Gladstone Capital Corporation Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

INVESTMENTS

INVESTMENTS

3 Months Ended

Dec. 31, 2025

Investments, Debt and Equity Securities [Abstract]

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 December 31, 2025, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investments in money market funds, which were valued using Level 1 inputs, and our investment in Gladstone Alternative Income Fund (“Gladstone Alternative”), which was valued using NAV as a practical expedient. As of September 30, 2025, all of our investments were valued using Level 3 inputs within the ASC 820 fair value hierarchy, except for our investments in money market funds, which were valued using Level 1 inputs, and our investments in Gladstone Alternative and Leeds Novamark Capital I, L.P. (“Leeds”), which were 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 three months ended December 31, 2025 and 2024, there were no investments transferred into or out of Levels 1, 2 or 3 of the valuation hierarchy.

As of December 31, 2025 and September 30, 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 December 31, 2025:
Secured first lien debt	$	—	$	—	$	647,576	$	647,576
Secured second lien debt	—		—		170,662		170,662
Unsecured debt	—		—		346		346
Preferred equity	—		—		36,761		36,761
Common equity/equivalents	—		—		42,492		42,492
Total	$	—	$	—	$	897,837	$	897,837
Investments measured at NAV(A)	—		—		—		5,075
Total Investments	$	—	$	—	$	897,837	$	902,912
Cash Equivalents	1,253		—		—		1,253
Total Investments and Cash Equivalents as of December 31, 2025	$	1,253	$	—	$	897,837	$	904,165


	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, 2025:
Secured first lien debt	$	—	$	—	$	622,371	$	622,371
Secured second lien debt	—		—		150,542		150,542
Unsecured debt	—		—		333		333
Preferred equity	—		—		31,214		31,214
Common equity/equivalents	—		—		49,553		49,553
Total	$	—	$	—	$	854,013	$	854,013
Investments measured at NAV(A)	—		—		—		5,111
Total Investments	$	—	$	—	$	854,013	$	859,124
Cash Equivalents	31,774		—		—		31,774
Total Investments and Cash Equivalents as of September 30, 2025	$	31,774	$	—	$	854,013	$	890,898

(A)Includes our investment in Gladstone Alternative as of December 31, 2025 and our investments in Gladstone Alternative and Leeds as of September 30, 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 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 December 31, 2025 and September 30, 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 Using Significant Unobservable Inputs (Level 3)
	December 31, 2025			September 30, 2025
Non-Control/Non-Affiliate Investments
Secured first lien debt	$	540,903		$	517,762
Secured second lien debt	151,870			131,750
Unsecured debt	16			17
Preferred equity	22,643			16,794
Common equity/equivalents	27,981			29,958		(B)
Total Non-Control/Non-Affiliate Investments	$	743,413		$	696,281
Affiliate Investments
Secured first lien debt	$	33,251		$	34,713
Preferred equity	8,648			9,420
Common equity/equivalents	4,817		(A)	4,703		(B)
Total Affiliate Investments	$	46,716		$	48,836
Control Investments
Secured first lien debt	$	73,422		$	69,896
Secured second lien debt	18,792			18,792
Unsecured debt	330			316
Preferred equity	5,470			5,000
Common equity/equivalents	9,694			14,892
Total Control Investments	$	107,708		$	108,896
Total Investments at Fair Value Using Level 3 Inputs	$	897,837		$	854,013

(A)Excludes our investment in Gladstone Alternative with a fair value of $5.1 million as of December 31, 2025, which was valued using NAV as a practical expedient.

(B)Excludes our investments in Gladstone Alternative and Leeds with fair values of $5.1 million and $36 thousand, respectively, as of September 30, 2025, which were valued using NAV as a practical expedient.

In accordance with ASC 820, the following table provides quantitative information about our Level 3 fair value measurements of our investments as of December 31, 2025 and September 30, 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

Range / Weighted Average as of

December 31,
2025

September 30,
2025

Valuation

Techniques/

Methodologies

Unobservable

Input

December 31,
2025

September 30,
2025

Secured first lien debt(A)

