debt
Preferred
Equity
Common
Equity/
Equivalents
Total
Fair Value as of March 31, 2024 $ 563,849  $ 140,409  $ 33  $ 32,598  $ 54,435  $ 791,324 
Total gains (losses):
Net realized gain (loss)(A)
(50) —  —  —  1,465  1,415 
Net unrealized appreciation (depreciation)(B)
(6,748) 727  —  367  9,213  3,559 
Reversal of prior period net depreciation (appreciation) on realization(B)
(33) (58) —  —  —  (91)
New investments, repayments and settlements: (C)
Issuances/originations
26,964  20,132  —  —  750  47,846 
Settlements/repayments
(41,749) (43,335) —  —  —  (85,084)
Net proceeds from sales
50  —  —  —  (1,484) (1,434)
Fair Value as of June 30, 2024
$ 542,283  $ 117,875  $ 33  $ 32,965  $ 64,379  $ 757,535 

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Nine months ended June 30, 2024 Secured
First Lien
Debt
Secured
Second
Lien Debt
Unsecured
Debt
Preferred
Equity
Common
Equity/
Equivalents
Total
Fair Value as of September 30, 2023 $ 510,701  $ 127,854  $ 24  $ 26,855  $ 39,128  $ 704,562 
Total gains (losses):
Net realized gain (loss)(A)
(50) —  —  219  1,724  1,893 
Net unrealized appreciation (depreciation)(B)
(1,750) 2,270  (3,270) 24,804  22,063 
Reversal of prior period net depreciation (appreciation) on realization(B)
(52) 99  —  130  (283) (106)
New investments, repayments and settlements: (C)
Issuances/originations
106,939  35,494  —  10,000  750  153,183 
Settlements/repayments
(73,555) (47,842) —  —  —  (121,397)
Net proceeds from sales
50  —  —  (969) (1,744) (2,663)
Fair Value as of June 30, 2024
$ 542,283  $ 117,875  $ 33  $ 32,965  $ 64,379  $ 757,535 
(A)Included in net realized gain (loss) on investments on our accompanying Consolidated Statements of Operations for the corresponding period.
(B)Included in net unrealized appreciation (depreciation) on investments on our accompanying Consolidated Statements of Operations for the corresponding period.
(C)Includes increases in the cost basis of investments resulting from new portfolio investments, accretion of discounts, PIK, and other non-cash disbursements to portfolio companies, as well as decreases in the cost basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs and other cost-basis adjustments.
Investment Activity
Proprietary Investments
As of June 30, 2025 and September 30, 2024, we held 49 and 47 proprietary investments with an aggregate fair value of $747.5 million and $792.9 million, or 99.5% and 99.6% of the total investment portfolio at fair value, respectively. The following significant proprietary investment transactions occurred during the nine months ended June 30, 2025:

In October 2024, our $15.0 million debt investment in Perimeter Solutions Group paid off at par. We also received a $0.5 million prepayment penalty in conjunction with the payoff.
In October 2024, our investment in Antenna Research Associates, Inc. was sold, which resulted in a net realized gain on our common equity of approximately $59.3 million and the repayment of our debt investment of $31.3 million at par.
In November 2024, we invested an additional $28.9 million in Giving Home Healthcare, LLC (“Giving Home”), an existing portfolio company, through secured first lien debt. In June 2025, we invested an additional $7.0 million in Giving Home through secured first lien debt.
In November 2024, we invested $10.5 million in Wings ‘N More Restaurants, LLC (“Wings”) through secured first lien debt. We also extended Wings a $1.5 million secured first lien line of credit commitment and a $5.0 million secured first lien delayed draw term loan commitment, both of which were unfunded at close.
In November 2024, our $22.3 million debt investment in ENET Holdings, LLC paid off at par.
In December 2024, we invested $42.8 million in Vet’s Choice Radiology, LLC through secured first lien debt.
In December 2024, we invested $28.9 million in Pan-Am Dental, LLC through secured second lien debt and preferred equity.
In December 2024, we invested $15.0 million in Freedom Dental Management, Inc. through secured first lien debt.
In December 2024, we invested $5.0 million in Tube Bending Technology, LLC through secured second lien debt.
In December 2024, we invested $5.0 million in Gladstone Alternative, one of our affiliated funds, through common equity.
In December 2024, our investment in Salt and Straw, LLC, paid off which resulted in a realized gain of approximately $2.5 million on our preferred equity and the repayment of our debt investment of $10.9 million at par. We also received a $0.1 million prepayment penalty in conjunction with the payoff. We continue to hold warrants for common equity in Salt and Straw, LLC.
In December 2024, we sold our debt investments in DKI Ventures, LLC, which resulted in a net realized loss on our debt of approximately $4.1 million.
In January 2025, our $20.6 million debt investment in Fix-It Group, LLC paid off at par. We also received a $0.1 million prepayment penalty.
In January 2025, our $5.4 million debt investment in Sokol and Company, LLC (“Sokol”) paid off at par. Additionally, in February 2025, a portion of our common equity investment in Sokol was sold, representing a return of our equity cost basis of $1.1 million and a realized gain of $4.7 million.
In February 2025, we invested $18.9 million in Dutch Gold Honey, Inc. through secured second lien debt and common equity.
In February 2025, we invested $19.4 million in Viron International, LLC through secured first lien debt and common equity.
In March 2025, we received a $6.0 million partial repayment on our debt investment in Viva Railings, LLC.
In March 2025, we exited our investment in MCG Energy Solutions, LLC, which resulted in a realized gain on our preferred equity investment of approximately $3.0 million and the repayment of our debt investment of $20.4 million at par.
In April 2025, our $42.2 million debt investment in SpaceCo Holdings, LLC paid off at par.
In April 2025, our investment in Eegees, LLC was restructured as part of the bankruptcy process resulting in a new $12.8 million first lien debt investment and a new $8.5 million common equity investment in Eegee Acquisition Corporation. In conjunction with the restructuring, we recorded a net realized loss of approximately $4.4 million.
In May 2025, we invested $46.0 million in Altior Healthcare, LLC through secured first lien debt.
In June 2025, our $36.1 million debt investment in Cafe Zupas paid off at par. We also received a $0.4 million prepayment penalty in conjunction with the payoff.
In June 2025, we invested $12.6 million in RF Technologies, LLC through secured first lien debt. We also extended RF Technologies, LLC a $3.5 million secured first lien line of credit commitment which was unfunded as of June 30, 2025.