570,154

548,670

Yield Analysis

Discount Rate

9.0% - 18.0%

/ 11.2%

9.4% - 19.8%

/ 11.7%

77,422

73,701

TEV

EBITDA multiple

3.6x – 8.3x

/ 6.2x

3.5x – 8.0x

/ 6.0x

EBITDA

$490 - $4,266

/ $3,485

$538 - $4,655

/ $3,540

Revenue multiple

0.6x – 0.8x

/ 0.7x

0.6x – 0.8x

/ 0.7x

Revenue

$8,268 - $22,244

/ $14,884

$10,844 - $21,649

/ $15,090

Secured second lien debt

151,870

141,750

Yield Analysis

Discount Rate

11.1% - 14.8%

/ 12.3%

11.4% - 15.2%

/ 13.1%

18,792

8,792

TEV

EBITDA multiple

5.0x – 5.6x

/ 5.3x

5.4x – 5.4x

/ 5.4x

EBITDA

$2,355 - $11,359

/ $7,146

$2,345 - $2,345

/ $2,345

Unsecured debt

346

333

TEV

EBITDA multiple

8.3x – 8.3x

/ 8.3x

8.0x – 8.0x

/ 8.0x

EBITDA

$3,755 - $3,755

/ $3,755

$3,804 - $3,804

/ $3,804

Revenue multiple

0.9x – 0.9x

/ 0.9x

0.9x – 0.9x

/ 0.9x

Revenue

$4,708 - $4,708

/ $4,708

$4,846 - $4,846

/ $4,846

Preferred and common equity / equivalents(B)

79,253

80,767

TEV

EBITDA multiple

3.6x – 15.1x

/ 7.0x

3.5x – 14.6x

/ 6.8x

EBITDA

$490 -$143,118

/ $9,727

$538 -$142,549

/ $10,222

Revenue multiple

0.6x – 0.9x

/ 0.7x

0.6x– 0.9x

/ 0.7x

Revenue

$4,708 -$22,244

/ $11,209

$4,846 -$21,649

/ $12,394

Total Level 3 Investments, at Fair Value

897,837

854,013

(A)Fair value as of December 31, 2025 includes one proprietary debt investment totaling $43.6 million, which was valued using the payoff amount as the unobservable input.

(B)Fair value as of December 31, 2025 excludes our investment in Gladstone Alternative with a fair value of $5.1 million, which was valued using NAV as a practical expedient. Fair value as of September 30, 2025 includes one proprietary equity investment totaling $2.2 million, which was valued using the payoff amount as the unobservable input. Fair value as of September 30, 2025 excludes our investments in Gladstone Alternative and Leeds with fair values of $5.1 million and $36 thousand, respectively, which were valued using NAV as a practical expedient.

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 months ended December 31, 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 December 31, 2025	Secured First Lien Debt		Secured Second Lien Debt		Unsecured Debt		Preferred Equity		Common Equity/ Equivalents		Total
Fair Value as of September 30, 2025	$	622,371	$	150,542	$	333	$	31,214	$	49,553	$	854,013
Total gains (losses):
Net realized gain (loss)(A)	(112)		—		—		—		1,790		1,678
Net unrealized appreciation (depreciation)(B)	(23)		739		—		607		(4,821)		(3,498)
Reversal of prior period net depreciation (appreciation) on realization(B)	(169)		(145)		—		—		(1,790)		(2,104)
New investments, repayments and settlements: (C)
Issuances/originations	57,276		39,071		13		4,940		—		101,300
Settlements/repayments	(31,767)		(19,545)		—		—		—		(51,312)
Net proceeds from sales	—		—		—		—		(2,240)		(2,240)

Fair Value as of December 31, 2025	$	647,576	$	170,662	$	346	$	36,761	$	42,492	$	897,837

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)


Three Months Ended December 31, 2024	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)	(4,074)		—		—		2,450		59,348		57,724
Net unrealized appreciation (depreciation)(B)	(3,534)		115		5		3,136		12,396		12,118
Reversal of prior period net depreciation (appreciation) on realization(B)	3,581		—		—		(2,450)		(55,140)		(54,009)
New investments, repayments and settlements: (C)
Issuances/originations	111,754		29,244		322		6,262		—		147,582
Settlements/repayments	(76,255)		(15,841)		—		—		—		(92,096)
Net proceeds from sales	—		—		—		(9,450)		(63,631)		(73,081)

Fair Value as of December 31, 2024	$	586,409	$	127,234	$	359	$	31,294	$	49,164	$	794,460

(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

During the three months ended December 31, 2025, the following significant investment transactions occurred:

•In October 2025, we invested $11.0 million in Total Access Elevator, LLC (“Total Access”), an existing portfolio company, through secured first lien debt. We also extended Total Access a new $9.85 million delayed draw term loan commitment, which was unfunded at close.

•In October 2025, our $28.1 million debt investment in Leadpoint Business Services, LLC paid off at par. We also received a $0.3 million prepayment penalty in conjunction with the payoff.

•In October 2025, the sale of our remaining common equity investment in Sokol & Company Holdings, LLC (“Sokol”) was completed, representing a return of our equity cost basis of $0.5 million and a realized gain of approximately $1.8 million.

•In October 2025, our $17.8 million debt investment in Sea Link International IRB, Inc. (“Sea Link”) paid off at par. We also received a $0.2 million exit fee in conjunction with the payoff. We continue to hold common and preferred equity in Sea Link.