Syndicated Investments
As of June 30, 2025 and September 30, 2024, we held two syndicated investments with an aggregate fair value of $3.8 million and $3.3 million, or 0.5% and 0.4% of the total investment portfolio at fair value, respectively.
Investment Concentrations
As of June 30, 2025, our investment portfolio consisted of investments in 51 portfolio companies located in 22 states in 14 different industries, with an aggregate fair value of $751.3 million. The five largest investments at fair value as of June 30, 2025 totaled $189.7 million, or 25.3% of our total investment portfolio, as compared to the five largest investments at fair value as of September 30, 2024 totaling $232.7 million, or 29.2% of our total investment portfolio. As of June 30, 2025 and September 30, 2024, our average investment by obligor was $15.3 million and $15.7 million at cost, respectively.
The following table outlines our investments by security type as of June 30, 2025 and September 30, 2024:
June 30, 2025 September 30, 2024
Cost Fair Value Cost Fair Value
Secured first lien debt $ 555,347  71.4  % $ 529,149  70.4  % $ 580,736  75.3  % $ 554,937  69.7  %
Secured second lien debt 144,231  18.5  144,299  19.2  113,691  14.8  113,716  14.3 
Unsecured debt 543  0.1  354  0.1  198  0.0  32  0.0 
Total debt investments 700,121  90.0  673,802  89.7  694,625  90.1  668,685  84.0 
Preferred equity 37,279  4.8  25,717  3.4  45,017  5.8  31,346  3.9 
Common equity/equivalents 40,451  5.2  51,741  6.9  31,369  4.1  96,229  12.1 
Total equity investments
77,730  10.0  77,458  10.3  76,386  9.9  127,575  16.0 
Total Investments
$ 777,851  100.0  % $ 751,260  100.0  % $ 771,011  100.0  % $ 796,260  100.0  %
Our investments at fair value consisted of the following industry classifications as of June 30, 2025 and September 30, 2024:
June 30, 2025 September 30, 2024
Industry Classification Fair Value Percentage of
Total
Investments
Fair Value Percentage of
Total
Investments
Healthcare, Education, and Childcare $ 272,883  36.3  % $ 101,707  12.8  %
Diversified/Conglomerate Manufacturing 174,470  23.2  160,264  20.1 
Diversified/Conglomerate Service 110,727  14.7  179,032  22.5 
Beverage, Food, and Tobacco 56,001  7.5  88,327  11.1 
Automobile 27,147  3.6  28,286  3.6 
Machinery 25,831  3.4  21,816  2.7 
Cargo Transportation 20,000  2.7  20,200  2.5 
Oil and Gas 18,463  2.5  20,554  2.6 
Aerospace and Defense 16,975  2.3  153,096  19.2 
Personal and Non-Durable Consumer Products 12,743  1.7  13,586  1.7 
Printing and Publishing 5,445  0.7  4,312  0.5 
Other, < 2.0%
10,575  1.4  5,080  0.7 
Total Investments $ 751,260  100.0  % $ 796,260  100.0  %
Our investments at fair value were included in the following U.S. geographic regions as of June 30, 2025 and September 30, 2024:
June 30, 2025 September 30, 2024
Location
Fair Value
Percentage of
Total
Investments
Fair Value
Percentage of
Total Investments
South $ 247,674  33.0  % $ 314,010  39.4  %
Midwest 229,178  30.5  192,897  24.2 
West 218,612  29.1  249,082  31.3 
Northeast 55,796  7.4  40,271  5.1 
Total Investments $ 751,260  100.0  % $ 796,260  100.0  %
The geographic composition indicates the location of the headquarters for our portfolio companies. A portfolio company may have additional locations in other geographic regions.
Investment Principal Repayments
The following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of June 30, 2025:
Amount
For the remaining three months ending September 30:
2025(A)
$ 4,951 
For the fiscal years ending September 30:
2026 71,503 

2027 160,622 

2028 204,797 

2029 105,614 

Thereafter 153,214 

Total contractual repayments
$ 700,701 

Adjustments to cost basis of debt investments (580)

Investments in equity securities 77,730 

Investments held as of June 30, 2025 at cost:
$ 777,851 
(A)Includes debt investments with contractual principal amounts totaling $0.5 million for which the maturity date has passed as of June 30, 2025.
Receivables from Portfolio Companies
Receivables from portfolio companies represent non-recurring costs incurred on behalf of such portfolio companies and are included in other assets on our accompanying Consolidated Statements of Assets and Liabilities. We generally maintain an allowance for uncollectible receivables from portfolio companies when the receivable balance becomes 90 days or more past due or if it is determined, based upon management’s judgment, that the portfolio company is unable to pay its obligations. We write off accounts receivable when we have exhausted collection efforts and have deemed the receivables uncollectible. As of June 30, 2025 and September 30, 2024, we had gross receivables from portfolio companies of $2.4 million and $1.7 million, respectively. The allowance for uncollectible receivables was $0.1 million and $75 thousand as of June 30, 2025 and September 30, 2024, respectively.