•In November 2025, we invested $15.0 million in Turn Key Health Clinics, LLC (“Turn Key”), an existing portfolio company, through secured first lien debt. We also increased our existing line of credit commitment to Turn Key by $1.0 million to $5.0 million, which was unfunded at close.

•In November 2025, we invested $26.6 million in Sicilian Oven Restaurants LLC through secured first lien debt and preferred equity.

•In December 2025, we invested $30.0 million in RPM Freight Systems, LLC, an existing portfolio company, through secured second lien debt.

•In December 2025, we invested $11.3 million in Flexible Technology Solutions, LLC through secured second lien debt and preferred equity.

Investment Concentrations

As of December 31, 2025, our investment portfolio consisted of investments in 54 portfolio companies located in 22 states in 16 different industries, with an aggregate fair value of $902.9 million. The five largest investments at fair value as of December 31, 2025 totaled $215.7 million, or 23.9% of our total investment portfolio, as compared to the five largest investments at fair value as of September 30, 2025 totaling $196.5 million, or 22.9% of our total investment portfolio. As of December 31, 2025 and September 30, 2025, our average investment by obligor was $17.1 million and $15.9 million at cost, respectively.

The following table outlines our investments by security type as of December 31, 2025 and September 30, 2025:


	December 31, 2025								September 30, 2025
	Cost				Fair Value				Cost				Fair Value
Secured first lien debt	$	671,528	72.5	%	$	647,576	71.7	%	$	646,131	73.7	%	$	622,371	72.4	%
Secured second lien debt	169,463		18.3		170,662		18.9		149,937		17.1		150,542		17.5
Unsecured debt	568		0.1		346		0.0		555		0.1		333		0.1
Total debt investments	841,559		90.9		818,584		90.6		796,623		90.9		773,246		90.0
Preferred equity	42,369		4.6		36,761		4.1		37,429		4.3		31,214		3.6
Common equity/equivalents	42,112		4.5		47,567		5.3		42,562		4.8		54,664		6.4
Total equity investments	84,481		9.1		84,328		9.4		79,991		9.1		85,878		10.0
Total Investments	$	926,040	100.0	%	$	902,912	100.0	%	$	876,614	100.0	%	$	859,124	100.0	%

Our investments at fair value consisted of the following industry classifications as of December 31, 2025 and September 30, 2025:


	December 31, 2025				September 30, 2025
Industry Classification	Fair Value		Percentage of Total Investments		Fair Value		Percentage of Total Investments
Healthcare, Education, and Childcare	$	288,403	31.9	%	$	273,262	31.8	%
Diversified/Conglomerate Manufacturing	203,153		22.5		202,466		23.6
Diversified/Conglomerate Service	146,845		16.3		152,042		17.7
Beverage, Food, and Tobacco	77,921		8.6		54,605		6.4
Cargo Transportation	50,000		5.5		20,000		2.3
Home and Office Furnishings, Housewares and Durable Consumer Products	29,928		3.3		30,000		3.5
Machinery	26,467		3.0		26,381		3.1
Personal, Food, and Miscellaneous Supplies	22,751		2.5		23,700		2.7
Oil and Gas	16,746		1.9		17,512		2.0
Personal and Non-Durable Consumer Products	13,576		1.5		13,866		1.6
Automobile	9,264		1.0		27,361		3.2
Printing and Publishing	5,365		0.6		5,809		0.7
Other, < 2.0%	12,493		1.4		12,120		1.4
Total Investments	$	902,912	100.0	%	$	859,124	100.0	%

Our investments at fair value were included in the following U.S. geographic regions as of December 31, 2025 and September 30, 2025:


	December 31, 2025				September 30, 2025
Location	Fair Value		Percentage of Total Investments		Fair Value		Percentage of Total Investments
South	$	320,014	35.4	%	$	287,371	33.5	%
Midwest	266,400		29.5		237,417		27.6
West	213,878		23.7		233,564		27.2
Northeast	102,620		11.4		100,772		11.7
Total Investments	$	902,912	100.0	%	$	859,124	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 December 31, 2025:


		Amount
For the remaining nine months ending September 30:	2026(A)	$	22,553
For the fiscal years ending September 30:	2027	130,873
	2028	200,051
	2029	146,569
	2030	239,554
	Thereafter	103,360
	Total contractual repayments	$	842,960
	Adjustments to cost basis of debt investments	(1,401)
	Investments in equity securities	84,481
	Investments held as of December 31, 2025 at cost:	$	926,040

(A)Includes debt investments with contractual principal amounts totaling $0.4 million for which the maturity date has passed as of December 31, 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 December 31, 2025 and September 30, 2025, we had gross receivables from portfolio companies of $2.7 million and $2.4 million, respectively. The allowance for uncollectible receivables was $54 thousand and $52 thousand as of December 31, 2025 and September 30, 2025, respectively.